Document:

exv10w3

 

Exhibit 10.3

Master
Revolving Note
Eurodollar Rate-Maturity Date-Committed (Business and Commercial Loans Only)

	 	 	 	 	 	 	 
	 
	AMOUNT	 	NOTE DATE	 	MATURITY DATE	 	TAX IDENTIFICATION NUMBER
	$9,000,000.00

	 	September 30, 2006
	 	September 30, 2008
	 	75-0724417
	 

On the Maturity Date, as stated above, for value received, the undersigned promise(s) to pay to the
order of Comerica Bank (“Bank”), at any office of the Bank in the State of Texas, Nine Million
Dollars (U.S.) (or that portion of it advanced by the Bank and not repaid as later provided) with
interest until maturity, whether by acceleration or otherwise, or until the occurrence of an Event
of Default (as defined in that certain Credit Agreement dated as of October 30, 2003, between the
undersigned and Bank (the “Credit Agreement”) and used with the same meaning herein), at a per
annum rate equal to the lesser of (a) the Maximum Rate, as later defined, or (b) the Stated Rate,
as later defined, and after that at a rate equal to the rate of interest otherwise prevailing under
this Note plus three percent (3%) per annum (but in no event in excess of the Maximum Rate). If on
any day the Stated Rate shall exceed the Maximum Rate for that day, the rate of interest applicable
to this Note shall be fixed at the Maximum Rate on that day and on each day thereafter until the
total amount of interest accrued on the unpaid principal balance of this Note equals the total
amount of interest which would have accrued if there had been no Maximum Rate. Interest rate
changes will be effective for interest computation purposes as and when the Maximum Rate or the
Stated Rate, as applicable, changes. Subject to the limitations hereinbelow set forth, interest
shall be calculated on the basis of a 360-day year for actual number of days the principal is
outstanding. Accrued interest on this Note shall be payable on the first Eurodollar Business Day,
as later defined, of each calendar month, commencing with the first Eurodollar Business Day of the
calendar month following the date of this Note and with respect to interest accrued on any
Eurodollar Balance, as later defined, on the last day of the applicable Eurodollar Interest Period,
as later defined, until the Maturity Date (set forth above) when all amounts outstanding under this
Note shall be due and payable in full. If the frequency of interest payments is not otherwise
specified, accrued interest on this Note shall be payable monthly on the first day of each month.
If any payment of principal or interest under this Note shall be payable on a day other than a day
on which the Bank is open for business, this payment shall be extended to the next succeeding
business day and interest shall be payable at the rate specified in this Note during this
extension. A late payment charge equal to a reasonable amount not to exceed five percent (5%) of
each late payment may be charged on any payment not received by the Bank within ten (10) calendar
days after the payment due date, but acceptance of payment of this charge shall not waive any Event
of Default under this Note.

Subject to the provisions hereof, the undersigned shall have the option (an “Interest Option”)
exercisable from time to time to designate a portion of the unpaid principal balance of this Note
to bear interest at the Prime Rate (such portion being herein referred to as the “Prime Rate
Balance”) and to designate one or more portions of the unpaid principal balance of this Note to
bear interest at a Eurodollar Rate (each such portion being herein referred to as a “Eurodollar
Balance”).

The term “Maximum Rate” as used herein, shall mean at the particular time in question the maximum
nonusurious rate of interest which, under applicable law, may then be charged on this Note. If
such maximum rate of interest changes after the date hereof, the Maximum Rate shall be
automatically increased or decreased, as the case may be, without notice to the undersigned from
time to time as of the effective date of each change in such maximum rate. For purposes of
determining the Maximum Rate under the law of the State of Texas, the applicable interest rate
ceiling shall be the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas
Finance Code, as amended.

The term “Stated Rate,” as used in this Note, shall mean (a) with respect to the Prime Rate Balance
outstanding from time to time, a fluctuating per annum rate of interest equal to the Prime Rate
minus the Applicable Margin and (b) with respect to each Eurodollar Balance, a per annum
rate of interest equal to the Eurodollar Rate for the Eurodollar Interest Period then in effect
with respect to such Eurodollar Balance plus the Applicable Margin.

The term “Prime Rate,” as used herein, shall mean that annual rate of interest which is equal to
the greater of the annual rate of interest designated by the Bank as its Prime Rate which is
changed by the Bank from time to time or a variable per annum rate of interest determined from day
to day which equals the sum of 1% plus the average per annum rate of interest on overnight Federal
funds transactions with members of Federal Reserve System arranged by Federal funds brokers
(“Overnight Transactions”) transacted on the immediately preceding Business Day, as published by
the Federal Reserve Bank of New York, or, if such interest rate is not so published for any
Business Day, the average of the per annum interest rate quotations for Overnight Transactions
received by the Bank (or, at its option, the Reference Bank) for such Business Day from 3 Federal
funds brokers of recognized standing selected by the Bank. The Bank’s Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged by the Bank (or,
at its option, the Reference Bank) to any of its customers. The Bank may make commercial loans at
rates of interest at, above or below its Prime Rate.

The term “Eurodollar Rate”, as used herein, shall mean, with respect to the applicable Eurodollar
Interest Period and applicable Eurodollar Balance (as later defined), the quotient of the following
(rounded upwards, if necessary, to the nearest 1/16 of 1%): (a) the interest rate determined by the
Bank (which determination shall be conclusive) to be the per annum interest rate at which deposits
in immediately available funds in U.S. dollars are offered to the Bank (or, if elected by the Bank,
by Bank’s designated eurodollar lending office) at such time as the Bank elects on the first day of
such Eurodollar Interest Period, to prime banks in the interbank eurodollar market selected by Bank
(or, if applicable, by Bank’s designated eurodollar lending office) for delivery on the first day
of such Eurodollar Interest Period in an amount equal to the principal amount of the corresponding
Eurodollar Balance for a period equal to the length of such Eurodollar Interest Period; divided by
(b) a percentage (expressed as a decimal) equal to 1.00 minus the maximum rate during such interest
period at which Bank (or, if applicable, Bank’s designated eurodollar lending office) is required to
maintain reserves on “Eurocurrency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of
the Federal Reserve System or, if such regulation or designation is modified, and as

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long as Bank (or, if applicable, Bank’s designated eurodollar lending office) is required to maintain reserves
against a category of liabilities which includes eurodollar deposits or includes a category of
assets which includes eurodollar loans, the rate at which such reserves are required to be
maintained on such category.

The term “Eurodollar Interest Period”, as used herein, shall mean, with respect to the applicable
Eurodollar Balance, a period commencing on the date (which must be a Eurodollar Business Day) upon
which, pursuant to an Interest Notice, as later defined, the principal amount of such Eurodollar
Balance begins to accrue interest at the applicable Eurodollar Rate (or, in the case of a rollover
to a successive Eurodollar Interest Period, the last day of the immediately preceding Eurodollar
Interest Period) and ending 30, 60, 90 or 180 days after the commencement date (as designated in
the Interest Notice); provided, that: (i) any Eurodollar Interest Period which would otherwise end
on a day which is not a Eurodollar Business Day shall be extended to the next succeeding Eurodollar
Business Day (unless such Eurodollar Business Day falls in another calendar month, in which case,
such Eurodollar Interest Period shall end on the next preceding Eurodollar Business Day); and (ii)
any Eurodollar Interest Period which begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Eurodollar Interest Period shall end on
the last Eurodollar Business Day of such last calendar month; and (iii) no Eurodollar Interest
Period shall extend beyond the Maturity Date.

The term “Eurodollar Business Day,” as used herein, shall mean a Business Day on which dealings in
U.S. dollars are carried out in the interbank eurodollar market selected by Bank (or, if
applicable, Bank’s designated eurodollar lending office).

The term “Applicable Margin,” as used herein, shall be determined in accordance with the following
schedule based on the Debt to Tangible Net Worth Ratio of the undersigned, determined in accordance
with the Credit Agreement:

	 	 	 	 	 	 	 	 	 
	Debt to Tangible Net Worth Ratio	 	Prime Rate Balance	 	Eurodollar Balance
	 
	Equal to or greater than 1.5:1
	 	 	0.00	%	 	 	2.50	%
	 
	Less than 1.5:1 and greater than 1:1
	 	 	0.25	%	 	 	2.25	%
	 
	Less than or equal to 1:1
	 	 	0.50	%	 	 	2.00	%

Any decrease in Stated Rate due to a change in the Applicable Margin shall take effect five (5)
Business Days after the undersigned has submitted a Compliance Certificate and Financial Statements
in accordance with Section 4.3 of the Credit Agreement to Bank demonstrating a Debt to Worth Ratio
which would cause such decrease; provided, no reduction in the Applicable Margin shall take effect
until Borrower shall have maintained a certain Debt to Worth Ratio giving rise to such reduction
for a consecutive three-month period. Any increase in the Stated Rate resulting from an increase
in the Applicable Margin due to a change in the Debt to Worth Ratio shall take effect immediately
upon the Bank’s receipt of a Compliance Certificate or Financial Statements (as defined in the
Credit Agreement) demonstrating a Debt to Worth Ratio which would cause such increase, or in the
event the Bank does not timely receive a Compliance Certificate and all Financial Statements as
required by the Credit Agreement or any other Loan Document, as defined in the Credit Agreement,
then the Applicable Margin shall become 0.00% for the Prime Rate Balance and 2.50% for all
Eurodollar Balances on the earliest date on which delivery the Compliance Certificate and/or any
Financial Statement was due.

The term “Business Day” as used herein, shall mean any day other than a Saturday, Sunday or
holiday, on which the Bank and the Reference Bank (and, if applicable, the Reference Bank’s
designated eurodollar lending office) are open to carry on all or substantially all of their normal
commercial lending business in Dallas, Texas.

The Interest Option shall be exercisable by the undersigned subject to the other limitations in
this Note on the undersigned’s option to designate a portion of the unpaid principal balance hereof
as a Eurodollar Balance and only in the manner provided below:

     (i) Before 12:00 noon at least 3 Business Days prior to the date the undersigned has requested
the Bank to make an advance upon this Note, the undersigned shall have given the Bank written
notice (any such notice, an “Interest Notice”) in form and content satisfactory to Bank specifying
the initial Interest Option(s) and the respective initial amounts of the Prime Rate Balance and
Eurodollar Balance designated by the undersigned for each advance. If the required Interest Notice
shall not have been timely received by the Bank or fails to designate all or any portion of the
unpaid principal amount of the advance as either a Prime Rate Balance or a Eurodollar Balance in
accordance with the terms and provisions of this Note, the undersigned shall be deemed conclusively
to have designated such amounts to be a Prime Rate Balance and to have given the Bank notice of
such designation.

     (ii) At least three (3) Business Days prior to the termination of any Eurodollar Interest
Period for a Eurodollar Balance, the undersigned shall give the Bank an Interest Notice specifying
the Interest Option which is to be applicable to such Eurodollar Balance upon the expiration of
such Eurodollar Interest Period. If the required Interest Notice shall not have been timely
received by the Bank the undersigned shall be deemed conclusively to have designated such amount as
a Prime Rate Balance immediately upon the expiration of such Eurodollar Interest Period and to have
given the Bank notice of such designation.

     (iii) The undersigned shall have the right, exercisable on any Business Day subject to the
terms of this Note, to convert an eligible portion of the Prime Rate Balance to a Eurodollar
Balance by giving the Bank an Interest Notice of such designation at least three (3) Eurodollar
Business Days prior to the effective date of such exercise. Additionally, upon termination of any
Eurodollar Interest Period, the

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undersigned shall have the right, on any Business Day, to convert all or a portion of such principal amount
from the Eurodollar Balance to a Prime Rate Balance by giving Bank an Interest Notice of such selection at least
three (3) Eurodollar Business Days prior to effective date of such exercise.

     (iv) There may be no more than five (5) Eurodollar Balances in effect at any time.

     (v) Each Eurodollar Balance must be, as of the first day of the applicable Eurodollar Interest
Period, at least $100,000.

     (vi) No Event of Default, or condition or event which, with the giving of notice or the lapse
of time, or both, would constitute an Event of Default, shall have occurred and be continuing or
exist.

     (vii) Each exercise of an Interest Option to designate a Eurodollar Balance to bear interest
at a Stated Rate which is based on the Eurodollar Rate shall not be revocable.

Changes in the Stated Rate applicable to a Prime Rate Balance or a Eurodollar Balance shall become
effective without prior notice to the undersigned automatically as of the opening of business on
the date of each change in the Prime Rate or the Eurodollar Rate, as the case may be.

If the Bank (or, if applicable, Bank’s designated eurodollar lending office) determines that
deposits in U.S. dollars (in the applicable amounts) are not being offered to prime banks in the
interbank eurodollar market selected by the Bank (or if applicable, Bank’s designated eurodollar
lending office for the applicable Eurodollar Interest Period, or that the rate at which such dollar
deposits are being offered will not adequately and fairly reflect the cost to the Bank (or, if
applicable, Bank’s designated eurodollar lending office) of making or maintaining a Eurodollar
Balance for the applicable Eurodollar Interest Period, the Bank shall forthwith give notice thereof
to the undersigned, whereupon, until the Bank notifies the undersigned that such circumstances no
longer exist, the right of the undersigned to select an Interest Option based upon the Eurodollar
Rate shall be suspended, and the undersigned may only select Interest Options based on the Prime
Rate.

If the adoption of any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or compliance by the
Bank (or, if applicable, Bank’s designated eurodollar lending office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or comparable agency
shall make it unlawful or impractical for the Bank (or, if applicable, Bank’s designated eurodollar
lending office) to make or maintain a Eurodollar Balance, the Bank shall so notify the undersigned
and any then-existing Eurodollar Balance shall automatically convert to a Prime Rate Balance either
(i) on the last day of the then-current Eurodollar Interest Period applicable to such Eurodollar
Balance, if the Bank (and, if applicable, its designated eurodollar lending office) may lawfully
continue to maintain and fund such Eurodollar Balance to such day, or (ii) immediately, if the Bank
(or, if applicable, its designated eurodollar lending office) may not lawfully continue to maintain
such Eurodollar Balance to such day. Further, until Bank notices the undersigned that such
conditions or circumstances no longer exist, the right of the undersigned to select an Interest
Option based on the Eurodollar Rate shall be suspended, and the undersigned may only select
Interest Options based on the Prime Rate.

If either (i) the adoption of any applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any governmental authority, central bank
or comparable agency charged with the interpretation or administration thereof, or compliance by
the Bank (or, if applicable, its designated eurodollar lending office) with any request or
directive (whether or not having the force of law) of any such authority, central bank or
comparable agency shall subject the Bank (or, if applicable, its designated eurodollar lending
office) to any tax (including without limitation any United States interest equalization or similar
tax, however named), duty or other charge with respect to any Eurodollar Balance, this Note or the
Bank’s (or, if applicable, its designated eurodollar lending office) obligation to compute interest
on the principal balance of this Note at a rate based upon the Eurodollar Rate, or shall change the
basis of taxation of payments to the Bank (or, if applicable, its designated eurodollar lending
office) of the principal of or interest on any Eurodollar Balance or any other amounts due under
this Note in respect of any Eurodollar Balance or the Bank’s (or, if applicable, its designated
eurodollar lending office) obligation to compute the interest on the balance of this Note at a rate
based upon the Eurodollar Rate, or (ii) any governmental authority, central bank or other
comparable authority shall at any time impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal Reserve System), special
deposit or similar requirement against assets of, deposits with or for the account of, or credit
extended by, the Bank (or, if applicable, its designated eurodollar lending office), or shall
impose on the Bank (or, if applicable, its designated eurodollar lending office) or any relevant
interbank eurodollar market or exchange any other condition affecting any Eurodollar Balance, this
Note or the Bank’s (or, if applicable, its designated eurodollar lending office) obligation to
compute the interest on the balance of this Note at a rate based upon the Eurodollar Rate; and the
result of any of the foregoing is to increase the cost to the Bank (or, if applicable, its
designated eurodollar lending office) of maintaining any Eurodollar Balance, or to reduce the
amount of any sum received or receivable by the Bank (or, if applicable, Bank’s designated
eurodollar lending office) under this Note by an amount deemed by the Bank to be material, then
upon demand by the Bank in writing, accompanied by reasonable detail and explanation, the
undersigned shall pay to the Bank such additional amount or amounts as will compensate the Bank
(or, if applicable, Bank’s designated eurodollar lending office) for such increased cost or
reduction. The Bank will promptly notify the undersigned of any event of which it has knowledge,
occurring after the date hereof, which will entitle the Bank (or, if applicable, Bank’s designated
eurodollar lending office) to compensation pursuant to this paragraph. A certificate of the Bank
claiming compensation under this paragraph and setting forth the additional amount or amounts to be
paid to the Bank hereunder shall be conclusive in the absence of manifest error.

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If any applicable law, treaty, rule, or regulation (whether domestic or foreign) now or hereafter
in effect and whether presently applicable to the Bank (or, if applicable, its designated
eurodollar lending office) or any change therein or any interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the interpretation or
administration thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by the Bank (or, if applicable, its
designated eurodollar lending office) therewith or with any guidance, request or directive of any
such governmental authority, central bank or comparable agency (whether or not having the force of
law), including any risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by the Bank (or any corporation controlling the Bank), and
the Bank determines that the amount of such capital is increased by or based upon the existence of
any obligations of Bank hereunder or the maintaining of any Eurodollar Balance hereunder, and such
increase has the effect of reducing the rate of return on Bank’s (or its controlling corporation’s)
capital as a consequence of such obligations or the maintaining of Eurodollar Balances hereunder to
a level below that which the Bank (or such controlling corporation) could have achieved but for
such circumstances (taking into consideration its policies with respect to capital adequacy), then
the undersigned shall pay to Bank, within fifteen (15) days of receipt by the undersigned of
written notice from the Bank demanding such compensation and detailing the calculation thereof,
such additional amounts as are sufficient to compensate the Bank (and its controlling corporation)
for any increase in the amount of capital and reduced rate of return which the Bank determines to
be allocable to the existence of any obligations of the Bank (or its controlling corporation)
hereunder or maintenance of any Eurodollar Balances hereunder. A certificate of Bank as to the
amount of such compensation and the calculation thereof, prepared in good faith and in reasonable
detail by the Bank, which is submitted by the Bank to the undersigned shall be conclusive and
binding for all purposes absent manifest error.

The undersigned may not repay any Eurodollar Balance or convert all or any portion of a Eurodollar
Balance to a Prime Rate Balance prior to the expiration of the applicable Eurodollar Interest
Period, unless (i) such repayment or conversion is specifically required by the terms of this Note,
(ii) the Bank demands that such repayment or conversion be made, or (iii) the Bank, in its sole
discretion, consents to such repayment or conversion. If for any reason, whether or not consent
shall have been given or demand shall have been made by the Bank, any Eurodollar Balance is repaid
or converted prior to the expiration of the corresponding Eurodollar Interest Period, or any
Interest Option which designates a Eurodollar Balance is revoked for any reason whatsoever prior to
the commencement of the applicable Eurodollar Interest Period or the undersigned fails for any
reason to borrow the full amount of any Eurodollar Balance for which the undersigned has exercised
an Interest Option, or if for any other reason whatsoever, the basis for determining the Stated
Rate shall be changed from a Eurodollar Rate to the Prime Rate prior to the expiration of the
applicable Eurodollar Interest Period, or the undersigned shall fail to make any payment of
principal or interest upon this Note at any time that the Stated Rate if based on a Eurodollar
Rate, then the undersigned shall pay to the Bank on demand any amounts required to compensate the
Bank (and, if applicable, its designated eurodollar lending office) for any losses, costs or
expenses which it may incur as a result thereof, including, without limitation, any loss, cost or
expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties.
Amounts payable by the undersigned to the Bank pursuant to this paragraph may include, without
limitation, amounts equal to the excess, if any of (a) the amounts of interest which would have
accrued on any amounts so prepaid, refunded, converted or not so borrowed, from the respective
dates of prepayment, refund, conversion or failure to borrow through the last day of the relevant
Eurodollar Interest Periods at the applicable rates of interest for the applicable Eurodollar
Balances, as provided under this Note, over (b) the amounts of interest determined by the Bank (or,
if applicable, its designated eurodollar lending office) which would have accrued to the Bank or
Reference Bank (or, if applicable, its designated eurodollar lending office) on such respective
amounts by placing such amounts on deposit for comparable periods with leading banks in the
interbank eurodollar market selected by the Bank (or, if applicable, its designated eurodollar
lending office). The calculation of any such amounts under this paragraph shall be made as if the
Bank (or, if applicable, its designated eurodollar lending office) actually funded or committed to
fund the relevant Eurodollar Balances hereunder through the purchase of underlying deposits in
amounts equal to the respective amounts of the applicable Eurodollar Balances and having terms
comparable to the applicable Eurodollar Interest Periods; provided, however, that the Bank (or, if
applicable, its designated eurodollar lending office) may fund Eurodollar Balances hereunder in any
manner they may elect in their sole discretion, and the foregoing assumptions shall be utilized
only for the purposes of calculating amounts payable under this paragraph. Upon written request by
the undersigned, the Bank shall deliver to the undersigned a certificate setting for the basis for
determining such losses, costs and expenses which certificate shall be conclusive in the absence of
manifest error.

For any Eurodollar Balance, if the Bank shall designate a eurodollar lending office which maintains
books separate from those of the Bank, the Bank shall have the option of maintaining and carrying
such Eurodollar Balance on the Books of such eurodollar lending office.

The principal amount payable under this Note shall be the sum of all advances made by the Bank to
or at the request of the undersigned, as provided in the Credit Agreement less principal payments
actually received by the Bank. The books and records of the Bank shall be the best evidence of the
principal amount and the unpaid interest amount owing at any time under this Note and shall be
conclusive absent manifest error. No interest shall accrue under this Note until the date of the
first advance made by the Bank; after that interest on all advances shall accrue and be computed on
the principal balance outstanding from time to time under this Note until the same is paid in full.

This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of
them) to the Bank, and any and all modifications, renewals or extensions of it, whether joint or
several, contingent or absolute, now existing or later arising, and however evidenced and whether
incurred voluntarily or involuntarily, known or unknown, or originally payable to the Bank or to a
third party and subsequently acquired by Bank including, without limitation, any late charges; loan
fees or charges; overdraft indebtedness; costs incurred by Bank in establishing, determining,
continuing or defending the validity or priority of any security interest, pledge or other lien or
in pursuing any of its rights or remedies under any loan document (or otherwise) or in connection
with any proceeding involving the Bank as a result of any financial accommodation to the
undersigned (or any of them); and reasonable costs and expenses of attorneys and paralegals,
whether inside or outside counsel is used, and whether any suit or other action is instituted, and
to court costs if suit or action is instituted, and whether any such fees, costs or expenses are
incurred at the trial court level or on appeal, in bankruptcy, in administrative proceedings, in
probate proceedings or otherwise (collectively “Indebtedness”), are secured by and the Bank is
granted a security interest in and lien upon all

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items deposited in any account of any of the undersigned with the Bank and by all proceeds of these
items (cash or otherwise), all account balances of any of the undersigned from time to time with
the Bank, by all property of any of the undersigned from time to time in the possession of the Bank
and by any other collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other security or collateral agreement which
has been, or will at any time(s) later be, executed by any (or all) of the undersigned to or for
the benefit of the Bank (collectively “Collateral”).

Upon the occurrence of an Event of Default, the Bank may, at its option and without prior notice to
the undersigned (or any of them), declare any or all of the Indebtedness to be immediately due and
payable (notwithstanding any provisions contained in the evidence of it to the contrary), cease
advancing money or extending credit to or for the benefit of the undersigned under this Note or any
other agreement between the undersigned and Bank, terminate this Note as to any future liability or
obligation of Bank, but without affecting Bank’s rights and security interests in any Collateral or
the Indebtedness, sell or liquidate all or any portion of the Collateral, set off against the
Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at
the default rate provided in the Credit Agreement and exercise any one or more of the rights and
remedies granted to the Bank by any agreement with the undersigned (or any of them) or given to it
under applicable law. All payments under this Note shall be in immediately available United States
funds, without setoff or counterclaim.

This Note shall bind the undersigned and its personal representatives, successors and assigns.

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or
intent to demand, notice of acceleration or intent to accelerate, and all other notices, except as
set forth in the Credit Agreement, and agree(s) that no extension or indulgence to the undersigned
(or any of them) or release, substitution or nonenforcement of any security, or release or
substitution of any of the undersigned, any guarantor or any other party, whether with or without
notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all
defenses or right to discharge available under Section 3.605 of the Texas Uniform Commercial Code
and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that
the Bank has the right to sell, assign, or grant participations or any interest in, any or all of
the Indebtedness, as provided in the Credit Agreement, and that, in connection with this right, but
without limiting its ability to make other disclosures to the full extent allowable, the Bank may
disclose all documents and information which the Bank now or later has relating to the undersigned
or the Indebtedness. The undersigned agree(s) that the Bank may provide information relating to
this Note or the Indebtedness or relating to the undersigned to the Bank’s parent, affiliates,
subsidiaries and service providers.

The undersigned agree(s) to reimburse the holder or owner of this Note upon demand for any and all
costs and expenses (including without limit, court costs, legal expenses and reasonable attorneys’
fees, whether inside or outside counsel is used, and whether or not suit is instituted and, if suit
is instituted, whether at the trial court level, appellate level, in a bankruptcy or administrative
proceeding or otherwise) incurred in collecting or attempting to collect this Note or incurred in
any other matter or proceeding relating to this Note.

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written,
establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be
amended, waived or modified except in a writing signed by an officer of the Bank expressly stating
that the writing constitutes an amendment, waiver or modification of the terms of this Note. As
used in this Note, the word “undersigned” means, individually and collectively, each maker,
accommodation party, indorser and other party signing this Note in a similar capacity. If any
provision of this Note is unenforceable in whole or part for any reason, the remaining provisions
shall continue to be effective. Chapter 346 of the Texas Finance Code (and as the same may be
incorporated by reference in other Texas statutes) shall not apply to the Indebtedness evidenced by
this Note. THIS NOTE IS MADE IN THE STATE OF TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLE.

This Note and all other documents, instruments and agreements evidencing, governing, securing,
guaranteeing or otherwise relating to or executed pursuant to or in connection with this Note or
the Indebtedness evidenced hereby (whether executed and delivered prior to, concurrently with or
subsequent to this Note), as such documents may have been or may hereafter be amended from time to
time (the “Loan Documents”) are intended to be performed in accordance with, and only to the extent
permitted by, all applicable usury laws. If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for any reason and to any
extent, be invalid or unenforceable, neither the application of such provision to any other person
or circumstance nor the remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by law. It is expressly
stipulated and agreed to be the intent of the holder hereof to at all times comply with the usury
and other applicable laws now or hereafter governing the interest payable on the indebtedness
evidenced by this Note. If the applicable law is ever revised, repealed or judicially interpreted
so as to render usurious any amount called for under this Note or under any of the other Loan
Documents, or contracted for, charged, taken, reserved or received with respect to the indebtedness
evidenced by this Note, or if Bank’s exercise of the option to accelerate the maturity of this
Note, or if any prepayment by the undersigned or prepayment agreement results (or would, if
complied with, result) in the undersigned having paid, contracted for or being charged for any
interest in excess of that permitted by law, then it is the express intent of the undersigned and
Bank that this Note and the other Loan Documents shall be limited to the extent necessary to
prevent such result and all excess amounts theretofore collected by Bank shall be credited on the
principal balance of this Note or, if fully paid, upon such other Indebtedness as shall then
remaining outstanding (or, if this Note and all other Indebtedness have been paid in full, refunded
to the undersigned), and the provisions of this Note and the other Loan Documents shall immediately
be deemed reformed and the amounts thereafter collectable hereunder and thereunder reduced, without
the necessity of the execution of any new document, so as to comply with the then applicable law,
but so as to permit the recovery of the fullest amount otherwise called for hereunder or
thereunder. All sums paid, or agreed to be paid, by the undersigned for the use, forbearance,
detention, taking, charging, receiving or reserving of the indebtedness of the undersigned to Bank
under this Note or arising under or pursuant to the other Loan Documents shall, to the maximum
extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the

5

 

rate or amount of interest on account of such indebtedness does not exceed the usury ceiling from
time to time in effect and applicable to such indebtedness for so long as such indebtedness is
outstanding. To the extent federal law permits Bank to contract for, charge or receive a greater
amount of interest, Bank will rely on federal law instead of the Texas Finance Code for the purpose
of determining the Maximum Rate. Additionally, to the maximum extent permitted by applicable law
now or hereafter in effect, Bank may, at its option and from time to time, implement any other
method of computing the Maximum Rate under the Texas Finance Code or under other applicable law, by
giving notice, if required, to the undersigned as provided by applicable law now or hereafter in
effect. Notwithstanding anything to the contrary contained herein or in any of the other Loan
Documents, it is not the intention of Bank to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the time of such
acceleration.

The indebtedness evidenced this Note in in renewal, extension and modification, but not in
extinguishment or novation, of the indebtedness evidenced by that certain Promissory Note dated as
of October 30, 2003, as amended to the date hereof, in the original principal amount of $12,500,000
executed by Borrower payable to the order of Bank.

THE UNDERSIGNED AND THE BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING
HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR
THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE)
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

	 	 	 	 	 
	 	 	 
	PEERLESS MFG. CO. 	By:  	/s/ HENRY G. SCHOPFER, III
 	 
	 	 	HENRY G. SCHOPFER, III 	 
	 	 	CHIEF FINANCIAL OFFICER 	 
	 

	 	 	 	 	 	 	 	 	 
	2819 Walnut Hill Lane,

	 	Dallas
	 	Texas
	 	 	75229	 
	 
	STREET ADDRESS

	 	CITY
	 	STATE
	 	ZIP CODE

CCAR #

  

	 	 	 	 	 	 	 	 	 
	 

	 	For Bank Use Only
	 	 	 	CCAR #	 	 
	 
	 	 	 	 	 	 	 	 
	 
	LOAN OFFICER INITIALS

	 	LOAN GROUP NAME
	 	OBLIGOR NAME	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	LOAN OFFICER ID. NO.

	 	LOAN GROUP NO.
	 	OBLIGOR NO.
	 	NOTE NO.
	 	AMOUNT
	 
	 	 	 	 	 	 	 	 
	 

6exv4w1

 

EXHIBIT 4.1

SIPEX CORPORATION

STAND-ALONE STOCK OPTION AGREEMENT

	I.	 	NOTICE OF STOCK OPTION GRANT
	 
	 	 	«First» «MI» «Last»
	 
	 	 	«Address1»
	 
	 	 	«City», «ST» «Zip»

     You have been granted a Nonstatutory Stock Option to purchase Common Stock of the Company,
subject to the terms and conditions of this Agreement, as follows:

	 	 	 	 	 
	 

	 	Date of Grant
	 	«Grantdate»
	 
	 	 	 	 
	 

	 	Vesting Commencement Date
	 	«VestBaseDate»
	 
	 	 	 	 
	 

	 	Exercise Price per Share
	 	$«OptionPrice»
	 
	 	 	 	 
	 

	 	Total Number of Shares Granted
	 	«SharesGranted»
	 
	 	 	 	 
	 

	 	Total Exercise Price
	 	$«TotalOption»
	 
	 	 	 	 
	 

	 	Term/Expiration Date:
	 	«ExpireDatePeriod1»

     Vesting Schedule:

     This Option shall vest and may be exercised, in whole or in part, in accordance with the
following schedule, subject to the Optionee continuing to be a Service Provider on such dates:

	 	 	 	 	 
	 

	 	«VestDatePeriod1»
	 	«SharesPeriod1» shares
	 
	 	 	 	 
	 

	 	«VestDatePeriod2»
	 	«SharesPeriod2» shares
	 
	 	 	 	 
	 

	 	«VestDatePeriod3»
	 	«SharesPeriod3» shares
	 
	 	 	 	 
	 

	 	«VestDatePeriod4»
	 	«SharesPeriod4» shares

     Termination Period

     This Option may be exercised for three (3) months after Optionee ceases to be a Service
Provider in accordance with Section 7 of this Agreement. Upon the death or Disability of the
Optionee, this Option may be exercised for one hundred and eighty (180) days after the Optionee

 

 

ceases to be a Service Provider in accordance with Sections 8 and 9 of this Agreement. In no
event shall this Option be exercised later that the Term/Expiration Date provided. This Option
shall terminate and immediately cease to be exercisable on the date Optionee receives notice of
termination for Cause in accordance with Section 10 of this Agreement.

II. AGREEMENT

     1. Definitions. As used herein, the following definitions shall apply:

          (a) “Agreement” means this stock option agreement between the Company and Optionee
evidencing the terms and conditions of this Option.

          (b) “Applicable Laws” means the requirements relating to the administration of stock
options under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction that may apply to this Option.

          (c) “Board” means the Board of Directors of the Company or any committee of the Board
that has been designated by the Board to administer this Agreement.

          (d) “Cause” means conduct involving one or more of the following: (i) the substantial
and continuing failure of the Optionee, after notice thereof, to render services to the Company or
any Parent or Subsidiary in accordance with the terms or requirements of Optionee’s employment or
business relationship; (ii) gross negligence, willful misconduct, dishonesty, fraud or breach of
fiduciary duty to the Company or any Parent or Subsidiary; (iii) the commission of an act of
embezzlement or fraud; (iv) deliberate disregard of the rules or policies of the Company or any
Parent or Subsidiary, or breach of an employment or other agreement with the Company or any Parent
or Subsidiary, either of which results in significant direct or indirect loss, damage or injury to
the Company or any Parent or Subsidiary; (v) the unauthorized disclosure of any trade secret or
confidential information of the Company or any Parent or Subsidiary; or (vi) the commission of an
act which constitutes unfair competition with the Company or any Parent or Subsidiary or which
induces any customer or supplier to breach a contract with the Company or any Parent or Subsidiary.

          (e) “Change in Control” means

                         (1) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing sixty percent (60%) or more of the total
voting power represented by the Company’s then outstanding voting securities; or

                         (2) a change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
will mean directors who either (A) are directors of the Company as of June 7, 2005, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or nomination (but will not include an
individual whose election or nomination is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company); or

-2-

 

                         (3) the date of the consummation of a merger or consolidation of the Company with any other
corporation that has been approved by the stockholders of the Company, other than a merger or
consolidation which would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than sixty percent (60%) of the total voting power
represented by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company; or

                         (4) the date of the consummation of the sale or disposition by the Company of all or
substantially all the Company’s assets.

          Notwithstanding the foregoing, a “Change in Control” shall not include any transaction or
series of transactions involving the Company’s issuance of any equity or debt securities to third
parties for capital raising purposes.

          (f) “Code” means the Internal Revenue Code of 1986, as amended.

          (g) “Common Stock” means the common stock of the Company.

          (h) “Company” means SIPEX Corporation, a Delaware corporation.

          (i) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.

          (j) “Director” means a member of the Board.

          (k) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

          (l) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.
Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.

          (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (n) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

                         (1) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, or is actively traded over-the-counter, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on
such exchange or system on the date of grant, or if unavailable, for the

-3-

 

last market trading day prior to date of grant, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

                         (2) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of determination; or

                         (3) In the absence of an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Board.

          (o) “Nonstatutory Stock Option” means an Option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

          (p) “Notice of Grant” means a written notice, in Part I of this Agreement, evidencing
certain the terms and conditions of this Option grant. The Notice of Grant is part of the Option
Agreement.

          (q) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

          (r) “Option” means this stock option.

          (s) “Optioned Stock” means the Common Stock subject to this Option.

          (t) “Optionee” means the person named in the Notice of Grant or such person’s
successor.

          (u) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (v) “Service Provider” means an Employee, Director or Consultant.

          (w) “Share” means a share of the Common Stock, as adjusted in accordance with Section
11 of this Agreement.

          (x) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     2. Grant of Option. The Board hereby grants to the Optionee named in the Notice of
Grant attached as Part I of this Agreement the Option to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the
“Exercise Price”), subject to the terms and conditions of this Agreement.

     3. Exercise of Option.

-4-

 

          (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of this
Agreement.

          (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election
to exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the
Company. The Exercise Notice shall be completed by the Optionee and delivered to the Secretary of
the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price.

          (c) Legal Compliance. No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance,
for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on the
date the Option is exercised with respect to such Exercised Shares.

          (d) Buyout Provisions. The Board may at any time offer to buy out for a payment in
cash or Shares an Option previously granted based on such terms and conditions as the Board shall
establish and communicate to the Optionee at the time that such offer is made.

     4. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

          (a) cash or check;

          (b) consideration received by the Company under a cashless exercise program implemented by the
Company;

          (c) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.

     5. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of this Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.

     6. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the terms of this
Agreement. Notwithstanding any other provision of this Agreement, in no event shall this Option be
exercised later than the Term/Expiration Date provided.

     7. Termination of Relationship as a Service Provider. If the Optionee ceases to be a
Service Provider (other than for death or Disability), this Option may be exercised for a period of
three (3) months after the date of such termination (but in no event later than the expiration date
of

-5-

 

this Option as set forth in the Notice of Grant) to the extent that the Option is vested on
the date of such termination. To the extent that the Optionee does not exercise this Option within
the time specified herein, the Option shall terminate.

     8. Disability of Optionee. If the Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, this Option may be exercised for a period of one hundred and
eighty (180) days after the date of such termination (but in no event later than the expiration
date of this Option as set forth in the Notice of Grant) to the extent that the Option is vested on
the date of such termination. To the extent that Optionee does not exercise this Option within the
time specified herein, the Option shall terminate.

     9. Death of Optionee. If the Optionee dies while a Service Provider, the Option may
be exercised at any time within one hundred and eighty (180) days following the date of death (but
in no event later than the expiration date of this Option as set forth in the Notice of Grant), by
the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, after death, the Optionee’s estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate.

     10. Termination for Cause. If the Optionee is terminated for Cause, this Option shall
terminate immediately upon the Optionee’s receipt of written notice of such termination and shall
thereafter not be exercisable to any extent whatsoever.

     11. Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

          (a) Subject to any required action by the stockholders of the Company, the number of shares of
Common Stock and class of securities covered by this Option, as well as the price per share of
Common Stock covered by this Option and the vesting schedule, shall be proportionately adjusted (or
a substituted option may be granted) for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off, split-up or other similar event or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board or its designated committee, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to this Option.

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board or its designated committee shall notify Optionee as soon as
practicable prior to the effective date of such proposed transaction. The Board or its designated
committee in its discretion may provide for the Optionee to have the right to exercise his or her

-6-

 

Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option would not otherwise be exercisable. To
the extent it has not been previously exercised, the Option will terminate immediately prior to the
consummation of such proposed

          (c) Merger or Change in Control. In the event of a merger of the Company with or into
another corporation, or a Change in Control, the Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.
In the event that the successor corporation in a merger or Change in Control refuses to assume or
substitute for the Option, then the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable. If the Option is not assumed or substituted in connection with a
merger or Change in Control, the Board or its designated committee shall notify the Optionee in
writing or electronically that the Option shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the Option shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered assumed if, following
the merger or Change in Control, the option confers the right to purchase or receive, for each
Share subject to the Option immediately prior to the merger or Change in Control, the consideration
(whether stock, cash, or other securities or property) received in the merger or Change in Control
by holders of Common Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding Shares); provided, however, that if such consideration received in
the merger or Change in Control is not solely common stock of the successor corporation or its
Parent, the Board or its designated committee may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option, for each Share
subject to the Option, to be solely common stock of the successor corporation or its Parent equal
in fair market value to the per share consideration received by holders of common stock in the
merger or Change in Control.

     12. Notices. Any notice to be given to the Company hereunder shall be in writing and
shall be addressed to the Company at its then current principal executive office or to such other
address as the Company may hereafter designate to the Optionee by notice as provided in this
Section. Any notice to be given to the Optionee hereunder shall be addressed to the Optionee at
the address set forth beneath his signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. A notice shall be deemed to have
been duly given when personally delivered or mailed by registered or certified mail to the party
entitled to receive it.

     13. Tax Consequences. Some of the federal tax consequences relating to this Option,
as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND
THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

          (a) Exercising the Option. The Optionee may incur regular federal income tax
liability upon exercise of a Nonstatutory Stock Option (an “NSO”). The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal to the excess, if
any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate

-7-

 

Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.

          (b) Disposition of Shares. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes.

     14. Entire Agreement; Governing Law. This Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the subject matter hereof,
and may not be modified adversely to the Optionee’s interest except by means of a writing signed by
the Company and Optionee. This agreement is governed by the internal substantive laws, but not the
choice of law rules, of California.

     15. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUES ENGAGEMENT AS A SERVICE PROVIDER FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

-8-

 

     By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of this Agreement.
Optionee has reviewed this Agreement in its entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Agreement and fully understands all provisions of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board upon any questions relating to this Agreement. Optionee further
agrees to notify the Company upon any change in the residence address indicated below.

	 	 	 
	OPTIONEE

	 	SIPEX CORPORATION
	 
	 	 
	 

	 	 
	Signature

	 	By: Ralph Schmitt, President & CEO
	 
	 	 
	«First» «MI» «Last»
	 	 
	 

Name

	 	 
	 
	 	 
	«Address1»
	 	 
	 

Residence Address

	 	 
	 
	 	 
	«City», «ST» «Zip»
	 	 
	 

	 	 

-9-

 

EXHIBIT A

SIPEX CORPORATION

EXERCISE NOTICE

SIPEX Corporation

233 South Hillview Drive

Milpitas, CA 95053

Attention:

     Exercise of Option. Effective as of today, ___, 200_, the undersigned
(“Purchaser”) hereby elects to purchase ___shares (the “Shares”) of the Common Stock of
SIPEX Corporation (the “Company”) under and pursuant to the Stock Option Agreement dated
___(the “Option Agreement”). The purchase price for the Shares shall be $___, as
required by the Option Agreement.

     Delivery of Payment. Purchaser herewith delivers to the Company the full purchase
price for the Shares.

     Representations of Purchaser. Purchaser acknowledges that Purchaser has received,
read and understood the Option Agreement and agrees to abide by and be bound by their terms and
conditions.

     Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no
right to vote or receive dividends or any other rights as a stockholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be
issued to the Optionee as soon as practicable after exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the date of issuance,
except as provided in Section 11 of the Option Agreement.

     Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.

     Successors and Assigns. The Company may assign any of its rights under this Exercise
Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,
this Exercise Notice shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.

 

 

     Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review
such dispute at its next regular meeting. The resolution of such a dispute by the Administrator
shall be final and binding on all parties.

     Entire Agreement; Governing Law. The Option Agreement is incorporated herein by
reference. This Agreement, and the Option Agreement constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not
be modified adversely to the Purchaser’s interest except by means of a writing signed by the
Company and Purchaser. This agreement is governed by the internal substantive laws, but not the
choice of law rules, of California.

	 	 	 
	Submitted by:

	 	Accepted by:
	 
	 	 
	OPTIONEE

	 	SIPEX CORPORATION
	 

	 	 
	 
	 	 
	 

	 	 
	Signature
	 	 
	 
	 	 
	 

	 	 
	Print Name
	 	 
	 
	 	 
	 

	 	 
	Address:

	 	Address:
	 

	 	233 South Hillview Drive
	 
	 

	 	Milpitas, CA 95053
	 
	 
	 	 
	 

	 	Date Received:                                         

-2-

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