Document:

Exhibit 10.16

 

SECOND AMENDMENT TO LOAN AGREEMENT

 

THIS SECOND
AMENDMENT TO LOAN AGREEMENT (herein called this “Amendment”) is made as of the
22nd day of November, 1999 by and among Western Gas Resources, Inc.
(“Borrower”), and Bank of America, N.A. (“Agent”), and the Lenders under the
Loan Agreement referred to below.

 

W I T N E S S E T H:

 

WHEREAS,
Borrower, Agent, and Lenders have entered into that certain Loan Agreement
dated as of April 29, 1999 (as amended, restated, or supplemented to the date
hereof, the “Original Agreement”), for the purposes and consideration therein
expressed, pursuant to which Lenders made and became obligated to make loans to
Borrower as therein provided;

 

WHEREAS, Borrower, Agent, and
Lenders desire to amend the Original Agreement for the purposes described
herein;

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and in the Original Agreement, in consideration of
the loans which may hereafter be made by Lenders to Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I.

 

Definitions and References

 

§1.1.                       Defined
Terms.               Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment. As used herein, the term “Loan Agreement” means the Original
Agreement as amended by this Amendment.

 

ARTICLE II.

 

Amendment

 

§2.1.                       Definitions.                                  The
definition of “Funded Debt” in Section 1.1 of the Loan Agreement is hereby
amended in its entirety to read as follows:

 

“‘Funded Debt’ means (without duplication) the aggregate of the
following Debt of Borrower and its Subsidiaries, after elimination of
intercompany items and other Consolidation in accordance with GAAP: (a) Debt
(including the Obligations) for

 

 

borrowed
money, regardless of maturity, (b) Debt constituting an obligation to pay the
deferred purchase price of property, (c) Debt evidenced by a bond, debenture,
note or similar instrument, (d) Debt which is due and payable at the time in
question, with respect to letters of credit or reimbursement agreements
therefor, and (e) obligations payable under leases whether or not such payments
are capitalized in accordance with GAAP, but only the amount thereof which at
the time in question exceeds $35,000,000, in the aggregate, excluding
obligations arising under oil and gas leases, real estate leases for office
space used by Borrower, and leases for vehicles, office equipment and data
processing equipment.”

 

§2.2.                       Debt.
Section 6.2(a)(iii) of the Original Agreement is hereby amended to read in its
entirety as follows:

 

“(iii)                         obligations
under leases, whether capital leases or operating leases, entered into in the
ordinary course of business in arm’s-length transactions at competitive market
rates under competitive terms and conditions considering all aspects thereof,
provided that the obligations payable over the remaining lives of any such
leases do not in the aggregate exceed $50,000,000, and in addition, obligations
under oil and gas leases, real estate leases for office space used by Borrower,
and leases for vehicles, office equipment and data processing equipment;”

 

ARTICLE III.

 

Conditions of Effectiveness

 

§3.1.                       Effective
Date. This Amendment shall become effective as of the date first above
written when, and only when, Agent shall have received all of the
following:

 

(a)                                  This
Amendment, duly authorized, executed and delivered by Borrower and Majority
Lenders, and in form and substance satisfactory to Agent.

 

(b)                                 A
certificate of a duly authorized officer of Borrower to the effect that all of
the representations and warranties set forth in Article IV hereof are true and
correct at and as of the time of such effectiveness.

 

(c)                                  Payment
of all fees and expenses owing to Agent and Lenders in connection with the Loan
Agreement and payment of fees and disbursements of Thompson & Knight L.L.P.
relating to this Amendment and the Loan Agreement as provided in the Loan
Agreement.

 

2

 

ARTICLE IV.

 

Representations and Warranties

 

§4.1.                       Representations
and Warranties of Borrower. In order to induce each Lender to enter into
this Amendment, Borrower represents and warrants to each Lender that:

 

(a)                                  The
representations and warranties contained in Article V of the Original Agreement
are true and correct at and as of the time of the effectiveness hereof (except
as such representations and warranties have been modified by the transactions
contemplated herein).

 

(b)                                 Borrower
is duly authorized to execute and deliver this Amendment and Borrower is and
will continue to be duly authorized to borrow monies and to perform its
obligations under the Loan Agreement. Borrower has duly taken all corporate
action necessary to authorize the execution and delivery of this Amendment.

 

(c)                                  The
execution and delivery by Borrower of this Amendment, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby do not and will not conflict with any provision of law, statute, rule or
regulation or of the certificate of incorporation and bylaws of Borrower or of
any material agreement, judgment, license, order or permit applicable to or
binding upon Borrower or result in the creation of any lien, charge or
encumbrance upon any assets or properties of Borrower. Except for those which
have been obtained, no consent, approval, authorization or order of any court
or governmental authority or third party is required in connection with the
execution and delivery by Borrower of this Amendment.

 

(d)                                 When
duly executed and delivered, this Amendment and the Loan Agreement will be a
legal and binding obligation of Borrower enforceable against Borrower in
accordance with its terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of creditors’
rights and by equitable principles of general application.

 

(e)                                  The
unaudited Consolidated quarterly financial statements of Borrower dated as of
June 30, 1999 fairly present the Consolidated financial position at such date
of Borrower and the Consolidated statement of operations and the changes in
Consolidated financial position for the periods ending on such date for
Borrower. Copies of such financial statements have heretofore been delivered to
Agent. Since June 30, 1999, no material adverse change has occurred in the
financial condition or business or in the Consolidated financial condition or
business of Borrower.

 

3

 

ARTICLE V.

 

Miscellaneous

 

§5.1.                       Ratification
of Agreements. The Original Agreement as hereby amended is hereby ratified
and confirmed in all respects. Any reference to the Loan Agreement in any Loan
Document shall be deemed to be a reference to the Original Agreement as hereby
amended. The Loan Documents, as they may be amended or affected by this
Amendment, are hereby ratified and confirmed in all respects. The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of Lenders
under the Loan Agreement, the Notes, or any other Loan Document nor constitute
a waiver of any provision of the Loan Agreement, the Notes, or any other Loan
Document.

 

§5.2.                       Survival
of Agreements. All representations, warranties, covenants and agreements of
Borrower herein shall survive the execution and delivery of this Amendment and
the performance hereof, including without limitation the making or granting of
the Loans, and shall further survive until all of the Obligations are paid in
full. All statements and agreements contained in any certificate or instrument
delivered by Borrower hereunder or under the Loan Agreement to any Lender shall
be deemed to constitute representations and warranties by, and/or agreements
and covenants of, Borrower under this Amendment and under the Loan Agreement.

 

§5.3.                       Loan
Documents. This Amendment is a Loan Document, and all provisions in the
Loan Agreement pertaining to Loan Documents apply hereto.

 

§5.4.                       Governing
Law. This Amendment shall be governed by and construed in accordance the
laws of the State of Texas and any applicable laws of the United States of
America in all respects, including construction, validity and performance.

 

§5.5.                       Counterparts.
This Amendment may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to constitute one and the same Amendment.

 

THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

 

4

 

IN WITNESS
WHEREOF, this Amendment is executed as of the date first above written.

 

	
   

  	
  WESTERN GAS
  RESOURCES, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ William Krysiak

  	
   

  	 

	
   

  	
   

  	
  Name: William Krysiak

  
	
   

  	
   

  	
  Title: VP–Finance

  
					

 

 

	
   

  	
  BANK OF
  AMERICA, N.A., as Agent and Lender

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Tracey S. Barclay

  	
   

  	 

	
   

  	
   

  	
  Name: Tracey S. Barclay

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  SOCIETE
  GENERALE SOUTHWEST AGENCY,

  a Lender

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Paul E. Cornell

  	
   

  	 

	
   

  	
   

  	
  Name: Paul E. Cornell

  
	
   

  	
   

  	
  Title: Managing Director

  
					

 

 

	
   

  	
  ABN AMRO
  BANK N.V., a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Cunningham

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert J. Cunningham

  
	
   

  	
   

  	
  Title:

  	
  Group Vice President

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jamie A. Conn

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jamie A. Conn

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  BANKBOSTON,
  N.A., a Lender

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Bryon E. Cail

  	
   

  
	
   

  	
   

  	
  Name: Bryon E. Cail

  	 

	
   

  	
   

  	
  Title: Loan Officer

  	 

					

 

 

	
   

  	
  UNION BANK
  OF CALIFORNIA, N.A., a Lender

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Gary Shekerjian

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  Gary Shekerjian

  	 

	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Damien Melburger

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Damien Melburger

  	 

	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	 

								

 

 

	
   

  	
  BANK ONE, NA, a Lender

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Dixon P. Schultz

  	
   

  	 

	
   

  	
   

  	
  Name: Dixon P. Schultz

  
	
   

  	
   

  	
  Title: First Vice President

  
					

 

 

	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION,

  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Caroline M McClurg

  	
   

  
	
   

  	
   

  	
  Name: Caroline M McClurg

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

	
   

  	
  CREDIT
  LYONNAIS, a Lender

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Philippe Soustra

  	
   

  	 

	
   

  	
   

  	
  Name: Philippe Soustra

  
	
   

  	
   

  	
  Title: Senior Vice President

  
					

 

 

CONSENT AND AGREEMENT

 

Each of the
undersigned hereby (i) consents to the provisions of this Amendment and the
transactions contemplated herein, and (ii) ratifies and confirms its respective
Guaranty dated as of April 29, 1999 made by it in favor of Agent for the
benefit of each Lender, and agrees that its obligations and covenants
thereunder are unimpaired hereby and shall remain in full force and effect.

 

	
   

  	
  MIGC, INC.

  
	
   

  	
  WESTERN GAS
  RESOURCES TEXAS, INC.

  
	
   

  	
  MOUNTAIN GAS
  RESOURCES, INC.

  
	
   

  	
  WESTERN GAS
  RESOURCES-OKLAHOMA,

  INC.

  
	
   

  	
  LANCE OIL
  & GAS COMPANY, INC.

  
	
   

  	
  PINNACLE GAS
  TREATING, INC.

  
	
   

  	
  WESTERN GAS
  WYOMING, L.L.C.

  

 

	
   

  	
  By:

  	
  /s/ John C. Walter

  	
   

  
	
   

  	
   

  	
  Name: John C. Walter

  
	
   

  	
   

  	
  Title: Executive Vice President

  

 

CONSENT AND AGREEMENT

 

The
undersigned hereby (i) consents to the provisions of this Amendment and the
transactions contemplated herein, and (ii) ratifies and confirms its Guaranty
dated as of October 14, 1999 made by it in favor of Agent for the benefit of
each Lender, and agrees that its obligations and covenants thereunder are unimpaired
hereby and shall remain in full force and effect.

 

	
   

  	
  MGTC, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ John C. Walter

  	
   

  	 

	
   

  	
   

  	
  Name: John C. Walter

  
	
   

  	
   

  	
  Title: Executive Vice PresidentExhibit 10.29

 

Appendix A

of the Notice of Annual

Shareholder’s Meeting

on May 21, 1997

 

WESTERN
GAS RESOURCES, INC.

1997 STOCK OPTION PLAN

 

This Plan is established by
Western Gas Resources, Inc., a Delaware corporation, for certain employees of
the Corporation who qualify as participants, and shall be known as the Western
Gas Resources, Inc. 1997 Stock Option Plan. The Plan provides stock options for
employees of the Corporation. It is intended that options granted under the
Plan constitute “incentive stock options” within the meaning of Section 422 of
the Code and the Plan and any options granted hereunder shall be construed
accordingly.

 

1.                                       Purpose. The purpose of the Plan is to enable certain of the Corporation’s
employees to participate in the growth and profitability of the Corporation by
providing a method whereby such employees may be encouraged to invest in the
Corporation’s common stock on reasonable terms, to increase incentives to
contribute to the Corporation’s future success and prosperity and to allow them
to acquire a proprietary interest in the Corporation’s business. Further, the
availability and offering of stock options under the Plan supports and
encourages employees to remain in the employ of the Corporation.

 

2.                                     Definitions. The terms used herein shall have the following meanings:

 

(a)                                  “Board” shall mean the Board of Directors of
the Corporation.

 

(b)                                 “Code” shall mean the Internal Revenue Code
of 1986, as amended.

 

(c)                                  “Common Stock” shall mean the $0.10 par value
common stock of the Corporation which shall be authorized and unissued stock or
treasury stock.

 

(d)                                 “Corporation” shall mean Western Gas
Resources, Inc., a Delaware corporation, and any subsidiary thereof.

 

(e)                                  “Disabled” shall mean an employee of the
Corporation found to be unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death, or which has lasted, or can be expected to last,
for a continuous period of not less than twelve (12) months.

 

(f)                                    “Disqualified Employee” shall mean an
employee of the Corporation who, either directly or indirectly at the time an
option is granted, owns more than ten percent (10%)  of the total combined voting power of all classes of stock
of the Corporation or any subsidiary or parent of the Corporation. For purposes
of this determination, the employee shall be considered as owning the stock
owned, directly or indirectly, by or for his spouse, brothers and sisters
(whether by whole or half-blood), ancestors, and lineal descendants; and stock
owned, directly or indirectly, by or for a corporation, partnership, estate, or
trust shall be considered as being owned proportionally by or for a
shareholder.

 

(g)                                 “Fair Market Value” of stock shall mean the
New York Stock Exchange Composite Transactions average closing price for the
Common Stock reflected in The Wall Street
Journal or another publication selected by the Board for the ten
(10) business days preceding the day the Option is granted to each eligible
employee. If Shares of Common Stock have not been traded on the New York Stock
Exchange for more than 10 business days immediately preceding the granting of
an Option, or if deemed appropriate by the Board for any other reason, the fair
market value of shares of Common Stock shall be as determined by the Board in
such other manner as it may deem appropriate.

 

(h)                                 “Incentive Stock Option” shall mean any
option which is intended to meet and comply with the term “incentive stock
option” as set forth in Section 422 of the Code.

 

(i)                                     “Option” shall mean an incentive stock option
granted by the Corporation under this Plan.

 

(j)                                     “Optionee” shall mean an eligible employee of
the Corporation who has been granted an Option under this Plan.

 

A-1

 

(k)                                  “Plan” shall mean the 1997 Stock Option Plan
set forth in and by this document and all subsequent amendments thereto.

 

(I)                                    “Regulations” or “Regs.” shall mean the
Treasury Regulations promulgated under the Code.

 

(m)                               “Stock Option Agreement” shall mean an
agreement between an Optionee and the Corporation which evidences the
Optionee’s right to acquire Common Stock under the Plan and which contains
terms and conditions consistent with this Plan as approved by the Board.

 

3.                                       Eligibility. Employees of the Corporation who have been employed by the Corporation
for at least one (1) year shall be eligible for selection to participate in the
Plan as determined from time to time by the Board, No Option shall be granted
to a Disqualified Employee.

 

4.                                       Administration of Plan.

 

(a)                                  The Board of Directors of the Corporation
shall administer the Plan. The Board shall have the authority to: (i) construe
and interpret the Plan; (ii) define the terms used herein; (iii) determine the
duration and purpose of leaves of absence which may be granted to Optionees
without constituting a termination of their employment for the purposes of the
Plan; (iv) make all other determinations necessary or advisable for the
administration of the Plan; and (v) appoint a Committee to administer the Plan
and to delegate to that Committee all of the authority to administer the Plan
in accordance with the provisions of this Agreement. The determination of the
Board in the matters referred to in this paragraph shall be conclusive.

 

(b)                                 The Board shall have power, subject to the
limitations contained herein, to fix the price, terms, and conditions for the
grant or exercise of any Option under the Plan.

 

(c)                                  The Board may at any time cancel any
unexercised stock options awarded under the Plan, whether or not vested, if an
Optionee engages in conduct which the Board determines to be detrimental to the
best interests of the Corporation.

 

(d)                                 The Board may at any time and from time to
time amend, suspend, or terminate the Plan and may amend the form of the Stock
Option Agreement, in such respects as it shall deem advisable; provided that
such modification shall not change: (1) the maximum number of shares for which
Options may be granted; (2) the Option price; (3) the period during which
Options may be granted or exercised; (4) the provisions relating to the class
of persons eligible to receive Options granted under the Plan; or (5) the
provisions relating to adjustments to be made upon changes in capitalization of
the Corporation. Such modification in the Plan shall not, without the consent of an Optionee, affect such Optionee’s rights under an Option
previously granted to him or her.

 

(e)                                  If the provisions of the Code or Regulations
relating to Incentive Stock Options are changed during the term of the Plan,
the Board shall have the power to alter the Plan to conform to such changes.
The Board shall have such authority without the necessity of obtaining
further stockholder approval unless such changes in the Code or Regulations
require such approval.

 

5.                                       Participants and Allotments. The Board may, from time to time, select
Optionees from the eligible class of employees and determine the terms and
provisions of the respective Stock Option Agreements (which need not be identical),
the times at which such Options shall be granted and the number of shares
subject to each Option.

 

6.                                       Shares Subject to Plan. The maximum number of shares from which
Options may be granted under the Plan are One Million (1,000,000) shares of the
Corporation’s authorized and unissued Common Stock. If any Option granted under
the Plan shall terminate or expire prior to exercise, in whole or in part, the
shares so released from the Option may be made the subject of additional
options granted under the Plan.  The
Corporation shall reserve and keep available such number of shares of stock as
will satisfy the requirements of all outstanding options and grants under this
Plan.

 

7.                                       Option Price. The purchase price of the stock under each
Option shall be the Fair Market Value of the stock subject to the Option at the
time the Option is granted.

 

A-2

 

8.                                       Conditions for Exercise of
Option.

 

(a)                                  Notwithstanding anything to the contrary, no
Option or portion thereof granted under this Plan may be exercised after the
earlier of (1) five (5) years from the date the Optionee has the right to
exercise such Option or portion thereof as provided in Paragraph 8(b), below;
or (2) ten (10) years from the date the Option is granted.

 

(b)                                 At the time of the issuance of an Option, the
Board shall determine with respect to each Option the annual vesting
percentage, which shall be not less than twenty percent (20%) and not more than
thirty-three and one-third percent (33-1/3%). 
For this purpose, the annual vesting percentage shall mean the
percentage of the Option which the Optionee shall become entitled to exercise.
The vesting period for each annual vesting percentage shall be the one (1) year
period commencing on the date of grant and on each one (1) year anniversary
thereof. As  of each one (1) year
anniversary of the date of grant, the Optionee shall be entitled to exercise
the portion of the Option granted equal to the annual vesting percentage
multiplied by the number of one (1) year vesting periods from the original date
of grant of the Option.  The Optionee’s
right to purchase the Common Stock subject to the Option shall be cumulative,
with the result that as of the end of each one (1) year vesting period, the
cumulative vesting percentage shall be increased by the annual vesting
percentage. When the cumulative vesting percentage equals one hundred percent
(100%), the Optionee shall be entitled to purchase all the Common Stock covered
by the Option, subject to the provisions of this Plan. The Option or any
portion thereof, once it becomes vested or exercisable as provided above, shall
remain vested and exercisable until it shall expire in accordance with the
provisions of this Plan, including the provisions of Sections 8(a), (c), (d)
and (e).

 

(c)                                  Except as provided in Sections 8(d) and (e),
an Optionee may exercise an Option only if, at the time such Option is
exercised, such Optionee is an employee of and has continuously since the grant
of the Option been an employee of the Corporation.

 

(d)                                 If an Optionee’s employment with the
Corporation is terminated for any reason other than (1) his or her death or
disability or (ii) his or her discharge for dishonesty or commission of a
crime, the Optionee may, within sixty (60)  days
thereafter and subject to the provisions of Sections 8(a), (b) and (c),
exercise the Option or portion thereof to the extent it was exercisable as of
the date of termination of his or her employment. All unexercised Options, or
portions thereof, shall terminate, be forfeited, and shall lapse upon
expiration of said sixty (60) day period, or immediately if the Optionee’s
employment is terminated for any of the reasons set forth in (ii) above.

 

(e)                                  If an Optionee dies or becomes Disabled while
employed by the Corporation, all of the Options granted to such employee shall
become one hundred percent (100%) exercisable, without regard to the provisions
of Section 8(b), above. In such event, the Options may be exercised by the
Disabled employee, or the person or persons to whom the deceased employee’s
rights under the Option shall pass by will, or by the applicable laws of
descent and distribution; provided, however, that no such Option may be
exercised after one hundred eighty (180) days from such employee’s date of death,
or termination of employment as a result of Disability, whichever is
applicable. Upon expiration of said period, all unexercised Options, or
portions thereof, shall terminate, be forfeited and shall lapse.

 

9.                                       Method of Exercise.

 

(a)                                  To exercise an Option, the Optionee, or his or
her successors, shall give written notice to the Corporation’s Treasurer at the
Corporation’s principal office accompanied by full payment of the Common Stock
being purchased and a written statement that the shares are purchased for
investment and not with a view to distribution. However, this statement shall
not be required in the event the Common Stock subject to the Option is
registered with the Securities and Exchange Commission.  If the Option is exercised by the successor
of the Optionee, following his or her death, proof shall be submitted,
satisfactory to the Board, of the right of the successor to exercise the
Option.

 

(b)                                 Common Stock issued pursuant to this Plan
which has not been registered with the Securities and Exchange Commission shall
bear the following legend:

 

“The securities represented
by this Stock Certificate have not been registered under the Securities Act of
1933 (the “Act”) or applicable state securities laws (the “State Acts”), and
shall not be sold, pledged, hypothecated, donated or otherwise transferred
(whether or not for consideration) by the holder, except upon the issuance to
the Corporation of a favorable opinion of its counsel and submission to the

 

A-3

 

Corporation of such other
evidence as may be satisfactory to the Corporation to the effect that any such
transfer shall not be in violation of the Act and the State Acts.”

 

(c)                                  The Corporation shall not be required to
transfer and deliver any stock certificate or certificates for shares purchased
upon exercise of said Options until after compliance with all then-applicable
requirements of law. In no event shall the Corporation be required to issue
fractional shares to the Optionee.

 

(d)                                 If the Corporation shall be advised by counsel
that shares of stock deliverable upon exercise of an Option are required to be
registered under the Act, or that the consent of any other authority is
required for the issuance of same, the Corporation may effect registration or
obtain consent, and delivery of shares by the Corporation may be  deferred until registration is effected
or consent obtained.

 

10.                                 Rights To Terminate Employment. Nothing in this Plan or in any Stock Option
Agreement shall confer upon any participant the right to continue in the
employment of the Corporation or affect any right which the Corporation may
have to terminate the employment of such participant.

 

11.                                 Amendments and Termination. The Board of Directors may amend, suspend,
discontinue or terminate the Plan, but no such action may, without the consent
of the Optionee, alter or impair his or her Option, except as provided in
Paragraph 8.

 

12.                                 Rights As Stockholders. No stock shall be issued until full payment
for such stock has been made. The Optionee shall have no rights as a
stockholder with respect to optioned shares until the date of the issuance of
the stock certificate to him or her for such shares. No adjustments shall be
made for dividends (ordinary or extraordinary, whether in cash, securities, or
other properties) or distributions or other rights for which the record date is
prior to the date such certificate is issued.

 

13.                                 Adjustments of and Change In Stock. No adjustment shall be made to the number of
shares of Common Stock for which options are granted by the Plan or the
exercise price thereof as a result of any change in the number of issued and
outstanding shares of Common Stock. Provided, however, the number of shares of
Common Stock covered by outstanding Options, as well as the exercise price,
shall be adjusted proportionately for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock split, the payment of
a stock dividend with respect to the Common Stock, or any other increase or decrease
in the number of issued shares of Common Stock effected without receipt of
consideration by the Company. In addition, in the event of a dissolution or
liquidation of the Corporation, a merger of the Corporation, or sale of all or
substantially all of the assets of the Corporation, the Corporation shall take
such action as may be necessary to enable the Optionee to receive, in lieu of
shares of Common Stock, securities or other assets that were issued or payable
upon such event in receipt of or in exchange for such shares of Common Stock.

 

14.                                 Stock Option Agreement. The granting of an Option under this
Agreement occurs only by a written Stock Option Agreement, effective on the
date set forth therein, substantially in the form attached hereto and marked Exhibit
1. executed by and on behalf of the Corporation and the employee to whom the
Option is granted, and such executed Agreement is delivered to the Corporation.

 

15.                                 Nonassignability. No Option granted under this Plan shall be
assignable or transferable in any manner voluntarily, involuntarily, or by
operation of law, except by will or by the laws of descent and distribution.
During the life of such recipient, an Option shall be exercisable only by such
person or by such person’s guardian or legal representative.

 

16.                                 Period of Plan. No Options shall be granted on or after May
21, 2007. The Plan shall terminate on the later of (I) May 21, 2007; (2) the date on which all Options
granted under the Plan have expired; or (3) the date on which all Options granted
under the Plan have been exercised in full.

 

A-4

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