Document:

Exhibit
10.20

 

EXECUTION COPY

 

 

AMENDMENT No. 3 AND
CONSENT

TO

CREDIT AGREEMENT

 

THIS AMENDMENT No. 3 AND
CONSENT TO CREDIT AGREEMENT (this “Amendment”) dated as of May 28, 2004,
is entered into among GLADSTONE BUSINESS LOAN, LLC, as the Borrower, GLADSTONE
ADVISERS, INC. (the “Existing Servicer”), GLADSTONE MANAGEMENT
CORPORATION (the “Successor Servicer”), CONCORD MINUTEMEN CAPITAL
COMPANY, LLC (“Concord”) and PUBLIC SQUARE FUNDING LLC, as CP Lenders
(collectively, the “CP Lenders”), CANADIAN IMPERIAL BANK OF COMMERCE (“CIBC”)
and KEYBANK, NATIONAL ASSOCIATION (“KeyBank”), as Committed Lenders
(collectively, the “Committed Lenders”), CIBC and KeyBank as Managing
Agents (in such capacity, collectively the “Managing Agents”) and CIBC
as Administrative Agent (in such capacity, the “Administrative Agent”).  Capitalized terms used herein without
definition shall have the meanings ascribed thereto in the “Credit Agreement”
referred to below.

 

PRELIMINARY STATEMENTS

 

A.                                   Reference
is made to that certain Credit Agreement dated as of May 19, 2003 among the
Borrower, Gladstone Advisers, Inc., as Servicer, the CP Lenders, the Committed
Lenders, the Managing Agents and the Administrative Agent (as amended,
restated, supplemented or modified from time to time, the “Credit Agreement”).

 

B.                                     The
parties hereto have agreed to amend certain provisions of the Credit Agreement
upon the terms and conditions set forth herein.

 

SECTION 1.  Amendment.  Subject to the satisfaction of the conditions precedent set forth
in Section 3 hereof, the parties hereto hereby agree:

 

(i) to delete in its entirety the definition of “Commitment
Termination Date” and to substitute in its entirety the following therefor:

 

Commitment Termination Date:  May 30, 2005 or such later date to which the
Commitment Termination Date may be extended (if extended) in the sole
discretion of the Lenders in accordance with the terms of Section 2.1(b).

 

SECTION 2.  Consent.  Subject to (x) the satisfaction of the conditions precedent set
forth in Section 3 hereof and (y) the amendment of that certain
Performance Guaranty dated as of May 19, 2003 issued by Gladstone Capital
Corporation in favor of Gladstone Business Loan, LLC, replacing Gladstone
Adviser, Inc. as Servicer with Gladstone Management Corporation, the parties
hereto hereby consent to (i) the termination of Gladstone Advisers, Inc. as
Servicer under the Credit Agreement on or around July 1, 2004 (the “Servicer
Transition Date”), and (ii)

 

 

the appointment of Gladstone Management Corporation as
the Successor Servicer as of the Servicer Transition Date.  From and after the Servicer Transition Date,
the Successor Servicer agrees that it will perform in accordance with their
terms all of the duties, obligations, and other undertakings which by the terms
of the Credit Agreement and other Transaction Documents are required to be
performed by it as Servicer, including, without limitation, Sections 12.9 and
12.10 of the Credit Agreement.

 

SECTION 3.  Representations and Warranties.  The Borrower hereby represents and warrants
to each of the other parties hereto, that:

 

(a)                                  The Successor Servicer has equal or
greater capability than that of the Existing Servicer in performing the duties
and obligations of Servicer under the Credit Agreement;

 

(b)                                 this Amendment constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms; and

 

(c)                                  on the date hereof, before and after
giving effect to this Amendment, other than as amended or waived pursuant to
this Amendment, no Early Termination Event or Unmatured Termination Event has
occurred and is continuing.

 

SECTION 4.  Conditions Precedent.  This Amendment shall become effective on the
first Business Day (the “Effective Date”) on which the Administrative
Agent or its counsel has received counterpart signature pages of this
Amendment, executed by each of the parties hereto.

 

SECTION 5.  Reference to and Effect on the
Transaction Documents.

 

(a)                                  Upon the effectiveness of this Amendment,
(i) each reference in the Credit Agreement to “this Credit Agreement”, “this
Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean
and be a reference to the Credit Agreement as amended or otherwise modified
hereby, and (ii) each reference to the Credit Agreement in any other Transaction
Document or any other document, instrument or agreement executed and/or
delivered in connection therewith, shall mean and be a reference to the Credit
Agreement as amended or otherwise modified hereby.

 

(b)                                 Except as specifically amended,
terminated or otherwise modified above, the terms and conditions of the Credit
Agreement, of all other Transaction Documents and any other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect and are hereby ratified and confirmed.

 

(c)                                  The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power or remedy
of the Administrative Agent, any Managing Agent or any Lender under the Credit
Agreement or any other Transaction Document or any other document, instrument
or agreement executed in connection therewith, nor constitute a waiver of any
provision contained therein, in each case except as specifically set forth
herein.

 

2

 

SECTION 6.  Execution in Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same
instrument.  Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION 7.  Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

 

SECTION 8.  Headings.  Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.

 

SECTION 9.  Fees and Expenses.   Seller hereby confirms its agreement to pay
on demand all reasonable costs and expenses of the Administrative Agent,
Managing Agents or Lenders in connection with the preparation, execution and
delivery of this Amendment and any of the other instruments, documents and
agreements to be executed and/or delivered in connection herewith, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
to the Administrative Agent, Managing Agents or Lenders with respect thereto.

 

SECTION 10.  Bankruptcy
Petitions Against Concord.
Gladstone Management Corporation hereby covenants and agrees that, prior to the
date which is one year and one day after the payment in full of all outstanding
commercial paper and any other debt securities of Concord rated, at the request
of Concord, by an internationally recognized rating agency, it will not
institute against, or join any other person in instituting against, Concord any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of any jurisdiction. This provision
shall survive the termination of the Credit Agreement.

 

[Remainder of Page
Deliberately Left Blank]

 

3

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed by their
respective officers as of the date first above written.

 

 

	
   

  	
  GLADSTONE BUSINESS LOAN,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Gladstone

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Gladstone

  
	
   

  	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GLADSTONE ADVISERS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Gladstone

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Gladstone

  
	
   

  	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GLADSTONE MANAGEMENT
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Gladstone

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Gladstone

  
	
   

  	
   

  	
  Title:

  	
  Chairman

  
					

 

Signature Page to

Amendment No. 3 and Consent to Credit Agreement

 

 

	
   

  	
  CONCORD MINUTEMEN
  CAPITAL COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J.
  Irvin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas J. Irvin

  
	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANADIAN IMPERIAL BANK
  OF COMMERCE, as a

  Committed Lender, Managing Agent and Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey C.
  Bazoian

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey C.
  Bazoian

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim Lees

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jim Lees

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

 

	
   

  	
  PUBLIC SQUARE FUNDING
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Evelyn
  Echevarria

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Evelyn
  Echevarria

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK, NATIONAL
  ASSOCIATION, as a

  Committed Lender and Managing Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Henson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paul Henson

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  PresidentExhibit
4.03

 

BROADBAND
STORAGE, INC.

 

2001
STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN

 

1.                                       PURPOSE.  The Broadband Storage, Inc. 2001 Stock
Option and Restricted Stock Purchase Plan (the “Plan”) is intended to provide
incentive to key employees, members of the Board of Directors (the “Board”) and
consultants of Broadband Storage, Inc. a Delaware corporation (the “Company”),
to encourage proprietary interest in the Company, to encourage such key
employees and members of the Board to remain in the employ of the Company or
such key consultants to remain in the service of the Company, and to attract
new employees, managers and consultants with outstanding qualifications.

 

2.                                       DEFINITIONS.  Unless otherwise defined herein or the
context otherwise requires, the capitalized terms used herein shall have the
following meanings:

 

a.                                       “Administrator”
shall mean the Board or the Committee, whichever shall be administering the
Plan from time to time in the discretion of the Board, as described in Section
4 of the Plan.

 

b.                                      “Board”
shall mean the Board of Directors of the Company.

 

c.                                       “Cause”
shall mean, as used in the context of termination of employment, that the
Company (or its successor) (the “Employer”) has exercised its right to
terminate an individual’s employment with the Employer for one or more of the
following reasons:  (1) engaging in any
fraudulent act that is harmful to the Employer; (2) engaging in gross, willful
or intentional misconduct that is harmful to the Employer; (3) willful failure
to perform his/her duties; (4) habitual drunkenness at the office; (5)
narcotics drug addiction, (6) any conviction of or a plea of “guilty” or “no
contest” to a felony that is harmful to the Employer or (7) gross neglect of
his/her duties.

 

d.                                      “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

e.                                       “Commission”
shall mean the Securities and Exchange Commission.

 

f.                                         “Committee”
shall mean the committee, if any, appointed by the Board in accordance with
Section 4 of the Plan.

 

g.                                      “Company”
shall mean Broadband Storage, Inc., a Delaware corporation.

 

 

h.                                      “Corporate
Transaction” shall mean a sale of all or substantially all of the Company’s
assets, a merger into, consolidation with or any other reorganization in which
the Company is not the surviving entity, or if the Company is the surviving
entity, a change in the ultimate ownership of the outstanding equity securities
of the Company following the transaction by fifty percent (50%) or more as a
result of such transaction.

 

i.                                          “Disability”
shall mean a medically determinable physical or mental impairment which has
made an individual incapable of performing his or her duties, as determined in
good faith by the Administrator.  A
condition shall be considered a Disability if (i) it can be expected to result
in death or has lasted or can be expected to last for a continuous period of
not less than twelve (12) months, and (ii) the Administrator, based upon
medical evidence, has expressly determined that a Disability exists.

 

j.                                          “Employee”
shall mean an individual who is employed (within the meaning of Section 3401 of
the Code and the regulations thereunder) by the Company.

 

k.                                       “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

 

l.                                          “Exercise
Price” shall mean the price per Share, as determined by the Administrator,
at which an Option may be exercised.

 

m.                                    “Fair
Market Value” shall mean the value of one (1) Share, determined as follows:

 

(i)                           If the
Shares are (A) listed on an exchange, the closing price as reported for
composite transactions on the business day immediately prior to the date of
valuation or, if no sale occurred on that date, then the mean between the
closing bid and asked prices on such exchange on such date, or (B) traded
over-the-counter on the National Market System (the “NMS”) of the National
Association of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”),
the last sale price on the business day immediately prior to the date of
valuation or, if no sale occurred on such date, then the mean between the
highest bid and lowest asked prices as of the close of business on the business
day immediately prior to the date of valuation, as reported in NASDAQ;

 

(ii)                        If the
Shares are not traded on an exchange or the NMS but are otherwise traded
over-the-counter, the mean between the highest bid and lowest asked prices
quoted in NASDAQ as of the close of business on the business day immediately
prior to the date of valuation or, if on such day such Shares are not quoted in
NASDAQ, the mean between the representative bid and asked prices on such date
in the

 

2

 

domestic over-the-counter market as reported
by the National Quotation Bureau, Inc., or any similar successor organization;
or

 

(iii)                     If neither
clause (i) nor (ii) above applies, the fair market value as determined by the
Administrator in good faith.  Such
determination shall be conclusive and binding on all persons.

 

n.                                      “Incentive
Option” shall mean any Option which is intended to qualify under Section
422 of the Code as an “incentive stock option”.

 

o.                                      “Incentive
Option Agreement” shall mean a written option agreement evidencing a grant
of an Incentive Option.

 

p.                                      “Nonstatutory
Option” shall mean any Option which is not intended to qualify under
Section 422 of the Code as an “incentive stock option”.

 

q.                                      “Nonstatutory
Option Agreement” shall mean a written option agreement evidencing a grant
of a Nonstatutory Option.

 

r.                                         “Option”
shall mean any Incentive Option or Nonstatutory Option granted pursuant to the
Plan.  An Option shall be granted as of
the date the Administrator takes the necessary action to approve the
grant.  However, if the minutes or
appropriate resolutions of the Administrator provide that an Option is to be
granted as of a date in the future, the date of grant shall be that future
date.

 

s.                                       “Option
Agreement” shall mean an Incentive Option Agreement or Nonstatutory Option
Agreement.

 

t.                                         “Option
Purchase Price” shall mean the Exercise Price multiplied by the number of
Shares with respect to which an Option is exercised.

 

u.                                      “Optionee”
shall mean a Participant who has received an Option.

 

v.                                      “Participant”
shall have the meaning assigned to it in Section 5(a) hereof.

 

w.                                    “Parent”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

x.                                        “Plan”
shall mean this Broadband Storage, Inc. 2001 Stock Option and Restricted Stock
Purchase Plan, as it may be amended from time to time.

 

3

 

y.                                      “Restricted
Shares” shall mean restricted Shares purchased under and having the terms
and conditions set forth in the Plan.

 

z.                                        “Restricted
Share Purchase Price” shall mean the purchase price per Restricted Share to
be issued under the Plan, subject to adjustment for stock splits, stock
combinations and the like.

 

aa.                                 “Restricted
Stock Agreement” shall mean a written restricted stock agreement evidencing
the purchase of Restricted Shares.

 

bb.                               “Retirement”
shall mean the voluntary cessation of employment by an Employee upon the
attainment of age sixty-five (65) or thereafter and the completion of not less
than three (3) years of service with the Company.

 

cc.                                 “Securities
Act” shall mean the Securities Act of 1933, as amended from time to time.

 

dd.                               “Shares”
shall mean shares of common stock, par value $.001 per share, of the Company.

 

ee.                                 “Subsidiary”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

 

ff.                                     “10%
Shareholder” shall mean the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company (or any Parent or
Subsidiary).

 

3.                                       EFFECTIVE
DATE.  The Plan was adopted by the Board
effective March 9, 2001 (the “Effective Date”).

 

4.                                       ADMINISTRATION.

 

a.                                       Administrator.  The Plan shall be administered, in the
discretion of the Board from time to time, by the Board or a Committee which
shall be appointed by the Board.  The
Board may from time to time remove members from, or add members to, the
Committee.  Vacancies on the Committee,
however caused, shall be filled by the persons already serving as members of
the Board.  The Board shall appoint one
of the members of the Committee as Chairman. 
The Administrator shall hold meetings at such times and places as it may
determine.  Acts of a majority of the
Administrator at which a quorum is present, or acts reduced to or approved in
writing by

 

4

 

the unanimous consent of the members of the
Administrator, shall be the valid acts of the Administrator.

 

b.                                      Powers
of Administrator.  The Administrator
shall from time to time at its discretion select the Employees, members of the
Board and consultants who are to be granted Options or issued Restricted Shares
and determine the number of Shares to be subject to Options to be granted to
each Optionee or the number of Restricted Shares to be received.  A Committee or Board member shall in no
event participate in any determination relating to Options held by or to be
granted, or Restricted Shares to be issued, to such Committee or Board
member.  The interpretation and
construction by the Administrator of any provision of the Plan or of any Option
Agreement or Restricted Stock Agreement shall be final.  No member of the Administrator shall be
liable for any action or determination made in good faith with respect to the
Plan or any Options or Restricted Shares granted or issued thereunder.

 

5.                                       PARTICIPATION.

 

a.                                       Eligibility.  The persons eligible to receive Options or
purchase Restricted Shares shall be such persons (collectively, “Participants”;
individually, a “Participant”) as the Administrator may select from among the
following classes of persons, subject to the terms and conditions of Section 7
below:

 

(i)                           in the
case of Nonstatutory Options and Restricted Shares, all officers (including
officers who are members of the Board), other Employees, non-Employee directors
and non-Employee consultants (including non-Employee consultants who are
members of the Board) of the Company or any of its Subsidiaries or Parents; and

 

(ii)                        in the
case of Incentive Options, all officers (including officers who are members of
the Board) and other Employees of the Company or any of its Subsidiaries or
Parents.

 

b.                                      10%
Shareholders.  To the extent
required by the Code, a 10% Shareholder shall not be eligible to receive an
Incentive Option unless (i) the Option Exercise Price of the shares subject to
such Incentive Option is at least one hundred ten percent (110%) of the Fair
Market Value on the date of grant, and (ii) such Incentive Option by its terms
is not exercisable after the expiration of five (5) years from the date of
grant.

 

6.                                       SHARES.  The Shares subject to Options and Restricted
Shares purchased under the Plan shall be the Company’s unissued or reacquired
Shares.  The aggregate number of Shares
which may be issued under the Plan shall not exceed One Million (1,000,000)
Shares.  The number of Shares subject to
Options and available for purchase as Restricted Shares outstanding at any time
shall not exceed the number of Shares remaining available for issuance under
the Plan.  Notwithstanding the foregoing,

 

5

 

at no time shall the total number of Shares
issuable upon exercise of all outstanding Options and the total number of
Shares provided for under any stock bonus or similar plan of the Company exceed
a number of Shares equal to thirty percent (30%) of the then outstanding Shares
(including Shares issuable upon the conversion of the Company’s convertible
preferred stock), based on the shares which are outstanding at the time the
calculation is made, unless approved by at least two-thirds of the outstanding
shares of the Company entitled to vote. 
In the event any outstanding Option under the Plan for any reason
expires or is canceled or terminated, or in the event that any Restricted
Shares purchased under the Plan for any reason are reacquired by the Company,
the Shares allocable to the unexercised portion of such Option, or the
Restricted Shares so reacquired, may again be subjected to grant or issuance
under the Plan.  The Shares shall be
subject to adjustment in the manner provided in Section 9 hereof upon the
occurrence of an event specified in Section 9.

 

7.                                       TERMS
AND CONDITIONS OF OPTIONS AND RESTRICTED SHARES.

 

a.                                       Options.  Options granted under the Plan may be (i)
Incentive Options, (ii) Nonstatutory Options, and (iii) combinations of the foregoing.

 

b.                                      Option
Agreements; Restricted Stock Agreements. 
Each Option and purchase of Restricted Shares shall be evidenced by a
written Incentive Option Agreement, Nonstatutory Option Agreement or Restricted
Stock Agreement, as the case may be, substantially in the form of Annex A,
Annex B and Annex C, respectively, to this Plan, or in such other form as the
Administrator shall from time to time determine.  Such agreements need not be identical but shall comply with and
be subject to the terms and conditions set forth in this Section 7.

 

c.                                       Number
of Shares.  Each Option Agreement
and Restricted Stock Agreement shall state the number of Shares or Restricted
Shares, respectively, to which it pertains and shall provide that the
adjustment thereof shall be subject to the provisions of Section 9 hereof.

 

d.                                      Vesting
of Options.  Each Option shall
become exercisable in one or more installments at such time or times and
subject to such conditions, including, without limitation, the achievement of
specified performance goals or objectives, as shall be determined by the
Administrator and set forth in the applicable Incentive Option Agreement or
Nonstatutory Option Agreement, as the case may be.  Notwithstanding the foregoing, any Options granted under the Plan
shall become exercisable at a minimum of twenty percent (20%) per year, unless
earlier terminated.

 

e.                                       Annual
Limit on Incentive Options.  To the
extent required for “incentive stock option” treatment under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the date of grant) of
the common stock, with respect to

 

6

 

which Incentive Options granted under this
Plan become exercisable for the first time by an Optionee during any calendar
year, shall not exceed $100,000.

 

f.                                         Option
Exercise Price.  Each Option shall
state the Option Exercise Price.  In the
case of a Nonstatutory Option, the Option Exercise Price shall not be less than
eighty-five percent (85%) of the Fair Market Value on the date of grant.  In the case of an Incentive Option, the
Option Exercise Price shall not be less than the Fair Market Value on the date
of grant.  Notwithstanding the
foregoing, the Option Exercise Price of any Incentive Option or Nonstatutory
Option shall not be less than one hundred ten percent (110%) of the Fair Market
Value if the Optionee is a 10% Shareholder.

 

g.                                      Restricted
Share Purchase Price.  Each
Restricted Stock Agreement shall state the Restricted Share Purchase
Price.  The Restricted Share Purchase
Price shall not be less than eighty-five percent (85%) of the Fair Market
Value, calculated on the date of purchase of the Restricted Shares; provided,
however, that the Restricted Share Purchase Price shall not be less than one
hundred ten percent (110%) of the Fair Market Value if the Participant is a 10%
Shareholder.

 

h.                                      Medium
and Time of Payment; Notice.  Upon
the exercise of the Option or the issuance of Restricted Shares, the Option
Purchase Price and the Restricted Share Purchase Price, as the case may be,
shall be payable in full in United States dollars or, if permitted by the
Administrator, by the issuance of a promissory note in a form acceptable to the
Administrator.

 

In the event
the Company determines that it is required to withhold state or Federal income
tax as a result of the exercise of an Option or issuance of Restricted Shares,
as a condition to the exercise or issuance thereof, a Participant must make
arrangements satisfactory to the Company to enable it to satisfy such
withholding requirements before the Participant shall be permitted to exercise
the Option or purchase the Restricted Shares, as the case may be.

 

The Optionee
shall exercise an Option by completing and delivering to the Company,
concurrently with the payment of the Option Purchase Price in the manner
described above, an exercise notice in such other form as the Administrator
shall from time to time determine.

 

i.                                          Term
and Non-Transferability of Options. 
Subject to the acceleration provisions set forth in Section 9 or elsewhere
in this Plan or in the applicable Option Agreement, each Option shall state the
time or times when all or part thereof becomes exercisable.  No Option shall be exercisable after the
expiration of ten (10) years from the date it was granted; provided, however,
to the extent required by the Code, no Incentive Option granted to a 10%
Shareholder shall be exercisable after the expiration of five (5) years from
the date it was granted.  During the
lifetime of the Optionee, the Option shall be exercisable only by the Optionee
or the Optionee’s guardian or legal representative and shall not be assignable
or transferable except by will

 

7

 

or by the laws of descent and
distribution.  Any other attempted alienation,
assignment, pledge, hypothecation, attachment, execution or similar process,
whether voluntary or involuntary, with respect to all or any part of any Option
or right thereunder, shall be null and void and, at the Company’s option, shall
cause all of the Optionee’s rights under the Option to terminate.

 

j.                                          Vesting
and Non-Transferability of Restricted Shares.   Subject to the acceleration provisions set forth in Section 9 or
elsewhere in this Plan or in the applicable Restricted Stock Agreement, each Restricted
Stock Agreement shall state the time or times of vesting of Restricted Shares
purchased thereunder.  Until they become
vested pursuant to the terms of the applicable Restricted Stock Agreement, a
Participant shall not sell, transfer (including a transfer by operation of
law), assign or pledge any or all of the Restricted Shares, and any sale,
transfer, assignment or pledge of the Restricted Shares shall be void without
the prior written consent of the Company, which may be withheld in the Company’s
sole and absolute discretion.  The
Company shall not (A) transfer on its books any Restricted Shares which shall
have been sold, transferred, assigned or pledged in violation of any of the
provisions of this Agreement, or (B) treat as owner of such Restricted Shares
or to accord the right to vote as such owner any transferee to whom such
Restricted Shares shall have been so sold, transferred, assigned or pledged in
violation of this Agreement.  No
Restricted Stock Agreement shall be assignable or transferable by the person
receiving same except by will or the laws of descent and distribution.  Any other attempted alienation, assignment,
pledge, hypothecation, attachment, execution or similar process, whether voluntary
or involuntary, with respect to all or any rights thereunder, shall be null and
void and, at the Company’s option, shall cause all of the Participant’s rights
thereunder to terminate.

 

k.                                       Cessation
of Employment (Except by Death, Disability or Retirement).  If an Optionee ceases to be an Employee for
any reason other than his or her death, Disability or Retirement, such Optionee
shall have the right, subject to the restrictions referred to in Sections 7(d)
and 7(i) above, to exercise its Option at any time within three (3) months
after cessation of employment, but, except as otherwise provided in the
applicable Option Agreement or in Sections 9 or 13 of this Plan, only to the
extent that, at the date of cessation of employment, the Optionee’s right to
exercise such Option had accrued pursuant to the terms of the applicable Option
Agreement and/or this Plan and had not previously been exercised.

 

For purposes
of this Section 7(k), the employment relationship shall be treated as
continuing intact while the Participant is on military leave, sick leave or
other bona fide leave of absence (to be determined in the sole discretion of
the Administrator).

 

l.                                          Death
of Optionee.  If an Optionee dies
while a Participant, or after ceasing to be a Participant but during the period
in which he or she could have exercised the Option under this Section 7, and
has not fully exercised the Option, then the Option may be exercised in full,
subject to the restrictions referred to in Sections 7(d) and

 

8

 

7(i) above, at any time within twelve (12)
months after the Optionee’s death by the executor or administrator of his or
her estate or by any person or persons who have acquired the Option directly
from the Optionee by bequest or inheritance, but, except as otherwise provided
in the applicable Option Agreement, only to the extent that, at the date of
death, the Optionee’s right to exercise such Option had accrued and had not
been forfeited pursuant to the terms of the applicable Option Agreement and had
not previously been exercised.

 

m.                                    Disability
of Optionee.  If an Optionee ceases
to be an Employee by reason of Disability, such Optionee shall have the right,
subject to the restrictions referred to in Sections 7(d) and 7(i) above, to
exercise the Option at any time within twelve (12) months after such cessation
of employment, but, except as provided in the applicable Option Agreement, only
to the extent that, at the date of such cessation of employment, the Optionee’s
right to exercise such Option had accrued pursuant to the terms of the
applicable Option Agreement and had not previously been exercised.

 

n.                                      Retirement
of Optionee.  If an Optionee ceases
to be an Employee by reason of Retirement, such Optionee shall have the right,
subject to the restrictions referred to in Sections 7(d) and 7(i) above, to
exercise the Option at any time within three (3) months after such cessation of
employment, but only to the extent that, at the date of such cessation of
employment, the Optionee’s right to exercise such Option had accrued pursuant
to the terms of the applicable Option Agreement and had not previously been
exercised.

 

o.                                      Rights
as a Shareholder.  No one shall have
rights as a shareholder of the Company with respect to any Shares or Restricted
Shares until the date of the issuance of a share certificate for such Shares or
Restricted Shares.  No adjustment shall
be made for distributions (ordinary or extraordinary, whether in cash,
securities or other property) or other rights for which the record date is
prior to the date such certificate is issued, except as expressly provided in
Section 9 hereof.

 

p.                                      Other
Provisions.  An Option Agreement or
Restricted Stock Agreement authorized under the Plan may contain such other
provisions not inconsistent with the terms of the Plan (including, without
limitation, restrictions upon the exercise of the Option and vesting of
Restricted Shares) as the Administrator shall deem advisable.

 

q.                                      Certain
Terminations of Employment, Hardship and Approved Leaves of Absence.  Notwithstanding any other provision of this
Plan to the contrary, in the event of termination of employment by reason of
death, disability, normal retirement, early retirement with the consent of the
Company, termination of employment to enter public service with the consent of the
Company, termination without cause or leave of absence approved by the Company,
or in the event of hardship or other special circumstances, of an officer,
manager or consultant of the Company who holds an Option that is not
immediately and fully exercisable or unvested Restricted Shares, the

 

9

 

Administrator may in its sole discretion take
any action that it deems to be equitable under the circumstances or in the best
interests of the Company, including without limitation, waiving or modifying
any limitation or requirement, including accelerating the right to exercise,
with respect to such Options, and accelerating the vesting with respect to such
Restricted Shares, issued under this Plan.

 

8.                                       TERM
OF PLAN.  The Plan shall be effective on
the Effective Date and, unless earlier terminated in accordance with the terms
hereof, shall terminate on March 9, 2011.

 

9.                                       EFFECT
OF CERTAIN EVENTS.

 

a.                                       Reclassification
of Shares.  Except as set forth in
Section 9(b) below, in the event that the outstanding Shares are hereafter
increased or decreased or changed into or exchanged for a different number or
kind of Shares or other securities of the Company by reason of merger,
consolidation or reorganization in which the Company is the surviving entity or
of a recapitalization, stock split, stock combination, reclassification,
reincorporation, stock dividend or other change in the corporate structure of
the Company (including, without limitation, the incorporation of the Company),
appropriate adjustments shall be made by the Administrator in the aggregate
number and kind of Shares subject to this Plan, and the number and kind of
Shares and the price per share subject to outstanding Option and Restricted
Stock Agreements in order to preserve, but not to increase, the benefits to
persons then holding the Options and/or Restricted Shares.

 

b.                                      Corporate
Transaction.   In the event of a
Corporate Transaction, the following shall occur:

 

(i)                           Assumed/Substituted
Plan.  In the event of a Corporate
Transaction, the surviving entity may elect to (x) continue the Plan, Options
and unvested Restricted Shares or (y) substitute for the Options and unvested
Restricted Shares new options and unvested securities, with appropriate
adjustments as to the number and purchase price of such securities in order to
preserve, but not to increase, the benefits to persons then holding the Options
and/or Restricted Shares; provided, however, that the accrual of exercisability
and/or vesting, as the case may be, shall continue in the manner set forth
herein and/or in the applicable original Option Agreement or Restricted Stock
Agreement except to the extent that such exercisability and/or vesting has been
accelerated by the Administrator pursuant to this Section 9(b).  Notwithstanding the foregoing, the
Administrator, in such Administrator’s sole and absolute discretion, shall have
the right to provide that the exercisability of any or all Options or vesting
of any or all Restricted Shares shall be accelerated to accrue and/or vest upon
the effective date of such Corporate Transaction.  In any event, any continued Plan, Options and unvested Restricted
Shares, or any substituted options or unvested securities, shall provide for
full acceleration of vesting in the manner set forth below in Section 9(b)(iii)
in the event that, on or after the occurrence of such Corporate Transaction,
the Company (or its successor)

 

10

 

(A) terminates the employment of the
Participant without Cause, or (B) substantially and without the Participant’s
consent, reduces the base cash compensation received by the Participant in the
course of such employment (unless all similarly situated employees are treated
in the like manner).

 

(ii)                        Plan Not
Assumed or Substituted.   If
provision is not made in a Corporate Transaction for the continuance of the
Plan and the assumption of Options and Restricted Shares, or the substitution
for such Options and Restricted Shares of new options and equity securities of
a successor entity, then the Administrator shall cause written notice of such
Corporate Transaction and the acceleration described herein (including the
expiration of all unexercised Options following the closing of the Corporate
Transaction) to be given to the persons holding Options and Restricted Shares
not less than 10 days prior to the anticipated effective date of such Corporate
Transaction.  Immediately prior to the
consummation of such Corporate Transaction, the exercisability of all Options
and vesting of all Restricted Shares shall be accelerated in full and such
persons shall have the right to exercise all or any portion of their Options at
such time and/or shall hold entirely vested Restricted Shares.  Upon the closing of such a Corporate
Transaction, any unexercised Options shall expire.

 

(iii)                     Termination
Without Cause.  Notwithstanding
anything to the contrary contained in this Plan and/or in the applicable Option
Agreement or Restricted Stock Agreement, in the event that a Participant is
terminated without Cause by the Employer on or after a Corporate Transaction,
the exercisability and/or vesting of all such Participant’s Options and/or
Restricted Shares shall be accelerated to accrue and/or vest, as applicable, in
full immediately upon such date of termination without any additional action
required on the part of the Administrator or the Employer.

 

c.                                       Adjustment
Determination.  To the extent that
the foregoing adjustments relate to securities of the Company, such adjustments
shall be made by the Administrator, whose determination shall be conclusive and
binding on all persons.

 

d.                                      Limitation
on Rights.  Except as expressly
provided in this Section 9, the Participant shall have no rights to the payment
of any distribution in the form of Shares or any other increase or decrease in
the number of Shares of any class or by reason of any dissolution, liquidation,
merger or consolidation or spinoff of assets or stock of the Company.  No adjustment by reason of any of the
foregoing shall be made with respect to the number or Exercise Price of Shares
subject to an Option Agreement or the number or Restricted Share Purchase Price
of Restricted Shares subject to a Restricted Stock Agreement.  The grant of an Option or issuance of
Restricted Shares pursuant to the Plan shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.

 

11

 

10.                                 SECURITIES
LAW REQUIREMENTS.

 

a.                                       Legality
of Issuance.  No Shares or
Restricted Shares shall be issued under the Plan unless and until the Company
has determined that:

 

(i)                                     it
and the Participant, as the case may be, have taken all actions required to
register the offer and sale of the Shares or Restricted Shares under the
Securities Act, or to perfect an exemption from the registration requirements
thereof;

 

(ii)                                  any
applicable listing requirement of any stock exchange on which the Shares are
listed has been satisfied; and

 

(iii)                               any
other applicable provision of state or Federal law has been satisfied.

 

b.                                      Restrictions
on Transfer; Representations of Participant; Legends.  Regardless of whether the offering and sale
of Shares or Restricted Shares under the Plan has been registered under the
Securities Act or has been registered or qualified under the securities laws of
any state, the Company may impose restrictions upon the sale, pledge or other
transfer of such Shares or Restricted Shares (including the placement of
appropriate legends on certificates) if, in the judgment of the Company and its
counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Securities Act, the securities laws of
any state or any other law.  In the
event that the issuance of Shares or Restricted Shares under the Plan is not
registered under the Securities Act but an exemption is available which
requires an investment representation or other representation, each Participant
shall be required to represent that such Shares or Restricted Shares, as the
case may be, are being acquired for investment, and not with a view to the sale
or distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Company and its counsel.  Certificates evidencing Shares or Restricted
Shares granted or acquired under the Plan pursuant to an unregistered transaction
shall bear the following restrictive legend and such other restrictive legends
as are required or deemed advisable under the provisions of any applicable law
or agreement:

 

12

 

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES LAW.  ACCORDINGLY, THESE
SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
UNLESS THEY HAVE FIRST BEEN REGISTERED UNDER THE SECURITIES ACT AND REGISTERED
OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW OR UNLESS THE ISSUER,
AFTER CONSULTATION WITH ITS COUNSEL, APPROVES SUCH TRANSACTION ON THE GROUNDS
THAT REGISTRATION UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION
UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED.  THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE COMPANY’S 2001 STOCK
OPTION AND RESTRICTED STOCK PURCHASE PLAN, DATED MARCH 9, 2001, COPIES OF WHICH
ARE ON FILE WITH THE COMPANY.

 

c.                                       Interpretation.  Any determination by the Company and its
counsel in connection with any of the matters set forth in this Section 10
shall be conclusive and binding on all persons.

 

d.                                      Registration
or Qualification of Securities.  The
Company may, but shall not be obligated to, register or qualify the sale of
Shares or Restricted Shares under the Securities Act or any other applicable
law.  The Company shall not be obligated
to take any affirmative action in order to cause the issuance of Shares or
Restricted Shares under the Plan to comply with any law.

 

e.                                       Exchange
of Certificates.  If, in the opinion
of the Company and its counsel, any legend placed on a certificate representing
Shares or Restricted Shares issued under the Plan is no longer required, the
holder of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares or Restricted Shares but
without such legend.

 

11.                                 APPROVAL
OF SHAREHOLDERS.  The Plan must be
approved on or before the one year anniversary of the Effective Date by the
affirmative vote of the holders of a majority of the total combined voting
power of all classes of stock of the Company. 
If such shareholder approval is not so obtained, (i) any Option
exercised and any Restricted Shares purchased before such shareholder approval
is obtained automatically shall be rescinded, and (ii) the Plan and all Options
granted thereunder automatically shall be terminated.

 

12.                                 FINANCIAL
STATEMENTS.  The Company shall provide
Optionees, shareholders, and holders of Restricted Shares with financial
statements, which may or may not be audited, at least annually.

 

13

 

13.                                 REPURCHASE
OPTION.

 

a.                                       If
the Participant’s service with the Company ceases due to a voluntary
termination by Participant or termination by the Company for Cause, the Company
shall have the unconditional right and option (the “Company Repurchase Option”)
to repurchase all or any portion of the Shares and/or Restricted Shares
acquired by the Participant under the Plan at a purchase price equal to (i)
with respect to all Shares acquired upon the exercise of the Options and all vested
Restricted Shares, the higher of (a) the purchase price paid by the Participant
for such Shares or Restricted Shares or (b) the Fair Market Value, as of the
date of such determination, of the Shares or Restricted shares, as the case may
be, and (ii) with respect to all unvested Restricted Shares, at the applicable
Restricted Shares Purchase Price (each, the “Repurchase Price”), which
Repurchase Price shall be binding upon the Participant.  The Company Repurchase Option must be
exercised, if at all, (x) with respect to all Shares acquired on or before the
date of such cessation upon the exercise of the Options and all Restricted
Shares, within sixty (60) days after the date of such termination, and (y) with
respect to all Shares acquired after the date of such cessation upon the
exercise of the Options, within sixty (60) days after such exercise.

 

b.                                      If
the Company waives or fails to exercise the Company Repurchase Option with
respect to any of the Shares and/or Restricted Shares acquired under the Plan
within the period specified in subsection (a) of this Section 13, the Company
Repurchase Option shall expire with respect to such Shares and/or Restricted
Shares.

 

c.                                       The
Company Repurchase Option shall be exercised by giving written notice signed by
an officer of the Company to the Participant in accordance with the provisions
for giving notices in the applicable Option Agreement or Restricted Stock
Agreement.  Amounts due to the
Participant from the Company as a result of the exercise of the Company Repurchase
Option shall be payable, in the discretion of the Company, by cancellation of
all or a portion of any outstanding purchase money indebtedness of the
Participant to the Company or by check.

 

d.                                      Nothing
in this Section 13 or anything else in the Plan shall affect in any manner
whatsoever the right or power of the Company (or a parent or subsidiary of the
Company), which the Participant acknowledges is absolute and unconditional, to
terminate the Participant’s service with the Company for any reason or no reason,
with or without cause or prior notice.

 

e.                                       Any
other provision of this Section 13 notwithstanding, in the event that the
Shares and/or Restricted Shares shall become listed on an established stock
exchange or quoted on NASDAQ, the Company Repurchase Option shall terminate and
no longer be in effect.

 

14

 

f.                                         Notwithstanding
the foregoing and provided that the Participant has remained in the Company’s
service, (i) the Repurchase Option shall immediately terminate, and the Option
shall accelerate and be immediately exercisable in full and the Restricted
Shares shall immediately vest in full, immediately prior to the closing of a
Corporate Transaction, unless (i) surviving entity desires that the Participant
remain in the surviving entity’s service after the Corporate Transaction and
(ii) the surviving entity continues the Plan and the Participant’s vesting
and/or exercisability schedule thereunder or exchanges the Participant’s
Options and unvested Restricted Shares for comparable options or unvested
equity securities in the surviving entity’s stock option/restricted stock
plan.  To the extent the Repurchase
Option remains in effect following a Corporate Transaction, such right shall
apply to any new securities or other property (including any cash payments)
received in exchange for the Shares in consummation of the Corporate
Transaction.  Appropriate adjustments
shall be made to the price per share payable upon exercise of the Repurchase
Option to reflect the effect of the Corporate Transaction upon the Company’s
capital structure; provided, however, that the aggregate purchase price shall
remain the same.

 

14.                                 AMENDMENT
AND TERMINATION OF THE PLAN.  The
Administrator may alter, amend, suspend or terminate the Plan in such respects
as it deems advisable; provided, however, that no such alteration, amendment,
suspension, or termination shall be made without the consent of the Participant
if it substantially impairs any rights or obligations under any applicable
Option Agreement or Restricted Stock Agreement.

 

15.                                 GOVERNING
LAW.  This Plan, the Option Agreements
and the Restricted Stock Agreements shall be governed by, and enforced and
construed in accordance with the internal substantive laws (and not the laws of
conflicts of laws) of the State of California.

 

	
   

  	
  BROADBAND STORAGE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John R. Staub

  	
   

  
	
   

  	
  Name: John R. Staub

  
	
   

  	
  Title: President & CEO

  

 

15

 

ANNEX
A

 

FORM
OF INCENTIVE OPTION AGREEMENT

 

ANNEX
B

 

FORM
OF NONSTATUTORY OPTION AGREEMENT

 

ANNEX
C

 

FORM
OF RESTRICTED STOCK AGREEMENT

 

16

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