PERFORMANCE ENGINEERING CORPORATION
STOCK OPTION AGREEMENT
1. PURPOSE OF STOCK OPTION AWARDS
Performance Engineering Corporation (the "Corporation") desires to
attract and retain the best available talent and encourage the highest level of
performance in order to continue to serve the best interests of the Corporation,
its customers and stockholders. By affording eligible employees the opportunity
to acquire proprietary interests in the Corporation and by providing incentives
for such employees to put forth the maximum efforts for the success of the
business, the stock option awards should contribute greatly to the attainment of
those objectives.
2. SCOPE AND DURATION OF OPTION PLAN
Awards under this Agreement shall be available for grant beginning
February 1, 1987, through January 31, 2001. Unless this plan is extended, no
further options shall be granted hereunder after that date.
3. ADMINISTRATION OF OPTION PLAN
The Board of Directors of the Corporation will serve as the Option Plan
Committee and shall administer the Option Plan.
The Committee shall have the absolute and sole authority in its
discretion to determine the form of the option, the employees to whom, and the
time or times at which, options shall be granted and the number of shares to be
covered by each option, the purchase price of the shares covered by each option,
and to make all of the determinations deemed necessary or advisable for the
administration or interpretation of the Option Plan.
The interpretation and construction by the Committee of any Plan
provision or any award shall be final. No member of the Committee shall be
personally liable for any action, failure to act, determination or
interpretation made in good faith with respect to the Option Plan or any
transaction hereunder.
4. ELIGIBILITY: FACTORS TO BE CONSIDERED IN GRANTING AWARD
Awards may be granted only to employees (including officers) of the
Corporation who hold, at the time of grant, managerial positions, as determined
by the Committee, or are otherwise deemed by the Committee to be "key employees"
of the Corporation. In determining to whom of the eligible employees awards
shall be granted and the number of shares to be covered by each award, the
Committee shall take into account the duties of the employees, their present and
potential contributions to the success of the Corporation, and such other
factors as they shall deem relevant in connection with accomplishing the
purposes of the Option Plan. Subject to the provisions of Paragraph 2, an
employee who has been granted an award or awards under the option plan may be
granted an additional award or awards irrespective of whether the option so held
was previously exercised, expired, surrendered or still held.
5. OPTION PRICE
The purchase price of the Common Stock covered by each option shall be
established by the Committee on the date the option is granted, but in no event
shall be less than One Hundred Percent (100%) of the fair market value of the
Common Stock on the date the option is granted. Said price shall be subject to
adjustment as provided in Paragraph 13 hereof. The date on which the Committee
adopts a resolution expressly granting an option shall be considered the date on
which such option is granted.
Notwithstanding the foregoing provisions, however, any stockholder
owning ten percent (10%) or more of the total combined voting power of all
classes of stock of the Corporation shall receive options priced at one hundred
ten percent (110%) of the fair market value of the stock at the time the option
is granted, in order to comply with the Internal Revenue Code Section
422A(c)(6). This section may be amended from time to time as is necessary to
ensure compliance of this Plan with the provision of the Code.
6. TERMS OF OPTIONS
The term of each option shall be as specified by the Committee, subject
to earlier termination as provided in Paragraphs 10 and 11. However, under no
circumstances shall the term of an option be longer than five (5) years.
7. EXERCISE OF OPTIONS
(a) Subject to the provisions of this Agreement, an option granted
hereunder shall become exercisable according to its terms by giving written
notice to the Corporation specifying the option being exercised.
(b) An option may be exercised, subsequent to the second full year after
its grant and at any time, only as to all full shares as to which the option has
become exercisable.
(c) The purchase price of the shares as to which an option is exercised
shall be paid in full at the time of exercise either in cash or in shares
acquired by previous exercise of a prior option, or by a combination of cash and
stock as herein described.
(d) No option may be exercised at any time unless the holder thereof is
then an employee of the Corporation and unless the employee has remained in the
continuous employ of the Corporation, from the date of its grant to the date of
exercise.
(e) Upon the due exercise of an option in accordance with the option
Agreement and such rules and regulations as may be established by the Committee,
the holder thereof shall have the rights of a stockholder with respect to the
shares covered by such option so exercised, subject to the provisions of this
Agreement.
8. VOLUNTARY SALE
In the event that an employee wishes to offer for sale stock acquired as
a result of exercise of a stock option grant, then the following valuation rules
shall apply. In the case of an employee who has exercised his option to purchase
shares of the Corporation more than six (6) months prior to said offer for sale,
such shares are required to be offered for sale to the Corporation by the
employee at a price equal to the Annex I value as incorporated by Attachment
hereto, at the date of sale. Book value shall be determined on an accrual basis,
giving proper consideration for valid and collectible receivables of the
Corporation. Should the exercise of an option take place less than six (6)
months prior to an offer for sale, such shares are required to be offered for
sale to the Corporation at option purchase price to the employee. Closing on
such sale shall take place within thirty (30) days of the event of termination.
Any payment shall, at the discretion of the Corporation, be in the form of check
or notes payable. Should the Corporation elect not to purchase the shares, then
the employee may offer the shares for sale to other Stockholders and employees,
or qualified third parties, under the terms set forth in Section 3.3 of the
Performance Engineering Corporation Stockholders' Agreement. Nothing in that
Section, however, shall be deemed to alter the valuation of the shares as set
forth herein vis a vis any offer for sale to the Corporation.
9. NON-TRANSFERABILITY OF OPTIONS
Options granted under the Option Plan shall not be transferable, and
options may be exercised, during the lifetime of the employee, only by the
employee.
10. TERMINATION OF EMPLOYMENT
In the event that the employment of an employee to whom an award has
been granted under the Option Plan but not exercised shall be terminated for
reasons other than death, retirement at age 65 or later, or disability, such
award shall forthwith terminate. Awards granted under the Option Plan shall not
be affected by any change of duties or position so long as the holder continues
to be an employee of the Corporation. Any option award may contain such
provisions as the Committee shall approve with reference to the determination of
the date employment terminates for purposes of the Option Plan and the effect of
leaves of absence in accordance with the Corporation's regular policies. Nothing
in the Option Plan or in any award granted pursuant to the Option Plan shall
confer upon any employee any right to continue in the employee of the
Corporation or interfere in any way with the right of the Corporation to
terminate his employment at any time.
In the event of the termination of employment, for any reason, of an
employee who has exercised his option to purchase shares of the Corporation more
than six (6) months prior to said termination, such shares are required to be
offered for sale to the Corporation, by the employee or his personal
representative at a price equal to the Annex I value as incorporated by
Attachment hereto, at the date of termination. Book value shall be determined on
an accrual basis, giving proper consideration for valid and collectible
receivables of the Corporation. Should the exercise of an option take place less
than six (6) months prior to an event of termination, such shares are required
to be offered for sale to the Corporation at the option purchase price to the
employee. Closing on such sale shall take place within thirty (30) days of the
event of termination. Any payment shall, at the discretion of the Corporation,
be in the form of check or notes payable. The Corporation is and shall be
obligated to purchase any and all such shares offered for sale under either
circumstance, and such purchase shall take place according to all of the
processes and procedures herein just as if the purchase were voluntary on the
part of the Corporation. This obligatory purchase applies only to shares offered
at time of termination, and does not apply to any offer at any other time.
11. TERMINATION AND AMENDMENT OF THE OPTION PLAN
The Board of Directors of the Corporation may at any time prior to
January 31, 2001, suspend, terminate, modify or amend the Option Plan provided
that any increase in
the aggregate number of shares reserved for issue upon the exercise of options,
any increase in the maximum number of shares for which options may be granted or
exercised, or any material modification in the requirements as to eligibility
for participation in the Option Plan, shall be subject to the approval of the
holders of a majority of the shares of Common Stock of the Corporation issued
and outstanding and entitled to vote thereon, except that any such increase,
reduction or change that may result from adjustments authorized by Paragraph 13
do not require such approval. No suspension, termination, modification or
amendment of the Option Plan may, without the consent of the employee to whom an
award shall theretofore have been granted, affect the rights of such employee
under such award. Notwithstanding the foregoing, the Board of Directors of the
Corporation may amend any part of this Option Agreement, without the consent of
any employee, solely to enable the Option Plan and the options and rights
granted to conform to such exemption, if any, as may exist from the effect and
provision of S16(b) of the Securities Exchange Act of 1934, as amended.
12. DEATH, RETIREMENT OR DISABILITY OF AN EMPLOYEE
If an employee to whom an award has been granted under the Option Plan
shall die or become disabled while he is employed by the Corporation, or if he
shall retire at age 65 or after, and prior to the exercise of awards granted
him, the Corporation shall pay the employee or his personal representative the
difference between the option price indicated in the outstanding awards and the
Annex I value, as incorporated by Attachment hereto, of the Corporation's shares
for the number of optioned shares, at the date of death, retirement or
disability. Such payment shall, at the discretion of the Corporation, be in the
form of check, notes payable, or common stock of the Corporation. Retirement
prior to age 65, except for retirement due to disability, shall not constitute
retirement for purposes of this clause. Disability shall be defined as a
disability rendering the employee unable to perform any of the natural functions
of his employment for a continuous period of five (5) months.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provisions of the Option Agreement, each
option award may be modified as the Committee shall determine to be appropriate
for the adjustment of the number and class of shares covered by such option, the
option prices and the numbers of shares as to which options shall be exercisable
at any time, and appropriate changes in the rights related to such options in
the event of changes in the outstanding shares of the Corporation by reason of
split-ups, recapitalizations, mergers, consolidations, combinations or exchanges
of shares, separations, reorganizations, liquidations, stock splits, stock
dividends, and the like. Any fractional shares resulting from such adjustments
shall be eliminated.
14. SHARE RESTRICTIONS
Any and all shares acquired pursuant to exercise of options granted
hereunder shall be and are specifically subject to the following restrictions:
1. Article III. Transfer of Shares of the Stockholders Agreement (copy
follows)
2. Article IV. Miscellaneous Provisions (copy follows).
ARTICLE III. TRANSFER OF SHARES
3.1 TRANSFERS UPON DEATH OR DISABILITY OR RETIREMENT. Upon the earlier of
an Initial Stockholder's death or disability or retirement on or after age 65,
the withdrawing Initial Stockholder or estate shall have an option to offer for
sale to the Corporation such Initial
Stockholder's entire initial Stock interest, as defined in Article I, INITIAL
CAPITALIZATION, Section 1.1 INITIAL ISSUANCE, hereof, at the price and terms
described in Section 3.4. The withdrawing Initial Stockholder or estate shall be
permitted the period of one hundred twenty (120) days from said death,
retirement, or determination of disability to deliver his written request to the
Corporation to purchase such shares. The purchase, or commitment to purchase, as
applicable, by the Corporation, in accordance with the terms of Section 3.4, of
said shares shall take place within sixty (60) days of the delivery to the
Corporation of the written request. In no event shall any offer for sale
obligate the Corporation to accept such offer.
The withdrawing Initial Stockholder or estate shall be granted additional
option(s) to request that the Corporation purchase his entire initial Stock
interest, as defined in Article I, INITIAL CAPITALIZATION, Section 1.1 INITIAL
ISSUANCE hereof, upon the occurrence of each additional or subsequent event of
withdrawal, defined for this purpose as death, disability or retirement on or
after age 65.
This provision shall not apply to any shares acquired by any Stockholder,
Initial Stockholder or otherwise, by exercise of options granted under the
Performance Engineering Corporation Stock Option Agreement or any other means.
Disposition of said Stock shall be governed by Article 12 of said Stock Option
Agreement.
Disability shall be defined as total disability under the terms of a
Corporation-maintained insurance company disability policy covering the
withdrawing Initial Stockholder, or if no such policy exists, disability
rendering the withdrawing Initial Stockholder unable to perform any of the
material functions of his employment with the Corporation for a continuous
period of five (5) months. The date of the occurrence of an event of disability
shall be the date of the first determination of total disability made by the
insurance company, if the Corporation has such a policy, or the Board of
Directors, if the Corporation does not.
Upon the first occurrence of death, disability or retirement on or after
age 65, the nonwithdrawing Stockholders shall be released from any and all
obligations under this Agreement to continue the withdrawing Initial
Stockholder, or his representative or successor, as a director and/or officer of
the Corporation, regardless of whether the withdrawing Initial Stockholder, or
his estate, exercises the option to offer the withdrawing Initial Stockholder's
entire Stock interest to the Corporation for purchase, and regardless of whether
the Corporation purchases said Stock or portions thereof.
3.2 TRANSFERS UPON TERMINATION FOR CAUSE. Any of the Initial Stockholders
or any other Stockholder may be terminated as a director and/or officer of the
Corporation for cause as determined by the majority of the Stockholders or of
the Board of Directors, as applicable according to the election privileges
accorded to each. For this purpose, cause shall be limited to intentional
malfeasance, repeated gross negligence resulting in significant damage, loss or
exposure to the Corporation, or fraud committed by a Stockholder in his capacity
as an officer or director of the Corporation or in his capacity as a Stockholder
with respect to his obligations to the other Stockholders under this Agreement.
If a Stockholder's employment is terminated for cause, such Stockholder shall
automatically be discharged as a Director and/or officer.
Upon the termination of employment for cause of any Stockholder, said
Stockholder shall offer for sale to the Corporation and the Corporation shall
have the option to purchase his entire Stock interest at the price and terms
established in Section 3.4, except that, for such shares as were obtained
through Stock options, price and terms shall be established in accordance with
Article 10, TERMINATION OF EMPLOYMENT, of the Performance Engineering
Corporation Stock Option Agreement. Should the Corporation decline to purchase
all or any part of any Initial Stockholders' Initial shares hereunder, then such
shares shall be offered according to the sequence outlined in Section 3.3,
below, treating the Corporation's initial option to purchase as the first
offering thereunder. Closing of said purchase, or commitment to purchase, as may
be applicable under Section 3.4, shall take place within sixty (60) days of the
official written determination of termination for cause.
3.3 RIGHT OF FIRST REFUSAL. If for any reason a Stockholder desires to
sell, transfer, or otherwise dispose of any portion or all of his Stock in the
Corporation, he shall offer to sell such entire Stock interest or portion
thereof to the Corporation at a price and upon the terms determined in
accordance with the provisions of Section 3.4 of this Agreement; except that for
such shares as were obtained through Stock option exercise, price shall be
established in accordance with the second paragraph of Article 8, VOLUNTARY
SALE, of the Performance Engineering Corporation Stock Option Agreement. Any
Stock not purchased by the Corporation within thirty (30) days after receipt of
such offer in writing shall then first be available at the same price and terms
to the other Stockholders, each of whom shall have the right, within ten (10)
days after the expiration of the Corporation's option to purchase, to purchase
such remaining Stock offered for sale in proportion to the ratio that the number
of shares owned by him on the date the offering Stockholder first offered his
Stock to the Corporation bears to the total number of shares of Stock owned by
the Stockholders on such date, excluding the shares of Stock owned by the
offering Stockholder or Stockholders; provided, however that if any remaining
Stockholder does not purchase his full proportionate share of the Stock within
ten (10) days, the offered Stock may, within five (5) days after the expiration
of said ten (10) day period, be purchased by the other remaining Stockholders as
they shall agree but, failing agreement, in equal shares. If both the
Corporation and the remaining Stockholders fail or refuse to purchase the
offered Stock of the offering Stockholder at the price and upon the terms and
within the times aforesaid, then the offering Stockholder shall offer the
remaining Stock to the non-Stockholder employees of the Corporation, each of
whom shall have the right, within ten (10) days after the expiration of the
Stockholders' option to purchase, to purchase such remaining Stock offered for
sale. If the Corporation, the remaining Stockholders and the employees fail or
refuse to purchase any or all of the offered Stock of the offering Stockholder
at the price and upon the terms and within the times aforesaid, then the
offering Stockholder shall be at liberty to offer his remaining offered Stock to
any other qualified third party (other than the remaining Stockholders), but the
offering Stockholder shall not sell such Stock to any third party without again
offering such Stock first to the Corporation and then to the remaining
Stockholders and employees as provided above, allowing the periods provided
above in each instance for the acceptance thereof, at the lower of (a) such
price and terms aforesaid or (b) at such price and terms offered to any
qualified third party. Prior to any sale of Stock by an offering Stockholder to
any non-Stockholder employee or to such qualified third party, the Corporation
must have received from its counsel the unqualified opinion of such counsel that
the proposed sale will not violate Federal and applicable state securities laws,
including any restrictions placed upon the public offering of such Stock.
3.4 VALUATION AND PAYMENT. The valuation of the Stock of the Corporation
for purposes of establishing the purchase price to be paid for the Stock of a
Stockholder pursuant to sections 3.1, 3.2, or 3.3, shall be the Annex I value of
the Stock, as determined by this section.
Valuation of Stock acquired as a result of options exercised under the
Performance Engineering Corporation Stock Option Agreement shall be governed by
said Agreement. Such shares which are disposed of as a result of termination,
death, disability, retirement or choice thereunder shall be disposed of in
accordance with Article 8, Article 10, or Article 12, of the Stock Option
Agreement, whichever is applicable.
The values set forth in Annex I shall be reviewed at least annually by
December 31 of each year or more frequently if agreed to by the Board of
Directors. Any changes in such values must be made in a writing signed by all of
the Board of Directors.
If such annual review does not take place or agreement as to change in
valuation cannot be reached, the effective new Annex I value shall be the last
value agreed upon increased by the rate of ten percent (10%) per full year or
part thereof, from the date of such last agreement.
Payment by the Corporation for the Stock of a Stockholder , whether Stock
shall have been acquired as Initial Shares, or through options, or otherwise,
shall be as determined by this section.
The purchase price shall be evidenced by a negotiable promissory note
executed by the Corporation bearing interest at the rate of ten percent (10%)
per annum, requiring not more than 60 equal monthly payments of principal and
interest, provided however that the minimum monthly payment may not be less than
$2,000.00, excluding final payments which may be less than $2,000.00. Such note
shall provide that, upon default in the payment of any installment of interest
or principal, all remaining installment payments shall, at the option of the
holder of said note, become immediately due and payable. Said note shall also
give the Corporation the option of prepayment in whole or in part at any time
with no penalty. Upon the sale of the Stock to the Corporation, the withdrawing
Stockholder or estate shall be entitled to retain a security interest in the
Stock to secure payment of the Corporation's obligation, which security interest
shall be relinquished upon full payment for all of the Stock to be purchased
under this Agreement. This note shall not be required, however, should the
Corporation elect to pay the purchase price in full on the date of closing as
specified herein.
Notwithstanding the foregoing, however, where such total payment of
principal and interest would exceed the amount of $240,000.00, the Corporation
shall have the option, in the sole discretion of the Board of Directors, to
phase such purchase over a period of between 72 and 120 months, to be phased in
increments of 12 months, under terms as follows: if such purchase option is
elected by the Board of Directors, the withdrawing Stockholder shall be
obligated by the terms of this Agreement to sell the Stock to the Corporation
annually over the period specified by the Corporation in increments of shares to
be determined by the Corporation for each 12-month period of sale, equal
payments to be made each month including interest at the rate of ten percent
(10%), calculated over the 12-month period, at the Annex I value in effect for
the beginning of each such 12-month period; in no case, however, shall payment
to the Stockholder for such Stock be less than $4,000.00 per month, excluding
final payments which may be less than $4,000.00. If at any time the total
payment due the Stockholder for any outstanding shares would exceed $240,000.00,
as determined at the beginning of each new 12-month increment, the Corporation
may in its discretion elect a new phased purchase plan under the same terms and
conditions as if the new phased plan were the original election. Upon the sale
of each increment of the Stock to the Corporation, the withdrawing Stockholder
or estate shall be entitled to retain a security interest in that increment of
Stock, to secure payment of the Corporation's obligation, which security
interest shall be relinquished upon full payment for each increment of the Stock
to be purchased under this paragraph. For all Stock obligated to be sold by the
Stockholder under this paragraph but retained by him prior to sale, the
Stockholder shall retain full rights.
3.5 CLOSING DATE. The closing of any purchase under this Agreement shall
take place at 1:00 o'clock p.m. on the day provided in this Agreement at the
offices of Performance Engineering Corporation, 0000 Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx or at such other time and place as shall be fixed by agreement of the
parties hereto (the "Closing").
At the Closing, the selling Stockholder or his personal representative
shall deliver to the Corporation or to the purchasing Stockholder, as the case
may be, certificates representing all of the Stock to be purchased, duly
endorsed, free and clear of all liens, claims or encumbrances, with evidence of
payment of all transfer taxes and fees, if any. The Corporation or the
purchasing Stockholders, as the case may be, shall deliver to the selling
Stockholder or his personal representative the payment (by certified or
cashier's check) or the promissory note, as provided in Section 3.4. The
Corporation shall also deliver at closing to the selling Stockholder or his
personal respresentative an appropriate release from any and all liabilities of
the Corporation, including any and all secondary liability with respect thereto
by way of personal guarantees of corporate indebtedness and any other
agreements. In connection with the Closing, the Corporation and all Stockholders
and their
personal representatives, if any, shall do all things necessary and appropriate
to accomplish the purchase and sale.
If the selling Stockholder or his personal representative does not tender
the certificates for the shares of Stock to be purchased as provided herein at
the Closing, the Corporation shall cause the transfer books of the Corporation
to reflect that such shares of Stock have been canceled or transferred, as the
case may be, and the Corporation or the purchasing Stockholders, as the case may
be, shall tender to the selling Stockholder or his personal representative the
payment (by certified or cashier's check) or the promissory note, as provided in
Paragraphs (a) and (b) above. After the transfer books of the Corporation have
been so modified and after such tender of payment has been made (whether or not
accepted by the selling Stockholder, his estate, or his personal
representative), neither the selling Stockholder, his estate, nor his personal
representative shall be considered to own Stock in the Corporation and shall
have no rights under the terms of this Paragraph.
Each Stockholder hereby appoints the Corporation as his agent and
attorney-in-fact for the purpose of executing and delivering any and all
documents necessary to convey such Stockholder's Stock pursuant to the
provisions of this Paragraph. In the event the Stockholder is not present at the
Closing, any conveyance by such agent and attorney-in-fact shall be a conveyance
of all of the Stockholder's right, title and equity in and to the Stock. This
power of attorney is coupled with an interest and shall not expire upon the
death or incapacity of a Stockholder, nor may this power of attorney be
terminated by any Stockholder as long as this Agreement remains in effect.
3.6 LIFE INSURANCE. The Corporation shall have the right to purchase
insurance on the lives of any or all of the Stockholders to fund its obligations
under this Agreement. The Corporation agrees to pay premiums on said insurance
policies, if any, and shall provide proof of payment of premiums to any
Stockholder who requests such proof. If a premium is not paid within ten (10)
days after its due date, the insured shall have the right to pay such premiums
and be reimbursed therefor by the Corporation. In the event that the Corporation
decides to purchase life insurance on any Stockholder, each Stockholder hereby
agrees to cooperate fully by performing all the requirements of the insurer
which are necessary conditions precedent to the issuance of life insurance
policies. The Corporation shall be the sole owner of the policies issued to it
and it may apply any dividends toward the payment of premiums.
Notwithstanding the provisions of this Agreement, any life insurance
company which has issued a policy of life insurance subject to the provisions of
this Agreement is hereby authorized to act in accordance with the terms of such
policy as if the Agreement did not exist, and the payment or other performance
of its contractual obligations required by any such policy shall completely
discharge such company from all claims, suits and demands of all persons
whomsoever.
If, at any time after the death of a Stockholder, the Corporation shall
receive the proceeds from any insurance policy owned by the Corporation on the
life of the deceased Stockholder, the Corporation shall immediately use such
funds to prepay the installment payments owing to the estate or any beneficiary
of the deceased Stockholder, as provided in Section 3.1 hereof. If the
Corporation has elected not to purchase shares offered under Section 3.1 above,
and the Corporation subsequently receives such insurance proceeds, the
Corporation shall then be obligated to purchase such shares up to the full
amount of the proceeds received, should an offer for sale be then current, using
such insurance proceeds as outlined in this paragraph, above.
3.7 TRANSFER IN VIOLATION OF THIS AGREEMENT. The Stockholders may not,
either singly or collectively, under any circumstances sell or transfer their
Stock in the Corporation other than in accordance with the terms of this
Agreement, and, for Stock acquired under the Performance Engineering Corporation
Stock Option Agreement, in additional accordance with the terms thereunder; nor
may they pledge, assign, or otherwise encumber their Stock in the Corporation.
In the event any Stockholder (hereinafter referred to as the "Offending
Stockholder") sells, assign, transfers, gives, pledges, encumbers, or otherwise
disposes of or grants a security interest in any of the Stock owned by him
otherwise than in strict accordance with the terms of this Agreement, then, in
addition to the right to any other remedies hereunder, including specific
performance, the Corporation shall have the option to purchase such Stock from
the person, trust, association, company, firm or corporation (the "Transferee")
to whom such Stock has been sold, assigned, transferred, given, pledged,
encumbered, or otherwise disposed of, for an amount, in cash, equal to the
amount paid by such Transferee for such Stock or fifty percent (50%) of the
value of such Stock, as determined under Section 3.4 hereof, whichever is less.
The payment of such purchase price shall be by certified or cashier's check at
the closing described in the following paragraph.
The Corporation may exercise the purchase option provided for in this
Section 3.7 by giving written notice to the Transferee of the Offending
Stockholder at any time within one year after the Corporation receives actual
notice of such sale, assignment, transfer, gift, pledge, encumbrance or other
disposition of Stock otherwise than in accordance with the provisions of this
Agreement or, for Stock acquired under the Performance Engineering Corporation
Stock Option Agreement, in additional accordance with the terms thereunder. The
closing of any purchase under this Section 3.7 shall take place at the offices
of Performance Engineering Corporation, 0000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx at
2:00 o'clock p.m. on the thirtieth (30th) day after the Corporation delivers
such notice to the Transferee, or at such other time and place as shall be fixed
by written agreement of the Corporation and the Transferee. At such closing, the
Transferee shall deliver to the Corporation certificates representing the Stock
transferred to him by the Offending Stockholder, duly endorsed in blank for
transfer, or with duly executed blank Stock powers attached, free and clear of
all liens, claims or encumbrances, with evidence of payment of all transfer
taxes and fees, if any, and accompanied by such further instruments as may be
necessary or desirable, in the opinion of counsel for the Corporation, to effect
the transfer of such Stock. The Corporation shall deliver to the Transferee or
his personal representative the payment (by certified or cashier's check) for
the Stock, as provided in this Section 3.7. Acceptance by any purchaser,
assignee, transferee, donee, pledgee or other party of any of the Stock held by
any of the Stockholders shall evidence conclusively the consent of such party to
all the terms and provisions hereof, and all such parties agree to do all things
necessary and appropriate to accomplish the purchase and sale pursuant to this
Section 3.7.
If the Transferee or his personal representative does not tender the
certificates for the shares of Stock to be purchased as provided herein at such
closing, the Corporation shall cause the transfer books of the Corporation to
reflect that such shares of Stock have been canceled upon the tender by the
Corporation to the Transferee or his personal representative of a certified or
cashier's check for the full amount of the purchase price as provided in this
Section 3.7. After the transfer books have been so modified and after such
tender of payment has been made (whether or not accepted by the Transferee or
his personal representative), neither the Transferee nor his personal
representative shall be considered to own Stock in the Corporation and shall
have no rights as a Stockholder to the extent of the shares of Stock so canceled
under the terms of this Section 3.7.
3.8 CORPORATE ACTION AND STOCKHOLDER GUARANTY. If the Corporation is
unable to make any purchase required of it under this Agreement, or to fulfill
any obligation incurred in connection therewith, because of the provisions of
applicable statutes or of its Articles of Incorporation or Bylaws, the
Corporation agrees to take such action as may be necessary to permit it to make
such purchases and the Stockholders agree that they will also take such action
(other than making additional capital contributions to the Corporation or
guaranteeing debts of the Corporation) as may be necessary for the Corporation
to make such purchases when, as and if required.
If the Corporation shall, nevertheless, be unable or refuses to purchase
all of a Stockholder's Stock, or Offending Stockholder's transferred Stock, or
be unable to make payment upon any note given to a Stockholder in the purchase
of his Stock, or to a
Transferee for purchase of transferred Stock, the obligation of the Corporation
with respect to the shares of Stock which the Corporation shall be unable or
refuses to purchase shall be deemed assumed by the remaining Stockholders. The
obligation of the Corporation to purchase such Stock under this Agreement shall
be primary and the aforementioned obligation of the remaining Stockholders shall
be secondary and conditional. If the remaining Stockholders are called upon to
purchase such Stock hereunder, each remaining Stockholder shall be obligated to
purchase, on the same terms and conditions as would be applicable to a purchase
by the Corporation, such portion of the Stock offered for sale in proportion to
the ratio that the number of shares owned by him (on the date on which the
Corporation's obligation to purchase such Stock arose) bears to the total number
of shares of Stock owned by the Stockholders on such date, excluding the Stock
which the Corporation is obligated to purchase.
ARTICLE IV. MISCELLANEOUS PROVISIONS
4.1 STOCK LEGEND. The provisions of the Agreement shall apply to all
Stock in the Corporation now owned or hereafter acquired by the Stockholders,
whether acquired by option exercise or otherwise.
Each certificate evidencing shares of Stock of the Corporation shall bear
the following legend on the face of such certificate:
The shares of Stock represented by this certificate (and all
transfers thereof) are subject to the terms of a Stockholders'
Agreement dated as of September 18, 1992, by and among the
Corporation and its stockholders, a copy of which is on file at
the principal offices of the Corporation and is available for
inspection during reasonable business hours. No transfer of any
share represented by this certificate shall be valid unless made
in accordance with such Agreement.
In the event such legend cannot practicably be placed on the face of such
certificate, either alone or in conjunction with other legends required by law
or by this Agreement to be placed on the face of such certificate, the legend
shall be set out in conspicuous type on the back of the certificate, and notice
thereof shall be given in conspicuous type on the front of the certificate.
4.2 AMENDMENT AND TERMINATION. This Agreement may be altered, amended or
terminated at any time only by a written instrument executed by all of the
Stockholders of the Corporation. This Agreement shall terminate upon the
occurrence of any of the following events:
(i) The bankruptcy, receivership or dissolution of the
Corporation; or
(ii) The death or disqualification of all Stockholders within a
period of sixty (60) days, in which case the Agreement shall be deemed to have
terminated immediately preceding the date on which the first such Stockholder
shall have died or become disqualified to practice his respective profession in
the Commonwealth of Virginia. Termination of this Agreement as herein provided
shall have no effect on any obligation of the parties which arose pursuant to
the purchase of Stock under this Agreement prior to its termination under this
Section 4.2.
4.3. INSTRUCTIONS TO EXECUTOR. Each Stockholder shall execute a will
directing his respective executor to perform according to this Agreement and to
execute all documents necessary to effectuate the purposes of this Agreement.
The failure, however, of any Stockholder to execute such a will shall not affect
the rights of any Stockholder or the obligations of his estate, as provided
herein.
4.4 NOTICES AND OTHER COMMUNICATION. Any notice, offer, acceptance of an
offer, or other communication provided for or required by this Agreement shall
be in writing and shall be deemed to have been given when delivered by hand or
when deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, properly
addressed to the party to whom such notice or other communication is intended to
be given. The proper address of the Corporation shall be:
Performance Engineering Corporation
Xxxxxx Xxxxx Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
and in the case of any other party, shall be such address as such other party
may have previously furnished in writing to the Corporation or such other
party's last known address.
4.5 ENFORCEABILITY. The parties hereto do hereby recognize and
acknowledge that it is impossible to measure in money the damages which would
result to a party or to the personal representative of a deceased party by
reason of a failure of any of the parties to perform any obligations imposed
upon him or it under this Agreement. Therefore, if any party or the personal
representative of any deceased party should institute an action or proceeding to
enforce the provisions hereof, any person against whom such action or proceeding
is brought hereby waives the claim or defense that such party or such personal
representative has an adequate remedy at law, and such person shall not urge in
any action or proceeding the claim or defense that such a remedy at law exists.
4.6 POWER OF ATTORNEY. Each Stockholder hereby appoints the Corporation
as his agent and attorney-in-fact for the purpose of executing and delivering
any and all documents necessary to convey such Stockholder's Stock pursuant to
the provisions of this Agreement. In the event the Stockholder refuses to comply
with the provisions of this Agreement or is not present at the Closing, any
conveyance by such agent and attorney-in-fact shall be a conveyance of all of
the Stockholder's right, title and equity in and to the Stock. This power of
attorney is coupled with an interest and shall not expire upon the death or
incapacity of a Stockholder, nor may this power of attorney be terminated by any
Stockholder as long as this Agreement remains in effect.
4.7 INVALID PROVISIONS. The invalidity or unenforceability of any one or
more of the particular provisions of this Agreement shall not affect the
enforceability of the other provisions hereof, all of which are inserted
conditionally on their being valid in law, and in the event one or more
provisions contained herein shall be invalid, this instrument shall be construed
as if such invalid provisions had not been inserted, and if such invalidity
shall be caused by the length of any period of time, the size of any area or the
scope of activities set forth in any provision hereof, such period of time, such
area or scope or all, shall be considered to be reduced to a period, area, or
scope which would cure such invalidity.
4.8 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
4.9 COUNTERPARTS. For the convenience of the parties hereto, any number
of counterparts hereof may be executed, and each such executed counterpart shall
be deemed to be an original instrument.
4.10 ARBITRATION. Any controversy or claim arising out of or relating
directly or indirectly to the provisions of this Agreement shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrators may be
entered in any court having jurisdiction hereof.
4.11 GOVERNING LAWS. This Agreement shall be interpreted, construed, and
enforced in accordance with the laws of the Commonwealth of Virginia. The
parties hereby consent to the jurisdiction of the courts of the Commonwealth of
Virginia and agree that any disputes arising out of this Agreement shall be
litigated in those courts.
4.12 AUTHORITY. All provisions, terms and conditions of this Agreement
have been duly consented to, ratified, approved, and adopted where required by
the Board of Directors of the Corporation, and appropriate authority has been
delegated to the officers of the Corporation to carry out this Agreement.
4.13 ARTICLE OR SECTION HEADINGS. The Articles and Section headings
contained in this Agreement are for convenience only and shall in no manner be
construed as part of this Agreement.
4.14 GENDER. Where the context so requires, the masculine gender shall be
construed to include the feminine, a corporation, a trust, or other entity, and
the singular shall be construed to include the plural and singular.
4.15 ENTIRE AGREEMENT. This Agreement constitutes the sole and entire
agreement of the parties with respect to the matters contained herein, and any
representation, inducement, promise, or agreement, whether oral or written,
which pertains to such matters and is not embodied herein shall be of no force
or effect.
4.16 SECURITIES LAW RESTRICTIONS. As a condition of their subscriptions
and purchases and of the issuance of the Stock of the Corporation, the parties
hereby severally represent, warrant and covenant as follows:
(1) That they understand that the Stock has not been
registered under the Securities Act of 1933, as amended
(the "Act"), in reliance upon exemptions promulgated
thereunder or interpretations thereof, and cannot be
offered for sale, sold or otherwise transferred unless
the Stock is subsequently so registered or qualifies for
exemption from registration under the Act, that the
certificates representing the Stock shall bear a legend
to such effect, and that any transfer agent employed or
utilized by the Corporation shall be instructed not to
effect transfer of the Stock without prior written
authorization from the Corporation (or, if the
Corporation serves as its own transfer agent, a notation
shall be made in the Corporation's records indicating the
transfer restriction to which the Stock is subject);
(2) That the Stock is being acquired under this Agreement
by them in good faith solely for their own account, for
investment and not with a view toward resale or other
distribution within the meaning of the Act, and that the
Stock shall not be offered for sale, sold or
otherwise transferred without either registration or
exemption from registration under the Act;
(3) That they have such knowledge and experience in
financial and business matters that they are capable
of evaluating the merits and risks of their investment
in the Stock, and that they understand and are
able to bear any economic risks associated with
such investment (including the necessity of holding
the shares for an indefinite period of time, inasmuch
as the Stock has not been registered under the Act);
(4) That they are personally familiar with and have full
knowledge of the business which is intended to
be conducted by the Corporation, including
financial matters relating to such business, that they
have been given the opportunity to ask questions of,
and receive answers from each other concerning the
intended business and financial affairs of the
Corporation, and the terms and conditions of their
purchase of the Stock and that they have been given
the further opportunity to obtain any additional
information necessary to verify the accuracy of the
foregoing information; and
(5) That they understand that, notwithstanding any other
provisions of this Agreement regarding sale to third
parties, if an exemption for such sales is not available,
registration of the shares may be required, but that the
Corporation is under no obligation either to register the
shares or to facilitate compliance or to comply with any
exemption.
The certificates representing the Stock of the Corporation shall bear the
following legend:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") and cannot
be offered, sold or transferred in absence of registration or the
availability of an exemption from registration under the Act and
the regulations promulgated thereunder.
