EXHIBIT 10.3
STOCK REDEMPTION AND EXCHANGE AGREEMENT
THIS STOCK REDEMPTION AND EXCHANGE AGREEMENT (the "Agreement") is made as
of the 14th day of March, 1996, by and among Xxxxx X. Xxxx, Xxxx X. Xxxx,
Xxxxxxxx Xxxx Trust and Xxxx Xxxx Trust (collectively, the "Linn Entities") and
Xxx X. Xxxxxx, Xxxx X. Xxxxxx, Xxx Xxxxxx Trust, Xxxxx Xxxxxx Trust and Xxxxx
Xxxxxx Trust (collectively, the "Lammle Entities," and together with the Linn
Entities, the "Stockholders"), and R&D Systems Company, a Delaware corporation
(the "Corporation").
RECITALS
--------
A. The Stockholders currently own the shares of common stock of the
Corporation set forth on Exhibit A attached hereto (the "Common Stock").
---------
B. The Corporation desires to redeem all of the Common Stock held by the
Linn Entities, and 60% of the Common Stock held by the Lammle Entities
(collectively, the "Redemption Shares"), as more fully set forth on
Exhibit B, for the cash consideration set forth on Exhibit B. The
--------- ---------
Stockholders also desire that the Corporation redeem the Redemption
Shares for the cash consideration set forth on Exhibit B.
---------
C. The Corporation desires to exchange the remaining 40% of the Common Stock
held by the Lammle Entities (the "Exchange Shares") for shares of newly
issued Series B Convertible Participating Preferred Stock of the
Corporation, as set forth on Exhibit C (the "Preferred Stock"). The
---------
Lammle Entities also desire to exchange such Exchange Shares for the
Preferred Stock set forth on Exhibit C.
---------
NOW, THEREFORE, for good and valuable consideration herein recited and
the mutual promises herein contained, the parties hereto agree as follows:
AGREEMENT
---------
1. Redemption of Common Stock. Upon the terms and subject to the conditions
--------------------------
set forth in this Agreement, the parties hereto agree that all of the
Redemption Shares shall be redeemed for the cash consideration set forth
on Exhibit B.
---------
2. Exchange of Common Stock. Upon the terms and subject to the conditions
------------------------
set forth in this Agreement, the parties hereto agree that the Exchange
Shares shall be exchanged for the Preferred Stock set forth on Exhibit C.
---------
3. Closing of Redemption and Exchange. The closing (the "Closing") of the
----------------------------------
redemption and exchange of the Common Stock will occur on the date of the
closing of the Stock Purchase Agreement dated as of March __, 1996 among
the Company, the Stockholders, and the Investors named therein (the
"Purchase Agreement"). At the Closing, the Stockholders shall deliver to
the Company all certificates or other evidence of their ownership of the
Common Stock, and the Company shall deliver to the Stockholders the
consideration set forth on Exhibits B and C. Any certificates of stock
----------------
delivered by the Stockholders shall be duly endorsed in blank and
accompanied by duly executed stock powers.
4. Stockholder Representations. Each Stockholder severally represents and
---------------------------
warrants as follows:
a. Ownership. The Stockholder is the owner of the Common
---------
Stock set forth on Exhibits A and B opposite his, her or
----------------
its name, free and clear of all claims, encumbrances, liens,
pledges, security interests and rights of any kind or nature
whatsoever.
b. Authorization for and Validity of this Agreement. The
------------------------------------------------
Stockholder has all necessary power and authority to
execute, deliver and perform this Agreement. No approval of,
filing with, or other action by any court, governmental
body, agency or official is required by such Stockholder to
execute, deliver and perform the terms of this Agreement.
This Agreement constitutes a valid and binding agreement of
each Stockholder, enforceable against such Stockholder in
accordance with its terms.
c. Breach or Default. Neither the execution of this
-----------------
Agreement nor the consummation of the transactions
contemplated by it will:
(1) result in the breach of any of the terms or
conditions of, or constitute a default under, any
mortgage, note, bond, indenture, contract, agreement,
license or other instrument or obligation of any kind
or nature to which such Stockholder is a party or by
which such Stockholder or any of his, her or its
assets may be bound or affected; or
(2) violate any order, writ, injunction or decree
applicable to such Stockholder of any court,
administrative agency or governmental body.
5. Lammle Entities Representations. Each Lammle Entity severally represents
-------------------------------
and warrants as follows:
a. The Lammle Entity is acquiring the Preferred Stock for its
own account, for investment, and not with a present view to
any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Act").
b. The Lammle Entity understands that neither the Preferred
Stock to be issued and delivered to it pursuant to this
Agreement, nor any of the
2
securities that the Preferred Stock is convertible into, have
been registered under the Act, and that it cannot dispose of any
or all of the Preferred Stock or the securities issuable upon
conversion thereof unless such securities are registered under
the Act or exemptions from such registration are available. The
Lammle Entity understands that each certificate representing the
Preferred Stock will bear the following legend or one
substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). These
securities have been acquired for investment and not with a view
to distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such securities under the
Act or the availability of an exemption from such registration
requirements.
c. The Lammle Entity is sufficiently knowledgeable and experienced
in the making of venture capital investments so as to be able to
evaluate the risks and merits of its investment in the
Corporation, and is able to bear the economic risk of loss of
its investment in the Corporation.
6. Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations, warranties, covenants and agreements of the parties
hereto contained in this Agreement shall survive the Closing and shall
continue in full force and effect indefinitely thereafter, subject only
to applicable statutes of limitations.
7. Indemnification. Each Stockholder severally hereby agrees to save,
---------------
defend, indemnify and hold harmless the Corporation and its officers,
directors, stockholders, partners, members, managers, employees, agents,
representatives and affiliates (collectively, the "Corporation
Affiliates") against any loss, liability, damage or expense (including
reasonable legal fees and expenses), or any claim which if unsuccessful
would result in any such loss, liability, damage or expense, suffered or
incurred by the Corporation for or on account of or arising from or in
connection with a breach of any representation, warranty, covenant or
agreement of any Stockholder contained in this Agreement.
3
8. Miscellaneous Provisions.
------------------------
a. Assignability; Binding Effect. No party hereto shall have the
-----------------------------
right to assign such party's rights or obligations under this
Agreement without the consent of the other parties hereto.
Subject to the foregoing limitation, the benefits and
obligations of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
heirs, successors and assigns.
b. 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 agreement.
c. Entire Agreement. This Agreement constitutes the entire
----------------
agreement among the parties hereto with respect to the subject
matter hereof and supersedes all prior negotiations,
understandings, and agreements among the parties hereto with
respect to the subject matter hereof. No modification,
amendment or waiver of any provision hereof shall be binding
upon any party hereto unless it is in writing and executed by
all parties hereto or, in the case of a waiver, by the party
waiving compliance.
d. Waiver. The waiver by any party hereto of any default,
------
misrepresentation or breach of warranty or covenant hereunder
shall not be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant
and shall not affect in any way any rights arising by virtue of
any such prior or subsequent occurrence.
e. Section Headings. The section headings contained herein are for
----------------
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
f. Governing Law. This Agreement shall be construed in accordance
-------------
with and governed by the laws of the State of Colorado (without
giving effect to principles of conflicts of laws), except that
any Delaware corporate law matters relating to the Company
shall be construed and enforced in accordance with and governed
by the Delaware General Corporation Law (without giving effect
to principles of conflicts of laws).
g. Remedies. No right or remedy herein conferred upon or reserved
--------
to a party hereto is intended to be exclusive of any other
right or remedy, and all such rights and remedies shall be
cumulative.
4
h. No Closing. All of the provisions hereof shall be effective
----------
upon the Closing. In the event the Closing does not occur, this
Agreement shall be of no further force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
R&D SYSTEMS COMPANY
_________________________________
Name:____________________________
Title:___________________________
_________________________________
Xxxxx X. Xxxx
_________________________________
Xxxx X. Xxxx
Xxxxxxxx Xxxx Trust
_________________________________
By: Xxxxx X. Xxxx, Trustee
Xxxx Xxxx Trust
_________________________________
By: Xxxxx X. Xxxx, Trustee
_________________________________
Xxx X. Xxxxxx
_________________________________
Xxxx X. Xxxxxx
5
Xxx Xxxxxx Trust
__________________________
By: Xxx X. Xxxxxx, Trustee
Xxxxx Xxxxxx Trust
__________________________
By: Xxx X. Xxxxxx, Trustee
Xxxxx Xxxxxx Trust
__________________________
By: Xxx X. Xxxxxx, Trustee
6
Exhibit A to Redemption and Exchange Agreement
----------------------------------------------
Current Ownership
-----------------
Stockholders Shares
------------ ------
Xxx X. Xxxxxx 1,750
Xxxx X. Xxxxxx 1,750
Xxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 375
Xxxxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 375
Xxxxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 750
Xxxxx X. Xxxx 1,750
Xxxx X. Xxxx 1,750
Xxxx Xxxx Trust/Xxxxx X. Xxxx Trustee 750
Xxxxxxxx Xxxx Trust/Xxxxx X. Xxxx Trustee 750
Total Number of Shares 10,000
Exhibit B to Redemption and Exchange Agreement
----------------------------------------------
Redemption Shares
-----------------
Stockholder Shares Cash Consideration
----------- ------ ------------------
Xxxxx X. Xxxx 1,750 $ 11,025,000
Xxxx X. Xxxx 1,750 $ 11,025,000
Xxxx Xxxx Trust/Xxxxx X. Xxxx Trustee 750 4,725,000
Xxxxxxxx Xxxx Trust/Xxxxx X. Xxxx Trustee 750 4,725,000
Xxx X. Xxxxxx 1,050 6,125,000
Xxxx X. Xxxxxx 1,050 6,125,000
Xxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 225 1,312,500
Xxxxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 225 1,312,500
Xxxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 450 2,625,000
--------------------------------
8,000 $ 49,000,000
Exhibit C to Redemption and Exchange Agreement
----------------------------------------------
Exchange Shares
---------------
Series B
Convertible
Participating
Stockholder Shares Preferred Stock
----------- ------ ---------------
Xxx X. Xxxxxx 700 2,275
Xxxx X. Xxxxxx 700 2,275
Xxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 150 487.5
Xxxxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 150 487.5
Xxxxx Xxxxxx Trust/Xxx X. Xxxxxx Trustee 300 975
------ ---------------
2,000 6,500
