Document:

EX-10.2

 

SYRATECH CORPORATION

2002 STOCK INCENTIVE PLAN

 

1.             Purpose of the Plan.  This 2002 Stock Incentive Plan (the “Plan”) is intended to

encourage ownership of the stock of Syratech Corporation, a Delaware

corporation (the “Company”), by employees, officers, directors, and consultants

of the Company or its subsidiaries, to induce qualified personnel to enter and

remain in the employ or other service of the Company or its subsidiaries and

otherwise to provide additional incentive for optionees and recipients of stock

awards to promote the success of its business.

 

2.             Stock Subject to the Plan.

 

(a)           The initial maximum number of shares

of common stock, par value $.01 per share, of the Company (“Common Stock”)

available for stock options and stock awards granted under the Plan shall be

1,500,000 shares of Common Stock.  The

maximum number of shares of Common Stock available for grants shall be subject

to adjustment in accordance with Section 12 hereof.  Shares issued under the Plan may be authorized but unissued

shares of Common Stock or shares of Common Stock held in treasury.

 

(b)           If an option or award granted

hereunder shall expire or terminate for any reason without having been

exercised in full, the unpurchased or forfeited shares subject thereto shall thereafter

be available for subsequent option grants under the Plan.

 

(c)           Stock issuable under the Plan may be

subject to such restrictions on transfer, repurchase rights or other

restrictions as shall be determined by the Committee and set forth in the option

agreement.

 

3.             Administration of the Plan.  At the discretion of the Board of Directors,

the Plan shall be administered either (i) by the full Board of Directors or

(ii) by a committee (the “Committee”) consisting of two or more members of the

Company’s Board of Directors.  In the

event that the Board of Directors is the administrator of the Plan, references

herein to the Committee shall be deemed to include the full Board of Directors.  The Board of Directors may from time to time

appoint a member or members of the Committee in substitution for or in addition

to the member or members then in office and may fill vacancies on the Committee

however caused.  The Committee shall

choose one of its members as Chairman and shall hold meetings at such times and

places as it shall deem advisable.  A

majority of the members of the Committee shall constitute a quorum and any

action may be taken by a majority of those present and voting at any meeting.  Any action may also be taken without the

necessity of a meeting by a written instrument signed by a majority of the

Committee.  The decision of the

Committee as to all questions of interpretation and application of the Plan

shall be final, binding and conclusive on all persons.  The Committee shall have the authority to

adopt, amend and rescind such rules and regulations as, in its opinion, may be

advisable in the administration of the Plan. 

The Committee may correct any defect or supply any omission or reconcile

any inconsistency in the Plan or in any option or award agreement granted

hereunder in the manner and to the extent it shall deem expedient to carry the

Plan into effect and shall be the sole and final judge of such expediency.  No Committee member shall be liable for any

action or determination made in good faith.

 

4.             Stock Awards.

 

(a)           The Committee may grant, subject to

the limitation of the number of shares of Common Stock available under Section

2 hereof, stock awards to employees of and other key individuals engaged to

provide services to the Company and its subsidiaries.  A stock award may be made in the stock or denominated in stock

subject to such terms and conditions as the Committee, in its sole discretion,

shall determine and establish.  These

may include, but are not limited to, establishing a holding period during which

stock issued pursuant to an award may not be transferred, requiring forfeiture

of the stock award because of termination of employment or failure to achieve

specific objectives such as measures of individual, business unit or Company

performance, including stock price appreciation.  In determining a person’s eligibility to be granted an award, as

well as in determining the number of shares to be awarded to any person, the

Committee shall take into account the person’s position and responsibilities,

the nature and value to the Company or its subsidiaries of such person’s

service and 

 

 

 

accomplishments, such

person’s present and potential contribution to the success of the Company or

its subsidiaries, and such other factors as the Committee may deem relevant.

 

(b)           The Committee may provide that a

stock award shall earn dividends or dividend equivalents, which may be paid

currently or may be deferred in payment, including reinvestment in additional

shares covered by the applicable stock award, all on such terms and conditions

as the Committee shall deem appropriate.

 

(c)           The Committee shall require that for

any stock award to be effective, the recipient of the award shall execute an

award agreement at such time and in such form as the Committee shall

determine.  Any award agreement may

require that for any or some of the shares issued, the awardee must pay a

minimum consideration, whether in cash, property or services, as may be

required by applicable law or the Committee, as the Committee shall determine.

 

(d)           A stock award may be granted singly

or in combination or in tandem with another stock award or stock option.  A stock award may also be granted as the

payment form in settlement of a grant or right under any other Company employee

benefit or compensation plan, including the plan of an acquired entity.

 

(e)           Directors who are not otherwise

employees of the Company or a subsidiary shall not be eligible to receive stock

awards pursuant to the Plan.

 

(f)            No stock award granted to any person

under the Plan shall be assignable or transferable otherwise than by will or

the laws of descent and distribution. 

Any stock award granted under the Plan shall be null and void and

without effect upon any attempted assignment or transfer, except as herein

provided, including without limitation any purported assignment, whether

voluntary or by operation of law, pledge, hypothecation or other disposition,

attachment, trustee process or similar process, whether legal or equitable,

upon such award.

 

5.             Type of Options.

 

(a)           Options granted pursuant to the Plan

shall be authorized by action of the Committee and shall be designated as

either (i) non-qualified options which are not intended to meet the

requirements of Section 422 of the Internal Revenue Code of 1986, as amended,

(the “Code”), or (ii) “incentive stock options” under Section 422 of the Code

(“ISO”).

 

(b)           Options designated as ISOs may be

granted only to employees (including officers who are also employees) of the

Company or any of its subsidiaries, including subsidiaries which become such

after the adoption of this Plan. 

Non-qualified options may be granted to any director, officer, employee,

or consultant of the Company or of any of its subsidiaries, including

subsidiaries which become such after the adoption of this Plan.

 

(c)           In determining the eligibility of an

individual to be granted an option, as well as in determining the number of

shares to be optioned to any individual, the Committee shall take into account

the position and responsibilities of the individual being considered, the

nature and value to the Company or its subsidiaries of his or her service and

accomplishments, his or her present and potential contribution to the success

of the Company or its subsidiaries, and such other factors as the Committee may

deem relevant.

 

(d)           No option designated as an ISO shall

be granted to any employee of the Company or any subsidiary if such employee

owns, immediately prior to the grant of an option, stock representing more than

10% of the total combined voting power of all classes of stock of the Company

or a parent or a subsidiary, unless the purchase price for the stock under such

option shall be at least 110% of its fair market value at the time such option

is granted and the option, by its terms, shall not be exercisable more than

five years from the date it is granted. 

In determining the stock ownership under this paragraph, the provisions

of Section 424(d) of the Code shall be controlling.  In determining the fair market value under this paragraph, the

provisions of Section 7 hereof shall apply.

 

 

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6.             Option Agreement.  Each option shall be evidenced by an option agreement (the

“Agreement”) duly executed on behalf of the Company and by the optionee to whom

such option is granted, which Agreement shall comply with and be subject to the

terms and conditions of the Plan.  The

Agreement may contain such other terms, provisions and conditions which are not

inconsistent with the Plan as may be determined by the Committee.  No option shall be granted within the

meaning of the Plan and no purported grant of any option shall be effective

until the Agreement shall have been duly executed on behalf of the Company and

the optionee.  The date of grant of an

option shall be as determined by the Committee.

 

7.             Exercise Price. 

The exercise price or prices of shares of the Company’s Common Stock for

options designated as non-qualified options shall be as determined by the

Committee, but in no event shall the exercise price be less than 50% of the

fair market value of the Common Stock at the time the option is granted, as

determined by the Committee.  The

exercise price or prices of shares of the Company’s Common Stock for ISOs shall

be the fair market value of such Common Stock at the time the option is granted

as determined by the Committee in accordance with the Regulations promulgated

under Section 422 of the Code.  If such

shares are then listed on any national securities exchange, the fair market

value shall be the mean between the high and low sales prices, if any, on such

exchange on the business day immediately preceding the date of the grant of the

option or, if none, shall be determined by taking a weighted average of the

means between the highest and lowest sales prices on the nearest date before

and the nearest date after the date of grant in accordance with Treasury

Regulations Section 25.2512-2.  If the

shares are not then listed on any such exchange, the fair market value of such

shares shall be the mean between the high and low sales prices, if any, as

reported in The Nasdaq National Market for the business day immediately

preceding the date of the grant of the option, or, if none, shall be determined

by taking a weighted average of the means between the highest and lowest sales

on the nearest date before and the nearest date after the date of grant in

accordance with Treasury Regulations Section 25.2512-2.  If the shares are not then either listed on

any such exchange or quoted in The Nasdaq National Market, the fair market

value shall be the mean between the average of the “Bid” and the average of the

“Ask” prices, if any, as reported in The Nasdaq National Market for the

business day immediately preceding the date of the grant of the option, or, if

none, shall be determined by taking a weighted average of the means between the

highest and lowest sales prices on the nearest date before and the nearest date

after the date of grant in accordance with Treasury Regulations Section

25.2512-2.  If the fair market value

cannot be determined under the preceding three sentences, it shall be

determined in good faith by the Committee.

 

The maximum number of

shares of the Company’s Common Stock with respect to which an option or options

may be granted to any employee in any one taxable year of the Company shall not

exceed 500,000 shares, taking into account shares granted during such taxable

year under options that are terminated or repriced, and subject to adjustment

under Section 12 hereof.

 

8.             Manner of Payment; Manner of Exercise.

 

(a)           Options granted under the Plan may

provide for the payment of the exercise price by delivery of (i) cash or a

check payable to the order of the Company in an amount equal to the exercise

price of such options, (ii) shares of the capital stock of the Company owned by

the optionee having a fair market value equal in amount to the exercise price

of the options being exercised, or (iii) any combination of (i) and (ii); provided,

however, that payment of the exercise price by delivery of shares of

Common Stock of the Company owned by such optionee may be made only if such

payment does not result in a charge to earnings for financial accounting

purposes as determined by the Committee. 

With the consent of the Committee, the delivery of shares used to

exercise any option may be through attestation rather than physical delivery of

stock certificates.  If the Company’s

shares are then listed on any national securities exchange, with the consent of

the Committee, payment may also be made by delivery of a properly executed

exercised notice to the Company, together with a copy of irrevocable

instructions to a broker to deliver promptly to the Company the amount of sale

proceeds to pay the exercise price and any taxes.  To facilitate the foregoing, the Company may enter into

agreements for coordinated procedures with one or more brokerage firms.

 

(b)           To the extent that the right to

purchase shares under an option has accrued and is in effect, options may be

exercised in full at one time or in part from time to time, by giving written

notice, signed by the person or persons exercising the option, to the Company,

stating the number of shares with respect to which the option is 

 

 

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being exercised, accompanied

by payment in full for such shares as provided in subparagraph (a) above.  Upon such exercise, delivery of a

certificate for paid-up non-assessable shares shall be made at the principal

office of the Company to the person or persons exercising the option at such

time, during ordinary business hours, after ten (10) business days from the

date of receipt of the notice by the Company, as shall be designated in such

notice, or at such time, place and manner as may be agreed upon by the Company

and the person or persons exercising the option.

 

9.             Exercise of Options.  The vesting schedule, as well as the terms and conditions of

vesting, whether performance-based, time-based or both, of each option granted

under the Plan shall be determined by the Committee and set forth in each

Agreement;

provided, however, that no option granted under the Plan shall have

a term in excess of ten (10) years from the date of grant.  No partial exercise may be made for less

than fifty (50) full shares of Common Stock, or the balance of the unexercised

options if the balance of the exercise options is less than fifty (50) shares.

 

10.           Term of Options; Exercisability.

 

(a)           Term.  Each option shall expire not more than ten

(10) years from the date of the granting thereof, but shall be subject to

earlier termination as may be provided in the Agreement.

 

(b)           Exercisability.  An option granted to an employee optionee

who ceases to be an employee of the Company or one of its subsidiaries, at any

time, for any reason or for no reason, shall be exercisable only to the extent

that the right to purchase shares under such option has accrued and is in

effect on the date such optionee ceases to be an employee of the Company.

 

11.           Options Not Transferable.  Except as otherwise permitted in the option

grant agreement, the right of any optionee to exercise any option granted to

him or her shall not be assignable or transferable by such optionee other than

by will or the laws of descent and distribution, and any such option shall be

exercisable during the lifetime of such optionee only by him.  Any option granted under the Plan shall be

null and void and without effect upon the bankruptcy of the optionee to whom

the option is granted, or upon any attempted assignment or transfer, except as

herein provided, including without limitation any purported assignment, whether

voluntary or by operation of law, pledge, hypothecation or other disposition

contrary to the provisions hereof or levy of execution, attachment, divorce,

trustee process or similar process, whether legal or equitable, upon such

option.

 

12.           Recapitalizations, Reorganizations

and the Like.

 

(a)           In the event that the outstanding

shares of the Common Stock of the Company are changed into or exchanged for a

different number or kind of shares or other securities of the Company or of

another corporation by reason of any reorganization, merger, consolidation,

recapitalization, reclassification, stock split-up, combination of shares, or

dividends payable in capital stock, appropriate adjustment shall be made in the

number and kind of shares as to which options or stock awards may be granted

under the Plan and as to which outstanding options or portions thereof then

unexercised shall be exercisable, to the end that the proportionate interest of

the optionee or award recipient shall be maintained as before the occurrence of

such event; such adjustment in outstanding options shall be made without change

in the total price applicable to the unexercised portion of such options and

with a corresponding adjustment in the option price per share.

 

(b)           Except as otherwise provided in an

Agreement, in the event of a Sale (as hereinafter defined) while unexercised

options remain outstanding, the Committee may in its discretion cause one or

more of the following provisions to apply:

 

(i)            the Committee may, subject to the

provisions of subparagraphs (iv) and (v) below, on or before the effective date

of such Sale, permit each person who is a holder of an outstanding option

immediately prior to such effective date, upon exercise of such option, to

receive in lieu of shares of Common Stock, shares of such stock or other

securities or consideration as the holders of shares of Common Stock received

pursuant to the terms of the Sale;

 

 

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(ii)           the Committee may waive any

discretionary limitations imposed pursuant to Section 9 hereof so that some or

all of the options are exercisable in full, from and after a date prior to the

effective date of such Sale specified by the Committee;

 

(iii)          the Committee may cancel all

outstanding options in exchange for consideration in cash or in kind equal in

value to the value of the shares of stock or other securities the holder of an

option would have received had the option been exercised (to the extent then

exercisable) and no disposition of the shares acquired upon such exercise been

made prior to such Sale, less the option price therefor;

 

(iv)          the Committee may cause all

outstanding options to be canceled as of the effective date of any such Sale, provided

that notice of such cancellation is given to each holder of an option, and

each holder of an option has the right to exercise such option in full prior to

or contemporaneous with the effective date of such Sale; or

 

(v)           the Committee may cause all

outstanding options to be canceled as of the effective date of any such Sale, provided

that notice of such cancellation is given to each holder of an option, and

each holder of an option has the right to exercise such option, to the extent

then exercisable in accordance with any discretionary limitations imposed

pursuant to paragraph 9, prior to or contemporaneous with the effective date of

such Sale.

 

Upon any acceleration as

provided above, any options or portion thereof originally designated as ISOs

that no longer qualify as incentive stock options under Section 422 of the Code

as a result of such acceleration shall be redesignated as non-qualified stock

options.

 

As used herein, “Sale”

means (x) a sale of all or substantially all of the consolidated assets of the

Company or (y) a sale or other transfer of voting securities of the Company, in

one transaction or a series of related transactions, or a consolidation or

merger of the Company, in each case, as a result of which the beneficial

holders of a majority of the Company’s voting securities prior to such

transaction do not, directly or indirectly, beneficially hold a majority of the

Company’s voting securities (or of the voting power of the surviving or

acquiring entity) after such transaction.

 

(c)           In the event of the proposed

dissolution or liquidation of the Company, each option will terminate

immediately prior to the consummation of such proposed action or at such other

time and subject to such other conditions as shall be determined by the Board

of Directors, provided that prior to such dissolution or liquidation, the

vesting of any option shall automatically accelerate as if such dissolution or

liquidation is deemed to be a Sale (as such term is defined herein).

 

(d)           If by reason of a corporate merger,

consolidation, acquisition of property or stock, separation, reorganization, or

liquidation, the Board of Directors shall authorize the issuance or assumption

of a stock option or stock options in a transaction to which Section 424(a) of

the Code applies, then, notwithstanding any other provision of the Plan, the

Board of Directors may grant an option or options upon such terms and

conditions as it may deem appropriate for the purpose of assumption of the old

option, or substitution of a new option for the old option; in conformity with

the provisions of such Section 424(a) of the Code and the Regulations

thereunder, and any such option shall not reduce the number of shares otherwise

available for issuance under the Plan.

 

(e)           Notwithstanding the foregoing, any

adjustments made pursuant to subparagraphs (a), (b) or (c) with respect to ISOs

shall be made only after the Committee, after consulting with counsel for the

Company, determines whether such adjustments would constitute a “modification”

of such ISOs (as that term is defined in Section 424 of the Code) or would

cause any adverse tax consequences for the holders of such ISOs.  If the Committee determines that such

adjustments made with respect to ISOs would constitute a modification of such

ISOs, it may refrain from making such adjustments.

 

 

5

 

(f)            No fraction of a share shall be

purchasable or deliverable upon the exercise of any option, but in the event

any adjustment hereunder of the number of shares covered by the option shall

cause such number to include a fraction of a share, such fraction shall be

adjusted to the nearest whole number of shares.

 

(g)           The Committee may make similar

adjustments or substitutions for stock awards.

 

13.           No Special Employment Rights.  Nothing contained in the Plan or in any

option or award granted under the Plan shall confer upon any option or award

holder any right with respect to the continuation of his or her employment by

the Company (or any subsidiary) or interfere in any way with the right of the

Company (or any subsidiary), subject to the terms of any separate employment

agreement to the contrary, at any time to terminate such employment or to

increase or decrease the compensation of the option or award holder from the

rate in existence at the time of the grant of the option or award. Whether an

authorized leave of absence, or absence in military or government service,

shall constitute termination of employment shall be determined by the Committee

at the time.

 

14.           Withholding.  The Company’s obligation to deliver shares

upon the exercise of an option or award granted under the Plan shall be subject

to the option or award holder’s satisfaction of all applicable foreign,

federal, state, and local income, excise, employment, and other tax withholding

requirements. The Company shall be entitled to satisfy such withholding

requirement from any compensation or other amounts owed to the optionee or

award recipient.  Except to the extent

that share withholding would result in a charge to earnings for financial

accounting purposes, the Company and employee may agree to withhold shares of

Common Stock purchased upon exercise of an option to satisfy the

above-mentioned withholding requirements.

 

15.           Restrictions on Issue of Shares.

 

(a)           Notwithstanding the provisions of

Section 9, the Company may delay the issuance of shares covered by an award or

by the exercise of an option and the delivery of a certificate for such shares

until one of the following conditions shall be satisfied:

 

(i)            The shares with respect to which

such option has been exercised or award made are at the time of the issue of

such shares effectively registered or qualified under applicable federal and

state securities acts now in force or as hereafter amended; or

 

(ii)           Counsel for the Company shall have

given an opinion, which opinion shall not be unreasonably conditioned or

withheld, that such shares are exempt from registration and qualification under

applicable Federal and state securities acts now in force or as hereafter

amended.

 

(b)           It is intended that all exercises of

options and stock awards shall be effective, and the Company shall use its best

efforts to bring about compliance with the above conditions within a reasonable

time, except that the Company shall be under no obligation to qualify shares or

to cause a registration statement or a post-effective amendment to any

registration statement to be prepared for the purpose of covering the issue of

shares in respect of which any option may be exercised or stock award made,

except as otherwise agreed to by the Company in writing.

 

16.           Purchase for Investment; Rights of

Holder on Subsequent Registration. 

Unless the shares to be issued under the Plan have been effectively

registered under the Securities Act of 1933, as now in force or hereafter

amended, the Company shall be under no obligation to issue any shares covered

by any option or award unless the person who exercises such option, in whole or

in part, or who receives such award, shall give a written representation and

undertaking to the Company which is satisfactory in form and scope to counsel

for the Company and upon which, in the opinion of such counsel, the Company may

reasonably rely, that he or she is acquiring the shares issued for his or her

own account as an investment and not with a view to, or for sale in connection

with, the distribution of any such shares, and that he or she will make no

transfer of the same except in compliance with any rules and regulations in

force at the time of such transfer under the Securities Act of 1933, or any

other applicable law, and that if shares are issued with out such registration,

a legend to this effect may be endorsed upon the securities so issued.  In the event that the Company shall, nevertheless,

deem it necessary or desirable to register 

 

 

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under the Securities Act

of 1933 or other applicable statutes any shares with respect to which an option

shall have been exercised, or stock award made, or to qualify any such shares

for exemption from the Securities Act of 1933 or other applicable statutes,

then the Company may take such action and may require from each optionee or

award recipient such information in writing for use in any registration

statement, supplementary registration statement, prospectus, preliminary

prospectus or offering circular as is reasonably necessary for such purpose and

may require reasonable indemnity to the Company and its officers and directors

and controlling persons from such holder against all losses, claims, damages

and liabilities arising from such use of the information so furnished and

caused by any untrue statement of any material fact therein or caused by the

omission to state a material fact required to be stated therein or necessary to

make the statements therein no misleading in the light of the circumstances

under which they were made.

 

17.           Loans.  The Company may make recourse loans to

optionees to permit them to exercise options and to award recipients to permit

them to purchase shares.  If loans are

made, the requirements of all applicable federal and state laws and regulations

regarding such loans must be met.

 

18.           Modification of Outstanding

Options and Awards.  The Committee

may authorize the amendment of any outstanding option or award with the consent

of the optionee or award recipient when and subject to such conditions as are

deemed to be in the best interests of the Company and in accordance with the

purposes of the Plan and so long as such amendment does not violate any

contractual obligations of the Company.

 

19.           Approval of Stockholders.  The Plan shall be subject to approval by the

vote of stockholders holding at least a majority of the voting stock of the

Company present, or represented, and entitled to vote at a duly held

stockholders’ meeting, or by written consent of a majority of the stockholders,

within twelve (12) months after the adoption of the Plan by the Committee and

shall take effect as of the date of adoption by the Committee upon such

approval.  The Committee may grant

options or make awards under the Plan prior to such approval, but any such

option or award shall be conditioned upon such approval and, accordingly, no

such option may be exercisable prior to such approval and no such award shall

be settled prior to such approval.

 

20.           Termination and Amendment of Plan.  Unless sooner terminated as herein provided,

the Plan shall terminate ten (10) years from the date upon which the Plan was

duly adopted by the Board of Directors of the Company.  The Committee may at any time terminate the

Plan or make such modification or amendment thereof as it deems advisable so

long as such modification or amendment does not conflict with contractual obligations

of the Company; provided, however, that except as provided in Section 12,

the Committee may not, without the approval of the stockholders of the Company

obtained in the manner stated in Section 19, increase the maximum number of

shares for which options or awards may be granted or make any change in the

Plan which requires stockholder approval under applicable laws or regulations.

Termination or any modification or amendment of the Plan shall not, without the

consent of an optionee, adversely affect his or her rights under an option theretofore

granted to him or her.

 

21.           Reservation of Stock.  The Company shall at all times during the

term of the Plan reserve and keep available such number of shares of stock as

will be sufficient to satisfy the requirements of the Plan and shall pay all fees

and expenses necessarily incurred by the Company in connection therewith.

 

22.           Limitation of Rights in the Option

Shares.  An optionee shall not be

deemed for any purpose to be a stockholder of the Company with respect to any

of the options except to the extent that the option shall have been exercised

with respect thereto and, in addition, a certificate shall have been issued

theretofore and delivered to the optionee.

 

23.           Governing Law.  The Plan and all determinations made and

actions taken with respect thereto shall be governed by the laws of the

Commonwealth of Massachusetts, without regard to its conflict of law rules.

 

 

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Adopted by the Board of

Directors: March 25, 2002

 

Approved by the

Stockholders: June 18, 2002

 

 

8EXHIBIT 10

EXHIBIT 10.1

 

DEMAND NOTE

 

	

  $200,000

  	

  As of January 25, 2002

  

 

For value received, the

undersigned Axcess Inc. (the “Maker”) promises to pay ON DEMAND, in immediately

available funds, to the order of Amphion Investments LLC (hereinafter referred

to as the “Payee”), at the office of 

Payee located at 350 Madison Avenue New York, New York 10017, the

principal sum of Two Hundred Thousand Dollars ($200,000.00) plus 6.75% interest

plus such additional amounts (including interest) as may be shown on a Schedule

of Advances annexed hereto and acknowledges in writing by the maker

(“Principal”).

 

Notwithstanding anything to the

contrary set forth herein, the entire unpaid Principal is subject to mandatory

prepayment in the event of any liquidation, dissolution or winding up of the

Maker.  The consolidation or merger of

the Maker into or with any other entity or entities, or the sale or lease,

exchange or other transfer by the Maker into or with any other entity or

entities, or the sale, lease, exchange or other transfer by the Maker of all or

substantially all of its assets, or dissolution without reconstitution of the

Maker of this Note, appointment of a receiver of any part of the property of ,

assignment for the benefit of creditors by, or commencement of any proceeding

under the United States Bankruptcy Code or any insolvency laws by or against

the Maker, shall be deemed to be a liquidation, dissolution or winding up of

the Maker within the meaning of the provisions of this paragraph.

 

This Note may be prepaid in

whole or in part at any time without premium or penalty.

 

The Principal outstanding under

this Note may convert at any time, at the election of the Payee, into

securities of the Maker.

 

Every maker, endorser and

guarantor hereof or of the indebtedness evidenced hereby (a) waives notice of

and consents to any and all advances, settlements, compromises, favors and

indulgences (including, without limitation, any extension or postponement of

the time for payment), and any and all additions, substitutions and releases of

any person primarily or secondarily liable, (b) waives presentment, demand,

notice, protest and all other demands, notices and suretyship defenses

generally, in connection with the delivery, acceptance, performance, default or

enforcement of or under this Note, and (c) agrees to pay, to the extent

permitted by law, all costs and expenses, including, without limitation,

reasonable attorneys’ fees, incurred or paid by the Payee in enforcing this

Note and any collateral or security therefor on default, whether or not

litigation is commenced.

 

No delay or omission of the

Payee in exercising any right or remedy hereunder shall constitute a waiver of

any such right or remedy.  Acceptance by

the Payee of any payment after the acceleration shall not be deemed a waiver of

such acceleration. A waiver on one occasion shall not operate as a bar to or

waiver of any such right or remedy on any future occasion on any future

occasion.

 

The Maker represents that this

Note has been duly executed and delivered and constitutes a legal, valid and

binding obligation of the Maker, enforceable against the Maker in accordance

with its terms.  The execution, delivery

and performance of this Note does not and will not violate or conflict with,

result in a breach of, or constitute a default under, any applicable law or any

indenture, agreement, or other contractual restriction, or instrument to which

the Maker is a party, or all such violations, conflicts, breaches, or defaults

have been duly waived.

 

This Note shall take effect as

an instrument under seal and shall be governed and construed in accordance with

the laws of the New York.

 

	

   

  	

  AXCESS INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ ALLAN

  GRIEBENOW

  	

   

  
	

   

  	

   

  	

  Allan

  Griebenow, Chief Executive Officer

  

 

 

SCHEDULE OF ADVANCES

 

This Schedule supplements the Note dated January 25, 2002 by and

between AXCESS INC. as Maker and Amphion Investments LLC  as Payee. 

The Maker hereby acknowledges receipt of the advances in the amount and

on the dates set forth below, all of which shall be included as “Principal”

under, and be governed by the terms and conditions of, said Note.

 

	

  Date of

  Advance

  	

   

  	

  Amount of

  Advance

  	

   

  	

  % Interest

  	

   

  	

  Receipt Acknowledged

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  1/30/02

  	

   

  	

  $

  	

  150,000

  	

   

  	

  6.75

  	

  %

  	

  By:

  	

  /s/ ALLAN

  GRIEBENOW

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Allan

  Griebenow, Chief Executive Officer

  	

   

  
										

 

2

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