EXHIBIT 10.6
STOCK PURCHASE AND OPTION AGREEMENT (the "Agreement") made this 1st day of
November 1998, by and between MIL 3, INCORPORATED (the "Company"), a corporation
organized and existing under the laws of the State of Delaware, and XXXXXX XXXX
(the "Purchaser"), an individual residing in Massachusetts. The Company and the
Purchaser are sometimes collectively referred to herein as the "Parties" and
each individually as a "Party."
WITNESSETH:
WHEREAS, the Purchaser is a member of the Board of Directors of the Company
and is familiar with the Company and its business, and
WHEREAS, the Company desires to sell, and Purchaser desires to purchase,
ten thousand (10,000) shares of the Company's common stock, par value $.001 (the
"Common Stock"), and the Company desires to grant to the Purchaser an option to
acquire up to 20,000 shares of Common Stock, in each case in accordance with the
terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto, intending legally to be bound hereby, agree as
follows:
ARTICLE I
Sale of the Common Stock; Grant of Option
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1.1 Sale of the Common Stock. Subject to the terms and conditions
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hereof, and provided that the Purchaser remains a Director of the Company, the
Company will sell to the Purchaser, and the Purchaser will purchase from the
Company, ten thousand (10,000) shares of Common Stock at a purchase price (the
"Purchase Price") of $3.00 per share, or a total of $30,000.
1.2 Option.
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(a) Option to Purchase. Subject to the terms and conditions hereof,
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the Company grants to the Purchaser an option (the "Option") to purchase twenty
thousand (20,000) shares of Common Stock (the "Option Stock") at an exercise
price of $3.00 per share. The Option may be exercised only to the extent and
during the periods described below, and in any event on or before 5:00 p.m. on
November 30, 2008 (the "Option Expiration Date"; such period so ending during
which the Option may be exercised is hereafter sometimes referred to as the
"Option Term"):
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(i) During the period commencing November 30, 1999 until the Option
Expiration Date, the Purchaser may exercise the Option to purchase up to
ten thousand (10,000) shares of Common Stock;
(ii) During the period commencing November 30, 2000 until the Option
Expiration Date, the Purchaser may exercise the Option to purchase up to a
further five thousand (5,000) shares of Common Stock; and
(iii) During the period commencing November 30, 2001 until Option
Expiration Date, the Purchaser may exercise the Option to purchase up to a
further five thousand (5,000) shares of Common Stock.
(b) Certain Other Termination Provisions.
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(i) The Option and all rights hereunder with respect thereto,
to the extent such Option and such rights shall not have been exercised,
shall immediately terminate and become null and void on the Option
Expiration Date.
(ii) Notwithstanding anything to the contrary set forth in this
Agreement, if the Purchaser's association as a Director of the Company has
terminated for any reason, the Option, if and to the extent not previously
exercised, shall immediately terminate and become null and void except
where the termination of such association is by reason of the Purchaser's
death during the Option Term, provided, however, that termination of the
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Purchaser's association as a Director of the Company shall not be deemed a
termination for purposes of this Agreement if and for as long as the
Purchaser is a member of the board of directors of any parent or subsidiary
of the Company.
(iii) Notwithstanding anything to the contrary set forth in this
Agreement, upon termination of the Purchaser's association as a Director of
the Company by reason of death during the six (6) month period preceding
the Option Expiration Date, the Option shall terminate upon the expiration
of the six (6) month period following such death.
(c) Exercise.
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(i) The Purchaser may only exercise the Option with respect to
the Option Stock by giving written notice to the Company during the Option
Term of intent to exercise; the Purchaser's estate, or the person or
persons to whom the option is transferred by will or the laws of descent
and distribution (the "Permitted Transferee"), may only exercise the Option
with respect to the Option Stock by giving written notice to the Company on
or prior to the Option Expiration Date or, if the Purchaser's death occurs
during the six (6) month period preceding the Option Expiration Date,
during the six (6) month period after the Purchaser's death. The notice of
exercise shall specify that the
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Purchaser (or his estate or a Permitted Transferee, if applicable) is
exercising the Option and the date of exercise thereof.
(ii) If the Purchaser (or his estate or a Permitted Transferee,
if applicable) fails to pay for any of the Option Stock specified in such
notice or fails to accept delivery thereof, the Option shall immediately
terminate and become null and void.
(d) Adjustments. In the event of a reorganization, recapitalization,
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change of shares, stock split, stock dividend, reclassification, subdivision or
combination of shares or any other change in the corporate structure or shares
of capital stock of the Company, the Company shall make such adjustment as is
appropriate in the number and kind of shares of Common Stock subject to the
Option or in the exercise price; provided, however, that no such adjustment
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shall give the Purchaser any additional benefits under the Option.
(e) Merger or Other Business Combination. If and to the extent the
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Option has not been fully exercised or terminated, the Company shall provide the
Purchaser (or his estate or each Permitted Transferee, if applicable) with
thirty (30) days notice prior to the consummation of any merger or other
business combination involving the Company during the Option Term. Purchaser
(or his estate or each Permitted Transferee, if applicable) shall have the right
to exercise the Option and pay for the Option Stock during the thirty (30) day
period after such notice, following which the Option shall terminate and become
null and void.
(f) Transfer. During the Purchaser's lifetime, the Option shall be
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exercisable only by the Purchaser or any guardian or legal representative of the
Purchaser, and the Option shall not be transferable except, in case of the death
of the Purchaser, by will, or the laws of descent and distribution to a
Permitted Transferee, nor shall the Option be subject to attachment, execution
or other similar process. In the event of (i) any attempt by the Purchaser (or
his estate or any Permitted Transferee, if applicable) to alienate, assign,
pledge, hypothecate or otherwise dispose of the Option, except as expressly
provided for herein, or (ii) the levy of any attachment, execution or similar
process upon the rights or interests hereby conferred, the Company may terminate
the Option by notice to the Purchaser (or his estate or permitted Transferee, if
applicable), and it shall thereupon become null and void.
(g) No Rights as to Membership on Board of Directors or Employment.
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Neither the granting of the Option nor its exercise shall be construed as
granting to the Purchaser any right with respect to continuance as a member of
the board of directors of the Company, or of any parent or subsidiary of the
Company, or of employment with the Company, or any parent or subsidiary of the
Company.
1.3 No Rights as Shareholder. Notwithstanding anything to the contrary
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set forth in this Agreement, until the Purchaser (or his estate or Permitted
Transferee, if applicable) shall have fully paid for the shares of Common Stock
or the Option Stock in accordance with this Agreement, the Purchaser (or his
estate or Permitted Transferee, if applicable) shall not be considered a
shareholder with respect to such shares, shall have no rights to exercise any
voting or other rights with respect thereto, and shall not be entitled to any
compensation or consideration for any such
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rights which have not been exercised by full payment to the Company in
accordance with this Agreement.
ARTICLE II
Closings; Deliveries
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2.1 Closings.
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(a) The closing of the purchase and sale of the Common Stock
contemplated by Section 1.1 shall be held at 12:00 noon on November 30, 1998 at
the offices of the Company at 0000 Xxxxxxxxxxxxx Xxxxx, X.X., Xxxxxxxxxx, X.X.
00000.
(b) The closing of the purchase and sale of the Option Stock
contemplated by Section 1.2 shall be held at 10:00 a.m. at the offices of the
Company on the fifth (5th) business day (or such other day as agreed by the
Company and the Purchaser) after Purchaser (or his estate or Permitted
Transferee, if applicable) has provided written notice to the Company of
exercise of the Option.
2.2 Deliveries. At each closing, (a) the Company shall deliver to the
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Purchaser (or his estate or Permitted Transferee, if applicable) a certificate
for the number of shares of Common Stock to be purchased by the Purchaser (or
his estate or Permitted Transferee, if applicable) at such closing, registered
in the name of the Purchaser (or his estate or Permitted Transferee, if
applicable), and (b) the Purchaser (or his estate or each Permitted Transferee,
if applicable) shall deliver to the Company the aggregate Purchase Price per
share (in the case of the purchase contemplated by Section 1.1) or the aggregate
exercise price of the applicable Option Stock (in the case of exercise of the
Option), in the form of a cashier's or certified check or money order payable to
the Company, along with a letter (substantially in the form of Attachment A
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hereto) signed by the Purchaser (or his estate or each Permitted Transferee, if
applicable) reciting the representations and warranties contained in Sections
3.1 and 3.2 of this Agreement.
ARTICLE III
Representations and Warranties
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The Purchaser (or his estate or Permitted Transferee, if applicable)
represents and warrants to the Company as follows:
3.1 Investment. The Purchaser (or his estate or Permitted Transferee,
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as applicable) is acquiring the Common Stock and the Option Stock, as
applicable, for his (or its) own account for investment and not with a view to
any distribution thereof; the Purchaser (or his estate or Permitted Transferee,
as applicable) has no agreement, undertaking, arrangement, obligation or
commitment providing for the disposition thereof; and the Purchaser (or his
estate or Permitted Transferee, as applicable) understands that the Common Stock
and the Option Stock, as applicable,
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has not been registered under the Securities Act of 1933, as amended, and will
bear the legends specified in Section 3.3.
3.2 Receipt of Information. The Purchaser (or his estate or Permitted
----------------------
Transferee, as applicable) has been furnished access to the business and other
records of the Company and such additional information and documents as the
Purchaser (or his estate or Permitted Transferee, as applicable) has requested,
and has been afforded an opportunity to ask questions of and receive answers
from representatives of the Company concerning the terms and conditions of this
Agreement, the purchase of the Common Stock and the Option Stock, as applicable,
the Company's business, financial condition and prospects, and all other matters
deemed relevant by the Purchaser (or his estate or Permitted Transferee, as
applicable).
3.3 Legends. Each certificate representing (a) the Common Stock, (b)
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the Option Stock, and (c) any other securities issued in respect of the Common
Stock and/or the Option Stock, whether upon any stock split, stock dividend,
conversion, recapitalization, merger, consolidation or similar event, unless the
securities evidenced by such certificate shall have been registered under the
Securities Act of 1933, as amended, shall be imprinted with legends in the
following form (in addition to any other legend required under applicable state
securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
"THESE SECURITIES ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET
FORTH IN A STOCK PURCHASE AND OPTION AGREEMENT DATED NOVEMBER __,
1998, BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, AND MAY
ONLY BE SOLD, TRANSFERRED OR ASSIGNED IN ACCORDANCE THEREWITH. A
COPY OF SAID AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
OFFICES OF THE COMPANY."
ARTICLE IV
Transfer Restrictions
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4.1 Transfer Restrictions.
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(a) Notwithstanding anything to the contrary set forth herein, no
shares of Common Stock or Option Stock acquired by the Purchaser (or his estate
or Permitted Transferee,
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if applicable) hereunder may be sold, transferred, assigned, pledged or
otherwise disposed of (each, a "Transfer"), unless the Purchaser (or his estate
or Permitted Transferee, if applicable) has (a) entered into and complied with
such "lock-up" agreements (restricting public sale of the Common Stock and
Option Stock for a reasonable period of time, not to exceed one hundred and
eighty days) as required by underwriters of the Company's securities in
connection with the Initial Public Offering (as hereafter defined) thereof and
(b) first obtained the written approval of the Company's board of directors,
such approval not to be unreasonably withheld. If the Company's board of
directors does not approve such Transfer, the Company shall notify the Purchaser
(or his estate or Permitted Transferee, if applicable) in writing of that fact
and the reasons for its objection to the Transfer within sixty (60) days of
written notice from the Purchaser (or his estate or Permitted Transferee, if
applicable) that the Purchaser (or his estate or Permitted Transferee, if
applicable) desires to Transfer such shares of Common Stock or Option Stock.
(b) The obligation of the Purchaser (or his estate or Permitted
Transferee, if applicable) to obtain the prior approval of the Company's board
of directors in respect to any sale, transfer, assignment, pledge or other
disposition of the Common Stock or the Option Stock shall terminate upon the
effectiveness of the Company's Initial Public Offering (as hereafter defined).
(c) As used herein, the term "Initial Public Offering" shall mean the
first public offering of Common Stock of the Company, which offering is effected
pursuant to a registration statement other than on Form S-8 filed with, and
declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
ARTICLE V
Miscellaneous
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5.1 Notices. Any notice required or permitted under this Agreement shall
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be in writing and may be personally served or sent by facsimile or telex
transmission or mail and shall be deemed to have been given as follows: if
personally served, when served; if by facsimile transmission, when the
transmission is completed to the proper telefax number and confirmation of
receipt of the telefax is received; if by telex transmission, when the
transmission is completed to the proper telex number and confirmation of
delivery of the telex is received; or if mailed, on the fifth business day after
deposit in the mail with airmail postage prepaid and properly addressed. The
Parties shall promptly inform one another of any change in their addresses. For
purposes hereof, the addresses of the Parties (until notice of a change thereof
is given as provided herein) shall be as follows:
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To the Company:
MIL 3, Incorporated
0000 Xxxxxxxxxxxxx Xxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Verner, Liipfert, Bernhard, XxXxxxxxx and Hand
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Purchaser:
Xxxxxx Xxxx
0 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
5.2 Entire Agreement. This Agreement sets forth the entire
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understanding between the Parties with respect to the subject matter hereof, and
all prior discussions, memoranda of understanding, protocols of intent, letters
of intent, term sheets and similar writings with regard hereto, are superseded
and hereby terminated.
5.3 Amendments. All amendments, deletions and additions to this
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Agreement shall be in writing, signed by the Parties or their duly authorized
representatives.
5.4 No Waiver of Rights. No failure or delay by a Party in the exercise
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of any power, right or privilege hereunder shall operate as a waiver thereof.
The partial or single exercise by a Party of any power, right or privilege shall
not preclude the further or later exercise of that, or any other, power, right
or privilege.
5.5 Severability. If any one or more provisions in this Agreement,
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other than provisions constituting a material consideration to a Party, shall be
invalid or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remainder of this Agreement shall not be
affected or impaired; provided, however, in such event the Parties shall use
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their reasonable best efforts to achieve the purpose of the invalid or
unenforceable provision by a new legally valid stipulation.
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5.6 Third Parties. None of the provisions of this Agreement shall be
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for the benefit of or enforceable by any third parties except to the extent
expressly set forth herein as to the Purchaser's estate.
5.7 Headings. The inserted headings are for convenience only and shall
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not be used to construe or interpret this Agreement.
5.8 Counterparts. This Agreement may be executed in one or two
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counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
5.9 Binding Effect. This Agreement shall be binding on the Parties and
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their legal successors and permitted assignees and transferees.
5.10 Remedies. Each of the Parties will be entitled to enforce its
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rights under this Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The Parties agree and acknowledge that money damages may
not be an adequate remedy for any breach of the provisions of this Agreement and
that either Party may in its sole discretion apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
5.11 Choice of Law. All questions arising under this Agreement shall be
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governed by the laws of the District of Columbia (other than its choice of law
principles).
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[Signatures on Next Page]
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IN WITNESS WHEREOF, the Parties have executed this Stock Purchase and
Option Agreement on the day and year first above written.
MIL 3, INCORPORATED,
a Delaware corporation
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Chairman of the Board
/s/ Xxxxxx X. Xxxx
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Xxxxxx Xxxx
Attachment A
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[Date]
Xxxx X. Xxxxx
Chairman of the Board of
Directors
MIL 3, Incorporated
0000 Xxxxxxxxxxxxx Xxxxx, XX
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
This letter is delivered in connection with the undersigned's
[purchase of/exercise of an option to purchase] _________ shares of Common
Stock, par value $.001, of MIL 3, Incorporated (the "Company") in accordance
with Section 2.2 of that certain Stock Purchase and Option Agreement (the
"Agreement") dated as of November __, 1998 between the Company and [me/Xxxxxx
Xxxx]. Terms used in this letter with initial capital letters but not defined
herein shall have the meanings specified in the Agreement. The undersigned
represents and warrants to the Company as follows:
The undersigned is acquiring the [Common Stock/Option Stock] for
[his/its] own account for investment and not with a view to any distribution
thereof; the undersigned has no agreement, undertaking, arrangement, obligation
or commitment providing for the disposition thereof; and the undersigned
understands that the [Common Stock/Option Stock] has not been registered under
the Securities Act of 1933, as amended, and will bear the legends specified in
Section 3.3 of the Agreement.
The undersigned has been furnished access to the business and other
records of the Company and such additional information and documents as the
undersigned has requested, and has been afforded an opportunity to ask questions
of and receive answers from representatives of the Company concerning the terms
and conditions of this Agreement, the purchase of the [Common Stock/Option
Stock], the Company's business, financial condition and prospects, and all other
matters deemed relevant by the undersigned.
Very truly yours,
November __, 1998
Xxxx X. Xxxxx
Chairman of the Board of
Directors
MIL 3, Incorporated
0000 Xxxxxxxxxxxxx Xxxxx, XX
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
This letter is delivered in connection with my purchase of ten
thousand (10,000) shares of Common Stock, par value $.001, of MIL 3,
Incorporated (the "Company") in accordance with Section 2.2 of that certain
Stock Purchase and Option Agreement (the "Agreement") dated as of November __,
1998 between the Company and me. Terms used in this letter with initial capital
letters but not defined herein shall have the meanings specified in the
Agreement. I represent and warrant to the Company as follows:
I am acquiring the Common Stock for my own account for investment and
not with a view to any distribution thereof; I have no agreement, undertaking,
arrangement, obligation or commitment providing for the disposition thereof; and
I understand that the Common Stock has not been registered under the Securities
Act of 1933, as amended, and will bear the legends specified in Section 3.3 of
the Agreement.
I have been furnished access to the business and other records of the
Company and such additional information and documents as I have requested, and I
have been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement, the purchase of the Common Stock, the Company's business, financial
condition and prospects, and all other matters deemed relevant by me.
Very truly yours,
Xxxxxx Xxxx
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