Document:

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                                                                   Exhibit 10.32

December 22, 2000

David A. Broecker
13599 Brentwood Lane
Carmel, IN 46033

Dear David:

On behalf of Alkermes, Inc., I am pleased to offer you the position of Chief
Operating Officer.

1.   EFFECTIVE DATE: The effective date of your full-time employment with the
     Company is expected to be February 12, 2001.

2.   COMPENSATION: Your base compensation will initially be $275,000 per annum.
     You will be paid biweekly in accordance with the Company's payroll
     procedures. You will receive an initial salary review effective January 1,
     2002, and annually thereafter, which will be based on your performance and
     the Company's performance.

     You will receive a sign-on bonus of $100,000 payable within 30 days of the
     start of your employment. This amount will be grossed up for tax purposes
     immediately upon payment.

     You will also receive a loan in the amount of $300,000 within 30 days of
     the start of your employment which will be repayable in full by May 2002.

3.   BENEFITS: You and your dependents will be eligible for Alkermes' standard
     medical, dental, disability benefits, plus $500,000 life insurance
     coverage, all of which is paid for by the Company. You will also be able to
     participate in our Section 125 cafeteria plan at the start of your
     employment. You will be able to participate in Alkermes' 401(k) plan, which
     includes a company match of 50% of the first 6% of compensation deferred
     into the plan, beginning on April 1, 2001. Vacation accrual will be at the
     rate of four (4) weeks per year. Standard paid holidays will be observed.
     Transportation benefits including a choice of a subsidized MBTA pass or
     on-site parking are also available. The Company reserves the right to
     modify its employee benefits programs from time-to-time.

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David Broecker
December 22, 2000

     In order to assist you and your family with the move from Indiana to
     Massachusetts we will provide you with the following relocation assistance.

     -    A temporary living allowance of $4,000 per month for up to six months
          to assist you with the cost of living in Massachusetts while your
          family remains in Indiana. We will also pay for a rental car for the
          first month of your employment or until you own vehicle is shipped to
          Massachusetts from Indiana.

     -    Two househunting trips to Massachusetts for your family during your
          first six months of employment.

     -    Two round-trip airline tickets to Indiana per month during your first
          six months of employment.

     -    Reimbursement of reasonable and customary costs associated with
          selling your home to include: real estate commissions up to 6%; actual
          and reasonable legal and title fees; transfer and/or documentary taxes
          which you are required to pay.

     -    Packing and moving of your household goods from Indiana to
          Massachusetts.

     -    Reimbursement of costs associated with purchasing a home in
          Massachusetts within the first year of your employment to include:
          actual and reasonable legal and title fees; transfer and documentary
          taxes which you are required to pay; required appraisal fees; other
          one-time fees required by the lender connected with the purchase of
          the home; reasonable environmental/structural inspections fees; up to
          two points in connection with obtaining mortgage financing.

     -    Assistance with mortgage financing in the amount of $300,000. This may
          be provided in the form of a $300,000 loan which will be forgivable in
          equal amounts over the first five years of your employment, or in the
          form of a mortgage subsidy over five years also with a total value
          equal to the loan amount offered by the Company. In the event of a
          change in control, any remaining balance of this mortgage assistance
          will be forgiven.

     -    Any of the above amounts which require IRS reporting will be grossed
          up for tax purposes at year end.

4.   EQUITY PARTICIPATION, VESTING OF STOCK: Subject to approval by the
     Compensation Committee of The Board of Directors, you will be granted a ten
     (10) year stock option exercisable for 400,000 shares of Alkermes, Inc.,
     Common Stock at an exercise price equal to the current fair market value of
     the Company's Common Stock on your hire date. This option will vest equally
     over four (4) years on the anniversary of your hire date, provided that you
     remain employed by the Company. In the event of termination of your
     employment for any reason, vesting shall cease. We will provide you with a
     copy of the Company's Omnibus Stock Option Plan for complete details.

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David Broecker
December 22, 2000

5.   EMPLOYMENT PERIOD: Your employment with the Company will be at-will,
     meaning that you will not be obligated to remain employed by the Company
     for any specified period of time; likewise, the Company will not be
     obligated to continue your employment for any specific period and may
     terminate your employment at any time, with or without cause.

     In the event of termination of your employment by Alkermes, we shall
     provide you with notice of such termination at least 30 days prior to the
     intended date of the termination. Notwithstanding this, upon delivery of
     such notice, Alkermes may terminate your ability to act on behalf of the
     Company and may require that your duties be limited or discontinued.

     If Alkermes terminates your employment because of (a) your commission of a
     fraud or felony or other unlawful acts having significant deleterious
     effect on Alkermes, (b) perpetration of common law fraud against Alkermes,
     or (c) breach of confidential trade secret information, Alkermes shall have
     no further obligations to you.

     If Alkermes terminates your employment for any other reasons than stated in
     the paragraph immediately above, Alkermes will pay you at the monthly rate
     of your then current annual base salary for up to nine months or until you
     begin other replacement employment, whichever occurs first. The Company
     will have no further financial obligation to you other than this
     termination pay.

6.   EMPLOYMENT ELIGIBILITY VERIFICATION: Please note that all persons in the
     United States are required to complete an Employment Eligibility
     Verification Form on the first day of employment and submit an original
     document or documents that establish identity and employment eligibility
     within three (3) business days of employment. For your convenience, we are
     enclosing Form I-9 for your review. You will need to complete Section 1 and
     present original document(s) of your choice as listed on the reverse side
     of the form once you begin work.

7.   PROPRIETARY INFORMATION, NO CONFLICTS: You agree to execute the Company's
     standard Employee Agreement With Respect to Inventions and Proprietary
     Information and to be bound by all of the provisions thereof. A copy is
     enclosed with this letter. You also agree to execute a Covenant Not to
     Compete a copy of which is also enclosed. You hereby represent that you are
     not presently bound by any employment agreement, confidential or
     proprietary information agreement or similar agreement with any current or
     previous employer that would impose any restriction on your acceptance of
     this offer or that would interfere with your ability to fulfill the
     responsibilities of your position with the Company.

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David Broecker
December 22, 2000

David, we are all looking forward to your joining the leadership team at
Alkermes.

Please indicate your acceptance of the foregoing by signing one of the duplicate
originals of this letter and returning it to the Company no later than January
4, 2001. After that date, the offer will lapse.

Please return this entire letter, with your signature, and the benefits
information completed below, by fax to (617) 494-5360 with the original to
follow. The other duplicate original is for your records.

Yours truly, ALKERMES, INC.

/s/ James M. Frates
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James M. Frates
Vice President, Chief Financial Officer

The foregoing is signed and accepted as of the date first above written by:

/s/ David A. Broecker                             1/4/01
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David A. Broecker                                 Date

Enclosures

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           Please Complete the Following for your Benefits Enrollment

Legal Name
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Date of Birth
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M           F
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Social Security #:
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                          INSURANCE AUTO AUCTIONS, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

                   (AMENDED AND RESTATED AS OF JUNE 30, 2001)

I.       PURPOSE

         The purpose of the Insurance Auto Auctions, Inc. Employee Stock
Purchase Plan (the "Plan") is to promote the overall financial objectives of the
Company and its shareholders by motivating Participants in the Plan to achieve
long-term growth in shareholders' equity in the Company. The Plan is designed to
qualify as an employee stock purchase plan under Section 423 of the Code. The
adoption of the Plan, as amended and restated effective as of June 30, 2001, is
expressly conditioned upon the approval of the Plan by the shareholders of the
Company.

II.      DEFINITIONS

         For purposes of administration of the Plan, the following terms shall
have the meanings indicated:

         "Account" means the bookkeeping account established on behalf of a
Participant to which shall be credited all contributions paid for the purposes
of purchasing Common Stock under the Plan, and to which shall be charged all
purchases of Common Stock pursuant to the Plan.

         "Base Salary" means the regular basis earnings paid to a Participant by
one or more Participating Companies during such individual's period of
participation in the Plan, plus any pre-tax contributions made by the
Participant to any Code Section 401(k) salary deferral plan or any Code Section
125 cafeteria benefit program now or hereafter established by the Company or any
Corporate Affiliate. There shall be excluded from the calculation of Base Salary
(i) all overtime payments, bonuses, commissions, profit sharing distributions
and other incentive-type payments and (ii) all contributions (other than Code
Section 401(k) or Code Section 125 contributions) made on the Participant's
behalf by the Company or one or more Corporate Affiliates under any employee
benefit or welfare plan now or hereafter established.

         "Board" means the Board of Directors of the Company.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Common Stock" means shares of the Company's common stock.

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         "Company" means Insurance Auto Auctions, Inc., an Illinois corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of Insurance Auto Auctions, Inc. which shall adopt the Plan by appropriate
action.

         "Corporate Affiliate" means any parent or subsidiary corporation of the
Company (as determined in accordance with Code Section 424), including any
parent or subsidiary corporation which becomes such after the Effective Date.

         "Effective Date" means the first day of the initial Purchase Period
under the Plan, which is scheduled to commence upon the later of (i) July 1,
1993 or (ii) the effective date of the S-8 Registration Statement covering the
shares of Common Stock issuable under the Plan. However, for any Corporate
Affiliate which becomes a Participating Company in the Plan after the first day
of such initial Purchase Period, a subsequent Effective Date shall be designated
with respect to participation by its Eligible Employees.

         "Eligible Employee" means any person who is engaged, on a regularly
scheduled basis of more than twenty (20) hours per week for more than five (5)
months per calendar year, in the rendition of personal services to the Company
or any other Participating Company for earnings considered wages under Section
3121(a) of the Code.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "Participant" means any Eligible Employee of a Participating Company
who is actively participating in the Plan.

         "Participating Company" means the Company and any Corporate Affiliate
or Affiliates now existing or at any time hereafter created or acquired.

         "Plan Year" means the calendar year, provided that the initial Plan
Year begins with the Effective Date and ends December 31, 1993.

         "Securities Act" means the Securities Act of 1933, as amended, and the
regulations promulgated pursuant thereto.

         "Service" means the period during which an individual is in the employ
of the Company or any Corporate Affiliate and shall be measured from the later
of (i) his or her hire date or (ii) the date of the Company's acquisition of
that Corporate Affiliate.

III.     ADMINISTRATION

         The Plan shall be administered by a committee (the "Plan
Administrator") comprised of two or more non-employee Board members appointed
from time to time by the Board. A majority of the members of the committee
acting as Plan Administrator shall constitute a quorum at any meeting thereof
(including telephone conferences) and the acts of a majority of the members
present, or acts unanimously approved in writing by all members without a
meeting,

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shall be the acts of the Plan Administrator. A member shall be considered for
this purpose only if, at the time he exercises discretion in administering the
Plan, he is a "disinterested person" within the meaning of Rule 16b-3 under the
Exchange Act. The Board shall have the authority to remove, replace or fill any
vacancy of any member of the committee acting as Plan Administrator upon notice
to such committee and the affected member. Any member of the committee acting as
Plan Administrator may resign upon notice to the President of the Company or to
the Board. The Plan Administrator may delegate such duties and responsibilities
as it deems appropriate. Subject to the provisions of the Plan, the Plan
Administrator shall have the full and final authority in its discretion to:

         (a) determine from time to time whether a person is an Eligible
Employee;

         (b) determine the number of shares of Common Stock available as of the
beginning of any Purchase Period or subject to each Purchase Right (defined in
Section VII below);

         (c) provide for the acceleration of the right to exercise a Purchase
Right (or portion thereof);

         (d) determine what securities law requirements are applicable to the
Plan, Purchase Rights and the issuance of shares of Common Stock hereunder and
request of a Participant that appropriate action be taken;

         (e) cancel, with the consent of the holder or as otherwise provided in
the Plan Agreement, outstanding Purchase Rights;

         (f) require as a condition of the exercise of a Purchase Right or the
issuance or transfer of a certificate of Common Stock, the withholding from a
Participant of the amount of any federal, state or local taxes as may be
required by law;

         (g) determine the restrictions or limitations on the transfer of Common
Stock;

         (h) determine whether a Purchase Right is to be adjusted, modified or
purchased, or become fully exercisable under Section VI. B. of the Plan;

         (i) appoint and compensate agents, counsel, auditors or other
specialists to aid in the discharge of its duties;

         (j) correct any defect, supply any omission or reconcile any
inconsistency in the Plan relating to a Purchase Right, in such manner and to
the extent the Plan Administrator shall determine in order to carry out the
purposes of the Plan; and

         (k) construe and interpret this Plan, and take all other actions and
make all other determinations and take all other actions deemed necessary or
advisable for the administration of this Plan.

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A member of the committee acting as Plan Administrator shall not exercise any
discretion respecting himself under the Plan. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan.

IV.      PURCHASE PERIODS

         A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive periods ("Purchase Periods") until such time as
(i) the maximum number of shares of Common Stock available for issuance under
the Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated in accordance with Section IX.

         B. The Plan shall be implemented in a series of successive Purchase
Periods, each of a duration of six (6) months. The initial Purchase Period will
begin upon the later of (i) July 1, 1993 or (ii) the effective date of the S-8
Registration Statement covering the shares of Common Stock issuable under the
Plan and will end on the last business day in December 1993. Subsequent Purchase
Periods shall run from the first business day in January to the last business
day in June and from the first business day in July to the last business day in
December each year.

         C. Under no circumstances shall any Purchase Period commence under the
Plan, nor shall any shares of Common Stock be issued hereunder, until such time
as (i) the Plan shall have been approved by the Company's shareholders and (ii)
the Company shall have complied with all applicable requirements of the
Securities Act, all applicable listing requirements of any securities exchange
on which shares of the Common Stock are listed and all other applicable
statutory and regulatory requirements.

         D. The Participant shall be granted a separate Purchase Right for each
Purchase Period in which he or she participates. The Purchase Right shall be
granted on the start date of the Purchase Period and shall be automatically
exercised on the last day of that period.

         E. The acquisition of Common Stock through plan participation during
any Purchase Period shall neither limit nor require the acquisition of Common
Stock by the Participant in any subsequent Purchase Period.

V.       ELIGIBILITY AND PARTICIPATION

         A. Each Eligible Employee of a Participating Company shall be eligible
to participate in the Plan on the start date of any Purchase Period beginning on
or after his or her completion of the number of months of Service specified from
time to time by the Plan Administrator. Unless otherwise specified by the Plan
Administrator, there shall be no minimum eligibility requirements for
participation in the Plan. The Plan Administrator may increase or decrease the
eligibility period to be effective at the start of the next Purchase Period.

         B. To participate for a particular Purchase Period, the Eligible
Employee must complete the enrollment forms prescribed by the Plan Administrator
(including a purchase agreement and a payroll deduction authorization) and file
such forms with the Plan

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Administrator (or is designate) on or before the start date of that Purchase
Period.

         C. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Base Salary paid to the Participant during the Purchase
Period, up to a maximum of fifteen percent (15%). The deduction rate so
authorized shall continue in effect for the entire Purchase Period and for each
successive Purchase Period under the Plan, except to the extent such rate is
changed in accordance with the following guidelines:

         -  The Participant may, at any time during the Purchase Period, reduce
            his or her rate of payroll deduction. Such reduction shall become
            effective as soon as possible following the filing of the requisite
            reduction form with the Plan Administrator (or its designate), but
            the Participant may not effect more than one such reduction per
            Purchase Period.

         -  The Participant may, prior to the commencement of any new Purchase
            Period, increase or decrease the rate of his or her payroll
            deduction by filing the appropriate form which the Plan
            Administrator (or its designate). The new rate (which may not exceed
            the fifteen percent (15%) maximum) shall become effective as of the
            start date of the new Purchase Period.

Payroll deduction will automatically cease upon the termination of the
Participant's Purchase Right in accordance with the applicable provisions of
Section VII below.

VI.      STOCK SUBJECT TO PLAN

         A. The Common Stock purchasable under the Plan shall, solely in the
discretion of the Plan Administrator, be made available from either authorized
but unissued shares of Common Stock or from shares of Common Stock reacquired by
the Company, including shares of Common Stock purchased on the open market. The
total number of shares which may be issued under the Plan shall not exceed
150,000 shares (subject to adjustment under Section VI. B. below).

         B. In the event any change is made to the outstanding Common Stock by
reason of any stock dividend, stock split, combination of shares or other change
affecting such Common Stock as a class without the Company's receipt of
consideration, appropriate adjustments shall be made by the Plan Administrator
to (i) the class and maximum number of securities issuable over the term of the
Plan, (ii) the class and maximum number of securities purchasable per
Participant during any one Purchase Period and (iii) the class and number of
securities and the price per share in effect under each Purchase Right at the
time outstanding under the Plan. Such adjustments shall be designed to preclude
the dilution or enlargement of rights and benefits under the Plan.

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VII.     PURCHASE RIGHTS

         A. Purchase Rights of Eligible Employees. An Eligible Employee who
participates in the Plan for a particular Purchase Period shall have the right
to purchase shares of Common Stock upon the terms and conditions set forth in
this Section VII ("Purchase Rights") and shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may deem advisable.

         B. Purchase Price. Common Stock shall be issuable at the end of each
Purchase Period at a Purchase Price equal to eighty-five percent (85%) of the
lower of (i) the fair market value per share on the start date of the Purchase
Period or (ii) the fair market value per share on the purchase date at the end
of that Purchase Period (the "Purchase Price").

         C. Valuation. For purposes of the Plan, the fair market value per share
of Common Stock on any relevant date shall be the closing selling price per
share on that date, as officially quoted on the Nasdaq National Market. If there
is no quoted selling price for such date, then the closing selling price per
share of Common Stock on the next preceding day for which there does exist such
a quotation shall be determinative of fair market value.

         D. Number of Purchasable Shares.

            (i)     The number of shares purchasable per Participant during the
                    Purchase Period shall be the number of whole shares obtained
                    by dividing the amount collected from the Participant
                    through payroll deductions during that period by the
                    Purchase Price in effect for such period.

            (ii)    In addition, the following limitations shall be in effect
                    for the initial Purchase Period beginning July 1, 1993 and
                    ending December 31, 1993: (a) Participants subject to the
                    short-swing profit rules of the federal securities laws may
                    not purchase more than One Thousand Seven Hundred Fifty
                    (1,750) shares of Common Stock in the aggregate and (b) all
                    Participants as a group may not purchase more than
                    Forty-Three Thousand Five Hundred (43,500) shares of Common
                    Stock.

            (iii)   Under no circumstances shall Purchase Rights be granted
                    under the Plan to any Eligible Employee if such individual
                    would, immediately after the grant, own (within the meaning
                    of Code Section 424(d)) or hold outstanding options or other
                    rights to purchase, stock possessing five percent (5%) or
                    more of the total combined voting power or value of all
                    classes of stock of the Company or any Corporate Affiliate.

         E. Payment. Payment for the Common Stock purchased under the Plan shall
be effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the start date of the Purchase Period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of the Purchase Period. The amounts so

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collected shall be credited to the Participant's Account under the Plan, but no
interest shall be paid on the balance from time to time outstanding in such
Account. The amounts collected from a Participant may be commingled with the
general assets of the Company and may be used for general corporate purposes.

         F. Termination of Purchase Right. The following provisions shall govern
the termination of outstanding Purchase Rights:

            (i)     A Participant may, at any time prior to the last five (5)
                    business days of the Purchase Period, terminate his or her
                    outstanding Purchase Right under the Plan by filing the
                    prescribed notification form with the Plan Administrator (or
                    its designate). No further payroll deductions shall be
                    collected from the Participant with respect to the
                    terminated Purchase Right and, at the Participant's
                    election, any payroll deductions collected to date during
                    the Purchase Period shall be immediately refunded or held
                    for the purchase of shares at the end of the Purchase
                    Period. If no such election is made, then the collected
                    deductions shall be refunded as soon as possible after the
                    end of the Purchase Period.

            (ii)    The termination of such Purchase Right shall be irrevocable,
                    and the participant may not subsequently rejoin the Purchase
                    Period for which the terminated Purchase Right was granted.
                    In order to resume participation in any subsequent Purchase
                    Period, such individual must re-enroll in the Plan (by
                    making a timely filing of a new purchase agreement and
                    payroll deduction authorization) on or before the start date
                    of the new Purchase Period.

            (iii)   If the Participant ceases to remain an Eligible Employee
                    while his or her Purchase Right remains outstanding, then
                    such Purchase Right shall immediately terminate, and the
                    Participant (or the personal representative of the
                    Participant's estate in the event of his or her death) shall
                    have the following election, exercisable up until the end of
                    the Purchase Period in which such cessation of Eligible
                    Employee status occurs:

                    (a)  to withdraw all of the Participant's payroll deductions
                         for that Purchase Period; or

                    (b)  to have such funds held for the purchase of shares at
                         the end of that Purchase Period.

If no such election is made, then the collected deductions shall be refunded as
soon as possible after the end of the Purchase Period. In no event, however, may
any additional payroll deductions be made on the Participant's behalf following
his or her cessation of status as an Eligible Employee.

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         G. Stock Purchase. On the last day of the Purchase Period, shares of
Common Stock shall automatically be purchased on behalf of each Participant
(other than Participants whose payroll deductions have previously been refunded
in accordance with the Termination of Purchase Right provisions in Section VII.
F. above). The purchase shall be effected by applying each Participant's payroll
deductions for the Purchase Period to the purchase of whole shares of Common
Stock (subject to the foregoing limitations on both the maximum and aggregate
number of purchasable shares) at the Purchase Price in effect for that Purchase
Period. However, any payroll deductions not applied to the purchase of Common
Stock by reason of (i) the limitation on the maximum number of shares
purchasable by the Participant during the Purchase Period or (ii) the maximum
number of shares purchasable in the aggregate during the initial Purchase Period
shall be promptly refunded to the Participant.

         H. Proration of Purchase Rights. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding Purchase Rights
on any particular date exceed the number of shares then available for issuance
under the Plan (including the limitation on issuances for the initial Purchase
Period), the Plan Administrator shall make a pro-rata allocation for the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
Purchase Price payable for the Common Stock pro-rated to such individual, shall
be refunded to such Participant.

         I. Rights as Shareholder. A Participant shall have no shareholder
rights with respect to the shares subject to his or her outstanding Purchase
Right until the shares are actually purchased on the Participant's behalf in
accordance with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase. A Participant shall be entitled to receive,
as soon as practicable after the end of the Purchase Period, a stock certificate
for the number of shares purchased on the Participant's behalf. Such certificate
may, upon the Participant's request, be issued in the names of the Participant
and his or her spouse as community property or as joint tenants with right of
survivorship.

         J. Assignability. No Purchase Right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the Purchase Right shall be exercisable only by the
Participant.

         K. Change in Control. If there is a Change in Control of the Company
(as defined herein) or the Plan Administrator reasonably anticipates a Change in
Control is likely to occur then (1) the Plan Administrator may cause each
Purchase Right to be immediately exercisable; (2) the Plan Administrator may
provide that upon such Change in Control each Purchase Right may be purchased by
the Company in an amount equal to the excess, if any, of the aggregate fair
market value per share of Common Stock subject to the Purchase Right (or portion
thereof) over the aggregate Purchase Price of the shares subject to the Purchase
Right (or portion thereof) which the Plan Administrator determines to purchase;
or (3) the Company may provide for any combination of (1) and (2) above. For
purposes of this Section VII. K., the aggregate fair market value per share of
Common Stock subject to the Purchase Right that the Plan Administrator
determines to purchase shall be determined by the Plan Administrator by
reference to the cash or

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fair market value of the securities, property or other consideration receivable
pursuant to the Change in Control described in this Section VII. K. The
aggregate Purchase Price of the Common Stock shall be determined by multiplying
the number of such shares by the Purchase Price. In the event of a Change in
Control, and if the Purchase Right is unexercised and the Plan Administrator
does not exercise its discretion hereunder to purchase the Purchase Right, then
the Purchase Right shall be regarded as the right to receive the securities,
property, cash or other consideration receivable by stock holders of the Company
immediately prior to the Change in Control. The provisions of this Section VII.
K. shall be construed consistently with the terms of conditions of any
regulation or ruling respecting the status of Purchase Rights under Section 423
of the Code and the receipt of cash or other consideration coincident with the
cancellation of such Purchase Rights, and in order to provide the Participant
the economic benefit of the Purchase Right without incurring liability under
Section 16(b) of the Exchange Act. A "Change in Control" shall be deemed to have
occurred on the first to occur of any of the following events:

            (i)     An acquisition by any individual, entity or group (within
                    the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
                    Act) (a "Person") of beneficial ownership (within the
                    meaning of Rule 13d-3 promulgated under the Exchange Act) of
                    twenty-five percent (25%) or more of either (1) the then
                    outstanding shares of Common Stock of the Company or (2) the
                    combined voting power of the then outstanding voting
                    securities of the Company entitled to vote generally in the
                    election of directors (the "Outstanding Company Voting
                    Securities"); excluding, however, the following: (1) any
                    acquisition directly from the Company, other than an
                    acquisition by virtue of the exercise of a conversion
                    privilege unless the security being so converted was itself
                    acquired directly from the Company, (2) any acquisition by
                    the Company; (3) any acquisition by any employee benefit
                    plan (or related trust) sponsored or maintained by the
                    Company or any corporation controlled by the Company; or (4)
                    any acquisition by any Person pursuant to a transaction
                    which complies with clauses (1), (2) and (3) of subsection
                    (iii) of this Section VII. K.; or

            (ii)    Within any period of 24 consecutive months, a change in the
                    composition of the Board such that the individuals who,
                    immediately prior to such period, constituted the Board
                    (such board shall be hereinafter referred to as the
                    "Incumbent Board") cease for any reason to constitute at
                    least a majority of the Board; provided, however, for
                    purposes of this Section VII. K., that any individual who
                    becomes a member of the Board during such period, whose
                    election, or nomination for election by the Company's
                    shareholders, was approved by a vote of at least a majority
                    of those individuals who are members of the Board and who
                    were also members of the Incumbent Board (or deemed to be
                    such pursuant to this proviso) shall be considered as though
                    such individual were a member of the Incumbent Board; but,
                    provided further, that any such individual whose initial
                    assumption of office occurs as a result of either an actual
                    or threatened election contest (as such terms are used in
                    Rule 14a-11 of Regulation 14A promulgated under the Exchange
                    Act) or other actual or threatened

                                       9
<PAGE>   10

                    solicitation of proxies or consents by or on behalf of a
                    Person other than the Board shall not be so considered as a
                    member of the Incumbent Board; or

            (iii)   The approval by the shareholders of the Company of a
                    reorganization, merger or consolidation or sale or other
                    disposition of all or substantially all of the assets of the
                    Company ("Corporate Transaction"); excluding, however, such
                    a Corporate Transaction pursuant to which (1) all or
                    substantially all of the individuals and entities who are
                    the beneficial owners, respectively, of the outstanding
                    Common Stock and Outstanding Company Voting Securities
                    immediately prior to such Corporate Transaction will
                    beneficially own, directly or indirectly, more than
                    seventy-five percent (75%) of, respectively, the outstanding
                    shares of Common Stock, and the combined voting power of the
                    then Outstanding Voting Securities entitled to vote
                    generally in the election of directors, as the case may be,
                    of the corporation resulting from such Corporate Transaction
                    (including, without limitation, a corporation which as a
                    result of such transaction owns the Company or all or
                    substantially all of the Company's assets, either directly
                    or through one or more subsidiaries) in substantially the
                    same proportions as their ownership, immediately prior to
                    such Corporate Transaction, of the outstanding Common Stock
                    and Outstanding Company Voting Securities, as the case may
                    be, (2) no Person (other than the Company, any employee
                    benefit plan (or related trust) sponsored or maintained by
                    the Company, by any corporation controlled by the Company,
                    or by such corporation resulting from such Corporate
                    Transaction) will beneficially own, directly or indirectly,
                    more than twenty-five percent (25%) of, respectively, the
                    outstanding shares of Common Stock of the corporation
                    resulting from such corporate Transaction or the combined
                    voting power of the outstanding voting securities of such
                    corporation entitled to vote generally in the election of
                    directors, except to the extent that such ownership existed
                    with respect to the Company prior to the Corporate
                    Transaction, and (3) individuals who were members of the
                    Board immediately prior to the approval by the shareholders
                    of the Company of such Corporate Transaction will constitute
                    at least a majority of the members of the board of
                    directions of the corporation resulting from such Corporate
                    Transaction; or

            (iv)    The approval by the shareholders of the Company of a
                    complete liquidation or dissolution of the Company, other
                    than to a corporation pursuant to a transaction which would
                    comply with clauses (1), (2) and (3) of subsection (iii) of
                    this Section VII. K., assuming for this purpose that such
                    transaction were a Corporate Transaction.

VIII.    ACCRUAL LIMITATIONS

         A. No Participant shall be entitled to accrue rights to acquire Common
Stock

                                       10
<PAGE>   11

pursuant to any Purchase Right outstanding under this Plan if and to the extent
such accrual, when aggregated with (i) rights to purchase Common Stock accrued
under any other Purchase Right outstanding under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Section 423 of the Code) of the Company or its Corporate Affiliates, would
otherwise permit such Participant to purchase more than $25,000 worth of stock
of the Company or any Corporate Affiliate (determined on the basis of the fair
market value of such stock on the date or dates such rights are granted the
Participant) for each calendar year such rights are at any time outstanding.

         B. For purposes of applying such accrual limitations, the right to
acquire Common Stock purchase to each Purchase Right outstanding under the Plan
shall accrue as follows:

            (i)     The right to acquire Common Stock under each such Purchase
                    Right shall accrue as and when the Purchase Right first
                    becomes exercisable on the last business day of the Purchase
                    Period for which such right is granted.

            (ii)    No right to acquire Common Stock under any outstanding
                    Purchase Right shall accrue to the extent the Participant
                    has already accrued in the same calendar year the right to
                    acquire $25,000 worth of Common Stock (determined on the
                    basis of the fair market value on the date or dates of
                    grant) pursuant to one or more Purchase Rights held by the
                    Participant during such calendar year.

            (iii)   If by reason of such accrual limitations, any Purchase Right
                    of a Participant does not accrue on the last business day of
                    a particular Purchase Period, then the payroll deductions
                    which the Participant made during that Purchase Period shall
                    be promptly refunded.

         C. In the event there is any conflict between the provisions of this
Section VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Section VIII shall be controlling.

IX.      AMENDMENT AND TERMINATION

         A. Except as described below, the Board may at any time amend, waive,
discharge or terminate the Plan even with prejudice to a Participant. The Board
or the Plan Administrator may amend, waive, discharge, terminate, modify,
extend, replace or renew an outstanding Purchase Right, even with prejudice to a
Participant, provided such a change does not cause the Plan to fail to be a plan
as described in Section 423 of the Code. However, the Board may not, without the
approval of the Company's shareholders:

                                       11
<PAGE>   12

            (i)     materially increase the number of shares issuable under the
                    Plan, except that the Plan Administrator shall have the
                    authority, exercisable without shareholder approval, to
                    effect adjustments to the extent necessary to reflect
                    changes in the Company's capital structure pursuant to
                    Section VI. B.;

            (ii)    alter the Purchase Price formula so as to reduce the
                    Purchase Price payable for the shares issuable under the
                    Plan; or

            (iii)   materially increase the benefits accruing to Participants
                    under the Plan or materially modify the requirements for
                    eligibility to participate in the Plan.

X.       GENERAL PROVISIONS

         A. The Plan shall become effective on the designated Effective Date,
provided that no Purchase Period shall commence, and no shares of Common Stock
shall be issued hereunder until (i) the Plan shall have been approved by the
shareholders and (ii) the Company shall have complied with all applicable
requirements of the Securities Act of 1933 (as amended), all applicable listing
requirements of any securities exchange on which shares of the Common Stock are
listed and all other applicable requirements established by law or regulation.
In the event such shareholder approval is not obtained, or such Company
compliance is not effected, within twelve (12) months after the date on which
the Plan is adopted by the Board, the Plan shall terminate and have no further
force or effect.

         B. All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.

         C. Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any of its Corporate Affiliates
for any period of specific duration, and such person's employment may be
terminated at any time, with or without cause.

         D. The provisions of the Plan shall be governed by the laws of the
state of Illinois without resort to that state's conflict-of-laws rules.

                                       12

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