BIOSPHERICS INCORPORATED
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EXHIBIT 10.6
RESTATED STOCK REDEMPTION AGREEMENT
THIS AGREEMENT made and entered into this 15TH day of JANUARY, 1996 between
BIOSPHERICS INCORPORATED, a corporation organized under the laws of the State of
Delaware (hereinafter referred to as the "Corporation"), and XXXXXXX X. XXXXX
and M. XXXXX XXXXX (hereinafter referred to as the "Shareholders"). This
agreement takes effect upon the death of Xxxxxxx X. Xxxxx or M. Xxxxx Xxxxx
whichever shall occur last.
WITNESSETH
WHEREAS, the Corporation is engaged in research, development, products and
services in the areas of chemistry, biology, microbiology, occupational health,
air and water pollution control, toxicology, wastewater treatment, environmental
and medical products, writing, editing, word processing, graphics arts, and
information services, and
WHEREAS, the Shareholders have been highly valued and important employees
and Officers of the Corporation and have contributed in great part to the
financial success of the Corporation, and
WHEREAS, the Shareholders currently own shares of the common stock of the
Corporation (hereinafter sometimes referred to as the "Shares"), currently in
the amount of 1,642,253 Shares, and
WHEREAS, the Corporation wishes to forestall the possibility of a forced
sale of substantial amounts of its shares by the heirs and representatives of
the Shareholders in the event of the Shareholders' death, and
WHEREAS, the Corporation, in return for the valuable services of these
Shareholders as employees and Officers of the Corporation, wishes to provide the
Shareholders' estate and heirs with a source of funds, at minimal tax cost to
the Corporation, in order to prevent anticipated problems to the Shareholders'
heirs and representatives in paying Federal estate taxes and other expenses on
the event of the Shareholders' death,
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and other good and valuable consideration, the receipt of which
is hereby acknowledged, the Corporation and the Shareholders hereby agree, each
with the other, as follows:
1. REDEMPTION AT DEATH.
(a) The Corporation hereby agrees to purchase and the Shareholders
hereby agree that their executors or administrators shall sell such shares of
the Corporation as are provided for in this Agreement.
(b) Except as limited in Section 1(d) of this Agreement, the number
of shares subject to the requirement of sale and redemption as specified in
Section 1(a) of this Agreement shall be the maximum number of shares, the
payment for which will qualify for treatment as a distribution in full payment
or exchange for the shares in accordance with the provisions of Section 303 of
the Internal Revenue Code of 1986, as amended (hereinafter referred to as
"Section 303 of the Code"), as it may be in force and applicable at the time of
such sale and redemption , subject, however, to adjustment as provided in
Section 2 of this Agreement. In the event that Section 303 of the Code is not
applicable to the estate of the Shareholder at the time of such sale and
redemption, this Agreement shall be null and void at that time.
(c) Within the limitations of Section 1(d) of this Agreement, the
amount of shares to be so redeemed shall be determined by the executors or
administrators of the Shareholders' estate and shall be certified in writing to
the Corporation at its principal office at least ten (10) days before the date
of such sale and redemption as determined under Section 2(b) of this Agreement.
The Corporation shall have the right to inspect and review the computations made
by such executors or administrators in order to determine the accuracy thereof
and shall only be required to accept a reasonable computation of the number of
shares to be sold and redeemed under this Agreement.
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BIOSPHERICS INCORPORATED
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(d) Notwithstanding the foregoing provisions of this Section 1, the
Corporation's obligation to purchase shares from the Shareholders' estate shall
be limited to the number of shares that can be purchased under the terms of this
Agreement by a gross purchase price of five million dollars ($5,000,000).
Purchases of shares in excess of this amount may be made upon the mutual
agreement of the Corporation and the Shareholders' executors or administrators.
(e) This Agreement shall be operative only with respect to sales and
redemptions occurring upon and after the death of the Shareholders and shall not
be construed to in any way affect or restrict the right or ability of the
Shareholders or the Corporation to sell, exchange, gift, dispose of or otherwise
transfer any shares of the Corporation during the lifetime of the Shareholders.
Further, any sales, exchanges, gifts, dispositions or other transfers of the
shares of the Corporation that are made during the Shareholders' lifetimes shall
not have any affect on the rights and obligations imposed by this Agreement.
2. TERMS AND PRICE.
(a) The purchase price at which the Corporation shall make payment
for the shares sold and redeemed in accordance with Section 1 of this Agreement
shall be the average end-of-day closing sale price on the NASDAQ stock exchange
for the five (5) consecutive trading days the first day of which precedes by
fifteen (15) days the date of such scheduled sale and redemption. Payment of
the amounts so determined for redemption of the shares shall be made by the
Corporation in cash and closing shall take place at the principal office of the
Corporation.
(b) The redemption of the shares required pursuant to Section 1 of
this Agreement shall take place fifteen (15) days after receipt of insurance
proceeds; provided, however, that the Corporation and the executors or
administrators of the Shareholders' estate may, by mutual agreement, postpone
the date for sale and redemption until such later time as may mutually be agreed
upon.
(c) It is further agreed and understood that, in order to correctly
compute and determine the amount of shares to be sold and redeemed in accordance
with the provisions of Section 1 of this Agreement, it may be necessary to have
more than one sale and redemption. In such event, subsequent sales and
redemptions shall occur thirty (30) days following the date upon which the
executors or administrators of the Shareholders' estate certify in writing to
the Corporation that previous redemptions have not redeemed the full number of
shares to which Section 1 of this Agreement applies. In no event, however,
shall any subsequent redeterminations in the amount of shares to be sold and
redeemed in accordance with Section 1 of this Agreement require the Corporation
to sell any shares back to the Shareholders' estate or heirs and any shares sold
and redeemed in excess of the amounts required in accordance with Section 1 of
this Agreement shall not be required to be reissued or returned as a result of
any subsequent redeterminations.
Any such subsequent sales and redemptions shall be made at the terms and
price specified in Section 2(a) of this Agreement, except that the price shall
be determined by the average end-of-day closing price on the NASDAQ stock
exchange for the five (5) consecutive trading days preceding the date scheduled
for such subsequent sale and redemption.
3. APPLICABILITY OF AGREEMENT.
(a) This Agreement shall inure to the benefit of and shall be binding
upon the Corporation and its successors and assigns, the Shareholders, their
personal representatives, heirs and assigns.
(b) In making the redemption required pursuant to Section 1 of this
Agreement, the Corporation shall be required only to redeem shares held by the
Shareholders' estate, whether held for distribution to any testamentary trust
established by the Shareholders' will, the Shareholders' children, the
Shareholders' spouse or any other person. Only shares that qualify for
treatment under Section 303 of the Code shall be sold and redeemed. The
Shareholders' executors and administrators shall obtain either a private ruling
from the Internal Revenue Service or a satisfactory opinion of counsel that the
sale and redemption will qualify for treatment under Section 303 of the Code.
The shares to be sold and redeemed shall include only shares inherited or passed
by devise or descent from the Shareholders and shall not include any shares
acquired by purchase or gift.
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(c) Any shares transferred by the Shareholders before death shall not
in any way be restricted or affected by this Agreement in the hands of the
recipient of such shares whether such shares are transferred for adequate
consideration or not and whether such shares are includable in the gross estate
of the Shareholders for federal estate tax purposes or not.
(d) As used herein, the term "executors or administrators" means the
executor, executrix, executors or administrator or administrators with the will
annexed for the time in office.
4. FUNDING.
In order to insure that adequate funds will be available from the
Corporation's general assets to make the purchase of shares required by this
Agreement, the Corporation hereby agrees to maintain life insurance on the life
of the Shareholders and to maintain such life insurance for the duration of the
Shareholders' lives. The face amount of insurance to be purchased and
maintained shall be at least five million dollars ($5,000,000). The Corporation
may, in the discretion of the Board of Directors, purchase additional insurance
to the extent necessary to provide adequate funds to enable the Corporation to
make the redemption required by this Agreement. The Shareholders agree to
cooperate and assist in all respects in the purchase and maintenance of such
insurance and further agrees to take any physical examinations or complete any
applications necessary for such insurance to be purchased. Any such insurance
purchased shall be owned and every right thereunder shall be exercisable solely
by the Corporation.
5. INSUFFICIENT CORPORATE SURPLUS.
If the Corporation does not have sufficient surplus to permit it
lawfully to purchase all the shares required to be purchased under this
Agreement, the Stockholders; executors or administrators shall promptly take
such measures to vote the shares in order to adjust the par value of the
Corporation's common stock and the capital of the Corporation or to take such
other steps as may be appropriate or necessary in order to enable the
Corporation lawfully to purchase and pay for all of the shares so offered for
sale and so required to be purchased, including by way of illustration and not
by way of limitation, and up-to-date appraisal of the assets of the Corporation.
6. SPECIFIC PERFORMANCE.
(a) The parties hereby declare that it is impossible to measure in
money the damages that will accrue to the Corporation and to the Shareholders,
their estate or heirs, by reason of a failure to perform any of the obligations
of this Agreement. Therefore, if any action or proceeding is instituted to
enforce provisions of the Agreement, any person (including the Corporation)
against whom such action or proceeding is brought hereby waives the claim or
defense therein that such plaintiff has an adequate remedy at law and such
person shall not urge in any such action or proceeding the claim or defense that
such remedy at law exists.
(b) Notwithstanding Section 6(a) of this Agreement, if performance of
this Agreement would result in the bankruptcy or insolvency of the Corporation,
then Section 6(a) of this Agreement shall be null and void.
7. NOTICES.
Any notice required or permit to be given under the terms of this
Agreement shall be transmitted in writing and mailed, by certified or registered
mail, return receipt requested, to the person to whom such notice is given.
Unless a party hereto shall notify the other party of a change of
address, the address of each such party for purposes of notification shall be as
follows:
The Corporation:
Biospherics Incorporated
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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BIOSPHERICS INCORPORATED
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The Shareholders:
Xx. Xxxxxxx X. Xxxxx and M. Xxxxx Xxxxx
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
8. SEPARABILITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the other provisions hereof, and the Agreement shall
be construed in all respects as if such invalid or unenforceable provision were
omitted.
9. ENTIRE AGREEMENT.
This instrument contains the entire Agreement concerning stock
redemption between the parties hereto; all prior negotiations and understandings
between the parties hereto are superseded by this Agreement including the Stock
Redemption Agreement dated August 16, 1978 as amended.
10. ARBITRATION.
Should any dispute arise with respect to the rights and
obligations of the parties under this Agreement, the dispute shall be submitted
to arbitration proceedings conducted in accordance with the rules of the
American Arbitration Association. The Shareholders' executors or administrators
and the Corporation shall each choose an arbitrator and the two arbitrators so
chosen shall select a third. If the two arbitrators cannot agree on a third
arbitrator within thirty (30) days from the selection of the second arbitrator,
the American Arbitration Association shall appoint the third arbitrator who
shall serve as chairman of the arbitral tribunal. Such tribunal shall have the
power to examine the parties to the arbitration dispute and all private books
and records of such parties, as well as to call and examine witnesses and to
receive evidence. Each party shall bear the cost of his own counsel.
11. WAIVER.
A waiver of any breach of this Agreement shall not be a waiver of
any subsequent, similar or dissimilar, breach of any provision hereof.
12. GOVERNING LAW.
This Agreement is executed in the State of Maryland and shall be
governed and construed under the laws of the State of Maryland.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf, and its Corporate Seal to be hereto affixed, by its duly
appointed Officers and the Shareholders have set their hand and seal to this
Agreement, all as of this date first written above.
BIOSPHERICS INCORPORATED
BOARD OF DIRECTORS
ATTEST By:
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Xxxxxx X. Xxxxxxx, Chair
Compensation Committee
ATTEST
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Xxxxxxx X. Xxxxx
ATTEST
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M. Xxxxx Xxxxx
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