Document:

Exhibit 10.1

 

STANLEY
ASSOCIATES, INC.

1995
STOCK INCENTIVE PLAN,

as
amended, 11 October, 2001

 

1.             Purpose.

 

The
purpose of this Stock Incentive Plan (this “Plan”) is to offer to those
employees and non-employee directors who contribute materially to the successful
operation of STANLEY ASSOCIATES, INC. (the “Company”) additional incentive and
encouragement to remain in the service of the Company by increasing their
personal participation in the Company through stock ownership. This Plan
provides a means whereby these individuals may acquire shares of the Company’s
Common Stock pursuant to Qualified Options and Nonqualified Options.

 

2.             Definitions.

 

A. “Board”
means the Board of Directors of the Company.

 

B. “Code”
means the Internal Revenue Code of 1986, as amended.

 

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

 

D. “Employee”
means any employee of the Company or of any Parent or Subsidiary, including an
employee who serves as an officer or director of the Company or of a Parent or
Subsidiary.

 

E. “Fair Market
Value” means the most recent determination of the fair market value
of each share of Common Stock made in accordance with Section 7.

 

F. “Non-Employee Director” means a member of
the Company’s Board who is not an Employee.

 

G. “Nonqualified
Option” means a stock option granted under this Plan which is not
intended to qualify as an incentive stock option under Section 422 of the Code.

 

H. “Option”
includes both Nonqualified Options and Qualified Options.

 

I. “Option Shares”
mean the shares of Common Stock purchased by a Grantee upon exercise of an
Option.

 

J. “Optionee”
means an Employee or Non-Employee Director to whom an Option has been granted.

 

 

K. “Parent”
means a parent corporation of the Company within the meaning of Section 424(e)
of the Code.

 

L. “Qualified
Option” means a stock option granted under this Plan which qualifies
as an incentive stock option under Section 422 of the Code.

 

M. “Subsidiary”
means a subsidiary corporation of the Company within the meaning of Section
424(f) of the Code.

 

N. “Terminating
Event” means (i) the consummation of a merger or consolidation of
the Company into or with another corporation under circumstances in which the
Company is not the surviving corporation (other than circumstances involving a
mere change in the identity, form or place of organization of the Company);
(ii) the consummation of a sale of more than 50% of the Company’s outstanding
stock to persons who are not shareholders of the Company on the date of grant
of the Option other than pursuant to an initial public offering of the Company’s
Common Stock; or (iii) the liquidation or dissolution of the Company.

 

3.             Administration of the Plan.

 

This Plan will be
administered by the Board, which will have the right to delegate any and all of
its powers under this Plan to a committee of members of the Board comprised of
no fewer than three members (the “Committee”). If the Board appoints a
Committee to administer this Plan, in whole or in part, the Committee’s
determination will be subject to approval by the Board. To the extent of such
delegation, references in this Plan to the Board shall be deemed to refer to
the Committee. The Committee, shall report to the Board periodically concerning
its administration of the Plan.

 

The Board will have the
authority and discretion to adopt and revise such rules and regulations as it
deems necessary for the administration of this Plan and to determine,
consistent with the provisions of this Plan, the Employees or Non-Employee
Directors to be granted Options, the times at which Options will be granted,
the exercise price of the shares subject to each Option, the number of shares
subject to each Option, the vesting schedule of Options, the method of payment
for shares acquired upon the exercise of Options, the expiration dates of the
Options. In addition, the Board will have the authority, in connection with any
Option, granted or to be granted to any Employee or Non-Employee Director, to
eliminate, restrict, expand or otherwise modify, in such manner as the Board,
in its discretion, deems appropriate, the transfer restrictions set forth in
Section 8 of this Plan, provided that any modification of such rights are set
forth in a written agreement signed by the Company and such Employee or Non-Employee
Director. The Board’s actions, including any interpretation or construction of
any provisions of this Plan and any Option, shall be final, conclusive and
binding. No member of the Board shall be liable for any action or determination
made in good faith.

 

 

4.             Eligibility.

 

All current, full-time
Employees that the committee determines have been assigned by the Company a set
of responsibilities which are key to the continued successful operation of the
Company shall be eligible to receive Options.

All Non-Employee
Directors shall be eligible to receive Nonqualified Options.

 

5.             Shares of Stock Subject to the Plan.

 

The number of shares
which may be issued pursuant to this Plan shall not exceed 500,000 shares of
Common Stock, subject to a proportionate adjustment to account for any increase
or decrease in the number of issued shares of Common Stock of the Company
resulting from any stock split (whether by subdivision or consolidation of
shares) or any payment of a share dividend (but only on the Common Stock). Any
or all of such shares may be issued under Nonqualified or Qualified Options. Such
shares may be authorized and unissued shares or shares previously acquired by
the Company and held in its treasury. Any shares subject to an Option which
expires for any reason or is terminated unexercised as to such shares, and any
Option Shares which are repurchased by the Company, may again be subject to an
Option, under this Plan.

 

6.             Terms and Conditions of Options.

 

A. Option
Agreement. Each Option shall be evidenced by a written agreement
between the Company and the Optionee (an “Option Agreement”), which sets forth
(i) the number of shares subject to the Option; (ii) the exercise price,
vesting schedule and expiration date of the Option; (iii) the method of payment
on exercise of the Option; (iv) whether the Option is a Qualified Option or
Nonqualified Option; and (v) such additional provisions, not inconsistent with
this Plan, as the Board may prescribe.

 

B. Grant of
Options. No Option may be granted after the expiration of ten
(10) years from the date this Plan is adopted.

 

C. Exercise
of Options. Optionees may exercise at any time or from time to
time all or any portion of a vested Option. An Option shall be exercisable only
to the extent it is vested. Options will vest either immediately or
periodically over a period not exceeding ten (10) years as set forth in the
Option Agreement. Vesting of all or any portion of an Option may be accelerated
at the discretion of the Board.

 

To the extent that the
aggregate Fair Market Value of the Common Stock with respect to which options
qualifying as incentive stock options under Section 422 of the Code are
exercisable by the Optionee for the first time during any calendar year (under
all stock option plans of the Company, its Parents and Subsidiaries) exceeds
$100,000, such Options are not incentive stock options. For the purposes of
this paragraph, the Fair Market Value of the Common Stock shall be determined
as of the time the option with respect to such Common Stock is granted. This
paragraph shall be applied by taking options into account in the order in which
they were granted.

 

 

An Optionee shall
exercise an Option by delivering to the Company at its headquarters a written
notice signed by the Optionee that states the number of shares to be purchased
in cash accompanied by payment of the exercise price. If approved in advance by
the Board, payment of the exercise price may be in the form of Common Stock
having an aggregate Fair Market Value equal to the cash exercise price or may
be deferred in accordance with the Plan.

 

As soon as practicable
following payment of the exercise price, the Company will deliver to the
Optionee a certificate representing the Option Shares, provided that the
Optionee has made appropriate arrangements with the Company for any federal,
state or local taxes required to be withheld. An Optionee shall not have any of
the rights and privileges of a shareholder of the Company in respect of any of
the Option Shares until the Company has delivered the certificate.

 

D. Exercise
Price. The exercise price of each Qualified Option shall be at
least equal to the Fair Market Value of the Common Stock on the date the
Qualified Option is granted. In the case of a Qualified Option granted to a
person who owns, immediately after the grant of such Qualified Option, stock
possessing more than 10% of the total combined voting power of the Company, or
of its Parent or Subsidiary, the exercise price of the Qualified Option shall
be at least 110% of the Fair Market Value of the Common Stock on the date the
Qualified Option is granted.

 

The exercise price of
each Nonqualified Option shall be at least equal to 100% of the Fair Market
Value of the Common Stock on the date the Nonqualified Option is granted. In
the case of a Nonqualified Option granted to a person who owns, immediately
after the grant of such Nonqualified Option, stock possessing more than 10% of
the total combined voting power of the Company, or its Parent or Subsidiary,
the exercise price of the Nonqualified Option shall be at least 110% of the
Fair Market Value of the Common Stock on the date such Nonqualified Option is
granted.

 

The
exercise price of any Option shall not be less than the par value of the Common
Stock.

 

E. Expiration
of Options. Each Option shall expire on the date set forth in
the Option Agreement, provided that (i) each Option shall expire not later than
ten (10) years after the date it is granted, and (ii) each Qualified Option
granted to any person who owns stock possessing more than 10% of the total
combined voting power of the Company, or of its Parent or Subsidiary, shall
expire not later than five (5) years after the date it is granted. Notwithstanding
the foregoing, if an Optionee’s employment or service on the Board with the Company is terminated for any
reason before the expiration date set forth in the Option Agreement, the Option
granted under the Option Agreement shall terminate on the date the Optionee’s
employment or service on the Board is terminated; provided, however, that the
portion of the Option which is vested as of the date of such termination of
employment shall be exercisable for a period of sixty (60) days thereafter or,
if employment or service on the Board is terminated due to the Optionee’s death
or

 

 

disability, for a period ending no later than one (1) year following
the date of death or of the onset of such disability.

 

F. Non-Transferability
of Options. Options may not be transferred by the Optionee
otherwise than by will or the laws of descent and distribution, and each Option
shall be exercisable during the Optionee’s lifetime only by the Optionee. Upon
any attempt to transfer an Option or any interest therein contrary to the
provisions of this Plan, or to subject the Option or any interest therein to
execution, attachment or similar process, the Option shall immediately
terminate and become null and void.

 

G. Adjustment
Provisions. Subject to any required action by the shareholders
of the Company, the Board will make a proportionate adjustment in the number of
shares of Common Stock covered by each outstanding Option and the exercise
price per share to account for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a stock split (whether by
subdivision or consolidation of shares) or any payment of a share dividend (but
only on the Common Stock).

 

In the event of a change
in the Common Stock of the Company as presently constituted, which is limited
to a change of all of its authorized shares with par value into the same number
of shares with a different par value or without par value, the shares resulting
from any such change shall be deemed to be Common Stock within the meaning of
this Plan.

 

H. Terminating
Event. Notwithstanding the vesting schedule set forth in any
Option Agreement, the unvested portions of all Options shall vest, and such
Options shall be exercisable in full, immediately prior to the occurrence of a
Terminating Event. All Options shall terminate immediately following the
occurrence of a Terminating Event. The Company will provide each Optionee with
at least fifteen (15) days advance notice of the occurrence of a Terminating
Event.

 

I. Notice of
Disposition of Shares. The Optionee shall give written notice to
the Company of his intent to make any disposition of the shares acquired upon
exercise of a Nonqualified or Qualified Option if such disposition occurs
within two (2) years after the date the Nonqualified or Qualified Option was
granted or within one (1) year after the date the Nonqualified or Qualified
Option was exercised. The Optionee shall be required to make appropriate
arrangements with the Company for satisfaction of any federal, state or local
taxes the Company is required to withhold as a result of such disposition.

 

J. Repurchase
at Termination of Employment or Service on the Board. If a
shareholder terminates employment or service on the Board for any reason, the
Company for a period of sixty (60) days thereafter has the right to elect to
repurchase any or all of the stock acquired through the exercise of Options. Repurchase
will be at the most recent Fair Market Value at the time of termination.

 

K. Forfeiture
or Suspension of Options for Cause. If the President of the
Company or his or her designee reasonably believes an Optionee has committed an
act of

 

 

misconduct as described in this paragraph, the President may suspend
the Participant’s rights to exercise any option pending a determination by the
Board of Directors. If the Board of Directors determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of any
obligation owed to the Corporation, breach of fiduciary duty or deliberate
disregard of Company rules resulting in loss, damage or injury to the Company,
or if an Optionee makes an unauthorized disclosure of any trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any customer to breach a contract with the Company or
induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the optionee nor his or her estate shall be
entitled to exercise any Option whatsoever. In making such determination, the
Board of Directors shall act fairly and shall give the Optionee an opportunity
to appear and present evidence on his or her behalf at a hearing before the
Board of Directors.

 

7.             Valuation of Common Stock.

 

The
Fair Market Value of each share of Common Stock will be determined on an annual
basis by an appraiser designated by the Company’s Board of Directors. The
determination of such appraiser shall be conclusive and binding upon the
Company and the Optionee, and shall not be subject to review by any arbitral,
judicial, or other tribunal or authority.

 

8.             Transfer Restrictions.

 

A. General.
Without the prior written consent of the Company, which consent may be withheld
in its sole discretion, an Optionee may not sell, assign or otherwise transfer
any Option Shares, to any person or entity other than the Company, or, with the
consent of the Board of Directors, another shareholder of the Company or
another Optionee who is an Employee or Non-Employee Director [the sentence as-is is redundant and appears to be
contradictory, unless punctuation is changed]. With regard to any
Option Shares, which the Optionee proposes to sell, assign or otherwise
transfer to another shareholder of the Company or another Optionee who is an
Employee or Non-Employee Director (a “Permitted Transferee”), the Company shall
have a right of first refusal (the “Right of First Refusal”) to purchase such
shares in the manner set forth below:

 

(1)  Upon receiving an offer to purchase or
otherwise acquire any Option Shares, an Optionee shall require the Permitted
Transferee to submit a written offer with respect to such shares stating his name
and accompanied by a deposit in the form of a certified or cashier’s check in
an amount equal to not less than 20% of the proposed purchase price (a “Bona
Fide Offer”). The Optionee then shall transmit a copy of the Bona Fide Offer to
the Company. The Company shall have sixty (60) days following receipt of the
Bona Fide Offer in which to elect to purchase all, but not less than all, of
the shares referred to in the Bona Fide Offer at the price stated in the Bona
Fide Offer. In its discretion, the Company may either pay the entire purchase
price for the shares stated

 

 

in the Bona Fide Offer or the most recent Fair Market Value price. If
the Company fails to accept the offer for such shares against the proper
endorsement and delivery of the certificate(s) evidencing the shares within
such sixty (60) day period, the Right of First Refusal shall expire with
respect to that particular Bona Fide Offer, but shall remain in full force and
effect with respect to all material modifications of the Bona Fide Offer and
all future offers.

 

(2)  Any offered shares which are not purchased by
the Company as provided in (1) above may be sold to the Permitted Transferee
named in the Bona Fide Offer, but not at a lower price, or upon more favorable
terms to the Permitted Transferee, than the price and terms set forth in the
Bona Fide Offer. Title to the offered shares shall pass not later than ninety
(90) days after the expiration of the sixty (60) day period referred to in (1)
above or the Optionee will be required to reoffer the shares to the Company
prior to later sale. The Permitted Transferee shall take such shares subject to
the same rights and restrictions regarding transferability and repurchase as
would have applied to him had he acquired such shares upon exercise of an
Option granted to him under this Plan. If the Optionee desires to sell such
shares to the Permitted Transferee at a lower price, or upon terms more
favorable to the Permitted Transferee, than the price and terms stated in the
Bona Fide Offer, the Optionee shall, before he can sell to the Permitted
Transferee, again offer the shares to the Company in accordance with the
procedure set forth in this Section.

 

B. Transfer
Restrictions Imposed by the 1933 Act.

 

(1)  Notwithstanding any other provision of this
Plan or any Option Agreement, no transfer for value of any Option Shares, shall
be valid unless (i) there is an effective registration statement under the
Securities Act of 1933 (the “1933 Act”) covering the stock; (ii) the holder has
furnished an opinion of counsel satisfactory to the Company that such
registration is not required; or (iii) the holder has furnished a “no-action”
letter from the staff of the Securities and Exchange Commission satisfactory to
the Company that such registration is not required.

 

(2)  There shall be imprinted on the face of each
certificate for such shares a legend stating that the transferability of such
shares is restricted, and the following legend shall be imprinted on the back
of each such certificate:

 

“THE SHARES OF STOCK
REPRESENTED BY THIS CERTIFICATE (1) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR APPLICABLE STATE LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SUCH ACT OR LAWS OR AN
OPINION OF COUNSEL (WHICH MAY BE

 

 

COUNSEL TO THE COMPANY)
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR A “NO
ACTION” LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH
REGISTRATION IS NOT REQUIRED, AND (2) ARE SUBJECT TO, AND ARE TRANSFERABLE ONLY
UPON COMPLIANCE WITH, CERTAIN TRANSFER AND OTHER RESTRICTIONS CONTAINED IN AN
AGREEMENT BETWEEN STANLEY ASSOCIATES, INC. AND THE HOLDER OF THIS CERTIFICATE,
A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE COMPANY.”

 

(3)  Optionees may acquire stock only for their
own account and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the 1933 Act, and may dispose of
such stock only in a manner consistent with the provisions of this Section. The
Company may require Optionees to execute and be bound by an “Investment Letter”
representing such investment intent.

 

C. Settlement Process
if Company Repurchases Shares.

 

(1)  If the Company elects to repurchase Option
Shares under Section 6(J) or 8(A), settlement will occur within ninety (90)
days after the Company gives notice of its election to repurchase.

 

(2)  At settlement, an amount equal to at least
20% of the repurchase price will be paid.

 

(3)  The balance of the purchase price shall be
paid in 20 equal quarterly installments over the subsequent 5 years.

 

(4)  Interest will accrue and be paid each quarter.
The interest rate will be the prime rate as quoted by the Company’s primary
commercial bank as of the date of settlement.

 

(5)  The Company may accelerate payments at any
time.

 

9.             Lapse of Transfer Restrictions.

 

Notwithstanding anything
to the contrary in this Plan, the transfer restrictions set forth in Section
8(A) shall lapse under the earlier to occur of (i) the effective date of a
registration statement filed with the Securities and Exchange Commission under
the 1933 Act covering the Common Stock of the Company whether or not such
shares are covered, or (ii) the date on which any Common Stock of the Company
is registered under Section 12 of the Securities Exchange Act of 1934.

 

 

10.          Indemnification of the Board.

 

In addition to such other
rights as they may have as directors, the members of the Board (in their
capacity as such and also as members of the Committee) shall be indemnified by
the Company against the reasonable expenses (including attorneys’ fees)
incurred in connection with the defense of any action, suit or proceeding, and
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action or failure to act in connection with this Plan,
and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be finally
adjudged in such action, suit or proceeding that the Board member is liable for
willful misconduct or gross negligence in the performance of his duties or that
the Board member knowingly violated criminal law; provided that within sixty
(60) days after institution of any such action, suit, or proceeding (or within
thirty (30) days after service upon such member of legal process in such case,
if later) the Board member shall in writing offer the Company the opportunity,
at its own expense, to handle and defend the same.

 

11.          Termination and Amendment of the Plan.

 

Unless sooner terminated
as provided herein, this Plan shall remain in effect through December 13,
2005. The Board may terminate this Plan at any time or modify or amend it as it
deems advisable and may from time to time suspend, discontinue or abandon this
Plan, except that (i) the number of shares available under this Plan shall not
be increased (except as provided in Section 5) and the class of eligible
employees and non-employee directors shall not be modified without shareholder
approval, and (ii) no such action by the Board shall adversely affect any right
or obligation with respect to any grant previously made unless the written
consent of the affected Optionee is obtained.

 

12.          Miscellaneous.

 

The provisions of this
Plan shall be binding upon, and inure to the benefit of, all successors of any
Optionee including, without limitation, his estate and the executors,
administrators or trustees thereof, his heirs and legatees, and any receiver,
trustee in bankruptcy or representative of creditors of such Optionee

 

Nothing contained in this
Plan or in any Option Agreement shall confer upon any Employee the right to
continued employment or shall interfere in any way with the right to terminate
the employment of such Employee at any time, with or without cause.

 

Similarly, nothing
contained in this Plan or in any Option Agreement shall confer upon any
Director the right to continue service on the Board or shall interfere in any
way

 

 

with the right to terminate the service on the Board of such Director
at any time, with or without cause.

 

Except as expressly
provided in this Plan, Optionees shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class; the dissolution or liquidation of the Company; the merger
or consolidation of the Company with or into any other corporation; the sale or
other transfer of assets or stock of the Company; or any issue by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class.

 

The grant of an Option,
pursuant to this 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, or to merge or consolidate, or to dissolve
or liquidate, or to sell or transfer all or any part of its business or assets.

 

All Optionees, including
those who have exercised their Options, shall be furnished at least annually
financial statements and results of operations of the Company. Such information
shall be subject to any agreements regarding the confidentiality of proprietary
information between the Company and any Optionee; however, each Optionee shall
be permitted to remove and copy such information and review and discuss such
information with an attorney or other financial adviser for the legitimate
personal investment planning of such Optionee.

 

13.          Approval of Plan.

 

This Plan was adopted by
resolution of the Board on December 13, 1995 and approved by the shareholders
on December 13, 1995.Exhibit
10.2

 

STANLEY
ASSOCIATES, INC.

 

STOCKHOLDERS’
AGREEMENT

 

of AUGUST
27, 1996

 

As
amended, OCTOBER 1, 2000

 

 

STANLEY
ASSOCIATES, INC.

 

STOCKHOLDERS’
AGREEMENT

 

of AUGUST
27, 1996

 

As
amended, OCTOBER 1, 2000

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions

  	
  2

  
	
  2.

  	
  Scope of Agreement

  	
  4

  
	
  3.

  	
  Restrictions on Transfer

  	
  4

  
	
  4.

  	
  Right of First Refusal

  	
  5

  
	
  5.

  	
  Death or Permanent Disability of Stockholder

  	
  7

  
	
  6.

  	
  Voluntary Termination of Employment

  	
  7

  
	
  7.

  	
  Termination of Employment with Cause or Without
  Cause

  	
  8

  
	
  8.

  	
  Settlement

  	
  8

  
	
  19.

  	
  Corporate Action

  	
  9

  
	
  10.

  	
  Delivery of Stock and Documents

  	
  10

  
	
  11.

  	
  Stock Transfer Record

  	
  11

  
	
  12.

  	
  Endorsement on Stock Certificates

  	
  11

  
	
  13.

  	
  Agreement Binding Upon Transferees

  	
  11

  
	
  14.

  	
  Agreements by Corporation

  	
  12

  
	
  15.

  	
  Specific Performance

  	
  12

  
	
  16.

  	
  Arbitration

  	
  12

  
	
  17.

  	
  Invalid or Unenforceable Provisions

  	
  13

  
	
  18.

  	
  Notices

  	
  13

  
	
  19.

  	
  Remedy for Failure to Transfer Shares

  	
  13

  
	
  20.

  	
  Benefit and Burden

  	
  14

  
	
  21

  	
  Miscellaneous

  	
  14

  

 

i

 

STANLEY ASSOCIATES, INC.

 

STOCKHOLDERS’
AGREEMENT

 

of AUGUST
27, 1996

 

As
amended, OCTOBER 1, 2000

 

THIS STOCKHOLDERS’
AGREEMENT (this “Agreement”) is made and entered into this      
day of           , 2000 by
and between (i) STANLEY ASSOCIATES, INC., a District of Columbia
corporation (the “Corporation”), and (ii)                       ,
a stockholder of the Company (the “Stockholder”).

 

WHEREAS,
the Corporation has an authorized capital stock consisting of one million
(1,000,000) shares of common stock, with a par value of one cent ($.01) per
share (the “Stock”);

 

WHEREAS, the Stockholder
owns shares of the issued and outstanding Stock of the Corporation; and

 

WHEREAS, the parties
hereto desire to set forth in writing their understandings and agreements.

 

NOW, THEREFORE, in
consideration of the foregoing, of the mutual promises hereinafter set forth
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending legally to be
bound, hereby agree as follows:

 

 

1.             Definitions.
The following terms shall have the following meanings whenever used in this
Agreement:

 

A.            “Approved Charitable Organization” means
an organization approved by a majority vote of the Board of Directors acting in
its sole and absolute discretion which is one or more of the following:

 

(i)    A corporation, trust, or community chest,
fund, or foundation –

 

a. created or
organized in the United States or in any possession thereof, or under the law
of the United States, any State, the District of Columbia, or any possession of
the United States;

 

b. organized and
operated exclusively for religious, charitable, scientific, literary, or
educational purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the provision of
athletic facilities or equipment), or for the prevention of cruelty to children
or animals;

 

c. no part of the
net earnings of which inures to the benefit of any private shareholder or
individual; and

 

d. which is not
disqualified for tax exemption under section 501(c)(3) of the United States
Internal Revenue Code of 1986, as amended.

 

(ii)   A post or organization of war veterans,
or an auxiliary unit or society of, or trust or foundation for, any such post
or organization –

 

a. organized in
the United States or any of its possessions, and

 

b. no part of the
net earnings of which inures to the benefit of any private shareholder or
individual.

 

2

 

(iii)  A domestic fraternal society, order, or
association, operating under the lodge system, but only if the Stock or
proceeds thereof is to be used exclusively for religious, charitable,
scientific, literary, or educational purposes, or for the prevention of cruelty
to children or animals.

 

B.            “Articles
of Incorporation” shall mean the Articles of Incorporation dated May 17,
1968, the Articles of Amendment to the Articles of Incorporation of the
Corporation dated October 16, 1991, and any further amendments or
restatements thereof.

 

C.            “Bona
Fide Offer” shall mean an offer in writing, signed by an outside offeror (who
must be a person and/or entity other than the Corporation, a Stockholder, an
employee pension benefit plan maintained by the Corporation, or any other
stockholder of the Corporation) who must be financially capable of carrying out
the terms of such Bona Fide Offer, in a form legally enforceable against such
outside offeror.

 

D.            “Fair
Market Value” shall mean the fair market value of the shares of Stock as
determined in accordance with the most recent independent appraisal obtained
for purposes of the valuation of the Trust Fund under the Stanley Associates,
Inc. Employee Stock Ownership Plan.

 

E.             “Permanent
Disability” shall mean disability caused by accident, illness or mental
disorder resulting in the inability, for a period of twelve (12) consecutive
months, of a Stockholder to substantially and gainfully perform the duties as
an employee of the Corporation or any affiliate thereof which he was performing
prior to such disability. For purposes of this Agreement, a Stockholder shall
be deemed to be “Permanently Disabled” upon the expiration of such twelve (12)
month period; provided, however, in accordance with the provisions of this
§ D, if it is determined at any time prior to the last day of such twelve
(12) month period that such Stockholder will never again be able to perform
such duties as aforesaid, Permanent Disability shall be deemed to occur as of
such earlier date. For purposes of this

 

3

 

definition, all
determinations as to whether and when a period of Permanent Disability has
begun or ended shall be made by the Board of Directors of the Corporation.

 

F.             “Prime
Rate” shall mean the rate of interest reported as the prime rate from time to
time in The Wall Street Journal newspaper (or its successor in interest)
in its “Money Rates” column; provided, however, if more than one rate or a
range of rates are reported as the prime rate, then the higher or highest of
such rates shall be considered the Prime Rate.

 

G.            “Public
Offering” shall mean the consummation of a firm commitment or the completion of
a best efforts underwritten public offering of, as the case may be, Stock, or
another class of capital stock registered under the Securities Act of 1933, as
amended. For all purposes hereof, it is understood and agreed by the parties
hereto that any participation by a Stockholder in a Public Offering shall be
subject to any applicable Federal or state securities law, rule, regulation or
order.

 

H.            “Registered
Notice” shall mean notice delivered personally or sent by registered or
certified mail, return receipt requested, and first-class postage prepaid; and,
if such Registered Notice is sent with respect to a Bona Fide Offer, such Registered
Notice shall contain a true and complete copy of the Bona Fide Offer, setting
forth the price and all terms and conditions, with the name(s), address(es)
(both home and office) and business(es) or other occupation(s) of the outside
offeror or offerors.

 

I.              “Settlement”
shall mean the closing on a purchase or acquisition by the Corporation of
shares of Stock of a Stockholder pursuant to Article 8 hereof.

 

J.             “Termination
of Employment with Cause” shall mean a termination of employment of the Stockholder
by the Corporation or any affiliate thereof by reason of an act of misconduct
by such Stockholder which (1) is material, (2) is willful and in bad faith, and
(3) results in material damage or harm

 

4

 

to the Corporation or
such affiliate, or materially adversely affects the present or future financial
condition of the Corporation or such affiliate.

 

K.            “Termination
of Employment without Cause” shall mean a termination of employment of the
Stockholder by the Corporation or any affiliate thereof for any reason other
than death, Permanent Disability, Voluntary Termination of Employment or
Termination of Employment for Cause.

 

2.             Scope
of Agreement. This Agreement shall apply to all transfers of shares of Stock,
now owned or hereafter acquired by the Stockholder, whether voluntary,
involuntary or by operation of law, resulting from death, bankruptcy,
insolvency or otherwise.

 

3.             Restrictions
on Transfer.

 

A.            Except
as otherwise provided under this Agreement, no Stockholder shall sell,
exchange, deliver or assign, pledge, mortgage, hypothecate or otherwise
encumber, transfer or permit to be transferred any or all of the shares of
Stock now owned or hereafter acquired by such Stockholder, whether voluntarily,
involuntarily or by operation of law, including, without limitation, the laws
of bankruptcy, insolvency, intestacy, descent and distribution, or succession,
except as required to do so under applicable law.

 

B.            Notwithstanding § 3A hereof, the
Stockholder may sell, grant, transfer or deliver any shares of Stock to any one
or more employees of the Corporation, an employee pension benefit plan
maintained by the Corporation, the Corporation or an Approved Charitable
Organization, provided that the approval of the Board of Directors of the
Corporation of such sale, grant, transfer, or delivery is obtained by the
affirmative vote of the members of the Board of Directors. The Stock
transferred to any one or more employees of the Corporation or to an Approved
Charitable Organization shall continue to be subject to the

 

5

 

provisions of this Agreement; provided that, in the
case of a transfer to an Approved Charitable Organization, such reference
herein to the death, Permanent Disability or termination of employment of the
Stockholder, including such references in Articles 5, 6 and 7, shall be deemed
continued references to the Stockholder who transferred the Stock to each
Approved Charitable Organization.

 

C.            In
the event of a Stockholder’s death, any Stock then held of record by a
Stockholder may be transferred to such Stockholder’s executor, administrator,
personal or legal representative, legatee, heir, or distributees of his estate,
provided, that, as a condition of any such transfer, such prospective
transferee shall provide to the Corporation, at its request, sufficient
evidence of his or its legal right and authority to have any of the Stock so
transferred. The Stock so transferred shall be subject to the provisions of
this Agreement, including §5.

 

D.            Notwithstanding
§3A hereof, the provisions of this Article 3 shall terminate automatically and
be of no further force and effect upon a Public Offering of the Stock.

 

4.             Right
of First Refusal.

 

A.            In
the event that a Stockholder shall receive a Bona Fide Offer to purchase
(whether outright or pursuant to a merger, consolidation, reorganization, or
similar transaction) all (but not less than all) of such Stockholder’s shares
of Stock, and in the further event that such Stockholder (hereinafter referred
to for all purposes of this Article 4 as the “Offering Stockholder”) is willing
to accept such Bona Fide Offer, he shall promptly send Registered Notice to the
Corporation, offering to sell his shares of Stock to the Corporation at the
price provided in e4C hereof and upon the same terms and conditions as are
contained in the Bona Fide Offer. The Corporation shall then have such rights
and privileges for the prescribed time periods as are set forth in § 4C
hereof.

 

6

 

B.            For
purposes of this Article 4, the purchase price for the shares of Stock of the
Offering Stockholder shall be the lower of (1) the Fair Market Value as
determined pursuant to the last valuation of the Corporation’s Stock preceding
the receipt of such Bona Fide Offer or (2) the price provided under such
Bona Fide Offer.

 

C.            Whenever,
under this Agreement, the Offering Stockholder has received a Bona Fide Offer
to purchase all of his shares of Stock, the following procedures shall be
complied with:

 

(1)           For a period of sixty
(60) days from its receipt of the Registered Notice, the Corporation shall have
the right, at its sole option, to purchase all or any part of the shares of
Stock so offered at the purchase price provided in § 4B hereof and upon
such other terms and conditions as are contained in the Bona Fide Offer. If the
Corporation shall not elect to purchase all of the shares of Stock so offered
within such sixty (60)-day period for any reason whatsoever, then each employee
pension benefit plan maintained by the Corporation that is authorized to
purchase and hold Stock shall have the right, at its sole option, for a period
of thirty (30) days after the expiration of such sixty (60)-day period, to
purchase pro rata, in proportion to their ownership of shares of Stock,
or in such other proportion as they shall otherwise agree upon, all (but not
less than all) of the shares of Stock offered as aforesaid to the Corporation
and not elected to be purchased by the Corporation. The Corporation and the
employee pension benefit plans shall exercise such options to purchase by
giving Registered Notice to the Offering Stockholder, within the prescribed
time periods, of such intention to exercise.

 

(2)           If the Corporation and
the employee pension benefit plan shall not, individually or together, purchase
within the prescribed time periods all of the shares of Stock covered by the
Bona Fide Offer, the Offering Stockholder shall have the right to accept the
Bona Fide Offer in whole

 

7

 

(but not in part) and to sell such shares of Stock, subject to the
provisions and restrictions of this Agreement, but only in strict accordance
with all of the provisions of the Bona Fide Offer.

 

(3)           For all purposes of
this Article 4, such sale by the Offering Stockholder must be fully consummated
within one hundred twenty (120) days after the date of mailing of the
Registered Notice by the Offering Stockholder, and, in the event that such sale
is not fully consummated within such period or the terms of the Bona Fide Offer
change, the provisions of this Article 4 must again be complied with by the
Offering Stockholder.

 

D.            The
provisions of this Article 4 shall terminate automatically and be of no further
force and effect upon a Public Offering of the Stock.

 

5.             Death
or Permanent Disability of a Stockholder.

 

A.            In
the case of the death or Permanent Disability of the Stockholder, such
Stockholder shall have the obligation to sell to the Corporation, and the
Corporation shall have the obligation to purchase, all of the shares of Stock
held by such Stockholder, in accordance with this Article 5 and Articles 8 and
9 hereof.

 

B.            The
price for the shares of Stock to be acquired or purchased under this Article 5
shall be equal to the Fair Market Value of such shares.

 

6.             Voluntary
Termination of Employment.

 

A.            In
the event of a Voluntary Termination of Employment of the Stockholder, the
Corporation may elect to purchase and, if the Corporation so elects, the
Stockholder shall have the obligation to sell to the Corporation, all of the
shares of Stock held by such Stockholder, in accordance with the provisions of
this Article 6 and Articles 8 and 9 hereof.

 

8

 

B.            The
price for the shares of Stock of the Stockholder to be purchased pursuant to
this Article 6 shall be equal to the Fair Market Value of such shares of Stock.

 

C.            A
Stockholder shall give at least ten (10) days prior written notice of Voluntary
Termination of Employment to the Corporation. The Corporation shall give
written notice of its election to purchase (or its decision not to purchase)
such Stock within sixty (60) days thereafter.

 

7.             Termination
of Employment with Cause or Without Cause.

 

A.            In
the event of a Termination of Employment with Cause or Without Cause, the
Stockholder shall sell to the Corporation, and the Corporation shall purchase,
all of the shares of Stock held by such Stockholder, in accordance with the
provisions of this Article 7 and Articles 8 and 9 hereof.

 

B.            The
price for the shares of Stock of the Stockholder to be purchased pursuant to
this Article 7 upon Termination Without Cause shall be equal to the Fair Market
Value of such shares. The price for the shares of Stock of the Stockholder to
be purchased pursuant to this Article 7 upon Termination With Cause shall
be the lesser of  (1) the federal income
tax basis of the Stockholder for such shares or (2) the Fair Market Value of
such shares.

 

8.             Settlement.

 

A.            The
Settlement on a purchase or acquisition of Stock by the Corporation hereunder
shall be no later than ninety (90) days after (a) the date of a
Stockholder’s death or Permanent Disability pursuant to Article 5 hereof,
(b) the date of the Corporation’s written election to purchase the
Stockholder’s Stock upon Voluntary Termination of Employment under Article 6
hereof, or (c) the date of the Stockholder’s Termination of Employment
without Cause or Termination of Employment with Cause, as the case may be,
under Article 6 or Article 7 hereof.

 

9

 

B.            The
Settlement shall be held at the principal office of the Corporation or at such
other place which the Corporation and the Stockholder shall otherwise agree
upon. At the Settlement, the certificate or certificates representing the
shares of Stock so purchased shall be delivered to the Corporation. Furthermore,
at the Settlement, provided there is a purchase of all of his shares of Stock,
such Stockholder shall, if applicable, deliver a written resignation as a
director and/or officer of the Corporation and/or as a trustee under any
employee benefit trust then maintained by the Corporation.

 

C.            Payment
for the shares of Stock shall be as follows:

 

(1)           If such purchase price
is less than or equal to Two Thousand Dollars ($2,000), then there shall be a
cash payment equal to the entire price.

 

(2)           The balance, if any,
shall be paid to the Stockholder by the issuance of a promissory note, as
described in § 8D hereof.

 

D.            Except
as otherwise provided in this § 8(D), a promissory note issued by the
Corporation to the Stockholder pursuant to this Article 8 hereof shall provide
for a term of five (5) years and provide for the payment of principal in twenty
(20) equal quarterly installments provided, however, in the case of a
Termination of Employment with Cause, such promissory note shall provide for a
term of ten (10) years and provide for payment of principal in forty (40) equal
quarterly installments. Interest shall accrue on the unpaid balance thereof and
shall be payable simultaneously with payments of principal at an annual rate
equal to the Prime Rate as of the date of Settlement and with such rate of
interest to be adjusted on each anniversary of the Settlement. The first of
such installments of principal and interest shall be due and payable three (3)
months after the Settlement. The Corporation may prepay the unpaid principal
balance and any accrued and unpaid interest at any time without penalty.

 

10

 

9.             Corporate
Action.

 

A.            In
the event that the Corporation is obligated to purchase or acquire shares of
Stock hereunder, and in the further event that, under the applicable laws of
the jurisdiction of incorporation of the Corporation, the Corporation is
legally prevented from purchasing or acquiring such shares of Stock, the
Corporation shall promptly take (or cause to be taken) such measures (whether
it be an amendment of the Articles of Incorporation or Bylaws of the
Corporation, a reduction of its capital, a reappraisal of its assets and/or any
other corporate action) as are necessary or appropriate to enable the
Corporation to purchase or acquire such shares of Stock hereunder.

 

B.            In
the event that the measures described in e9A hereof prove ineffective and that,
despite such measures, the Corporation is legally prevented under the laws of
such jurisdiction of incorporation or for any other reason whatsoever from
purchasing any of the shares of Stock which the Corporation has exercised its right
of first refusal under Article 4 hereof or is otherwise obligated to purchase
or acquire shares of Stock hereunder, the other Shareholders of the Corporation
shall have the option (but shall not have the obligation) to purchase pro
rata, in proportion to their ownership of shares of Stock, or in such other
proportion as they shall otherwise agree upon, that part (even to the extent of
all) of the shares of Stock which the Corporation is legally prevented from
purchasing or acquiring hereunder, and if such option is so exercised, all
references herein to the Corporation with respect to such purchase or
acquisition shall be deemed to be references to the Corporation and/or to such
other Stockholders, where applicable. In the event that none of the other stockholders
exercises the aforesaid option to purchase, or only a portion of such
Stockholder’s shares of Stock are purchased pursuant to such option, the
Corporation shall purchase or acquire such shares or the balance of such
shares, as the case may be, as

 

11

 

soon as practicable after such time as it is no longer legally
prevented from making such purchase or acquisition.

 

10.           Delivery
of Stock and Documents. Upon the closing of any purchase of any shares of
Stock pursuant to this Agreement, the seller shall deliver to the purchaser the
following:  the certificate or
certificates representing the shares of Stock being sold, duly endorsed for
transfer, and such assignments, certificates of authority, consents to
transfer, instruments and evidences of title of the seller and of the seller’s
compliance with this Agreement as may be reasonably required by the purchaser
(or by counsel for the purchaser).

 

11.           Stock
Transfer Record. The Corporation shall keep a stock transfer book in which
shall be recorded, inter alia, the name and address of each Stockholder.
No transfer of any shares of Stock shall be effective or valid unless and until
recorded in such stock transfer book. The Corporation agrees not to record any
transfer of shares of Stock in such stock transfer book unless the transfer is
in strict compliance with all provisions of this Agreement. Each Stockholder
agrees that, in the event he desires to make a transfer within the provisions
hereof, he shall furnish to the Corporation such evidence of his compliance
with this Agreement as may be required by the Board of Directors of, or counsel
for, the Corporation.

 

12.           Endorsement
on Stock Certificates. Each certificate representing shares of Stock of the
Corporation now or hereafter held by a Stockholder shall bear any legend or
legends required by applicable securities laws and, in addition thereto, shall
bear a statement in substantially the following form:

 

“The voluntary or
involuntary encumbering, transfer or other disposition (including, without
limitation, any disposition pursuant to the laws of bankruptcy, intestacy,
descent and distribution, or succession) of the shares of Stock evidenced by
the within Certificate is restricted under the

 

12

 

terms of an Agreement,
dated August 27, 1996 and as amended from time to time, by and among the
Corporation and its stockholders, a copy of which Agreement is on file at the
principal office of the Corporation. Upon written request of the registered
holder of this Certificate, the Corporation shall furnish, without charge to
such holder, a copy of such Agreement.”

 

13.           Agreement
Binding Upon Transferees. In the event that, at any time or from time to
time, any shares of Stock are sold, bequeathed or otherwise transferred to any
party pursuant to the provisions hereunder, the transferee shall take such
shares of Stock pursuant to all provisions, conditions and covenants of this
Agreement, and, as a condition precedent to the transfer of such shares of
Stock, the transferee shall agree (for and on behalf of himself or itself, his
or its legal representatives and his or its transferees and assigns) in writing
to be bound by all provisions of this Agreement as a party hereto and in the
capacity of a Stockholder. In the event that there shall be any transfer to any
person or entity pursuant to any provision of this Agreement and in compliance
with the provisions of this Article 13, all references herein to a Stockholder
shall thereafter be deemed to include such transferee.

 

14.           Agreements
by Corporation. The Corporation agrees for and on behalf of itself and its
successors and assigns that:

 

A.            It
hereby consents to this Agreement.

 

B.            It
shall not transfer or reissue any Stock in violation of the provisions of this
Agreement.

 

C.            All
certificates representing shares of Stock issued by the Corporation during the
term of this Agreement shall bear an endorsement in substantially the form
specified in Article 12 hereof.

 

15.           Specific
Performance. The parties hereto agree that the shares of Stock of the
Corporation held hereunder are unique, that failure to perform the obligations
provided by this Agreement

 

13

 

will result in irreparable damage, and that specific performance of
these obligations may be obtained by suit in equity.

 

16.           Arbitration.
Any controversy, claim or dispute arising out of or relating to this Agreement
or breach thereof which cannot be settled between the parties hereto shall,
upon the request of either party involved, be submitted to and finally
determined by arbitration in accordance with the rules of the American
Arbitration Association then applicable in the District of Columbia. The
decision made pursuant thereto shall be conclusive and binding on all parties
involved and judgment or injunction based upon such decision may be entered in
any court having jurisdiction thereof.

 

17.           Invalid
or Unenforceable Provisions. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.

 

18.           Notices.
Any and all notices or other communications provided for herein shall be given
in writing and delivered personally or sent by registered or certified mail,
return receipt requested, with first-class postage prepaid; and such notices
shall be addressed:  (a) if to the
Corporation, to the principal office of the Corporation; (b) if to a
Stockholder, to the address as reflected in the stock records of the
Corporation, unless notice of a change of address is furnished to the other
parties in the manner provided in this Article 18. Any notice which is required
to be made within a stated period of time shall be considered timely if mailed
before midnight of the last day of such period.

 

19.           Remedy
for Failure to Transfer Shares. In the event that a Stockholder shall be
required to sell his shares of Stock pursuant to any provision hereof, and such
Stockholder is unable to, or for any reason does not, deliver the certificate
or certificates evidencing such shares to the person who, or entity

 

14

 

which, is (or desires) to purchase or acquire such shares, in
accordance with the applicable provisions of this Agreement, the purchaser or
acquirer of such shares may deposit the purchase price for such shares (as set
forth under the applicable provisions of this Agreement) with any bank doing
business within fifty (50) miles of the Corporation’s principal office, or with
the Corporation’s certified public accountant, as agent or trustee, or in
escrow, for such Stockholder, to be held by such bank or accountant until withdrawn
by such Stockholder. Upon such deposit by the purchaser or acquirer of such
shares, and upon notice to the Stockholder who was required to sell, (a) the
shares of Stock of such Stockholder to be sold or acquired pursuant to the
applicable provisions of this Agreement shall at such time be deemed to have
been sold, assigned, transferred and conveyed to such purchaser or acquirer,
(b) such Stockholder shall have no further rights thereto, and (c) the
Corporation shall record such transfer in its stock transfer book.

 

20.           Benefit
and Burden. This Agreement shall inure to the benefit of, and shall be
binding upon, (a) the Corporation and its respective successors and assigns and
(b) the Stockholders and their respective legatees, distributees, estates, executors,
administrators, and personal and legal representatives.

 

21.           Miscellaneous.

 

A.            The
use of either gender herein shall be deemed to be or include the other genders
and the use of the singular herein shall be deemed to be or include the plural
and vice versa, wherever appropriate.

 

B.            Any
change, modification or waiver of any provision of this Agreement relating to a
repurchase of the shares of Stock of a Stockholder by the Corporation hereunder
or an exchange of such shares shall not be valid unless the same is in writing
and signed by all of the parties hereto.

 

15

 

C.            The
failure of any party at any time to insist upon, or any delay by any party at
any time to insist upon, strict performance of any condition, promise,
agreement or understanding set forth herein shall not be construed as a waiver
or relinquishment of the right to insist upon strict performance of the same
condition, promise, agreement or understanding at a future time.

 

D.            This
Agreement sets forth all of the promises, agreements, conditions,
understandings, covenants, warranties and representations among the parties
hereto with respect to the shares of Stock held hereunder, and there are no
promises, other than as set forth herein. Any and all prior agreements with
respect to such shares of Stock are hereby revoked. This Agreement is, and is
intended by the parties to be, an integration of any and all prior agreements
or understandings, oral or written, with respect to such shares of Stock. This
Agreement may be terminated by a written instrument executed by the parties
hereto.

 

E.             This
Agreement shall be construed and enforced in accordance with the laws of the
District of Columbia, without regard to its otherwise applicable conflict of laws
principles.

 

F.             The
headings and other captions in this Agreement are for convenience of reference
only and shall not be used in interpreting, construing or enforcing any of the
provisions of this Agreement.

 

16

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.

 

 

	
   

  	
  CORPORATION:

  
	
   

  	
   

  
	
  ATTEST:

  	
  STANLEY ASSOCIATES, INC.,

  
	
   

  	
  a District of Columbia

  
	
   

  	
  corporation

  
	
   

  
	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
  Secretary

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  STOCKHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

17

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