Document:

SIXTH AMENDEMENT TO SECOND AMENDED AND

EXHIBIT 10.1

 

SIXTH AMENDMENT TO

SECOND AMENDED AND

RESTATED LOAN AND

SECURITY AGREEMENT

 

THIS SIXTH AMENDMENT TO

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (“Amendment”),

dated effective as of April 22, 2002 (the “Amendment Effective Date”), is

executed and entered into by and among the financial institutions listed on the

signature pages hereof (such financial institutions are referred to herein

individually as a “Lender” and collectively as the “Lenders”),

Bank of America, National Association (in its capacity as agent for the

Lenders, the “Agent”), and Pentacon, Inc. (the “Parent”) and each

of the other undersigned subsidiaries of the Parent party to the Agreement.

 

RECITALS:

 

A.            The Borrowers, the Lenders, and the Agent are parties to

the certain Second Amended and Restated Loan and Security Agreement, dated as

of September 30, 1999, as amended by the First Amendment to Second Amended and

Restated Loan and Security Agreement dated effective as of November 15, 1999,

the Second Amendment to Second Amended and Restated Loan and Security Agreement

dated effective as of December 31, 1999, the Third Amendment to Second Amended

and Restated Loan and Security Agreement dated effective as of September 30,

1999, the Fourth Amendment to Second Amended and Restated Loan and Security

Agreement dated effective as of October 30, 2001, and the Fifth Amendment to

Second Amended and Restated Loan and Security Agreement dated effective as of

March 19, 2002 (collectively, the “Agreement”).

 

B.            The Loan Parties, the Lenders and the Agent have agreed

to amend the Agreement as provided below.

 

NOW THEREFORE, in

consideration of the premises and the mutual covenants herein contained, the

parties hereto hereby agree as follows:

 

ARTICLE 1

Definitions

 

Section 1.1             Definitions.  Unless otherwise defined in this Amendment,

terms defined by the Agreement, where used in this Agreement, shall have the

same meanings in this Amendment as are prescribed by the Agreement.

 

ARTICLE 2

Amendments

 

Section 2.1             Amendment to Definitions in

Section 1.1 of the Agreement. 

Effective as of the Amendment Effective Date, the definitions of

“Commitment Termination Date” and “Stated Termination Date” in Section 1.1

of the Agreement are hereby amended and restated to read in their respective

entireties as follows:

 

“Commitment

Termination Date” means May 29, 2002.

 

“Stated Termination

Date” means May 31, 2002.

 

 

ARTICLE 3

Release

 

Section 3.1             Release.  In consideration of this Amendment, each of

the Loan Parties on its own behalf and on behalf of their respective

Subsidiaries, predecessors, successors and assigns (collectively, the “Releasing

Parties”), hereby irrevocably and forever releases, remises, discharges and

holds harmless the Agent and each Lender and all of their respective officers,

directors, employees, agents, attorneys and representatives, and all of their

respective predecessors, successors, and assigns, from any and all claims,

causes of action, demands, and liabilities of any kind whatsoever, if any,

whether direct or indirect, fixed or contingent, liquidated or nonliquidated,

disputed or undisputed, asserted or non-asserted, known or unknown, which any

of the Releasing Parties has relating in any way to any event, circumstance,

occurrence, act, action, or failure to act in connection with or otherwise

concerning this Agreement, the other Loan Documents or the transactions

contemplated therein from the beginning of time through the Amendment Effective

Date.

 

ARTICLE 4

Miscellaneous

 

Section 4.1             Conditions Precedent.  The effectiveness of this Amendment is

subject to the satisfaction of each of the following conditions precedent:

 

(a)           The Agent shall have received all of

the following, each dated the date of this Amendment (unless otherwise

indicated), in form and substance satisfactory to the Agent:

 

(i)            Amendment Documents.  This Amendment and any other agreement,

certificate, document, or instrument required by the Agent to be executed or

delivered by any Borrower, the Agent or the Lenders in connection with this

Amendment, in each case duly executed (the “Amendment Documents”);

 

(ii)           Fees and Expenses.  Evidence that costs and expenses (including,

without limitation, reasonable attorney’s fees and expenses) incurred by the

Agent incident to this Amendment or otherwise required to be paid in accordance

with Section 15.7 of the Agreement, to the extent incurred and submitted

to the Borrowers, shall have been paid in full;

 

(iii)          Additional Information.  The Agent shall have received such

additional documents, instruments, and information as the Agent may reasonably

request to effect the transaction contemplated hereby; and

 

(iv)          Consents.  All consents required by Section 13.2

of the Agreement shall have been obtained.

 

(b)           The representations and warranties

contained herein, in the Agreement, and in all other Loan Documents, as amended

hereby, shall be true and correct as of the date hereof as if made on the date

hereof (except those, if any, which by their terms specifically relate only to

a different date).

 

2

 

(c)           All corporate proceedings taken in

connection with the transactions contemplated by this Amendment and all other

agreements, documents, and instruments executed and/or delivered pursuant

hereto, and all legal matters incident hereto, shall be satisfactory to the

Agent.

 

(d)           No Default or Event of Default should

have occurred and be continuing.

 

Section 4.2             Representations and Warranties.  The Borrowers hereby represent and warrant

to, and agree with, the Agent, for the benefit of the Lenders, that, as of the

date of and after giving effect to this Amendment, (a) the execution, delivery,

and performance of this Amendment and any and all other Amendment Documents

executed and/or delivered in connection herewith have been authorized by all

requisite corporate action on the part of each of the Borrowers (as applicable)

and will not violate any of such Borrower’s certificate of incorporation or

bylaws, (b) all representations and warranties set forth in the Agreement and

in any other Loan Document are true and correct as if made again on and as of

such date (except those, if any, which by their terms specifically relate only

to a different date) in the Agreement, (d) no Default or Event of Default has

occurred and is continuing, (e) the Agreement (as amended by this Amendment),

and all other Loan Documents are and remain legal, valid, binding, and

enforceable obligations in accordance with the terms thereof, and (f) the

certifications delivered to the Agent under clause (i), clause (ii),

clause (iii), and clause (iv) of Section 10.1(a) of the

Agreement remain true, correct, and complete as of the Amendment Effective

Date.

 

Section 4.3             Survival of Representations and

Warranties.  All representations and

warranties made in this Amendment or any other Loan Document shall survive the

execution and delivery of this Amendment and the other Loan Documents, and no

investigation by the Agent or any Lender, or any closing, shall affect the

representation and warranties or the right of the Agent and the Lenders to rely

upon them.

 

Section 4.4             Reference to Agreement.  Each of the Loan Documents, including the

Agreement, the Amendment Documents, and any and all other agreements,

documents, or instruments now or hereafter executed and/or delivered pursuant

to the terms hereof or pursuant to the terms of the Agreement as amended

hereby, are hereby amended so that any reference in such Loan Documents to the

Agreement, whether direct or indirect, shall mean a reference to the Agreement

as amended hereby.

 

Section 4.5             Severability.  Any provision of this Amendment held by a

court of competent jurisdiction to be invalid or unenforceable shall not impair

or invalidate the remainder of this Amendment and the effect thereof shall be

confined to the provision so held to be invalid or unenforceable.

 

Section 4.6             Successors and Assigns.  This Amendment is binding upon and shall

inure to the benefit of the Agent, the Lenders, the Borrowers, and their

respective successors and assigns, except no Borrower may assign or transfer

any of its rights or obligations hereunder without the prior written consent of

the Agent and the Lenders.

 

Section 4.7             General.  This Amendment, when signed by each

signatory as required by the Agreement (a) shall be deemed effective prospectively

as of the Amendment Effective Date, (b) contains the entire agreement among the

parties and may not be amended or modified except in writing signed by all

parties as required by the Agreement, (c) shall be governed and construed

according to the laws of the State of Texas, and (d) may be executed in any

number of counterparts, each of which shall be valid as an original and all of

which shall be on and the same agreement. 

A telecopy or other electronic transmission of any executed counterpart

shall be deemed valid as an original.

 

3

 

THIS WRITTEN AGREEMENT 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 ORAL AGREEMENTS BETWEEN THE

PARTIES.

 

IN WITNESS WHEREOF, the parties hereto have caused

this Agreement to be executed by their duly authorized officers in several

counterparts effective as of the date specified in the introductory paragraph

hereof.

 

	

   

  	

  LOAN PARTIES:

  	

   

  
	

   

  	

   

  
	

   

  	

  PENTACON, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  PENTACON AEROSPACE GROUP, INC., a Nevada corporation

  and successor by merger to Texas International Aviation, Inc. West Coast Aero

  Products Holding Corp., Pollard Acquisition Corp., ASI Aerospace Group, Inc.

  and Alatec Products, Inc.

  
	

   

  	

  ALATEC CABLE & HARNESS 

  
	

   

  	

  ASSEMBLY DIVISION, INC.

  
	

   

  	

  ALATEC FASTENER AND COMPONENT GROUP, INC.

  
	

   

  	

  ALATEC RACE, INC.

  
	

   

  	

  TRACE ALATEC SUPPLY COMPANY, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  PENTACON INDUSTRIAL GROUP, INC., a Nevada

  corporation and successor by merger to AXS Solutions, Inc., Maumee

  Industries, Inc. and Sales Systems Limited

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
					

 

4

 

	

   

  	

  PENTACON USA, L.P., a Texas limited partnership and

  successor by merger to Pace Products, Inc. and Capitol Bolt & Supply,

  Inc.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  JIT Holdings, Inc., a Texas corporation

  
	

   

  	

  Its:

  	

  General Partner

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  THE AGENT:

  	

   

  
	

   

  	

   

  
	

   

  	

  BANK OF AMERICA, NATIONAL ASSOCIATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  THE LENDERS:

  	

   

  
	

   

  	

   

  
	

   

  	

  BANK OF AMERICA, NATIONAL ASSOCIATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  FLEET CAPITAL CORPORATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  PNC BANK, NATIONAL ASSOCIATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  UNION BANK OF CALIFORNIA, N.A.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
								

 

5Proxy2000v5.doc

Exh 10.1

 

INVESTORS FINANCIAL SERVICES CORP.

 

AMENDED AND RESTATED 1995 STOCK PLAN

 

 

           1.          Purpose.

The purpose of the Investors Financial Services Corp.  1995 Stock Plan (the “Plan”)

is to encourage key employees of Investors Financial Services Corp.  (the

“Company”) and of any present or future parent or subsidiary of the Company

(collectively, “Related Corporations”) and other individuals who render

services to the Company or a Related Corporation, by providing opportunities to

participate in the ownership of the Company and its future growth through

(a) the grant of options which qualify as “incentive stock options”

(“ISOs”) under Section 422(b) of the Internal Revenue Code of 1986, as amended

(the “Code”); (b) the grant of options which do not qualify as ISOs

(“Non-Qualified Options”); (c) awards of stock in the Company (“Awards”);

and (d) opportunities to make direct purchases of stock in the Company

(“Purchases”).  Both ISOs and

Non-Qualified Options are referred to hereafter individually as an “Option” and

collectively as “Options.”  Options,

Awards and authorizations to make Purchases are referred to hereafter

collectively as “Stock Rights.”  As used

herein, the terms “parent” and “subsidiary” mean “parent corporation” and

“subsidiary corporation,” respectively, as those terms are defined in Section

424 of the Code.

 

                                2.          Administration of the Plan.

 

                                             A.         Board or Committee Administration.  The Plan shall be administered by the

Board of Directors of the Company (the “Board”) or by a committee appointed by

the Board (the “Committee”); provided that the Plan shall be administered:

(i) to the extent required by applicable regulations under

Section 162(m) of the Code, by two or more “outside directors” (as defined

in applicable regulations thereunder) and (ii) to the extent required by

Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or any

successor provision (“Rule 16b-3”), by a disinterested administrator or

administrators within the meaning of Rule 16b-3.  Hereinafter, all references in this Plan to the “Committee” shall

mean the Board if no Committee has been appointed.  Subject to ratification of the grant or authorization of each

Stock Right by the Board (if so required by applicable state law), and subject

to the terms of the Plan, the Committee shall have the authority to

(i) determine to whom (from among the class of employees eligible under

paragraph 3 to receive ISOs) ISOs shall be granted, and to whom (from

among the class of individuals and entities eligible under paragraph 3 to

receive Non-Qualified Options and Awards and to make Purchases) Non-Qualified

Options, Awards and authorizations to make Purchases may be granted;

(ii) determine the time or times at which Options or Awards shall be

granted or Purchases made; (iii) determine the purchase price of shares

subject to each Option or Purchase, which prices shall not be less than the

minimum price specified in paragraph 6; (iv) determine whether each

Option granted shall be an ISO or a Non-Qualified Option; (v) determine

(subject to paragraph 7) the time or times when each Option shall become

exercisable and the duration of the exercise period; (vi) extend the

period during which outstanding Options may be exercised; (vii) determine

whether restrictions such as repurchase options are to be imposed on shares

subject to Options, Awards and Purchases and the nature of such restrictions,

if any, and (viii) interpret the Plan and prescribe and rescind rules and

regulations relating to it.  If the Committee

determines to issue a Non-Qualified Option, it shall take whatever actions it

deems necessary, under Section 422 of the Code and the regulations

promulgated thereunder, to ensure that such Option is not treated as an

ISO.  The interpretation and construction

by the Committee of any provisions of the Plan or of any Stock Right granted

under it shall be final unless otherwise determined by the Board.  The Committee may from time to time adopt

such rules and regulations for carrying out the Plan as it may deem

advisable.  No member of the Board or

the Committee shall be liable for any action or determination made in good

faith with respect to the Plan or any Stock Right granted under it.

 

1

 

                                             B.         Committee Actions.  The Committee may select one of its

members as its chairman, and shall hold meetings at such time and places as it

may determine.  A majority of the

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

the Committee at a meeting at which a quorum is present, or acts reduced to or

approved in writing by all the members of the Committee (if consistent with

applicable state law), shall be the valid acts of the Committee.   From time to time the Board may increase

the size of the Committee and appoint additional members thereof, remove

members (with or without cause) and appoint new members in substitution

therefor, fill vacancies however caused, or remove all members of the Committee

and thereafter directly administer the Plan.

 

                                             C.         Grant of Stock Rights to Board Members.  Subject to the provisions of

paragraph 2(A) above, if applicable, Stock Rights may be granted to

members of the Board.  All grants of

Stock Rights to members of the Board shall in all other respects be made in

accordance with the provisions of this Plan applicable to other eligible

persons.  Consistent with the provisions

of Paragraph 2(A) above, members of the Board who either (i) are

eligible to receive grants of Stock Rights pursuant to the Plan or

(ii) have been granted Stock Rights may vote on any matters affecting the

administration of the Plan or the grant of any Stock Rights pursuant to the

Plan, except that no such member shall act upon the granting to himself or

herself of Stock Rights, but any such member may be counted in determining the

existence of a quorum at any meeting of the Board during which action is taken

with respect to the granting to such member of Stock Rights.

 

           3.          Eligible

Employees and Others.  ISOs

may be granted only to employees of the Company or any Related

Corporation.  Non-Qualified Options,

Awards and authorizations to make Purchases may be granted to any employee,

officer or director (whether or not also an employee) or consultant of the

Company or any Related Corporation.  The

Committee may take into consideration a recipient’s individual circumstances in

determining whether to grant a Stock Right. 

The granting of any Stock Right to any individual or entity shall

neither entitle that individual or entity to, nor disqualify such individual or

entity from, participation in any other grant of Stock Rights.

 

           4.          Stock.  The stock subject to Stock Rights shall

be authorized but unissued shares of Common Stock of the Company, par value

$.01 per share (the “Common Stock”), or shares of Common Stock reacquired by

the Company in any manner.  The

aggregate number of shares which may be issued pursuant to the Plan is

7,640,000, subject to adjustment as provided in paragraph 13.  If any Stock Right granted under the Plan

shall expire or terminate for any reason without having been exercised in full

or shall cease for any reason to be exercisable in whole or in part or shall be

repurchased by the Company, the shares of Common Stock subject to such Stock

Right shall again be available for grants of Stock Rights under the Plan.

 

           No employee of the Company or any

Related Corporation may be granted Options to acquire, in the aggregate, more

than 1,792,000 shares of Common Stock under the Plan, subject to adjustment as

provided in paragraph 13.  If any Option

granted under the Plan shall expire or terminate for any reason without having

been exercised in full or shall cease for any reason to be exercisable in whole

or in part or shall be repurchased by the Company, the shares subject to such

Option shall be included in the determination of the aggregate number of shares

of Common Stock deemed to have been granted to such employee under the

Plan.  If, in accordance with the Plan,

an optionee uses shares of common stock of the Company to pay the exercise

price of an Option, only the number of shares issued net of shares tendered in

payment of such exercise price shall be deemed to be issued for purposes of

determining the maximum number of shares available under the Plan.

 

           5.          Granting

of Stock Rights.  Stock

Rights may be granted under the Plan at any time on or after August 15, 1995 and

prior to August 1, 2005.  The date of

grant of a Stock Right under the Plan will be the date specified by the

Committee at the time it grants the Stock Right; provided, however, that such

date shall not be prior to the date on which the Committee acts to approve the

grant.  Options granted under 

 

 

2

 

the Plan are

intended to qualify as performance-based compensation to the extent required

under Treasury Regulation Section 1.162-27.

 

           6.          Minimum

Option Price; ISO Limitations.

 

                                             A.         Price for Non-Qualified Options, Awards and Purchases.  The exercise price per share specified

in the agreement relating to each Non-Qualified Option granted, and the

purchase price per share of stock granted in any Award or authorized as a

Purchase, under the Plan shall in no event be less than the minimum legal

consideration required therefor under the laws of any jurisdiction in which the

Company or its successors in interest may be organized.

 

                                             B.         Price for ISOs.  The exercise price per share specified in the agreement relating

to each ISO granted under the Plan shall not be less than the fair market value

per share of Common Stock on the date of such grant.  In the case of an ISO to be granted to an employee owning stock

possessing more than ten percent (10%) of the total combined voting power of

all classes of stock of the Company or any Related Corporation, the price per

share specified in the agreement relating to such ISO shall not be less than

one hundred ten percent (110%) of the fair market value per share of Common

Stock on the date of grant.  For

purposes of determining stock ownership under this paragraph, the rules of

Section 424(d) of the Code shall apply.

 

                                             C.         $100,000 Annual Limitation on ISO Vesting.  Each eligible employee may be granted Options

treated as ISOs only to the extent that, in the aggregate under this Plan and

all incentive stock option plans of the Company and any Related Corporation,

ISOs do not become exercisable for the first time by such employee during any

calendar year with respect to stock having a fair market value (determined at

the time the ISOs were granted) in excess of $100,000.  The Company intends to designate any Options

granted in excess of such limitation as Non-Qualified Options.

 

                                             D.         Determination of Fair Market Value.  If, at the time an Option is granted

under the Plan, the Company’s Common Stock is publicly traded, “fair market

value” shall be determined as of the date of grant or, if the prices or quotes

discussed in this sentence are unavailable for such date, the last business day

for which such prices or quotes are available prior to the date of grant and

shall mean (i) the average (on that date) of the high and low prices of

the Common Stock on the principal national securities exchange on which the

Common Stock is traded, if the Common Stock is then traded on a national

securities exchange; or (ii) the last reported sale price (on that date)

of the Common Stock on the Nasdaq National Market, if the Common Stock is not

then traded on a national securities exchange; or (iii) the closing bid

price (or average of bid prices) last quoted (on that date) by an established

quotation service for over-the-counter securities, if the Common Stock is not

reported on the Nasdaq National Market. 

If the Common Stock is not publicly traded at the time an Option is

granted under the Plan, “fair market value” shall mean the fair value of the

Common Stock as determined by the Committee after taking into consideration all

factors which it deems appropriate, including, without limitation, recent sale

and offer prices of the Common Stock in private transactions negotiated at

arm’s length.

 

           7.          Option

Duration.  Subject to

earlier termination as provided in paragraphs 9 and 10 or in the agreement

relating to such Option, each Option shall expire on the date specified by the

Committee, but not more than (i) ten years from the date of grant in the

case of Options generally and (ii) five years from the date of grant in

the case of ISOs granted to an employee owning stock possessing more than ten

percent (10%) of the total combined voting power of all classes of stock of the

Company or any Related Corporation, as determined under

paragraph 6(B).  Subject to earlier

termination as provided in paragraphs 9 and 10, the term of each ISO shall

be the term set forth in the original instrument granting such ISO, except with

respect to any part of such ISO that is converted into a Non-Qualified Option

pursuant to paragraph 16.

 

3

 

           8.          Exercise

of Option.  Subject to

the provisions of paragraphs 9 through 12, each Option granted under the

Plan shall be exercisable as follows:

 

                                             A.         Vesting. 

The Option shall either be fully exercisable on the date of grant or

shall become exercisable thereafter in such installments as the Committee may

specify.

 

                                             B.         Full Vesting of Installments.  Once an installment becomes exercisable

it shall remain exercisable until expiration or termination of the Option,

unless otherwise specified by the Committee.

 

                                             C.         Partial Exercise.  Each Option or installment may be exercised at any time or

from time to time, in whole or in part, for up to the total number of shares

with respect to which it is then exercisable.

 

                                             D.         Acceleration of Vesting.  The Committee shall have the right to

accelerate the date that any installment of any Option becomes exercisable;

provided that the Committee shall not, without the consent of an optionee,

accelerate the permitted exercise date of any installment of any Option granted

to any employee as an ISO (and not previously converted into a Non-Qualified Option

pursuant to paragraph 16) if such acceleration would violate the annual

vesting limitation contained in Section 422(d) of the Code, as described in

paragraph 6(C).

 

            9.         Termination

of Employment.  Unless

otherwise specified in the agreement relating to such ISO, if an ISO optionee

ceases to be employed by the Company and all Related Corporations other than by

reason of death or disability as defined in paragraph 10, no further

installments of his or her ISOs shall become exercisable, and his or her ISOs

shall terminate on the earlier of (a) thirty (30) days after the  date of termination of his or her

employment, or (b)  their specified expiration dates, except to the extent

that such ISOs (or unexercised installments thereof) have been converted into

Non-Qualified Options pursuant to paragraph 16.  For purposes of this paragraph 9, employment shall be

considered as continuing uninterrupted during any bona fide leave of absence

(such as those attributable to illness, military obligations or governmental

service) provided that the period of such leave does not exceed 90 days

or, if longer, any period during which such optionee’s right to reemployment is

guaranteed by statute.  A bona fide

leave of absence with the written approval of the Committee shall not be

considered an interruption of employment under this paragraph 9, provided that

such written approval contractually obligates the Company or any Related

Corporation to continue the employment of the optionee after the approved

period of absence.  ISOs granted under

the Plan shall not be affected by any change of employment within or among the

Company and Related Corporations, so long as the optionee continues to be an

employee of the Company or any Related Corporation.  Nothing in the Plan shall be deemed to give any grantee of any

Stock Right the right to be retained in employment or other service by the

Company or any Related Corporation for any period of time.

 

                                    10.      Death;

Disability.

 

                                                           A.         Death.  If an ISO optionee ceases to be employed by

the Company and all Related Corporations by reason of his or her death, any ISO

owned by such optionee may be exercised, to the extent otherwise exercisable on

the date of death, by the estate, personal representative or beneficiary who

has acquired the ISO by will or by the laws of descent and distribution, until

the earlier of (i) the specified expiration date of the ISO or (ii) one year

from the date of the optionee’s death.

 

                                                           B.         Disability.  If an ISO optionee ceases to be

employed by the Company and all Related Corporations by reason of his or her

disability, such optionee shall have the right to exercise any ISO held by him

or her on the date of termination of employment, for the number of shares for

which he or she could have exercised on that date, until the earlier of (i) the

specified expiration date of the ISO or (ii) 

one year from the date of the termination of the optionee’s

employment.  For the 

 

 

4

 

                                purposes of the Plan, the term

“disability” shall mean “permanent and total disability” as defined in Section

22(e)(3) of the Code or any successor statute.

 

                11.          Assignability. Except as set forth

below, (i) no Stock Right shall be transferable by any grantee other than

by will or by the laws of descent and distribution and (ii) Stock Rights

may be exercised during the grantee’s lifetime only by the grantee (or, if the

grantee is disabled and so long as the Stock Right remains exercisable, by the

grantee’s duly appointed guardian or other legal representative). However, a

grantee may transfer (i) a Non-Qualified Option pursuant to a valid

domestic relations order and (ii) a Stock Right other than an ISO to, or

for the benefit of, family members or to other persons for estate planning

purposes.  Following any such transfer,

any such Stock Right shall continue to be subject to the same terms and

conditions as were applicable immediately prior to transfer, and references to

a grantee, to the extent relevant in the context, shall include references to

authorized transferees.  The events and

consequences of termination of employment set forth in a grantee’s agreement

pursuant to which such Stock Right is granted shall continue to be applied and

triggered with reference to the original grantee, following which the Stock

Right shall be exercisable by the transferee only to the extent and for the

periods specified in such agreement.

 

           12.        Terms and

Conditions of Options.  Options

shall be evidenced by instruments (which need not be identical) in such forms

as the Committee may from time to time approve.  Such instruments shall conform to the terms and conditions set

forth in paragraphs 6 through 11 hereof and may contain such other

provisions as the Committee deems advisable which are not inconsistent with the

Plan, including restrictions applicable to shares of Common Stock issuable upon

exercise of Options.  The Committee may

specify that any Non-Qualified Option shall be subject to the restrictions set

forth herein with respect to ISOs, or to such other termination and cancellation

provisions as the Committee may determine. 

The Committee may from time to time confer authority and responsibility

on one or more of its own members and/or one or more officers of the Company to

execute and deliver such instruments. 

The proper officers of the Company are authorized and directed to take

any and all action necessary or advisable from time to time to carry out the

terms of such instruments.

 

           13.        Adjustments.

 

                                             A.         Stock Dividends and Stock Splits.  If the shares of Common Stock shall be

subdivided or combined into a greater or smaller number of shares or if the

Company shall issue any shares of Common Stock as a stock dividend on its

outstanding Common Stock, the number of shares of Common Stock deliverable upon

the exercise of Options shall be appropriately increased or decreased

proportionately, and appropriate adjustments shall be made in the purchase

price per share to reflect such subdivision, combination or stock dividend.

 

                                             B.         Consolidations or Mergers.  If the Company is to be consolidated

with or acquired by another entity in a merger, sale of all or substantially

all of the Company’s assets or otherwise (an “Acquisition”), the Committee or

the board of directors of any entity assuming the obligations of the Company

hereunder (the “Successor Board”), shall, as to outstanding Options, either

(i) make appropriate provision for the continuation of such Options by

substituting on an equitable basis for the shares then subject to such Options

either (a) the consideration payable with respect to the outstanding

shares of Common Stock in connection with the Acquisition, (b) shares of

stock of the surviving corporation or (c) such other securities as the

Successor Board deems appropriate, the fair market value of which shall not

materially exceed the fair market value of the shares of Common Stock subject

to such Options immediately preceding the Acquisition; or (ii) upon

written notice to the optionees, provide that all Options must be exercised, to

the extent then exercisable, within a specified number of days of the date of

such notice, at the end of which period the Options shall terminate; or

(iii) terminate all Options in exchange for a cash payment equal to the

excess of the fair market value of the shares subject to such Options (to the

extent then exercisable) over the exercise price thereof.

 

5

 

                                             C.         Recapitalization or Reorganization.  In the event of a recapitalization or

reorganization of the Company (other than a transaction described in

subparagraph B above) pursuant to which securities of the Company or of

another corporation are issued with respect to the outstanding shares of Common

Stock, an optionee upon exercising an Option shall be entitled to receive for

the purchase price paid upon such exercise the securities he or she would have

received if he or she had exercised such Option prior to such recapitalization

or reorganization.

 

                                             D.         Modification of ISOs.  Notwithstanding the foregoing, any

adjustments made pursuant to subparagraphs A, B or C with respect to ISOs

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

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

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

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

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

ISOs or would cause adverse tax consequences to the holders, it may refrain

from making such adjustments.

 

                                             E.          Dissolution or Liquidation.  In the event of the proposed dissolution

or liquidation of the Company, each Option will terminate immediately prior to

the consummation of such proposed action or at such other time and subject to

such other conditions as shall be determined by the Committee.

 

                                             F.          Issuances of Securities.  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

subject to Options.  No adjustments

shall be made for dividends paid in cash or in property other than securities

of the Company.

 

                                             G.         Fractional Shares.  No fractional shares shall be issued

under the Plan and the optionee shall receive from the Company cash in lieu of

such fractional shares.

 

                                             H.         Adjustments.  Upon the happening of any of the events described in

subparagraphs A, B or C above, the class and aggregate number of shares

and the per participant limit set forth in paragraph 4 hereof that are

subject to Stock Rights which previously have been or subsequently may be

granted under the Plan shall also be appropriately adjusted to reflect the

events described in such subparagraphs. 

The Committee or the Successor Board shall determine the specific

adjustments to be made under this paragraph 13 and, subject to

paragraph 2, its determination shall be conclusive.

 

           14.        Means of

Exercising Options.  An

Option (or any part or installment thereof) shall be exercised by giving

written notice to the Company at its principal office address, or to such

transfer agent as the Company shall designate. 

Such notice shall identify the Option being exercised and specify the

number of shares as to which such Option is being exercised, accompanied by

full payment of the purchase price therefor either (a) in United States

dollars in cash or by check, (b) at the discretion of the Committee,

through delivery of shares of Common Stock having a fair market value equal as

of the date of the exercise to the cash exercise price of the Option,

(c) at the discretion of the Committee, by delivery of the grantee’s

personal recourse note bearing interest payable not less than annually at no

less than 100% of the lowest applicable Federal rate, as defined in

Section 1274(d) of the Code, (d) at the discretion of the Committee

and consistent with applicable law, through the delivery of an assignment to

the Company of a sufficient amount of the proceeds from the sale of the Common

Stock acquired upon exercise of the Option and an authorization to the broker

or selling agent to pay that amount to the Company, which sale shall be at the

participant’s direction at the time of exercise, or (e) at the discretion

of the Committee, by any combination of (a), (b), (c) and (d) above.  If the Committee exercises its discretion to

permit payment of the exercise price of an ISO by means of the methods set

forth in clauses (b), (c), (d) or (e) of the preceding sentence, such

discretion shall be exercised in writing at the time of the grant of the ISO in

question.  The holder of an Option shall

not have the rights of a stockholder with respect to the shares covered by such

Option until the date of issuance of a stock certificate to such holder for such

shares.  Except as expressly provided

above in 

 

6

 

paragraph 13

with respect to changes in capitalization and stock dividends, no adjustment

shall be made for dividends or similar rights for which the record date is

before the date such stock certificate is issued.

 

           15.        Term and

Amendment of Plan.  This

Plan was originally adopted by the Board on August 15, 1995, and approved by

the sole stockholder of the Company in August 1995.  The Plan shall expire at the end of the day on August 1, 2005

(except as to Options outstanding on that date).  The Board may terminate or amend the Plan in any respect at any

time, except that, without the approval of the stockholders obtained within 12

months before or after the Board adopts a resolution authorizing any of the

following actions: (a) the total number of shares that may be issued under

the Plan may not be increased (except by adjustment pursuant to

paragraph 13); (b) the benefits accruing to participants under the

Plan may not be materially increased; (c) the requirements as to eligibility

for participation in the Plan may not be materially modified; (d) the

provisions of paragraph 3 regarding eligibility for grants of ISOs may not

be modified; (e) the provisions of paragraph 6(B) regarding the

exercise price at which shares may be offered pursuant to ISOs may not be

modified (except by adjustment pursuant to paragraph 13); (f) the

expiration date of the Plan may not be extended; and (g) the Board may not

take any action which would cause the Plan to fail to comply with

Rule 16b-3.  Except as otherwise

provided in this paragraph 15, in no event may action of the Board or

stockholders alter or impair the rights of a grantee, without such grantee’s

consent, under any Option previously granted to such grantee.

 

           16.        Conversion

of ISOs into Non-Qualified Options.  The Committee, at the written request or with the written consent

of any optionee, may in its discretion take such actions as may be necessary to

convert such optionee’s ISOs (or any installments or portions of installments

thereof) that have not been exercised on the date of conversion into

Non-Qualified Options at any time prior to the expiration of such ISOs,

regardless of whether the optionee is an employee of the Company or a Related

Corporation at the time of such conversion. 

Such actions may include, but shall not be limited to, extending the

exercise period or reducing the exercise price of the appropriate installments

of such ISOs.  At the time of such

conversion, the Committee (with the consent of the optionee) may impose such

conditions on the exercise of the resulting Non-Qualified Options as the

Committee in its discretion may determine, provided that such conditions shall

not be inconsistent with this Plan. 

Nothing in the Plan shall be deemed to give any optionee the right to

have such optionee’s ISOs converted into Non-Qualified Options, and no such

conversion shall occur until and unless the Committee takes appropriate action.

 

           17.        Application

Of Funds.  The proceeds

received by the Company from the sale of shares pursuant to Options granted and

Purchases authorized under the Plan shall be used for general corporate

purposes.

 

           18.        Notice to

Company of Disqualifying Disposition.  By accepting an ISO granted under the Plan, each optionee agrees

to notify the Company in writing immediately after such optionee makes a

Disqualifying Disposition (as described in Sections 421, 422 and 424 of

the Code and regulations thereunder) of any stock acquired pursuant to the

exercise of ISOs granted under the Plan. 

A Disqualifying Disposition is generally any disposition occurring on or

before the later of (a) the date two years following the date the ISO

was granted or (b) the date one year following the date the ISO was

exercised.

 

           19.        Withholding

of Additional Income Taxes.  Upon

the exercise of a Non-Qualified Option, the transfer of a Stock Right, the

grant of an Award, the making of a Purchase of Common Stock for less than its

fair market value, the making of a Disqualifying Disposition (as defined in paragraph 18),

the vesting or transfer of restricted stock or securities acquired on the

exercise of an Option hereunder, or the making of a distribution or other

payment with respect to such stock or securities, the Company may withhold

taxes in respect of amounts that constitute compensation includible in gross

income.  The Committee in its discretion

may condition (i) the exercise of an Option, (ii) the grant of an

Award, (iii) the making of a Purchase of Common Stock for less than its

fair market value, or (iv) the vesting or transferability of restricted

stock or securities acquired by exercising an Option, on the grantee’s making

satisfactory arrangement for such withholding. 

Such arrangement may include payment by the grantee in cash or by check

of the amount of the withholding taxes or, at the discretion of the Committee,

by the 

 

7

 

grantee’s delivery

of previously held shares of Common Stock or the withholding from the shares of

Common Stock otherwise deliverable upon exercise of a Option shares having an

aggregate fair market value equal to the amount of such withholding taxes.

 

           20.        Governmental

Regulation.  The

Company’s obligation to sell and deliver shares of the Common Stock under this

Plan is subject to the approval of any governmental authority required in

connection with the authorization, issuance or sale of such shares.

 

           Government regulations may impose

reporting or other obligations on the Company with respect to the Plan.  For example, the Company may be required to

send tax information statements to employees and former employees that exercise

ISOs under the Plan, and the Company may be required to file tax information

returns reporting the income received by grantees of Options in connection with

the Plan.

 

           21.        Governing

Law.  The validity and

construction of the Plan and the instruments evidencing Options shall be

governed by the laws of the Commonwealth of Massachusetts, or the laws of any

jurisdiction in which the Company or its successors in interest may be

organized.

 

 

8

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