Exhibit 10.3
EMPLOYEE LOAN PROGRAM AGREEMENT
The undersigned (the "Employee") is the holder of the Employee Stock
Option(s) (the "Option(s)") issued by PDT, Inc., a Delaware corporation (the
"Company") described in Exhibit B.
The Employee has requested to borrow the Loan Amount identified
below, but not exceeding $25,000.00 in the aggregate, from the Company and the
Employee has agreed to execute and deliver the Employee Loan Promissory Note
(the "Note") in the form attached hereto as Exhibit A.
The Employee has reviewed the terms of the Note and agrees to be
bound by the terms thereof.
The Employee grants a security interest in the Option(s) to the
Company to secure the obligations under the Note and will deliver to the Company
the Employee's original copy of the Option(s) with such instrument of transfer
as the Company shall request. By its acceptance of the Option(s), the Company
consents to such transfer of the Option(s). The Employee also agrees that the
Option(s) constitute a "security" and (i) in the event of a default by the
Employee under the terms of the Note, the Company may set off and utilize the
Option(s) or the shares underlying the Option(s) for the purpose of paying the
principal and interest due pursuant to the Note, (ii) the Company shall be
entitled to receive from the proceeds of the sale of any stock underlying any
Company stock option funds sufficient to repay this Note and (iii) any such sale
proceeds shall be remitted by any selling broker directly to the Company. The
Employee further represents that the proceeds of the loan under the Employee
Loan Program are not for the purpose of purchasing or carrying margin stock
within the meaning of Regulation G promulgated by the Federal Reserve Board and
the Employee agrees to execute and deliver prior to funding such statement of
purpose as shall be required under such regulation.
The Employee hereby acknowledges, ratifies and affirms all of the
remaining terms and conditions of the Option(s).
In Witness Whereof the undersigned have duly executed this Agreement
on the respective dates indicated.
PDT, INC.
By:
-------------------------- --------------------------------------------
Date Title: Chief Financial Officer
Employee
------------------------- --------------------------------------------
Date
Exhibit A
Employee Loan Promissory Note
EMPLOYEE LOAN PROMISSORY NOTE
$25,000 Santa Barbara, CA
Date:
FOR VALUE RECEIVED, _____________________, (the "Employee"),
unconditionally promises to pay to the order of PDT, INC. (the "Company"), whose
address is 0000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, in the manner
and at the place hereinafter provided, the principal amount of Twenty Five
Thousand and 00/100ths Dollars ($25,000.00) (or such lesser amount as shall
equal the aggregate unpaid principal amount of the loans made by the Company to
the Employee under the Company's Employee Loan Program), together with interest
at the rate established from time to time by the Department of the Treasury and
defined as the annual Applicable Federal Rate, which shall accrue and be payable
together with the principal amount hereof upon the earlier of: (i) termination
of Employee's employment with Company, (ii) Employee's election to exercise of
any Company stock option held by Employee, or (iii) the earliest expiration of
the employee stock option(s) described in Paragraph 7 below (the "Maturity
Date").
The Employee also promises to pay on the Maturity Date interest on the
unpaid principal amount hereof as it exists from time to time from the date
hereof until paid in full. All computations of interest shall be made by the
Company on the basis of a 360-day year and the actual number of days elapsed in
the relevant period. In no event shall the interest rate payable on this Note
exceed the maximum rate of interest permitted to be charged under applicable
law.
The date and amount of each loan made by the Company to the Employee, and
each payment made on account of the principal of such loan(s), shall be recorded
by the Company on its books and, prior to any transfer of this Note, endorsed by
the Company on the schedule attached to this Note or any continuation of such
schedule, provided that the failure of the Company to make any such recordation
or endorsement shall not affect the obligations of the Employee to make a
payment when due of any amount owing under the Employee Loan Program or under
this Note in respect of the loans made by the Company.
This Note is the Employee Loan Promissory Note referred to in the Employee
Loan Program Agreement (as modified and supplemented and in effect from time to
time, the "Loan Agreement") between the Company and the Employee and evidences
loans made by the Company under the Loan Agreement.
1. PAYMENTS. All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America to the Company at
the address specified by the Company, or at such other place as shall be
designated in a written notice delivered to the Employee. Whenever any payment
on this Note shall be stated to be due on a day that is not a business day, such
payment shall instead be made on the next succeeding business day. Each payment
made hereunder shall be credited first to interest then due and the remainder of
such payment shall be credited to principal, and interest shall thereupon cease
to accrue upon the principal portion so credited.
2. LATE PAYMENT CHARGES. A late payment charge of five percent (5%) will be
payable by the Employee to the Company for any payment not made within ten (10)
days of its due date (including the Maturity Date).
3. COVENANT. The Employee covenants and agrees that until this Note is paid
in full, they will promptly, after the occurrence of an Event of Default (as
hereinafter defined) or an event, act or condition which, with notice or lapse
of time or both, would constitute an Event of Default, provide the Company with
a certificate specifying the nature thereof and the Employee's proposed response
thereto.
4. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) failure of the Employee to pay any principal, interest or other amount
due under this Note when due, whether at the due date, the Maturity
Date, by acceleration, or otherwise;
(b) sale, conveyance or transfer of any option(s) which secure this Note;
(c) the Employee shall die or shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due;
(d) (i) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Employee in an involuntary case
under Title 11 of the United States Code entitled "Bankruptcy" (as now
and hereinafter in effect, or any successor thereto, the "Bankruptcy
Code") or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable federal
or state law; or (ii) an involuntary case shall be commenced against
the Employee under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; or
(e) an order for relief shall be entered with respect to the Employee or
the Employee shall commence a voluntary case under the Bankruptcy Code
or any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or the
Employee shall make an assignment for the benefit of creditors; or the
Employee shall be unable or fail, or shall admit in writing their
inability to pay its debts as such debts become due.
5. REMEDIES. Upon the occurrence of any Event of Default specified in
Paragraph 4 above, the principal amount of this Note, together with
accrued interest thereon, shall become immediately due and payable,
without presentment, demand, notice, protest or other requirements of
any kind (all of which are hereby expressly waived by the Employee),
and upon the occurrence and during the continuance of any other Event
of Default, the Company may, by written notice to the Employee,
declare the principal amount of this Note, together with accrued
interest thereon to be due and payable, and the principal amount of
this Note, together with such interest, shall thereupon immediately
become due and payable without presentment, further notice, protest or
other requirements of any kind (all of which are hereby expressly
waived by the Employee). Upon any such acceleration of the amounts due
under this Note or upon the Maturity Date, the Company may withhold
from, exercise or setoff against any security for this Note, including
the employee stock option(s) securing this Note, amounts necessary to
repay this Note. The Employee further agrees that (i) the Company
shall be entitled to receive from the proceeds of the sale of any
stock underlying any Company stock option funds sufficient to repay
this Note and (ii) any such sale proceeds shall be remitted by any
selling broker directly to the Company.
6. MISCELLANEOUS.
(a) All notices and other communications provided for hereunder shall be
in writing (including telecopier communication) and mailed, telecopied
or delivered as follows: if to the Employee, (i) at their address
specified opposite their signature below or (ii) at their inter-office
mail box; and if to the Company, at the address for payment set forth
in Section 1 above; in each case at such other address as shall be
designated by the Company or the Employee in a written notice to the
other. All such notices and communications shall, when mailed,
telecopied or sent by overnight courier, be effective when deposited
in the mails, delivered to the overnight courier, or sent by
telecopier and, when hand delivered or deposited in the Employee's
inter-office mail box, be effective when deposited in such mail box.
(b) The Employee agrees to indemnify the Company against any losses,
claims, damages and liabilities and related expenses, including
counsel fees and expenses, incurred by the Company arising out of or
in connection with or as a result of the transactions contemplated by
this Note. In particular, the Employee promises to pay all costs and
expenses, including reasonable attorneys' fees, incurred in connection
with the collection and enforcement of this Note.
(c) No failure or delay on the part of the Company or any other holder of
this Note to exercise any right, power or privilege under this Note
and no course of dealing between the Employee and the Company shall
impair such right, power or privilege or operate as a waiver of any
default or an acquiescence therein, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are
cumulative to, and not exclusive of, any rights or remedies which the
Company would otherwise have. No notice to or demand on the Employee
in any case shall entitle the Employee to any other or further notice
or demand in similar or other circumstances or constitute a waiver of
the right of the Company to any other or further action in any
circumstances without notice or demand.
(d) The Employee and any endorser of this Note hereby consent to renewals
and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand and
notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand
hereunder.
(e) THIS NOTE, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER,
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA.
(f) THE TERMS OF THIS NOTE CONTAIN A BALLOON PAYMENT.
(g) This Note may be prepaid without penalty.
7. SECURITY. This Note is secured by a pledge of the required employee
stock option(s) and shares underlying such option(s) as described in the
Employee Loan Program Agreement executed by the Employee.
IN WITNESS WHEREOF, the Employee has caused this Note to be executed and
delivered as of the day and year and at the place first above written.
EMPLOYEE:
-----------------------------------------
Signature
Address:
SCHEDULE OF LOANS
This Note evidences loans made under the Loan Agreement to the Employee, on
the dates and in the principal amounts set forth below, subject to the payments
and prepayments of principal set forth below:
--------------------- ----------------------- ---------------------- ----------------------- --------------
Date Made Principal Amount Amount Paid Unpaid Notation
of Loan or Prepaid Principal Amount Made By
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
--------------------- ----------------------- ---------------------- ----------------------- --------------
PDT, INC.
EMPLOYEE LOAN PROGRAM
SUMMARY DESCRIPTION
General:
Under the PDT, Inc. Employee Loan Program (the "Loan Program"), Employees may
borrow from PDT, Inc. (the "Company") an amount up to a maximum of $25,000.00,
which will be due and payable at a specified period in the future. Interest will
accrue quarterly and will be due and payable upon the loan due date. To secure
the loan, employees will be required to pledge their vested stock options which
will be adjusted in the future based on the fair market value.
Loan Details:
Loan Limit: The loan will be the lesser of 25% of the employee's vested gain
value in their unexercised options pledged to secure the loan or $25,000.00. The
$25,000.00 represents a lifetime maximum that can be borrowed by an employee
under the Loan Program.
Vested Gain Value: The vested gain will be determined based on the average per
share closing price of the Company's stock as quoted on Nasdaq for the preceding
month of the enrollment period less the option exercise price times the number
of vested shares. An increase in the vested gain value of pledged options allows
an employee to borrow additional funds, up to the plan maximums, and a decrease
in the vested gain value may require a pledge of additional options.
Dates and Amounts of Loans: Subsequent to the initial enrollment period, an
employee who has not reached the maximum of $25,000.00 in loans may have an
opportunity to receive additional loans during subsequent enrollment periods.
This may occur if the employee, (i) vests additional options, or (ii) the vested
gain value increases. The employee must complete the Enrollment Application to
request the additional loan amounts.
Security Interest: The employee agrees to give the Company a security interest
in their unexercised vested options and will deliver to the Company their
original copy of those Option Agreements as determined by the Company required
to secure the loan. As the number of shares required to secure the loan will
fluctuate from time to time based on the market price per share, and because
accrued interest will be accumulating over the term of the loan, additional
Option Agreements may be requested to be provided to the Company and those
Option Agreements requested and delivered will be retained by the Company until
such time as the outstanding principal loan and interest amount is repaid.
Loan Due Date: The loan due date will be the earlier of: (i) termination of
employment with the Company, (ii) the date of any election to exercise a Company
option held by the employee or (iii) the earliest option expiration date. On the
loan due date the outstanding loan amount, including cumulative accrued
interest, will be due.
Interest: Interest will be accrued and compounded quarterly at the
Applicable Federal Rate. The cumulative accrued interest will be due and payable
at the loan due date.
Payment of Loan: Upon the loan due date, payment shall be made to the Company
for the principal loan amount and the accrued interest. If the employee does not
have the funds to repay the loan, the Company may offset and utilize the Options
or shares underlying the Options for the purpose of paying the principal and
interest due. The number of shares needed for such offset will be determined
based on the total loan amount and cumulative accrued interest divided by the
per share price of the stock as quoted on Nasdaq as of the close of business for
the preceding day of the period being measured. If an employee chooses to
exercise and sell their options, the employee agrees that the principle loan
amount and accrued interest will be paid out of the sale proceeds and remitted
by the broker to the Company on the employee's behalf. A late payment charge may
be applied to the outstanding amount and accrued interest.
Loan Enrollment: An employee will be able to apply for a loan from the Company
four times a calendar year. The enrollment periods will last approximately one
week during dates announced by the company.
Tax Impact: Upon repayment of the cumulative accrued interest, the employee will
receive notification of the amount paid to be used for possible tax purposes. If
all or a portion of the loan is considered to be forgiven, then that portion
which is forgiven will be considered compensation to the employee and the
related employment taxes may be due from the employee.
Eligibility:
Loan eligibility is determined based on salary level, employment length,
employee reviews (need satisfactory review on latest review), employee's number
of vested unexercised options, the expiration date of the employee's option and
the employee's unexercised vested option value. Additionally, the employee will
not have exercised any of their options since the commencement of the loan
program. Notwithstanding the above, any loan made under the Loan Program will be
at the Company's discretion.
Termination:
The Loan Program may be suspended or terminated at any time by the Company. Upon
and during any suspension or termination, the Company will not fund further
loans under the Loan Program, including loans in respect of applications
received by the Company but as to which the Company has not yet funded. Existing
loans will continue to be governed by the terms of the Employee Loan Agreement.
Examples:
Initial Loan Date
-----------------
Number of Shares underlying the Option........ 5,000
Number of Vested Shares....................... 2,000
Exercise Price per Share...................... $10.00
Average Nasdaq Closing Price per Share........ $30.00
Gain Value per Share.......................... $20.00 (FMV per share less per share exercise price)
Vested Gain Value............................. $40,000 (2,000 share times 20.00($30.00 - $10.00))
Loan Amount................................... $10,000 ($40,000*25%) not to exceed $25,000
Vested Options Shares Pledged as of Loan Date. 500 ($10,000/$20.00 per share)
Six Months Later
----------------
Average Nasdaq Closing per Share.............. $60.00
Gain Value per Share.......................... $50.00
Vested Gain Value............................. $100,000 ($50.00 per share * 2,000 shares)
Maximum Loan Amount........................... $25,000
Less: Previously Loaned Amount................ $10,000
Additional Available Loan Amount.............. $15,000
Total loan Amount............................. $25,000
Total Vested Option Shares Pledged............ 500 ($25,000/$50.00 per share)
