Document:

EXHIBIT 10.1

 

ZOMAX INCORPORATED

1996 EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated through June 8,
2004)

 

ARTICLE I - ESTABLISHMENT OF PLAN

 

1.01                                                                         Adoption
by the Board of Directors and Sole Shareholder.  By action of the Board of Directors and the sole shareholder of
Zomax Incorporated (the “Corporation”) on March 4, 1996, the Corporation
has adopted an Employee Stock Purchase Plan pursuant to which eligible
employees of the Corporation and certain of its Subsidiaries may be offered the
opportunity to purchase shares of Stock of the Corporation.  The terms and conditions of this Plan are
set forth in this plan document, as amended from time to time as provided
herein.  The Corporation intends that
the Plan shall qualify as an “employee stock purchase plan” under
Section 423 of the Internal Revenue Code of 1986, as amended from time to
time, (the “Code”) and shall be construed in a manner consistent with the
requirements of Code Section 423 and the regulations thereunder.

 

1.02                                                                         Term.  The Plan, as amended by the Board on
February 20, 2002, shall become effective on July 1, 2002, and shall
terminate on December 31, 2011.

 

ARTICLE II - PURPOSE

 

2.01                                                                         Purpose.  The primary purpose of the Plan is to
provide an opportunity for Eligible Employees of the Corporation to become
shareholders of the Corporation, thereby providing them with an incentive to
remain in the Corporation’s employ, to improve operations, to increase profits
and to contribute more significantly to the Corporation’s success.

 

ARTICLE III - DEFINITIONS

 

3.01                                                                         “Administrator” means the Board of Directors
or such Committee appointed by the Board of Directors to administer the
Plan.  The Board or Committee may, in
its sole discretion, authorize the officers of the Corporation to carry out the
day-to-day operation of the Plan.  In
its sole discretion, the Board may take such actions as may be taken by the
Administrator, in addition to those powers expressly reserved to the Board
under this Plan.

 

3.02                                                                         “Board of Directors” or “Board” means the Board of Directors of
Zomax Incorporated.

 

3.03                                                                         “Compensation” means the Participant’s total
compensation, including overtime, commissions and all bonuses.

 

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3.04                                                                         “Corporation” means Zomax Incorporated, a
Minnesota corporation.

 

3.05                                                                         “Eligible Employee” means any employee who,
as determined on or immediately prior to an Enrollment Period, is a full-time
or part-time employee of the Corporation or one of its Subsidiaries, and who
has been employed by the Corporation or the Subsidiary at least sixty (60)
consecutive days prior to the 
commencement date of a phase; provided, however, that employees who are
citizens or residents of a country other than the United States shall be
eligible to participate only to the extent permitted by the applicable laws of
such country.

 

3.06                                                                         “Enrollment Period” means the period
determined by the Administrator for purposes of accepting elections to
participate during a Phase from Eligible Employees.

 

3.07                                                                         “Fiscal Year” means the fiscal year of the
Corporation, which is the twelve-month period beginning January 1 and
ending December 31 each year.

 

3.08                                                                         “Participant” means an Eligible Employee who
has been granted an option and is participating during a Phase through payroll
deductions, but shall exclude those employees subject to the limitations
described in Section 9.03 below.

 

3.09                                                                         “Phase” means the period beginning on the
date that the option was granted, otherwise referred to as the commencement
date of the Phase, and ending on the date that the option was exercised,
otherwise referred to as the termination date of the Phase.

 

3.10                                                                         “Plan” means the Zomax Incorporated 1996
Employee Stock Purchase Plan.

 

3.11                                                                         “Stock” means the voting common stock of the
Corporation.

 

3.12                                                                         “Subsidiary” means any corporation defined
as a subsidiary of the Corporation in Code Section 424(f) as of the
effective date of the Plan, and such other corporations that qualify as
subsidiaries of the Corporation under Code Section 424(f) as the Board
approves to participate in this Plan from time to time.

 

ARTICLE IV - ADMINISTRATION

 

4.01                                                                         Administration.  Except for those matters expressly reserved
to the Board pursuant to any provisions of the Plan, the Administrator shall
have full responsibility for administration of the Plan, which responsibility
shall include, but shall not be limited to, the following:

 

(a)                                The
Administrator shall, subject to the provisions of the Plan, establish, adopt
and revise such rules and procedures for administering the Plan, and shall make
all other determinations as it may deem necessary or advisable for the
administration of the Plan;

 

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(b)                               The
Administrator shall, subject to the provisions of the Plan, determine all terms
and conditions that shall apply to the grant and exercise of options under this
Plan, including, but not limited to, the number of shares of Stock that may be
granted, the date of grant, the exercise price and the manner of exercise of an
option.  The Administrator may, in its
discretion, consider the recommendations of the management of the Corporation
when determining such terms and conditions;

 

(c)                                The
Administrator shall have the exclusive authority to interpret the provisions of
the Plan, and each such interpretation or determination shall be conclusive and
binding for all purposes and on all persons, including, but not limited to, the
Corporation and its Subsidiaries, the shareholders of the Corporation and its
Subsidiaries, the Administrator, the directors, officers and employees of the
Corporation and its Subsidiaries, and the Participants and the respective
successors-in-interest of all of the foregoing; and

 

(d)                               The
Administrator shall keep minutes of its meetings or other written records of
its decisions regarding the Plan and shall, upon requests, provide copies to
the Board.

 

ARTICLE V - PHASES OF THE PLAN

 

5.01                                                                         Phases.  The Plan shall be carried out in one or more
Phases of six (6) months each.  Unless
otherwise determined by the Administrator, in its discretion, Phases shall
commence on January 1 and July 1 of each fiscal year during the term
of the Plan; provided, however, that there shall be only one phase for the 1996
fiscal year commencing on July 1, 1996. 
No two Phases shall run concurrently.

 

5.02                                                                         Limitations.  The Administrator may, in its discretion,
limit the number of shares available for option grants during any Phase as it
deems appropriate.  Without limiting the
foregoing, in the event all of the shares of Stock reserved for the grant of
options under Section 12.01 is issued pursuant to the terms hereof prior
to the commencement of one or more Phases or the number of shares of Stock
remaining is so small, in the opinion of the Administrator, as to render
administration of any succeeding Phase impracticable, such Phase or Phases may
be cancelled or the number of shares of Stock limited as provided herein.  In addition, if, based on the payroll
deductions authorized by Participants at the beginning of a Phase, the
Administrator determines that the number of shares of Stock which would be
purchased at the end of a Phase exceeds the number of shares of Stock remaining
reserved under Section 12.01 hereof for issuance under the Plan, or if the
number of shares of Stock for which options are to be granted exceeds the
number of shares designated for option grants by the Administrator for such
Phase, then the Administrator shall make a pro rata allocation of the shares of
Stock remaining available in as nearly uniform and equitable a manner as the
Administrator shall consider practicable as of the commencement date of the
Phase or, if the Administrator so elects, as of the termination date of the
Phase.  In the event such

 

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allocation is made as of the commencement date of a Phase, the payroll
deductions which otherwise would have been made on behalf of Participants shall
be reduced accordingly.

 

ARTICLE VI - ELIGIBILITY

 

6.01                                                                         Eligibility.  Each employee who is an Eligible Employee on
or immediately prior to the commencement of a Phase shall be eligible to
participate in such Phase.

 

ARTICLE VII - PARTICIPATION

 

7.01                                                                         Participation.  Participation in the Plan is voluntary.  An Eligible Employee who desires to
participate in any Phase of the Plan must complete the Plan enrollment form
provided by the Administrator and deliver such form to the Administrator or its
designated representative during the Enrollment Period established by the
Administrator prior to the commencement date of the Phase.

 

7.02                                                                         Subsequent
Phases.  An Eligible Employee who
elects to participate in a Phase of a fiscal year shall be deemed to have
elected to participate in each subsequent Phase during that fiscal year and all
subsequent fiscal years unless such Participant elects to discontinue payroll
deductions during a Phase or exercises his or her right to withdraw amounts
previously withheld, as provided under Article 10 hereof.  In such event, such Participant must
complete a change of election form or a new Plan enrollment form and file such
form with the Administrator during the Enrollment Period prior to the next
Phase with respect to which the Eligible Employee wishes to participate.

 

ARTICLE VIII - PAYMENT: PAYROLL
DEDUCTIONS

 

8.01                                                                         Enrollment.  Each Eligible Employee electing to participate
shall indicate such election on the Plan enrollment form and designate therein
a percentage of such Participant’s Compensation to be paid during the
Phase.  Such percentage shall be at
least one percent (1%) but not more than ten percent (10%) of such Participant’s
Compensation to be paid during such Phase, or such other maximum percentage as
the Administrator may establish from time to time; provided, however, that the
payroll deduction authorized by the Participant must equal or exceed $10 per
paycheck.  In order to be effective,
such Plan enrollment form must be properly completed and received by the
Administrator by the due date indicated on such form, or by such other date
established by the Administrator.

 

8.02                                                                         Payroll
Deductions.  Payroll deductions for
a Participant shall commence on the first paycheck issued immediately after the
commencement date of the Phase and shall terminate on the last paycheck issued
immediately prior to the termination date of that Phase, unless the Participant
elects to discontinue payroll deductions or exercises his or her right to
withdraw all accumulated payroll deductions previously withheld during the
Phase as provided in Article 10 hereof. 
The authorized payroll

 

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deductions shall be made over the pay periods of such Phase by
deducting from the Participant’s Compensation for each such pay period that
percentage specified by the Participant in the Plan enrollment form.

 

Unless the Participant elected to discontinue payroll deductions or
exercised his or her right to withdraw all accumulated payroll deductions
previously withheld during the preceding Phase (in which event the Participant
must complete a change of election form or a new Plan enrollment form, as the
case may be, to continue participation for any subsequent Phase), the
Corporation shall continue to withhold from such Participant’s Compensation the
same designated percentage specified by the Participant in the most recent Plan
enrollment form previously completed by the Participant for all subsequent
Phases; provided, however, that the Participant may, if he or she so chooses,
increase, decrease or discontinue payroll deductions for any or all such
subsequent Phases by properly completing a new enrollment form during the
Enrollment Period for such subsequent Phase and delivering such form to the
Administrator by the due date for receipt of such forms for that Phase.

 

8.03                                                                         Increases
or Decreases During a Phase.  In
addition to the right to discontinue or withdraw payroll deductions during a
Phase as provided in Article 10 and the right to increase or decrease or
discontinue payroll deductions for subsequent Phases as provided in
Section 8.02, a Participant may increase or decrease the percentage of Compensation
designated to be deducted during a Phase by completing a change of election
form and filing such form with the Administrator on or before the date that is
fifteen (15) days prior to the date of the last paycheck during that Phase, or
on or before such other date established by the Corporation; provided, however,
that the Participant may exercise the right to increase or decrease his or her
payroll deductions only once during each Phase.

 

8.04                                                                         Change
in Compensation During a Phase.  In
the event that the Participant’s Compensation is increased or decreased during
a Phase for any reason so that the amount actually withheld on behalf of the
Participant as of the termination date of the Phase is different from the
amount anticipated to be withheld as determined on the commencement date of the
Phase, then the extent to which the Participant may exercise his or her option
shall be based on the amounts actually withheld on his or her behalf, subject
to the limitations contained in Article IX.  In the event of a change in the pay period of any Participant,
such as from biweekly to monthly, an appropriate adjustment shall be made to
the deduction in each new pay period so as to insure the deduction of the
proper amount authorized by the Participant.

 

8.05                                                                         Foreign Employees.  Payroll deductions which are authorized by
Participants who are paid compensation in foreign currency shall be credited to
a bookkeeping account (as described in Article XIII) in the currency of
the country in which such Participant is employed.  Upon exercise of the Participant’s option, the Participant’s
accumulated payroll deductions shall be used to purchase shares of Stock
pursuant to Section 9.04, but the extent to which the Participant may
exercise his or her option will be determined using the applicable foreign
currency exchange rate as of the exercise date.  The option price shall be paid to the Corporation in U.S. dollars
after applying the applicable foreign currency exchange rate as of the exercise
date.

 

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ARTICLE IX - OPTIONS

 

9.01                                                                         Grant
of Option.  Subject to
Article 10, a Participant who has elected to participate in the manner
described in Article VIII and who is employed by the Corporation or a
Subsidiary as of the commencement date of a Phase shall be granted an option as
of such date to purchase that number of whole shares of Stock determined by
dividing the total amount to be credited to the Participant’s account by the
option price per share set forth in Section 9.02(a) below.  The option price per share for such Stock
shall be determined under Section 9.02 hereof, and the number of shares
exercisable shall be determined under Section 9.03 hereof.

 

9.02                                                                         Option
Price.  Subject to the limitations
hereinbelow, the option price for such Stock shall be the lower of the amounts
determined under paragraphs (a) and (b) below:

 

(a)                                  Eighty-five
percent (85%) of the closing price for a share of the Corporation’s Stock as
reported on the Nasdaq National Market or on an established securities exchange
as of the commencement date of the Phase; or

 

(b)                                 Eighty-five
percent (85%) of the closing price for a share of the Corporation’s Stock as
reported on the Nasdaq National Market or on an established securities exchange
as of the termination date of the Phase.

 

In the event that the commencement or termination date of a Phase is a
Saturday, Sunday or holiday, the amounts determined under the foregoing
subsections shall be determined using the price as of the last preceding
trading day.

 

If the Corporation’s Stock is not so reported in the Nasdaq National
Market or upon an established securities exchange, the option price shall equal
the lesser of (i) eighty-five percent (85%) of the average of the closing “bid”
and “asked” prices quoted on the Nasdaq SmallCap Market as of the commencement
date of the Phase, or if there are no such quoted “bid” and “asked” prices on
such date, on the next preceding date for which there are quotes, and (ii)
eighty-five percent (85%) of the average of the closing “bid” and “asked”
prices quoted on the Nasdaq SmallCap Market as of the termination date of the
phase, or if there are no such quoted “bid” and “asked” prices on such date, on
the next preceding date for which there are such quotes.

 

If the Corporation’s Stock is not listed on an established securities
exchange, the Nasdaq National Market or the Nasdaq SmallCap Market, then the
option price shall equal the lesser of (i) eighty-five percent (85%) of the
fair market value of a share of the Corporation’s Stock as of the commencement
date of the Phase, and (ii) eighty-five percent (85%) of the fair market
value of such stock as of the termination date of the Phase.  Such “fair market value” shall be determined
by the Board.

 

9.03                                                                         Limitations.  No employee shall be granted an option
hereunder:

 

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(a)                                  Which
permits his or her rights to purchase Stock under all employee stock purchase
plans of the Corporation or its Subsidiaries to accrue at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000) of fair market value of such Stock
(determined at the time such option is granted) for each calendar year in which
such option is outstanding at any time;

 

(b)                                 If
such employee would own and/or hold, immediately after the grant of the option,
Stock possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Corporation or of any Subsidiary.  For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code shall apply.

 

(c)                                  Which,
if exercised, would cause the limits established by the Administrator under
Section 5.02 to be exceeded.

 

9.04                                                                         Exercise
of Option.  Subject to a
Participant’s right to withdraw in the manner provided in Section 10.01, a
Participant’s option for the purchase of shares of Stock will be exercised
automatically on the termination date of that Phase.  However, in no event shall a Participant be allowed to exercise
an option for more shares of Stock than can be purchased with the payroll
deductions accumulated by the Participant in his or her bookkeeping account
during such Phase, whether or not the accumulated payroll deductions are less
than the full percentage amount that such Participant anticipated he or she
would contribute at the beginning of such Phase.

 

9.05                                                                         Delivery
of Shares.  As promptly as
practicable after the termination of any Phase, the Corporation’s transfer
agent or other authorized representative shall deliver to each Participant
herein certificates for that number of whole shares of Stock purchased upon the
exercise of the Participant’s option. 
The Corporation may, in its sole discretion, arrange with the
Corporation’s transfer agent or other authorized representative to establish,
at the direction of the Participant, individual securities accounts to which
will be credited that number of whole shares of Stock that are purchased with
the Participant’s accumulated payroll deductions pursuant to Section 9.04
above, such securities account to be subject to such terms and conditions as
may be imposed by the transfer agent or authorized representative.  Any
accumulated payroll deductions remaining after the exercise of the
Participant’s option shall be returned to the Participant, without interest, on
the first paycheck issued for the payroll period which begins on or immediately
after the commencement date of next Phase; provided, however, that the
Corporation may, under rules of uniform application, retain such remaining
amount in the Participant’s bookkeeping account and apply it toward the
purchase of shares of Stock in the next succeeding Phase, unless the
Participant requests a withdrawal of such amount pursuant to
Section 10.01.

 

The shares of the Corporation’s common stock to be delivered to a
Participant pursuant to the exercise of an option under Section 9.04 of
the Plan will be registered in the name of the Participant or, if the
Participant so directs by written notice to the Administrator prior to the
termination date of the Phase, in the names of the Participant and one other
person the Participant may designate as his joint tenant with rights of
survivorship, to the extent permitted by law.

 

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ARTICLE X - WITHDRAWAL OR

DISCONTINUATION OF PAYROLL WITHHOLDINGS

 

10.01                                                                   Withdrawal.  A Participant may request a withdrawal of
all accumulated payroll deductions then credited to the Participant’s
bookkeeping account by completing a change of election form and filing such
form with the Administrator.  The
Participant’s request shall be effective as of the beginning of the next
payroll period immediately following the date that the Administrator receives
the  Participant’s properly completed
change of election form.  As soon as
administratively feasible after the end of that Phase, all payroll deductions
credited to a bookkeeping account for the Participant will be paid to such
Participant and no further payroll deductions will be made during that Phase or
any future Phase unless the Participant completes a new Plan enrollment form as
provided in Section 8.02 above.  If
the Participant requests a withdrawal, the option granted to the Participant
under that Phase of the Plan shall immediately lapse and shall not be exercisable.  Partial withdrawals of payroll deductions
are not permitted.

 

Notwithstanding the foregoing, in order to be effective for a
particular Phase, the Participant’s request for withdrawal must be properly
completed and received by the Administrator on or before the date that is
fifteen (15) days before the date of the last paycheck during the Phase, or on
or before such other date established by the Administrator. Requests for
withdrawal that are received after that due date shall not be effective and no
withdrawal shall be made, unless otherwise determined by the Administrator.

 

10.02                                                                   Discontinuation.  A Participant may also request that the
Administrator discontinue any further payroll deductions that would otherwise
be made during the remainder of the Phase by completing a change of election
form and filing such form with the Administrator on or before the date that is
fifteen (15) days before the date of the last paycheck during the phase, or on
or before such other date established by the Administrator.  The Participant’s request shall be effective
as of the beginning of the next payroll period immediately following the date
that the Administrator receives the Participant’s properly completed change of
election form.  Upon the effective date
of the Participant’s request, the Corporation will discontinue making payroll
deductions for such Participant for that Phase, and all future Phases, unless
the Participant completes another change of election form as provided above.

 

ARTICLE XI - TERMINATION OF EMPLOYMENT

 

11.01                                                                   If
a Participant’s employment terminates with the Corporation for any reason,
voluntarily or involuntarily, including by reason of retirement or death, the
payroll deductions credited to such Participant’s bookkeeping account for such
Phase, if any, will be returned to the Participant (or, in the case of death,
to the  Participant’s estate) and any
options granted to such Participant under the Plan shall immediately lapse and
shall not be exercisable.  The return of
such payroll deductions shall be made to the Participant (or to the Participant’s
estate) as soon as administratively

 

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practicable.  In the event that
such termination occurs near the end of a Phase and the Corporation is unable
to discontinue payroll deductions for such Participant for his or her final
paycheck(s), such deductions shall still be made but shall be returned to the
Participant (or his or her estate) as provided herein.  In no event shall the accumulated payroll
deductions be used to purchase any shares of Stock.

 

If the option lapses as a result of the Participant’s death, any
accumulated payroll deductions credited to the Participant’s bookkeeping
account will be paid to the Participant’s estate.  In the event a Participant dies after exercise of the
Participant’s option but prior to delivery of the Stock to be transferred
pursuant to the exercise of the option under Section 9.04 above, any such
Stock and/or accumulated payroll deductions remaining after such exercise shall
be paid by the Corporation to the Participant’s estate.

 

The Corporation will not be responsible for or be required to give
effect to the disposition of any cash or Stock or the exercise of any option in
accordance with any will or other testamentary disposition made by such
Participant or in accordance with the provisions of any law concerning
intestacy, or otherwise.  No person
shall, prior to the death of a Participant, acquire any interest in any Stock,
in any option or in the cash credited to the Participant’s bookkeeping account
during any Phase of the Plan.

 

11.02                                                                   In
the event that any Subsidiary ceases to be a Subsidiary of the Corporation, the
employees of such Subsidiary shall be considered to have terminated their
employment for purposes of Section 11.01 hereof as of the date the Subsidiary
ceased to be a Subsidiary of the Corporation.

 

ARTICLE XII - STOCK RESERVED FOR OPTIONS

 

12.01                                                                   The
maximum number of shares of Stock which may be issued upon the exercise of
options to be granted under the Plan shall be Two Million (2,000,000) shares (as
appropriately adjusted for stock splits, stock dividends, combination of
shares, reclassifications or similar events as provided in Section 14.01),
plus an annual increase, beginning January 1, 2003, and each
January 1st  thereafter so long as
the Plan is in effect, equal to the number of shares issued upon the exercise
of options in the Phases ending on June 30th and December 31st of the
immediately preceding calendar year. 
Such shares may be authorized but unissued shares of the Corporation (or
the number and kind of securities to which said shares may be adjusted in
accordance with Section 14.01 hereof). 
Shares subject to the unexercised portion of any lapsed or expired
option may again be subject to option under the Plan.

 

12.02                                                                   The
Participant (or a joint tenant named pursuant to Section 9.05 above) shall
have no rights as a shareholder with respect to any shares of Stock subject to
the Participant’s option until the date of the issuance of a stock certificate
evidencing such shares as provided in Section 9.05.  No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),

 

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distributions or other rights for which the record date is prior to the
date such stock certificate is actually issued, except as otherwise provided in
Section 14.01 hereof.

 

ARTICLE XIII - ACCOUNTING AND USE OF
FUNDS

 

13.01                                                                   Payroll
deductions for Participants shall be credited to bookkeeping accounts,
established by the Corporation for each such Participant under the Plan.  A Participant may not make any cash payments
into such account.  Such account shall
be solely for bookkeeping purposes and shall not require the Corporation to
establish any separate fund or trust hereunder.  All funds from payroll deductions received or held by the
Corporation under the Plan may be used, without limitation, for any corporate
purpose by the Corporation, which shall not be obligated to segregate such funds
from its other funds.

 

ARTICLE XIV - ADJUSTMENT PROVISION

 

14.01                                                                   Subject
to any required action by the shareholders of the Corporation, in the event of
an increase or decrease in the number of outstanding shares of Stock or in the
event the Stock is changed into or exchanged for a different number or kind of
shares of stock or other securities of the Corporation or another corporation
by reason of a reorganization, merger, consolidation, divestiture (including a
spin-off), liquidation, recapitalization, reclassification, stock dividend, stock
split, combination of shares, rights offering or any other change in the
corporate structure or shares of the Corporation, the Board (or, if the
Corporation is not the surviving corporation in any such transaction, the board
of directors of the surviving corporation), in its sole discretion, shall
adjust the number and kind of securities subject to and reserved under the Plan
and, to prevent the dilution or enlargement of rights of those Eligible
Employees to whom options have been granted, shall adjust the number and kind
of securities subject to such outstanding options and, where applicable, the
exercise price per share for such securities.

 

In the event of sale by the Corporation of substantially all of its
assets and the consequent discontinuance of its business, or in the event of a
merger, exchange, consolidation, reorganization, divestiture (including a
spin-off), liquidation, reclassification or extraordinary dividend
(collectively referred to as a “transaction”), after which the Corporation is not
the surviving corporation, the Board may, in its sole discretion, at the time
of adoption of the plan for such transaction, may provide for one or more of
the following:

 

(a)                                The
acceleration of the exercisability of outstanding options granted at the commencement
of the Phase then in effect, to the extent of the accumulated payroll
deductions made as of the date of such acceleration pursuant to Article 8
hereof;

 

(b)                               The
complete termination of this Plan and a refund of amounts credited to the
Participants’ bookkeeping accounts hereunder; or

 

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(c)                                The
continuance of the Plan only with respect to completion of the then current
Phase and the exercise of options thereunder. 
In the event of such continuance, Participants shall have the right to
exercise their options as to an equivalent number of shares of stock of the
corporation succeeding the Corporation by reason of such transaction.

 

In the event of a transaction where the Corporation survives, then the Plan
shall continue in effect, unless the Board takes one or more of the actions set
forth above.  The grant of an option
pursuant to the Plan shall not limit in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, exchange or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.

 

ARTICLE XV - NONTRANSFERABILITY OF
OPTIONS

 

15.01                                                                   Options
granted under any Phase of the Plan shall not be transferable and shall be
exercisable only by the Participant during the Participant’s lifetime.

 

15.02                                                                   Neither
payroll deductions granted to a Participant’s account, nor any rights with
regard to the exercise of an option or to receive Stock under any Phase of the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
by the Participant.  Any such attempted
assignment, transfer, pledge or other disposition shall be null and void and
without effect, except that the Corporation may, at its option, treat such act
as an election to withdraw in accordance with Section 10.01.

 

ARTICLE XVI - AMENDMENT AND TERMINATION

 

16.01                                                                   The
Plan may be terminated at any time by the Board of Directors, provided that,
except as permitted in Section 14.01 hereof, no such termination shall
take effect with respect to any options then outstanding.  The Board may, from time to time, amend the
Plan as it may deem proper and in the best interests of the Corporation or as
may be necessary to comply with Code Section 423 or other applicable laws
or regulations; provided, however, no such amendment shall, without the consent
of a Participant, materially adversely affect or impair the right of a
Participant with respect to any outstanding option; and provided, further, that
no such amendment shall, unless the shareholders of the Corporation have
approved the same, directly or indirectly:

 

(a)                                Increase
the total number of shares for which options may be granted under the Plan
(except as provided in Section 14.01 herein);

 

(b)                               Modify
the group of Subsidiaries whose employees may be eligible to participate in the
Plan or materially modify any other requirements as to eligibility for
participation in the Plan; or

 

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(c)                                Materially
increase the benefits accruing to Participants under the Plan.

 

ARTICLE XVII - NOTICES

 

17.01                                                                   All
notices, forms, elections or other communications in connection with the Plan
or any Phase thereof shall be in such form as specified by the Corporation or
the Administrator from time to time, and shall be deemed to have been duly
given when received by the Participant or his or her personal representative or
by the Corporation or its designated representative, as the case may be.

 

12Exhibit 10.1

 

LETTER AMENDMENT No. 2

 

July 19, 2004

 

M&I Marshall & Ilsley
Bank

651 Nicollet Mall

Minneapolis, Minnesota  55402-1611

 

Ladies/Gentlemen:

 

We refer to
the Revolving Credit and Term Loan Agreement dated as of October 17, 2003 (the
“Credit Agreement”) between you and us (under our former name of MedAmicus,
Inc.).  Unless otherwise defined in this
letter amendment, terms defined in the Credit Agreement are used in this letter
amendment as defined in the Credit Agreement.

 

It is hereby
agreed by you and us as follows:

 

The Credit
Agreement is, effective the date first above written, hereby amended as
follows:

 

(a)                                  For
purposes of calculating the Senior Funded Debt Ratio for the periods ending
June 30, 2004, September 30, 2004 and December 31, 2004, the Borrower may add
back into EBITDA a one-time intangible asset write-off expense in the
approximate amount of $2,809,199 taken by the Borrower during 2004 in addition
to the add back permitted under Letter Amendment No. 1.

 

We have
requested that you waive our failure to comply with Section 5.1(g) of the
Credit Agreement as of June 30, 2004. 
You have agreed to this request. 
We acknowledge that this waiver is subject to the provisions of Sections
7.1 and 7.2 of the Credit Agreement.

 

On and after
the effective date of this letter amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, or words of like import
referring to the Credit Agreement, and each reference in the Notes and the
Security Agreements to “the Credit Agreement”, “thereunder”, “thereof”, or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended by this letter amendment.  The Credit Agreement, as amended by this
letter amendment, is and shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed.

 

This letter
amendment may be executed in any number of counterparts and by any combination
of the parties hereto in separate counterparts, each of which counterparts
shall be an original and all of which taken together shall constitute one and
the same letter amendment.

 

1

 

If you agree
to the terms and provisions hereof, please evidence your agreement by executing
and returning one counterpart of this letter amendment to us.  This letter amendment shall become effective
as of the date first above written when and if counterparts of this letter
amendment shall have been executed by you and us and the consent attached
hereto shall have been executed by Enpath Lead Technologies, Inc. (f/k/a
Medacqusition, Inc.).

 

	
   

  	
  Very truly
  yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Enpath
  Medical, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed as of
  the date

  	
   

  	
   

  
	
  first above
  written:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  M&I
  Marshall & Ilsley Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  	
   

  
									

 

CONSENT

 

The
undersigned, as Debtor under the Third Party Security Agreement dated as of
October 17, 2003 (the “Pledge”) in favor of M&I Marshall & Ilsley Bank
referred to in the foregoing letter amendment, hereby consents to such letter
amendment and hereby confirms and agrees that the Pledge is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects except that, on and after the effective date of such letter amendment,
each reference in the Pledge to “the Credit Agreement”, “thereunder”, “thereof”
or words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by such letter amendment.

 

	
   

  	
  Enpath Lead
  Technologies, Inc.

  	
   

  
	
   

  	
  (f/k/a
  Medacqusition, Inc.)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  	
   

  
						

 

2

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