Document:

Exhibit

 
Exhibit 10.3

FIRST AMENDMENT

THIS FIRST AMENDMENT (this “Amendment”) is made and entered into as of August 28, 2019, by and between ECI FIVE OAKMEAD LLC, a Delaware limited liability company (“Landlord”), and ALPHA AND OMEGA SEMICONDUCTOR INCORPORATED, a California corporation (“Tenant”).

RECITALS

		
	A.
	Landlord (as successor in interest to OA Oakmead II, LLC, a Delaware limited liability company) and Tenant are parties to that certain Lease dated December 23, 2009 (the “Original Lease”), which Original Lease has been previously amended by that certain First Addendum to Lease dated December 23, 2009 (the “First Addendum to Lease”) and that certain Acceptance Agreement dated April 23, 2010 (collectively, the “Lease”).  Pursuant to the Lease, Landlord has leased to Tenant space currently containing approximately 57,310 rentable square feet (the “Premises”) in the building located at 475 Oakmead Parkway, Sunnyvale, California (the “Building”).

		
	B.
	The Lease by its terms shall expire on April 30, 2020 (“Prior Termination Date”), and the parties desire to extend the Lease Term, all on the following terms and conditions.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

		
	1.
	Extension.  The Lease Term is hereby extended for a period of ten (10) years and shall expire on April 30, 2030 (“Extended Termination Date”), unless sooner terminated in accordance with the terms of the Lease.  That portion of the Lease Term commencing the day immediately following the Prior Termination Date (“Extension Date”) and ending on the Extended Termination Date shall be referred to herein as the “Extended Lease Term”.

		
	2.
	Base Monthly Rent.  As of the Extension Date, the schedule of Base Monthly Rent payable with respect to the Premises during the Extended Lease Term is the following:

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	Period

	Rentable Square
Footage

	Monthly Rate Per
Square Foot

	Base Monthly
Rent

	5/1/20 – 4/30/21
	57,310
	$2.65
	$151,871.52

	5/1/21 – 4/30/22
	57,310
	$2.73
	$156,456.36

	5/1/22 – 4/30/23
	57,310
	$2.81
	$161,041.08

	5/1/23 – 4/30/24
	57,310
	$2.89
	$165,625.92

	5/1/24 – 4/30/25
	57,310
	$2.98
	$170,783.76

	5/1/25 – 4/30/26
	57,310
	$3.07
	$175,941.72

	5/1/26 – 4/30/27
	57,310
	$3.16
	$181,099.56

	5/1/27 – 4/30/28
	57,310
	$3.25
	$186,257.52

	5/1/28 – 4/30/29
	57,310
	$3.35
	$191,988.48

	5/1/29 – 4/30/30
	57,310
	$3.45
	$197,719.56

All Base Monthly Rent shall be payable by Tenant in accordance with the terms of the Lease, as amended hereby.

		
	3.
	Additional Security Deposit.  Upon Tenant’s execution hereof, Tenant shall pay Landlord the sum of $76,597.52 which is added to and becomes part of the Security Deposit, if any, held by Landlord as provided under Section 3.5 of the Original Lease as security for payment of rent and the performance of the other terms and conditions of the Lease by Tenant.  Accordingly, simultaneous with the execution hereof, the Security Deposit is increased from $75,274.00 to $151,871.52.

		
	4.
	Additional Rent.  For the period commencing on the Extension Date and ending on the Extended Termination Date, Tenant shall pay all Additional Rent payable under the Lease, including Tenant’s Share of Common Operating Expenses, in accordance with the terms of the Lease, as amended hereby.

5.    Improvements to Premises.

		
	5.1
	Condition of Premises.  Tenant is in possession of the Premises and accepts the same “as is” without any agreements, representations, understandings or obligations on the part of Landlord to perform any alterations, repairs or improvements, except as may be expressly provided otherwise in this Amendment.   Tenant hereby agrees and acknowledges that Landlord has fulfilled its obligations set forth in Exhibit “B” to the Original Lease.

		
	5.2
	Responsibility for Improvements to Premises.  Tenant may perform improvements to the Premises in accordance with the Exhibit A attached hereto and Tenant shall be entitled to an improvement allowance in connection with such work as more fully described in Exhibit A. Landlord, at Landlord’s sole cost, shall perform the following repairs to the parking lot serving the Building using Building standard materials and as otherwise reasonably determined by Landlord: (i) repair asphalt; (ii) repair the drain in the rear part of the parking lot; (iii) seal the parking lot; and (iv) paint the curbs. Landlord shall also perform certain HVAC Work in the Premises, as further described in Section 8 below and Exhibit A attached hereto.

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	6.
	Extension Option.  Section 2 of the First Addendum to Lease is hereby deleted in its entirety and is of no further force or effect.  Provided that (i) Alpha and Omega Semiconductor Incorporated, a California corporation, has not assigned the Lease or sublet any or all of the Premises other than to a Permitted Transferee (it being intended that all rights pursuant to this provision are and shall be personal to the original Tenant under the Lease and shall not be transferable or exercisable for the benefit of any transferee other than a Permitted Transferee), and (ii) no Event of Tenant’s Default exists under the Lease, as amended hereby,  at the time of exercise or at any time thereafter until the beginning of such extension of the Lease Term, Tenant shall have the option (the “Extension Option”) to extend the Lease Term for one (1) additional consecutive period of five (5) years (the “Extension Period”), by giving written notice to Landlord of the exercise of such Extension Option at least twelve (12) months, but not more than fifteen (15) months, prior to the expiration of the Extended Lease Term.  Tenant’s exercise outside of the period between such dates shall be of no force or effect. The exercise of the Extension Option by Tenant shall be irrevocable  and  shall  cover the entire  Premises leased  by Tenant pursuant to  the Lease, as amended hereby.  Upon such exercise, the term of the Lease shall automatically be extended for the Extension Period without the execution of any further instrument by the parties; provided that Landlord and Tenant shall, if requested in writing by either party, execute and acknowledge an instrument confirming the exercise of the Extension Option.  Any extension of the Lease Term shall be upon all the terms and conditions set forth in the Lease, as amended hereby, and all Exhibits thereto, except that: (i) Tenant shall have no further option to extend the Lease Term; (ii) Landlord shall not be obligated to contribute funds toward the cost of any remodeling, renovation, alteration or improvement work in the Premises; (iii) Landlord shall not be obligated to pay any fee or commission to any broker; and (iv) Base Monthly Rent for the Extension Period shall be one hundred percent (100%) of the then Fair Market Base Rental (as defined below) for the Premises for the space and term involved, which shall be determined as set forth below.

		
	6.1
	“Fair Market Base Rental” shall mean the “fair market” Base Monthly Rent at the time or times in question for the applicable space in the Building, based on the prevailing rentals then being charged to tenants in other office and research and development buildings in the general vicinity of the Building of comparable location and quality as the Building, for leases with terms approximately equal to the term for which Fair Market Base Rental is being determined, taking into account: the desirability, location in the building, size and quality of the space, including interior finishes and other tenant improvements; included services and related operating expenses and tax and expense stops or other escalation clauses; and any other special rights of Tenant under the Lease in comparison to typical market leases (e.g. for parking, signage, and extension or expansion options).  Fair Market Base Rental shall also reflect the then prevailing rental structure for comparable office and research and development buildings in the general vicinity of the Building, so that if, for example, at the time Fair Market Base Rental is being determined the prevailing rental structure includes periodic rental adjustments or escalations, Fair Market Base Rental shall reflect such rental structure.

		
	6.2
	Landlord and Tenant shall endeavor to agree upon the Fair Market Base Rental.  If they are unable to so agree within thirty (30) days after receipt by Landlord of Tenant’s notice of exercise of the Extension Option, Landlord and Tenant shall mutually select a licensed real estate broker who is active over the five (5) year period ending on the date of such appointment in the appraising or leasing, as the case may be, of such office and research and development buildings in the general vicinity of the Building.  Landlord shall submit Landlord’s determination of Fair Market Base Rental and Tenant shall submit Tenant’s determination of Fair Market Base Rental to such broker, at such time or times and in such manner as Landlord and Tenant shall agree (or as directed by the broker if Landlord and Tenant do not promptly agree).  The broker shall select either Landlord’s or Tenant’s 

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determination as the Fair Market Base Rental, and such determination shall be binding on Landlord and Tenant.  If Tenant’s determination is selected as the Fair Market Base Rental, then Landlord shall bear all of the broker’s cost and fees.   If Landlord’s determination is selected as the Fair Market Base Rental, then Tenant shall bear all of the broker’s cost and fees.  If the parties compromise and mutually agree upon Fair Market Base Rental, each party shall pay the cost and fees of its own broker.

		
	6.3
	In  the  event  the  Fair  Market  Base  Rental  for  the  Extension  Period  has  not  been determined  at  such  time  as  Tenant  is  obligated  to  pay  Base  Monthly  Rent  for  the Extension Period, Tenant shall pay as Base Monthly Rent pending such determination, the Base Monthly Rent in effect for such space immediately prior to the Extension Period; provided, that upon the determination of the applicable Fair Market Base Rental, any shortage of Base Monthly Rent paid shall be paid to Landlord by Tenant or any overage of Base Monthly Rent paid shall be paid to Tenant by Landlord.

7.    Right of First Offer to Purchase.

		
	7.1
	If, during the Lease Term, Landlord intends to formally offer for sale to unaffiliated third parties Landlord’s interest in the title to the Building and the legal parcel of land upon which the Building is situated, as a stand-alone sale transaction only and not a part of a portfolio offering or otherwise bundled with or conditioned on the sale of other assets (the "Offer Property", such offering being a “Public Offering”), Landlord shall first give written notice to Tenant of the purchase price and other material terms upon which Landlord in its sole discretion is willing to sell the Offer Property to Tenant ("Landlord's Offer Notice").   The right to receive the Landlord’s Offer Notice and exercise other rights set forth in this Section 7 shall be personal to Tenant and not transferable to or exercisable  by  any  subtenant  or  assignee  of  Tenant,  and  shall  not  apply  at  all  in connection with unsolicited offers to purchase the Offer Property received by Landlord absent a Public Offering, which Landlord may, in its sole discretion, consider, negotiate and accept without notice to Tenant.

		
	7.2
	Should Tenant be entitled to receive the Landlord’s Offer Notice, Tenant shall have the one time right of first offer ("Right of First Offer") to buy the Offer Property upon the economic terms and conditions contained in Landlord's Offer Notice and subject to the other terms and conditions set forth in this Section 7, provided that within ten (10) Business Days after receipt of Landlord's Offer Notice, Tenant delivers a written notice (the "Purchase Commitment") to Landlord of Tenant's desire to pursue the proposed sale transaction described in Landlord's Offer Notice.  Notwithstanding anything to the contrary contained herein, at Landlord’s option, Tenant shall have no such Right of First Offer and Landlord need not provide Tenant with Landlord's Offer Notice (if the same has not yet been delivered), and Tenant’s other rights under this Section 7 shall lapse and be of no further force and effect, if:

7.2.1     Tenant is in default under the Lease beyond any applicable notice and cure periods at the time that Landlord would otherwise be required to deliver Landlord's Offer Notice, or at any time thereafter prior to the closing of the sale of the Offer Property to Tenant or Tenant’s designee; or

7.2.2     twenty percent (20%) or more of the Premises is sublet at or prior to the time
Tenant delivers the Purchase Commitment; or

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7.2.3     the lease has been assigned by Tenant at or prior to the time Tenant delivers the
Purchase Commitment; or

7.2.4     Tenant is not occupying at least 80% of the Premises at or prior to the time
Tenant delivers the Purchase Commitment.

		
	7.3
	If Tenant timely delivers the Purchase Commitment, the parties shall have a period of fifteen (15) Business Days following Landlord’s delivery of the proposed purchase and sale agreement containing all of the terms and conditions upon which Landlord shall sell to Tenant and Tenant shall buy from Landlord the Offer Property (the economic terms and  conditions  of  which  shall  be  consistent  with  the  Landlord's  Offer  Notice)  to negotiate, execute and deliver such a formal, binding purchase and sale agreement (the “PSA”).   If the parties fail to execute and deliver the PSA within said fifteen (15) Business Day period, all rights of Tenant to purchase the Offer Property shall terminate, Tenant shall be deemed not to have exercised its Right of First Offer, and Landlord shall have no further obligation to notify Tenant of any proposed offer or sale of the Offer Property and Landlord shall thereafter have the unconditional right to offer, negotiate and sell the Offer Property to any party free of Tenant’s Right of First Offer.  If Tenant does not exercise or is deemed not to have exercised its Right of First Offer, or otherwise loses its rights under this Section 7, or if Tenant defaults under the PSA, Landlord shall be free of any obligations pursuant to this Section 7 and may sell the Offer Property, to any purchaser, on whatever terms and conditions Landlord, in its sole discretion, deems acceptable.

		
	7.5
	Tenant’s rights under this Right of First Offer may not be assigned, sold, encumbered, or otherwise transferred by Tenant without Landlord’s express prior written consent, which may be withheld or conditioned by Landlord in Landlord’s sole discretion; and any such assignment, sale, encumbrance, or transfer by Tenant without Landlord’s consent shall be void and of no force and effect.

8.    HVAC Work.

		
	8.1
	Landlord shall, at Landlord’s sole cost and expense, on the roof of the Building, (i) replace  certain  HVAC units  and  related  systems  to service  the  Building  (the “New HVAC Units”), (ii) remove certain abandoned HVAC units (the “Abandoned HVAC Units”) serving the Premises, and (iii) leave in place certain existing HVAC units (the “Existing HVAC Units”) and perform certain repairs to such Existing HVAC Units, as further described on Schedule 3 to Exhibit A attached hereto.  The installation of New HVAC  Units,  removal  of  Abandoned  HVAC  Units  and  performance  of  repairs  to Existing HVAC Units is collectively referred to herein as the “HVAC Work”, and the New HVAC Units and the Existing HVAC Units are collectively referred to herein as the “HVAC Units”.  Except as otherwise expressly provided in the following sentence, Landlord shall be solely responsible for all costs and expenses related to the HVAC Work. The HVAC Work shall include all engineering and design costs associated therewith, and the re-ducting and re-zoning as shown on Schedule 4 to Exhibit A to the extent needed to ensure that all HVAC Units are properly working and conducting air balancing for the New HVAC Units and Existing HVAC Units.  Tenant shall be responsible for the cost to re-duct, re-zone and rebalance the HVAC Units serving any new office space (subject to the Improvement Allowance, as defined below). Landlord shall use reasonable efforts to substantially complete the HVAC Work by December 31,

2019.

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	8.2
	Upon the installation of the New HVAC Units, title to the New HVAC Units shall pass to Landlord without any additional consideration to Tenant and upon the expiration or earlier termination of the Lease, the HVAC Units shall remain at the Building; provided that Tenant, not Landlord, shall be responsible for all costs and expenses related to the use, maintenance and operation of the HVAC Units (including the New HVAC Units following the installation thereof), subject to the terms of the Lease and this Amendment, including,  without  limitation,  Section  8.3,  below,  and  Landlord’s  obligations  under Section 5.6 of the Lease (including, without limitation, future replacement of HVAC equipment).

		
	8.3
	Subject to Landlord’s obligations under Section 5.6 of the Lease (including, without limitation, replacement of HVAC  Units), Tenant, at its sole cost and expense, shall procure and maintain in full force and effect, a contract (the “Service Contract”) for the service, maintenance, repair and replacement of the HVAC Units with a HVAC service and maintenance contracting firm reasonably acceptable to Landlord (“Service Contractor”).   Subject to Landlord’s obligations under Section 5.6 of the Lease (including, without limitation, replacement of HVAC Units), Tenant shall follow all reasonable recommendations made by the Service Contractor for the maintenance, repair and replacement of the HVAC Units.  The Service Contract shall require the Service Contractor to perform all required maintenance protocols established by the equipment manufacturer, and shall further provide that the Service Contractor perform inspections of the HVAC Units at intervals of not less than three (3) months, and that having made such inspections, the Service Contractor shall furnish a complete report of any defective conditions found to be existing with respect to the HVAC Units, together with any recommendations for maintenance, repair and/or replacement thereof.  Said report shall be furnished to Tenant with a copy to Landlord.  In addition, but subject to Landlord’s obligations under Section 5.6 of the Lease (including, without limitation, replacement of HVAC Units), Tenant shall be responsible for the cost of repairs to the HVAC Units serving the Premises to the extent such repairs are not fully covered by the Service Contract on such HVAC Unit.

		
	8.4
	Notwithstanding anything to the contrary in Section 8.3 above, for the first twelve (12) months following Landlord’s completion of the HVAC Work, Landlord shall service, maintain, repair and replace, as applicable, all of the HVAC Units; provided, however, that the cost to service, maintain, repair and replace the Existing HVAC Units and the cost to service and maintain (but not repair or replace) the New HVAC Units during such twelve  (12)  month  period  shall  be  included  in  Common  Operating  Expenses  in accordance  with  Section  5.6  of  the  Lease;  provided,  however,  any  HVAC  Service Contract obtained by Landlord shall be at a commercially reasonable rate.  In addition to the foregoing, with respect to each New HVAC Unit, for the first twelve (12) months following the installation of each New HVAC Unit (each twelve (12)-month period referred to as the “New HVAC Warranty Period”), Landlord shall be solely responsible for the cost to repair and replace the New HVAC Units (and such cost shall not be included in Common Operating Expense). Landlord’s obligation to pay for such cost to repair and replace any New HVAC Unit shall be applicable to any New HVAC Units requiring repair and/or replacement during the applicable New HVAC Warranty Period, regardless of when such repair and replacement work is actually commenced and completed.  Except as provided in the foregoing sentence, following the New HVAC Warranty Period, all HVAC Units shall be serviced, maintained and repaired by Tenant, at its sole cost, in accordance with the terms of Section 8.3 above.

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	9.
	Other Pertinent Provisions.   Landlord and Tenant agree that, effective as of the date of this Amendment (unless different effective date(s) is/are specifically referenced in this Section), the Lease shall be amended in the following additional respects:

9.1        Landlord’s Address for Notices.  Landlord’s address for notices set forth in Section Q of the Summary of the Original Lease is hereby deleted in its entirety and replaced with the following:

“ECI Five Oakmead LLC
c/o Embarcadero Capital Partners, LLC
1301 Shoreway Road, Suite 250
Belmont, CA 94002
Attn: John Hamilton
with a copy to:

Mr. Gregory B. Shean  Farella Braun + Martel LLP The Russ Building, 30th Floor
235 Montgomery Street
San Francisco, CA 94104”

9.2    Rent Payment Address.  Notwithstanding anything to the contrary contained in the 
Lease, Landlord’s address for payment of rent shall be the following:

ECI Five Oakmead LLC P.O. Box 398679
San Francisco, CA  94139-8679

9.3    Permitted Tenant’s Alterations Limit. The Permitted Tenant’s Alterations Limit set 
forth in Section O of the Summary of the Original Lease is hereby deleted and replaced with $175,000, and the second (2nd) sentence of Section 5.2A of the Original Lease is hereby amended and restated in its entirety as follows: “Tenant shall be entitled, without Landlord’s prior approval, but with prior notice to Landlord, to make Tenant’s Alterations (i) which do not affect the structural or exterior parts or water tight character of the Building, (ii) do not affect the  Building systems (i.e., any  HVAC Unit or  plumbing  systems), and (ii) the reasonably estimated cost of which, plus the original cost of any part of the Premises removed or materially altered in connection with such Tenant’s Alterations, together do not exceed the Permitted Tenant’s Alterations Limit specified in Section O of the Summary per Tenant’s Alteration.”

		
	9.2
	Cannabis. Tenant shall not bring upon the Premises or the Building or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or  consumption  of  any  cannabis,  marijuana  or  cannabinoid  product  or  compound, regardless of the legality or illegality of the same.

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	9.3
	Management Fee. Notwithstanding anything to the contrary contained in Section 8.2(c) of the Original Lease, the total amount charged for any management fee and included in Tenant’s Share of Common Operating Expenses shall not exceed the monthly rate of three percent (3%) of Base Monthly Rent.

		
	9.4
	Tenant Entity Name Correction.   References to Tenant in the Lease as “Alpha and Omega Semiconductor, Inc., a California corporation” are in error and the parties hereto acknowledge and agree that the definition of Tenant is as is stated in this Amendment. ALPHA AND OMEGA SEMICONDUCTOR INCORPORATED, a California corporation, hereby ratifies the Lease and agrees that it is bound by all terms and conditions of the Lease as of the original lease execution date, in the same manner and to the same extent as though the correct tenant name had been reflected therein.

10.    Miscellaneous.

10.1      This Amendment, including Exhibit A (Tenant Alterations) attached hereto, sets forth the entire agreement between the parties with respect to the matters set forth herein.  There have been no additional oral or written representations or agreements.  Under no circumstances shall Tenant be entitled to any rent abatement, improvement allowance, leasehold improvements, or other work to the Premises, or any similar economic incentives that may have been provided Tenant in connection with entering into the Lease, unless specifically set forth in this Amendment.

10.2      Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.  In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this Amendment shall govern and control. The capitalized terms used in this Amendment shall have the same definitions as set forth in the Lease to the extent that such capitalized terms are defined therein and not redefined in this Amendment.

10.3      This  Amendment  may  be  executed  and  delivered  by  facsimile  in  one  or  more counterparts, each of which shall constitute one and the same Amendment.  If this Amendment is signed and delivered in such manner, Landlord and Tenant shall promptly deliver  an  original  signed  version  to  the  other.   Any  digital  image  copy  of  this Amendment (to the extent fully executed and delivered) shall be treated by the parties as a true and correct original of the same and admissible as best evidence to the extent permitted by a court of proper jurisdiction.

10.4      Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for such an offer by Tenant.   Landlord shall not be bound by this Amendment until Landlord has executed and delivered the same to Tenant.

10.5      Tenant hereby represents to Landlord that Tenant has dealt with no broker in connection with this Amendment other than Newmark Cornish and Carey and Kidder Matthews. Tenant agrees to indemnify and hold Landlord, its members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents harmless from all claims of any other brokers claiming to have represented Tenant in connection with this Amendment. Landlord hereby represents to Tenant that Landlord has dealt with no broker in connection with this Amendment. Landlord agrees to indemnify and hold Tenant harmless from all claims 

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of any brokers claiming to have represented Landlord in connection with this Amendment.

		
	10.6
	Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of  the  date  of  this  Amendment,  the  Premises  have  not  undergone  inspection  by  a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable  construction-related  accessibility  standards  under  California  Civil  Code Section 55.53.  Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction- related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”  Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder, such CASp inspection shall be performed at Tenant’s sole cost and expense and Tenant shall be solely responsible for the cost of any repairs, upgrades, alterations and/or modifications to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such CASp inspection as required by Law, which repairs, upgrades, alterations and/or modifications may, at Landlord’s option, be performed by Landlord at Tenant’s expense, payable as additional rent within ten (10) days following Landlord’s demand. The terms and conditions of this Section 10.6 shall apply only in the event Tenant conducts an Inspection; otherwise, the terms and conditions of the Lease, as amended, shall govern with respect to each of Landlord’s and Tenant’s liability for compliance with applicable Laws.

10.7    If Tenant is billed directly by a public utility with respect to Tenant’s electrical usage 
at the Premises, then, upon written request, Tenant shall provide monthly electrical utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord’s option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant’s electricity  usage  with  respect  to  the  Premises  directly  from  the  applicable  utility company.

		
	10.8
	Redress for any claim against Landlord under the Lease and this Amendment shall be limited to and enforceable only against and to the extent of Landlord’s interest in the Building.  The obligations of Landlord under the Lease are not intended to and shall not be personally binding on, nor shall any resort be had to the private properties of, any of its trustees or board of directors and officers, as the case may be, its investment manager, the general partners thereof, or any beneficiaries, stockholders, employees, or agents of Landlord or the investment manager, and in no case shall Landlord be liable to Tenant hereunder for any lost profits, damage to business, or any form of special, indirect or consequential damage.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed this Amendment as of the date first written above.

	
						
	LANDLORD:
	 
	TENANT:

	 
	 
	 
	 
	 
	 

	ECI FIVE OAKMEAD LLC,
	 
	ALPHA AND OMEGA SEMOCONDUCTOR

	a Delaware limited liability company
	 
	INCORPORATED, a California corporation

	 
	 
	 
	 
	 
	 

	By:
	Embarcadero Capital Investors Five LP,
	 
	By: /s/ Steve Sun

	 
	a Delaware limited partnership,
	 
	Name: Steve Sun

	 
	its sole member
	 
	Title: VP of HR

	 
	 
	 
	 
	 
	 

	 
	By:
	ECP Five, LLC,
	 
	 
	By: /s/ Yifan Liang

	 
	 
	a Delaware limited liability company,
	 
	Name: Yifan Liang

	 
	 
	its general partner
	 
	Title: CFO

	 
	 
	 
	 
	 
	 

	 
	By:
	/s/ John Hamilton
	 
	 
	 

	 
	 
	John Hamilton
	 
	 
	 

	 
	 
	Manager
	 
	 
	 

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EXHIBIT A – TENANT ALTERATIONS

attached to and made a part of the Amendment dated as of August 28, 2019, between ECI FIVE OAKMEAD LLC, a Delaware limited liability company, as Landlord, and ALPHA AND OMEGA SEMICONDUCTOR INCORPORATED, a California corporation, as Tenant

I.    Tenant Improvements

1.          Tenant Improvements. Following the full and final execution of the Amendment to which this Exhibit A is attached, Tenant shall, with reasonable diligence through the Contractor (defined below) selected by Tenant and reasonably approved by Landlord pursuant to the provisions of this Section 1, construct and install the improvements and fixtures provided for in this Exhibit A (“Tenant Improvements”).  At least ten (10) Business Days prior to the date Tenant enters into any contract for construction of Tenant Improvements, Tenant shall submit to Landlord for Landlord’s prior approval (not to be unreasonably withheld, conditioned or delayed), the name of the general contractor, and those subcontractors  whose  work  affects  the  Building structure,  the  Building  systems,  or  the roof  of  the Building, and such additional information on such contractors as Landlord may reasonably request. Landlord shall have the reasonable right to review and approve or disapprove each contractor and subcontractor submitted by Tenant based upon such contractor’s or subcontractor’s qualifications, including (a) quality of work, (b) creditworthiness, (c) experience in general construction of Tenant Improvements, and in constructing improvements similar to the Tenant Improvements, and (d) references. Landlord shall have the right to designate any subcontractor whose work affects the structure of the Building, the roof, any life safety systems, and the Building systems.  The contractor selected by Tenant, as approved by Landlord, is herein called the “Contractor”.  The Contractor shall carry insurance in accordance with the requirements set forth in Schedule 1 attached hereto.  The Contractor shall deliver Contractor’s insurance certificates to Landlord at least ten (10) days prior to commencing construction of the Tenant Improvements.

1.1        Plans.  The Tenant Improvements shall be constructed substantially as shown on a conceptual space plan (“Space Plan”) for the Premises to be prepared by a space planner (“Space Planner”) who is to be retained by Tenant as the space planner for the Premises.  Landlord shall have the right to approve the Space Planner, which approval shall not be unreasonably withheld, conditioned or delayed.    The  Space  Plan  shall  be  subject  to  Landlord’s  approval,  which  approval  shall  not  be unreasonably withheld, conditioned or delayed.  The Space Plan which Landlord approves is herein called the “Approved Space Plan”.  Landlord shall use reasonable efforts to approve or disapprove the Space Plan by written notice to Tenant within five (5) Business Days after receipt.

The Space Planner will prepare and deliver to Landlord and Tenant detailed plans and specifications consistent with the Approved Space Plan and sufficient to permit the construction of the Tenant Improvements by the Contractor (“Construction Documents”).   Landlord shall approve or disapprove the Construction Documents by written notice to Tenant and the Space Planner within five (5) Business Days after receipt, specifying in reasonable detail any changes or modifications Landlord reasonably desires in the Construction Documents.  Landlord shall not unreasonably require changes or modifications or withhold its approval of the Construction Documents; provided, however, Landlord may, in its sole and absolute discretion, require changes or modifications or withhold its approval of the Construction Documents if  (1) the  Tenant  Improvements will affect the Building’s structure  or the Building systems, (2) any element of the Tenant Improvements fails to comply with any applicable Law, or (3) the cost of removing the Tenant Improvements at the end of the Lease Term would be excessive in Landlord’s reasonable estimation.  The Space Planner will then revise the Construction Documents 

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and resubmit them to Tenant and to Landlord for Landlord’s approval.  Landlord shall approve or disapprove the same within five (5) Business Days after receipt.  The revised Construction Documents, as approved by Landlord, are hereinafter referred to as the “Final Construction Documents”.  Tenant shall be responsible for the costs of all Construction Documents, which may be paid for out of the “Improvement Allowance”  (as  defined  below).    In  the  event  that  Landlord  fails  to  approve  or  disapprove  any Construction Documents that are materially consistent with the Approved Space Plan within ten (10) Business Days following Tenant’s submission thereof the Landlord, such failure shall be deemed Landlord’s disapproval of the Construction Documents as the Final Construction Documents.

1.2       Governmentally-Required Changes.  Tenant acknowledges that, pursuant to all applicable  Laws  and  regulations  (including,  without  limitation,  Title  III  of  the  Americans  with Disabilities Act of 1990 and the Building Code of the City of Sunnyvale, California), the construction of the Tenant Improvements in the Premises may result in additional governmentally-required alterations or improvements to the Premises or the Building.   If the proposed design and construction of the Tenant Improvements results in any such governmentally-required alterations or improvements being imposed as a condition to the issuance of applicable permits or approvals, then Tenant shall be solely responsible for all costs and expenses relating to such additional governmentally-required alterations and improvements (which shall be constructed by Landlord); provided, however, that if the performance of such governmentally-required alterations or improvements can be avoided by modifying the cost, design or manner of construction of the Tenant Improvements, then Tenant may elect to modify the Tenant Improvements in accordance with the provisions of this Tenant work letter (including, without limitation, Section 1.5 below).   Landlord shall notify Tenant in writing of any such required alterations or improvements promptly after Landlord is notified of the same.

1.3        Construction.     Following  approval  by  Landlord  and  Tenant  of  the  Final Construction Documents, and the Contractor providing evidence of its insurance, Tenant shall cause the Contractor to promptly commence and diligently proceed to cause the Tenant Improvements to be constructed in accordance with the Final Construction Documents, and Article 5 of the Original Lease. Tenant shall provide Landlord with at least fifteen (15) days’ prior written notice of the date for its commencement of construction of the Tenant Improvements in order to permit Landlord to post, file, and record such Notices of Nonresponsibility and other instruments as may be necessary to protect Landlord and its property from claims by contractors for construction costs that are to be paid by Tenant.  Tenant will obtain, comply with and keep in effect all consents, permits and approvals required by any governmental authorities (collectively, “Permits”) that relate to or are necessary for the lawful construction of the Tenant Improvements.  At the time Final Construction Documents are ready for submission to any governmental authorities for review in connection with the Permits, Landlord shall be notified in writing by Tenant.  Prior to applying for any of the Permits or submitting documentation in connection therewith, Tenant shall provide Landlord with the opportunity to review and approve (which approval shall not be unreasonably withheld, conditioned or delayed) any Permit applications Tenant intends  to  file.    Tenant  shall  further  provide  Landlord  with  any  comments  to  any  submitted  plan documents made by any governmental authority promptly upon Tenant’s receipt of same (all of which comments shall be subject to the provisions of Section 1.4 below), and copies of all Permits required for construction of the Tenant Improvements upon issuance.  Tenant shall comply with all applicable Laws and with all recorded restrictions (to the extent Tenant has been provided copies of same) affecting the Property.  Landlord shall have the right to suspend any construction activity by Tenant that materially or adversely detracts from harmonious labor relations at the Building.

1.4        Cost of Tenant Improvements. (a) Landlord shall contribute up to $573,100.00 (i.e., $10.00 per rentable square foot of the Premises) (the “Improvement Allowance”) toward Tenant’s performance of the Tenant Improvements. Landlord shall be entitled to deduct from the Improvement Allowance a construction coordination fee in an amount equal to two percent (2%) of the actual Improvement Allowance used by Tenant. The Improvement Allowance may only be used for architectural/engineering costs, project management costs, and hard costs in connection with the Tenant 

A-2

Improvements.  In no event shall the Improvement Allowance be used for the purchase of data and telecommunications cabling, equipment, furniture or other personal items or personal property of Tenant.

(b)      Tenant shall pay the balance, if any, of the total Tenant Improvements costs in excess of the Improvement Allowance.   If the cost of the Tenant Improvements exceeds the Improvement Allowance, Tenant shall be entitled to the Improvement Allowance in accordance with the terms hereof, but each individual disbursement of the Improvement Allowance shall be disbursed in the proportion that the Improvement Allowance bears to the total cost for the Tenant Improvements, less the ten percent (10%) retainage referenced below.

1.4.1    Disbursement of Improvement Allowance. Landlord shall disburse the Improvement  Allowance  to  Tenant  as  the  construction  of  the  Tenant  Improvements  progresses,  as follows:  Tenant shall deliver to Landlord, not more frequently than once per any thirty (30) day period (with a minimum request of One Hundred Thousand Dollars ($100,000), except for the final request for disbursement  which  shall  not  be  subject  to  any  dollar  limitation),  an  application  for  payment, accompanied by documentary evidence as reasonably required by Landlord (including, at a minimum, copies of the paid invoices and conditional or unconditional, as applicable, mechanics’ lien waivers reasonably required by Landlord from the previous disbursement and signed by the applicable party) of the costs incurred by Tenant for the design and construction of the Tenant Improvements since the last application for reimbursement.  Within thirty (30) days after Landlord’s receipt of such an application for reimbursement, Landlord shall pay to Tenant the amount of such application based upon the costs actually incurred by Tenant for construction of the Tenant Improvements; provided, however, Landlord shall retain an amount equal to ten percent (10%) of each application (the “Landlord Retention”), which Landlord Retention shall be released pursuant to the provisions of Section 1.4.3 below.  In no event shall Landlord be required to disburse more than the Improvement Allowance.

1.4.2    Evidence of Completion.  Within thirty (30) days following substantial completion of the Tenant Improvements (which shall mean completion of the Tenant Improvements and receipt of permit sign-offs, subject only to correction of punch-list items that do not affect safe occupancy of the Premises), Tenant shall submit to Landlord:

(a)       A statement of Tenant’s final construction costs, together with receipted evidence showing payment thereof, reasonably satisfactory to Landlord, and, to the extent not previously delivered, fully executed and notarized unconditional lien releases in the form prescribed by law from Tenant’s contractors, copies of all detailed, final invoices from Tenant’s contractors and subcontractors relating to the Tenant Improvements.

(b)       All Permits and other documents issued by any governmental authority in connection with the approval and completion of the Tenant Improvements, and all evidence reasonably available showing compliance with all applicable Laws of any and all governmental authorities having jurisdiction over the Premises, including, without limitation, a certificate of occupancy or its equivalent such as duly signed-off job cards, and/or building permit sign-offs, and/or other appropriate authorization.

(c)        A valid certificate of substantial completion executed by the Space Planner confirming that the Tenant Improvements have been substantially completed in accordance in all material respects with the Final Construction Documents, subject to punch-list items to be completed by Tenant’s Contractor.

(d)        A  written  certificate,  subscribed  and  sworn  before  a  Notary Public, from Tenant’s general Contractor as follows: “There are no known mechanics’ or materialmen’s liens outstanding, all due and payable bills with respect to the Tenant Improvements have been paid, 

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and there is no known basis for the filing of any mechanics’ or materialmen’s liens against the Premises or the Building, and, to the best of our knowledge, waivers from all subcontractors and materialmen are valid and constitute an effective waiver of lien under applicable law.”

(e)             Copies of all of Tenant’s contractors’ warranties.

(f)        A reproducible copy of the “as built” drawings of the Tenant Improvements, which drawings shall show the dimensions and location of all elements of the Tenant Improvements completed in accordance with the Final Construction Documents.

(g)            Any other items reasonably requested by Landlord.

Within thirty (30) days after receipt of all of the above, Landlord shall make its disbursement of the final ten percent (10%) of the Improvement Allowance (or so much of the Improvement Allowance that has not yet been paid by Landlord, but in no event to exceed, in the aggregate, the actual cost of the design and construction of the Tenant Improvements) to Tenant or Tenant’s contractors, as applicable, as required above.

1.4.3    Deadline on Use of Improvement Allowance.  Tenant shall have until December 31, 2020 to submit to Landlord a written request, with supporting documentation for the then completed construction of Tenant Improvements, for disbursement of the Improvement Allowance.  Tenant shall lose any portion of Improvement Allowance which Tenant has not requested be disbursed on or before December 31, 2020 in accordance with the requirements contained above.  Any portion of the Improvement Allowance not used in the design, construction and installation of the Tenant Improvements shall be retained by Landlord, and Tenant shall have no right to receive or apply toward Tenant’s rental obligations any portion of the Improvement Allowance not actually used.

1.5        Changes.  If Tenant desires any change, addition or alteration in or to any Final Construction Documents (“Changes”) Tenant shall cause the Space Planner to prepare additional Plans implementing such Change.  Tenant shall submit all proposed Changes to Landlord for Landlord’s prior written  approval  (which  approval  shall  not  be  unreasonably  withheld,  conditioned  or  delayed)    If Landlord fails to approve the Change within five (5) Business Days after receipt, then Landlord shall be deemed to have disapproved the Change.

2.         Ownership of Tenant Improvements.  All Tenant Improvements, whether installed by Landlord or Tenant, shall become a part of the Premises, shall be the property of Landlord and, subject to the provisions of the Lease, shall be surrendered by Tenant with the Premises, without any compensation to Tenant, at the expiration or termination of the Lease in accordance with the provisions of the Lease.

II.  HVAC Work

1.    Landlord shall perform the HVAC Work, at Landlord’s sole cost and expense (subject to the terms of Section 2 below), using Building standard methods, materials and finishes and as otherwise reasonably determined by Landlord and otherwise in accordance with all applicable Laws.  The HVAC Work is further depicted on Schedule 3 attached hereto.  Landlord shall determine the brand of the New HVAC Units, the manner in which the New HVAC Units are lifted to, and installed on, the roof of the Building, and the manner in which the New HVAC Units are connected to the Premises.  Landlord shall enter into a direct contract for the HVAC Work with a general contractor selected by Landlord.  In addition, Landlord shall have the right to select and/or approve of any subcontractors used in connection with the HVAC Work.

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2.          All other work and upgrades in connection with the HVAC Work, subject to Landlord’s approval, shall be at Tenant's sole cost and expense, plus any applicable state sales or use tax thereon, payable upon demand as additional rent under the Lease.  Tenant shall be responsible for any delay in completion of the HVAC Work resulting from any such other work and upgrades requested or performed by Tenant.

3.          Tenant acknowledges that the HVAC Work may be performed by Landlord in the Building during normal business hours following the execution of the Amendment.  Landlord and Tenant agree to cooperate with each other in order to enable the HVAC Work to be performed in a timely manner and with as little inconvenience to the operation of Tenant’s business as is reasonably possible. Notwithstanding anything herein to the contrary, any delay in the completion of the HVAC Work or inconvenience suffered by Tenant during the performance of the HVAC Work shall not delay the Extension Date, nor shall it subject Landlord to any liability for any loss or damage resulting therefrom or entitle Tenant to any credit, abatement or adjustment of rent or other sums payable under the Lease.

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SCHEDULE 1 TO EXHIBIT A

INSURANCE REQUIREMENTS

1.1        Without  limiting  Contractor’s  indemnifications  of  Tenant  set  forth  in  the  Lease, Contractor shall maintain as a part of the cost of the Tenant Improvements, and shall require that each subcontractor of every tier maintain at its own expense, at all times during the Tenant Improvements and for such additional periods as required by the Lease, the insurance as described below and covering all additional insured parties as more specifically named in Schedule 2 attached hereto unless otherwise amended from time-to-time with a project order to address project specific hazard conditions. This insurance shall be endorsed to provide that it shall not be terminated, be permitted to expire, be subject to non-renewal, nor be materially altered except on thirty (30) days prior written notice to Landlord.  All of such insurance shall be maintained in coverage amounts, with deductible amounts, with insurers, and on forms acceptable to Landlord and Landlord’s Lender (if any) and, for all policies, except Worker’s Compensation, Employer’s Liability Insurance and Professional Liability Insurance, shall continuously name Landlord, Landlord’s affiliates and subsidiaries as may be designated by Landlord or Property Manager at any time and as may be changed from time to time, Property Manager, the Construction Manager (if any), Landlord’s property management company for the Property (if different from the Property Manager named herein), Landlord’s Lender (if any), and any other persons or organizations as Landlord may specify from time to time (collectively, with Landlord, the “Landlord Parties”) as additional insureds, with coverage provided to such additional insureds at least as broad as provided to the named insured and as provided by endorsement form numbers CG 20 10 07 04 and CG 20 37 07 04 or their equivalent promulgated by the Insurance Services Office.  All insurance policies required shall be issued by companies licensed in the State who maintain a current Policyholder Alphabetic Category Rating of not less than “A-” and Financial Size Category Rating of not less than “VII” according to the latest edition of Best’s Key Rating Guide.  Prior to Contractor commencing the Tenant Improvements, Contractor shall, and shall require each subcontractor of every tier to, furnish Landlord with Certificates of Insurance, on forms acceptable to Landlord, evidencing that insurance policies are in full force and effect that provide the required coverages and amounts of insurance listed below along with a copy of the endorsement providing additional insured coverage, the primary and non-contributing endorsement and the waiver of subrogation endorsements to the Landlord Parties.  At Landlord’s request, Contractor shall provide Landlord with copies of each insurance policy.  Any other insurance carried by or available to any Landlord Parties which may be applicable, shall be deemed to be excess insurance and Contractor’s and each subcontractor’s insurance shall contain a provision that it is deemed primary and non- contributing with any insurance carried by or available to the Landlord Parties.  Each required insurance policy except for Worker’s Compensation, Employer’s Liability and Professional Liability shall include a Separation of Insureds clause such that the insurance applies separately to each insured against whom a claim or suit is asserted and the policies shall not contain any limitation or exclusion for claims or suits by one insured against another.   Contractor shall be responsible for any deductible  amounts under the required insurance policies, except to the extent such amounts may be included as part of the cost of the Tenant Improvements.  Contractor and each subcontractor of every tier shall provide the greater of (i) the insurance types, amounts and coverages already maintained by Contractor and each such subcontractor, determined individually with respect to each such party or (ii) the following insurance types, amounts and coverages:

(a)        Workers’ Compensation Insurance complying with applicable State and federal statutes and Employer’s Liability Insurance with limits of not less than $1,000,000 bodily injury by accident (each accident), $1,000,000 bodily injury by disease (each employee) and $1,000,000 bodily injury by disease (policy limit).

A-6

(b)        Commercial General Liability (“CGL”) Insurance written on an “occurrence form” basis, including, but not limited to, Premises - Operations Liability, Products - Completed Operations Liability, Blanket Contractual Liability Coverage and liabilities arising out of the actions of Independent Contractors.  Such insurance shall contain minimum limits of liability as follows:  of not less than $1,000,000 per occurrence limit, $1,000,000 Personal and Advertising Injury limit, $2,000,000
General Aggregate limit and $2,000,000 Products-Completed Operations Aggregate limit, with a Per
Project General Aggregate provision or endorsement.   The required limits may be provided by any combination of CGL and umbrella or follow form excess policies [see Section 1.1(d) below].   Such
insurance shall contain no explosion, collapse, or underground hazard exclusions.  The deductible or self- insured retention amount required under any such policy shall not exceed $10,000 per occurrence.  The insurance and the Landlord Parties’ additional insured status thereon shall be maintained continuously in force at least until the expiration of five (5) years after the expiration or termination of the Lease or final completion of the Tenant Improvements, whichever is later.  All such policies shall contain a provision that defense costs are paid in addition to and do not deplete any of the policy limits and a provision that the General Aggregate and, to the extent commercially reasonably available, Products - Completed Operations Aggregate apply separately to each project for which Contractor or any subcontractor of any tier performs operations away from premises owned by or rented to Contractor or any such subcontractor.

(c)        Business Auto Coverage with a limit of liability of $1,000,000 for any one accident or loss.  Such insurance shall cover liability arising out of the use of owned, nonowned and hired automobiles.  If Contractor or any subcontractor of any tier transports any hazardous materials, the business auto liability policy shall include ISO endorsement form MCS-90 or equivalent endorsement providing coverage for environmental and pollution claims and suits.

(d)        Umbrella  or  follow  form  excess  liability  insurance  at  least  as  broad  as  the underlying  CGL  insurance.   Umbrella/Excess  Liability  Insurance  shall  contain  minimum  limits  of $5,000,000 per occurrence and $5,000,000 aggregate and shall be excess over the primary General
Liability, Auto Liability and Employers Liability insurance.  The required CGL, Business Auto and
Employer’s Liability insurance limits may be provided on a combination of primary and umbrella/follow form excess insurance policies.  Any such umbrella/follow form excess insurance policies shall provide that the coverage “follows form” to the underlying insurance and that such policy provides substantially equivalent or broader coverage than that provided by such underlying insurance, including the coverage for all required additional insureds; provided, however, that any material changes shall be subject to Landlord’s approval.

(e)        If Contractor or any subcontractors of any tier use owned, chartered, leased or hired mobile construction equipment, Contractor shall, and shall require all such subcontractors to, maintain (or cause to be maintained) an “equipment floater” of the “all-risk” type, with limits not less than the full replacement cost of such equipment located at the jobsite and all of Contractor’s and any subcontractors’ business personal property, including tools and equipment, none of which will be insured under Landlord’s insurance policies.

(f)         Unless otherwise specified or agreed to, an “installation” floater and/or Builder’s Risk coverage or other property insurance providing “all risk” or “special causes of loss form” insurance coverage for all property, equipment, supplies and materials purchased for the Building prior to their delivery  to  the  Building  and  their  installation  or  incorporation  in  the  Building,  and  for  all  tools, equipment, other materials and other personal property owned, rented or used by Contractor or by any subcontractors of  any  tier and  used  in  connection with the  Tenant  Improvements.    Such  insurance coverage shall be for an amount at least equal to 100% of the estimated replacement cost of all such property, tools, equipment, supplies, materials and other personal property.

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(g)       If Contractor or any subcontractor of any tier performs any of the Tenant Improvements on a design-build basis or performs other professional services, then Contractor and each such subcontractor shall also, for all such design-build Tenant Improvements and services, maintain professional liability insurance (and ensure that the engineer or other design professional performing the design Tenant Improvements or services maintain professional liability insurance) in an amount equal to the greater of (1) the professional liability insurance currently maintained by the engineer or other design professional performing such design work, or (2) $2,000,000 per claim and $2,000,000 annual aggregate. Each such professional liability policy shall provide full prior acts coverage or shall include a retroactive date no later than the date of commencement of the design-build Tenant Improvements or other professional services.  Said insurance shall be maintained at all times during Contractor’s, subcontractor’s and the engineer’s or other design professional's performance on the Building, and for a period of five (5) years after the expiration or termination of the Lease or final completion of the Tenant Improvements, whichever is later.  In no event shall the self-insured retention on any such policy of insurance exceed
$25,000 per claim.

(h)        If under circumstances other than Tenant Improvements done on a design-build basis, Contractor or any of its subcontractors of any tier or consultants provides and/or engages the services of any type of professional, including but not limited to engineers, architects and environmental consultants,  whose  failure  due  to  a  mistake  or  deficiency  in  design,  formula,  plan,  specifications, advisory, technical, or other services could result in loss or liability, Contractor and each such other appropriate party shall obtain Professional (Errors and Omissions) Liability Insurance (with supervision of work exclusion deleted) with limits of liability of not less than $2,000,000 per claim and $2,000,000 annual aggregate.  Each such professional liability policy shall provide full prior acts coverage or shall include a retroactive date no later than the date of commencement of the services.  In no event shall the self-insured retention on any such policy of insurance exceed $25,000 per claim.

(i)         If Contractor’s or any subcontractor of any tier’s scope of Tenant Improvements requires  asbestos  or  other  toxic  or  hazardous  material  remediation,  removal,  abatement,  storage  or disposal work, including, but not limited to, demolition work, the Contractor and each such subcontractor shall provide Contractor’s Pollution Liability Insurance and pollution legal liability for protection from claims and suits arising out of the performance of any Tenant Improvements involving such materials or operations.    Coverage  shall  be  continuously  maintained  in  effect  during  the  performance  of  such operations  and  Tenant  Improvements  and  for  not  less  than  ten  (10)  years  after  the  expiration  or termination of the Lease or final completion of the Tenant Improvements, whichever is later, on an “occurrence form” basis, shall cover bodily injury or death, and property damage liability, defense costs, and clean-up costs.  The limits of liability for this insurance shall be at least $5,000,000 each occurrence and $10,000,000 annual aggregate.  Such policies shall include coverage for unknown UST’s; a definition of “property damage” that includes diminution in value of third party properties; a statement that such insurance is primary and non-contributory, including, but not limited to, as to any surety contracts or bonds; a statement that the insured’s rights will not be prejudiced if a failure to give notice due to the insured’s belief that the occurrence was not covered; coverage for products brought onto the Building; a definition of stop loss or cleanup cost cap that includes monitoring activities; a definition of cleanup costs that include any costs associated with natural resources damages; and a statement that exclusions for modification of remedial action plans shall not include changes required by regulatory agencies.

1.2        Contractor shall report immediately to Landlord and confirm in writing any injury, loss or damage incurred or caused by Contractor or any subcontractors of any tier, or its or their receipt or notice of any claim by a third party, or any occurrence that might give rise to such claim.  Contractor shall, upon completion of the Tenant Improvements, submit to Landlord a recap of all such injuries, losses, damage, notices of third-party claims, and occurrences that might give rise to such claims.

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1.3        Waiver of Rights of Recovery and Subrogation.  To the fullest extent permitted by law, Contractor hereby waives all rights of recovery against Landlord Parties on account of loss or damage occasioned to Contractor or others under Contractor’s control or for whom it is responsible to the extent such loss or damage is insured against under any of Contractor’s insurance policies which may be in force at the time of the loss or damage or would have been so insured against if Contractor had complied with its obligations under this Schedule 1.   Contractor shall procure substantially identical waivers from its subcontractors of every tier in favor of the Landlord Parties.  In addition, all of the insurance policies and coverages required to be obtained, pursuant to the provisions of this Schedule 1, by Contractor and/or any subcontractors of any tier, shall provide for or be endorsed to provide a waiver of rights of recovery (including, but not limited to, subrogation) against the Landlord Parties.

1.4        If Contractor fails to comply with any of the provisions of this Schedule 1, Contractor, at its own cost, shall to the fullest extent permitted by law, defend, indemnify, protect and hold harmless the Landlord Parties from and against any and all Claims (including, but not limited to, Claims arising or resulting from the death or injury to any person or damage to any property) to the extent that Landlord would have been protected by any and all insurance arrangements made by Contractor, or any third party, had Contractor complied with all of the provisions of this Schedule 1.

1.5        Neither Contractor nor any subcontractor of any tier shall settle any claims made under its insurance policies for the Building without first consulting with and obtaining the consent of Landlord. All insurance proceeds paid under any insurance policies for damage to the Building shall be paid to Landlord; provided, however, that in all cases, payment and use of insurance proceeds shall be done in compliance with the requirements of Landlord’s Lender.

1.6        In the case of policies expiring while performance of the Tenant Improvements is in progress, a renewal certificate with all applicable endorsements must be received at the business office of Landlord prior to the expiration of the existing policy or policies.   Permitting Contractor or any subcontractor of any tier to start Tenant Improvements, continue Tenant Improvements, or releasing any progress payment prior to or without compliance with any of these requirements shall not constitute a waiver of, or estoppel to assert, any such requirement.  If at any time Contractor’s or any subcontractor of any tier’s insurance fails to meet the requirements stated herein, all payments may be held until the non- compliance has been corrected to Landlord’s satisfaction.

1.7        None  of  the  requirements  contained  herein  as  to  types,  limits  and  acceptability  of insurance coverage to be maintained by Contractor and subcontractors of every tier are intended to, and shall not in any manner, limit or qualify the liabilities and obligations assumed by Contractor or any subcontractor of any tier under the Lease or at law, including, without limitation, such parties’ indemnification obligations and liability in excess of the limits of the coverages required herein.  Neither receipt of certificates, endorsements or policies showing less or different coverage than requested, nor any other forbearance or omission by Landlord, shall be deemed a waiver of, or estoppel to assert, any right or obligation regarding the insurance requirements herein.  Contractor and subcontractors of every tier shall be solely responsible to pay any amount that lies within the deductible(s) or self-insured retention(s) of such parties’ policies, regardless of the amount of the deductible(s) or self-insured retention(s) and regardless of the cause of the loss or damage.

1.8        None of the requirements contained herein shall relieve Contractor or any subcontractor of any tier of their respective obligations to exercise due care in the performance of their duties in connection with the Tenant Improvements or to complete the Tenant Improvements in strict compliance with the Contract Documents.

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1.9        Contractor shall immediately notify Landlord in writing upon receipt by Contractor, or its insurance broker or agent, of any notice of cancellation, non-renewal or rescission of any policy required to be maintained by Contractor pursuant to this Section.

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SCHEDULE 2 TO EXHIBIT A

ADDITIONAL INSURED ENTITIES

o    ECI Five 475 Oakmead LLC (Owner)
o    Embarcadero Capital Investors Five LP
o    Embarcadero Capital Partners LLC
o    ECP Five LLC
o    Embarcadero Realty Services LP (Manager)
o    ECP Management, Inc

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SCHEDULE 3 TO EXHIBIT A

HVAC WORK

UNITS TO BE REPLACED
	
			
	Unit
	Manufacturer
	Tons

	AC1
	TRANE
	15

	AC2
	TRANE
	7.5

	AC3
	YORK
	5

	AC4
	TRANE
	12.5

	AC6
	TRANE
	7.5

	AC9
	YORK
	5

	AC10
	YORK
	5

	AC11B
	TRANE
	8.5

	AC12
	YORK
	3

	AC13
	YORK
	3

	AC14
	TRANE
	10

	AC16
	YORK
	3.5

	AC19
	TRANE
	12.5

	AC21
	TRANE
	6.25

	AC23
	TRANE
	17.5

	AC25
	CARRIER
	5

	AC29
	CARRIER
	6.25

	AC30
	BDP
	3

	AC31
	TRANE
	10

	AC32
	TRANE
	12.5

	AC33
	TRANE
	10

	 
	 
	 

	 
	UNITS TO BE REMOVED
	 

	AC11A
	WESTINGHOUSE
	N/A

	AC22
	TRANE
	12.5

	AC28
	CARRIER
	N/A

	AC34
	YORK
	3

	 
	 
	 

	 
	HVAC REPAIRS
	 

	AC5
	Indoor fan motors needs to be adjusted.

	AC16
	Contactors and capacitor need to be replaced.

	AC17
	Sheave needs replacement. Contactors need to be replaced.

	AC19
	Contactors need to be replaced.

	AC23
	Contactors need to be replaced

	AC24
	Ductwork needs to be sealed. Contactors need to be replaced.

	AC25
	Head pressure control and condenser fan motor have failed.

	AC26
	Compressor contactors and sheave need replacement.

	AC27
	Blower wheel sheave and contactors need to be replaced.

	AC30
	Contactors need to be replaced.

	AC32
	Inducer motor and blower motor sheave have failed.

A-12

SCHEDULE 4 TO EXHIBIT A

RE-DUCTING AND RE-ZONING  WORK

A-13vabk-ex101_123.htm

 

Exhibit 10.1 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

2014 STOCK INCENTIVE PLAN*

 

1.Purpose and Effective Date.

(a)The purpose of the Virginia National Bankshares Corporation 2014 Stock Incentive Plan (the “Plan”) is to further the long-term stability and financial success of the Company (as defined below) by attracting and retaining personnel, including employees, directors and consultants, through the use of stock incentives.  The Company believes that ownership of Company Stock will stimulate the efforts of those persons upon whose judgment, interest and efforts the Company and its Affiliates are and will be largely dependent for the successful conduct of their businesses and will further the identification of those persons’ interests with the interests of the Company’s shareholders. 

(b)The Plan was adopted by the Board of Directors of the Company on March 18, 2014 (the “Effective Date”), subject to the approval of the Plan by the Company’s shareholders.

2.Certain Definitions.  The following terms have the meanings indicated:

(a)Act.  The Securities Exchange Act of 1934, as amended.

(b)Affiliate.  The meaning assigned to the term “affiliate” under Rule 12b-2 of the Act.

(c)Applicable Withholding Taxes.  The aggregate amount of federal, state and local income and payroll taxes that the Company or an Affiliate  is required to withhold (based on the minimum applicable statutory withholding rates) in connection with any exercise of an Option or the award, lapse of restrictions or payment with respect to Restricted Stock.

(d)Award.  The award of an Option, Restricted Stock or Other Stock-Based Award under the Plan.

(e)Board.  The Board of Directors of the Company.

(f)           Cause.  With respect to any employee or Consultant (1) if the employee or Consultant is a party to any employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or (2) if no such agreement exists, or is such agreement does not define Cause then (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitudes or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the company or any of its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; (iv) materials breach of an agreement with the Company or an Affiliate (including, without limitation, any loyalty, noncompetition, nonsolicitation or confidentiality agreement); or (v) material violation of state or federal securities law.  With respect to any Director, a determination by a majority of the disinterested Board members that the Director has engaged in any of the following:  (i) malfeasance in office; (ii) gross misconduct or neglect; (iii) false or fraudulent misrepresentation inducing the director's appointment; (iv) willful conversion of corporate funds; or (v) repeated failure to participate in Board meetings on a regular basis despite having received proper notice of the meetings in advance.  The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause. 

* As Amended April 22, 2020Page 1 of 11

 

(g)Change in Control.

(i)The acquisition by any Person (as defined below) of beneficial ownership of 50% or more of the then outstanding shares of common stock of the Company;

(ii)Individuals who constitute the Board on the Effective Date of this Plan (the “Incumbent Board”) cease to constitute a majority of the Board, provided that any director whose nomination was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered a member of the Incumbent Board, but excluding any such individual whose initial assumption of office is in connection with an actual or threatened election contest or actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of directors of the Company, as such terms are used in Rules 14a-11 and 12 under the Act;

(iii)Approval by the shareholders of the Company and consummation of a reorganization, merger, share exchange or consolidation (a “Reorganization”), provided that shareholder approval of a Reorganization will not constitute a Change in Control if, upon consummation of the Reorganization, each of the following conditions is satisfied:

(I)no Person beneficially owns 50% or more of either (1) the then outstanding shares of common stock or voting securities of the corporation or other entity resulting from the transaction or (2) the combined voting power of the then outstanding voting securities of such corporation or other entity entitled to vote generally in the election of members of the board of directors (or similar governing body); or

(II)at least a majority of the members of the board of directors (or similar governing body) of the corporation or other entity resulting from the Reorganization were members of the Incumbent Board at the time of the execution of the initial agreement providing for the Reorganization; or

(iv)Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, or of the sale or other disposition of all or substantially all of the assets of the Company.

For purposes of this Section 2(g), “Person” means any individual, entity or group (within the meaning of Section 13(d)(3) of the Act), other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated company, and “beneficial ownership” has the meaning given the term in Rule 13d-3 under the Act.

(h)Code.  The Internal Revenue Code of 1986, as amended.

(i)Committee.  The Committee appointed to administer the Plan pursuant to Plan Section 16, or if no such Committee has been appointed, the Board.

(j)Company.  Virginia National Bankshares Corporation, a Virginia corporation.

(k)Company Stock.  Common stock of the Company.  If the par value of the Company Stock is changed, or in the event of a change in the capital structure of the Company (as provided in Section 14), the shares resulting from such a change shall be deemed to be Company Stock within the meaning of the Plan.

(l)Consultant.  A person or entity rendering services to the Company or an Affiliate who is not an “employee” for purposes of employment tax withholding under the Code.

(m)Date of Grant.  The effective date of an Award granted by the Committee.

* As Amended April 22, 2020Page 2 of 11

 

(n)Disability or Disabled.  As to an Incentive Stock Option, a Disability within the meaning of Code Section 22(e)(3).  As to all other Awards, the Committee shall determine whether a Disability exists and such determination shall be conclusive.

(o)Fair Market Value.

(i)If the Company Stock is listed on any established stock exchange or quoted on any established stock market system, its Fair Market Value shall be the closing price for such stock on the Date of Grant as reported by such exchange or stock market system, or, if there are no trades on such date, the value shall be determined as of the last preceding day on which the Company Stock was traded.

(ii)If the Company Stock is not publicly traded, the Fair Market Value shall be determined by the Committee using any reasonable method in good faith, provided that the fair market value of Company Stock subject to an Incentive Stock Option shall be determined in good faith within the meaning of Treasury Regulation § 1.422-2(e)(2).

(iii)Fair Market Value shall be determined as of the Date of Grant specified in the Award.

(p)Incentive Stock Option.  An Option intended to meet the requirements of, and qualify for favorable federal income tax treatment under, Code Section 422.

(q)Nonstatutory Stock Option.  An Option that does not meet the requirements of Code Section 422, or that is otherwise not intended to be an Incentive Stock Option and is so designated.

(r)Option.  A right to purchase Company Stock granted under the Plan, at a price determined in accordance with the Plan.

(s)Other Stock-Based Award.  A right granted under Section 9.

(t)Participant.  Any individual who is granted an Award under the Plan. 

(u)Restricted Stock.  Company Stock awarded upon the terms and subject to the restrictions set forth in Section 8. 

(v)Retirement.  Means:

(i)the termination of an employee’s employment under conditions which would constitute “normal retirement” or “early retirement” under any tax qualified retirement plan maintained by the Company;

(ii)the termination of an employee’s employment after attaining age 65 (except in the case of termination for Cause); or

(iii)the termination of a Non-Employee Director’s service as a member of the Board after attaining age 65.  

(w)Rule 16b-3.  Rule 16b-3 promulgated under the Act, including any corresponding subsequent rule or any amendments to Rule 16b-3 enacted after the Effective Date of the Plan.

* As Amended April 22, 2020Page 3 of 11

 

(x)10% Shareholder.  A person who owns, directly or indirectly and within the meaning of Section 422 or 424 of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company.  Indirect ownership of stock shall be determined in accordance with Code Section 424(d).

3.General.  Awards of Options or Restricted Stock may be granted under the Plan.  Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options.

4.Stock.

(a)Subject to Section 14 of the Plan, there shall be reserved for issuance under the Plan an aggregate of 250,000 shares of Company Stock; which may include authorized, but unissued, shares.  Not more than 250,000 of such shares shall be available as any type of awards other than Incentive Stock Options.  Shares allocable to Options granted under the Plan that expire or otherwise terminate and shares that are forfeited pursuant to restrictions on Restricted Stock awarded under the Plan may again be subjected to an Award under this Plan. 

(b)The maximum number of shares with respect to which an Award may be granted in any calendar year to any employee during such calendar year shall be 50,000 shares.  

5.Eligibility.

(a)Any employee of, director of, or Consultant to the Company or an Affiliate who, in the judgment of the Committee, has contributed or can be expected to contribute to the profits or growth of the Company or the Affiliate is eligible to become a Participant.  The Committee shall have the power and complete discretion, as provided in Section 16, to select eligible Participants and to determine for each Participant the terms, conditions and nature of the Award and the number of shares to be allocated as part of the Award; provided, however, that any Award made to a member of the Committee must be approved by the Board.  The Committee is expressly authorized to make an Award to a Participant conditioned on the surrender for cancellation of an existing Award.

(b)The grant of an Award shall not obligate the Company or any Affiliate to pay an employee any particular amount of remuneration, to continue the employment of the employee after the grant or to make further grants to the employee at any time thereafter.

(c)Non-Employee Directors and Consultants shall not be eligible to receive the Award of an Incentive Stock Option.

6.Stock Options.

(a)Grant.  Whenever the Committee deems it appropriate to grant Options, notice shall be given to the Participant stating the number of shares for which Options are granted, the exercise price per share, whether the options are Incentive Stock Options or Nonstatutory Stock Options, and the conditions to which the grant and exercise of the Options are subject.  This notice, when duly accepted in writing by the Participant, shall become a stock option agreement between the Company and the Participant.  A Participant’s stock option agreement shall set forth all restrictions on disposition and transfer applicable to the Option shares.

(b)Exercise Price.  The Committee shall establish the exercise price of Options.  The exercise price of an Option shall be not less than 100% of the Fair Market Value of such shares on the Date of Grant, provided that if the Participant is a 10% Shareholder, the exercise price of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of such shares on the Date of Grant.  

(c)Term.  The Committee shall establish the term of each Option in the Participant’s stock option agreement.  The term of an Incentive Stock Option shall not be longer than ten years from the Date of Grant, except that an Incentive Stock Option granted to a 10% Shareholder shall not have a term in excess of five years.  No Option may be exercised after the expiration of its term or, except as set forth in the Participant’s stock option agreement, after the termination of the Participant’s employment with the Company and/or its Affiliates.

* As Amended April 22, 2020Page 4 of 11

 

(d)Time of Exercise.  

(i)During Participant’s Employment.  Options may be exercised during their terms in whole or in part at such times as may be specified by the Committee in the Participant’s stock option agreement.  The Committee may impose such vesting conditions and other requirements as the Committee deems appropriate, and the Committee may include such provisions regarding a Change in Control as the Committee deems appropriate.  

(ii)After Participant’s Termination of Employment.  The Committee shall set forth in the Participant’s stock option agreement when, and under what circumstances, an Option may be exercised after termination of the Participant’s employment or period of service; provided that no Incentive Stock Option may be exercised after the earlier of (a) (i) three months from the Participant’s termination of employment with the Company for reasons other than Disability or death, or (ii) one year from the Participant’s termination of employment on account of Disability or death; or (b) the expiration of the Option’s term.

(iii)After Participant’s Death.  If a Participant dies and if the Participant’s stock option agreement provides that part or all of the Option may be exercised after the Participant’s death, then such portion may be exercised by the executor or administrator of the Participant’s estate during the time period specified in the stock option agreement, but not later than the expiration of the Option’s term.

(e)Limit on Exercise of Incentive Stock Options.  An Incentive Stock Option, by its terms, shall be exercisable in any calendar year only to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the Company Stock with respect to which Incentive Stock Options are exercisable by the Participant for the first time during the calendar year does not exceed $100,000 (the “Limitation Amount”).  Incentive Stock Options granted under the Plan and all other plans of the Company (or Affiliate) and any parent or subsidiary of the Company (or Affiliate) shall be aggregated for purposes of determining whether the Limitation Amount has been exceeded.  The Board may impose such conditions as it deems appropriate on an Incentive Stock Option to ensure that the foregoing requirement is met.  If Incentive Stock Options that first become exercisable in a calendar year exceed the Limitation Amount, the excess Options will be treated as Nonstatutory Stock Options to the extent permitted by law.

(f)Options Forfeited Upon Termination of Employment for Cause.  If a Participant’s employment or services is terminated by the Company or by any Affiliate for Cause, the Participant’s Options, both vested and unvested, shall terminate as of the date of the misconduct, as determined by the Committee in its sole discretion.

7.Method of Exercise of Options.

(a)Exercise.  Options may be exercised by giving written notice of the exercise to the Company, stating the Option being exercised and the number of shares the Participant has elected to purchase under the Option.  

(b)Payment.  In no event shall any shares be issued pursuant to the exercise of an Option until the Participant has made full payment for the shares of Company Stock (including payment of the exercise price and any Applicable Withholding Taxes).  Company Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows, provided that the Committee may impose such limitations and restrictions on payments with shares of Company Stock as the Committee, in its discretion, deems advisable:

(i)in cash or by check, payable to the order of the Company;

(ii)by delivery of Company Stock that the Participant has previously acquired and owned (valued at Fair Market Value on the date of exercise), provided that such method of payment is then permitted under applicable law and the Company Stock was owned by the Participant at least six months prior to such delivery (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes);

* As Amended April 22, 2020Page 5 of 11

 

(iii) by withholding and retention by the Company of sufficient shares of Company Stock issuable in connection with the exercise to cover the exercise price (a "net share exercise"); 

(iv)by delivery of a properly executed exercise notice together with irrevocable instructions to a creditworthy broker to deliver promptly to the Company, from the sale or loan proceeds with respect to the sale of Company Stock or a loan secured by Company Stock, the amount necessary to pay the exercise price and, if required by the Committee, Applicable Withholding Taxes; or

(v)by any combination of the above permitted forms of payment.

(c)Delivery of Shares.  Upon the exercise of an Option in compliance with the provisions of this section, the receipt by the Company of the payment for the shares of Company Stock so acquired, and satisfaction of the provisions of this Section 7 of the Plan, the Company shall deliver or cause to be delivered, within a reasonable time, to the Participant exercising the Option, either certificate(s) or shares held in book entry form (“Book Entry Shares”) for the number of shares of Company Stock with respect to which the Option is exercised.  The shares of Company Stock shall be registered in the name of the exercising Participant or in such name jointly with the Participant as the Participant may direct in the written notice of exercise.  The Company may place on any certificate or Book Entry Shares representing Company Stock issued upon the exercise of an Option any legend or notation deemed desirable by the Company’s counsel to comply with federal or state securities laws.  The Company may require of the Participant a customary indication of his or her investment intent.  

(d)Disqualifying Disposition.  If a Participant disposes of shares acquired upon exercise of an Incentive Stock Option within two (2) years from the date the Option is granted or within one (1) year after the issuance of such shares to the Participant, the Participant shall notify the Company of such disposition and provide information regarding the date of disposition, sale price, number of shares disposed of, and any other information relating thereto that the Company may reasonably request.

(e)Compliance with Rule 16b-3.  Notwithstanding anything herein to the contrary, Awards shall always be granted and exercised in such a manner as to conform to the provisions of Rule 16b-3.

8.Restricted Stock Awards.

(a)Grant.  Whenever the Committee deems it appropriate to grant a Restricted Stock Award, notice shall be given to the Participant stating the number of shares of Restricted Stock for which the Award is granted, the Date of Grant, and the terms and conditions to which the Award is subject.  Certificates or Book Entry Shares representing the shares shall be issued in the name of the Participant, subject to the restrictions imposed by the Plan and the Committee.  A Restricted Stock Award may be made by the Committee in its discretion without cash consideration.

(b)Restrictions on Transferability and Vesting of Restricted Stock Awards.  The Committee may place such restrictions on the transferability and vesting of Restricted Stock as the Committee deems appropriate, including restrictions relating to continued employment and financial performance goals.  Without limiting the foregoing, the Committee may provide performance or Change in Control acceleration parameters under which all, or a portion, of the Restricted Stock will vest on the Company’s (or an Affiliate’s) achievement of established performance objectives.  Restricted Stock may not be sold, assigned, transferred, disposed of, pledged, hypothecated or otherwise encumbered until the restrictions on such shares shall have lapsed or shall have been removed pursuant to subsection (c) below.

(c)Lapse of Restrictions on Transferability.  The Committee shall establish as to each Restricted Stock Award the terms and conditions upon which the restrictions on transferability set forth in paragraph (b) above shall lapse.  Such terms and conditions may include, without limitation, the passage of time, the meeting of performance goals, the lapsing of such restrictions as a result of the Disability, death or retirement of the Participant, or the occurrence of a Change in Control.

* As Amended April 22, 2020Page 6 of 11

 

(d)Rights of the Participant and Restrictions.  A Participant shall hold shares of Restricted Stock subject to the restrictions set forth in the Award agreement and in the Plan.  In other respects, the Participant shall have all the rights of a shareholder with respect to the shares of Restricted Stock, including, but not limited to, the right to vote such shares and the right to receive all cash dividends and other distributions paid thereon.  Certificates or Book Entry Shares representing Restricted Stock shall bear a legend or other notation referring to the restrictions set forth in the Plan and the Participant’s Award agreement.  If stock dividends are declared on Restricted Stock, such stock dividends or other distributions shall be subject to the same restrictions as the underlying shares of Restricted Stock and shall be paid no later than 2 1⁄2 months after the end of the year in which the underlying Restricted Stock vests.

9.Other Stock-Based Awards.

	
(a)
	
The Committee is authorized to grant other types of equity-based or equity-related Awards not otherwise described by the terms of the Plan (including the grant or offer for sale of unrestricted shares of Company Stock) to Participants in such amounts and subject to such terms and conditions as the Committee shall determine.  Such Awards shall be referred to as “Other Stock-Based Awards.”  Each such Other Stock-Based Award may involve the transfer of actual shares to Participants or payment in cash or otherwise of amounts based on the value of shares of Company Stock.  

	
(b)
	
Each Other Stock-Based Award shall be expressed in terms of shares or units or an equivalent measurement based on shares, as determined by the Committee.  If the value of an Other Stock-Based Award will be based on the appreciation of shares from an initial value determined as of the date of grant, then such initial value shall not be less than the Fair Market Value of a share on the date of grant of such Other Stock-Based Award. 

10.Applicable Withholding Taxes.  Each Participant shall agree, as a condition of receiving an Award, to pay to the Company or the Affiliate, or make arrangements satisfactory to the Company or the Affiliate regarding the payment of, all Applicable Withholding Taxes with respect to the Award.  Until the Applicable Withholding Taxes have been paid or arrangements satisfactory to the Company or the Affiliate have been made, no stock certificates or Book Entry Shares (or, in the case of Restricted Stock, no stock certificates or Book Entry Shares free of a restrictive legend or other notation) shall be issued to the Participant.  As an alternative to making a cash payment to the Company or the Affiliate to satisfy Applicable Withholding Tax obligations, the Committee may establish procedures permitting the Participant to elect to (a) deliver shares of already owned Company Stock or (b) have the Company or the Affiliate retain that number of shares of Company Stock that would satisfy all or a specified portion of the Applicable Withholding Taxes.  Any such election shall be made only in accordance with procedures established by the Committee to avoid a charge to earnings for financial accounting purposes and in accordance with Rule 16b-3.

11.Conditions on Delivery of Stock.  The Company will not be obligated to deliver any shares of Company Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules, or regulations.  The Company may place on a certificate or Book Entry Shares representing Company Stock any legend required to reflect restrictions pursuant to the Plan, and any legend deemed necessary by the Company’s counsel to comply with federal or state securities laws.  The Company may require a customary written indication of a Participant’s investment intent.  Until a Participant has been issued a certificate or Book Entry Shares for the shares of Company Stock acquired, the Participant shall possess no shareholder rights with respect to the shares.  

12.Nontransferability of Awards.

(a)In general, Awards, by their terms, shall not be transferable by the Participant except by will or by the laws of descent and distribution or except as described below, without prior written approval from the Committee.  Options shall be exercisable, during the Participant’s lifetime, only by the Participant or by his guardian or legal representative.

* As Amended April 22, 2020Page 7 of 11

 

(b)Notwithstanding the provisions of (a) and subject to federal and state securities laws, the Committee may on a case by case basis grant or amend Nonstatutory Stock Options that permit a Participant to transfer the Options to one or more immediate family members, to a trust for the benefit of immediate family members, or to a partnership, limited liability company, or other entity the only partners, members, or interest-holders of which are among the Participant’s immediate family members.  Consideration may not be paid for the transfer of Options.  The transferee of an Option shall be subject to all conditions applicable to the Option prior to its transfer.  The agreement granting the Option shall set forth the transfer conditions and restrictions.  The Committee may impose on any transferable Option and on stock issued upon the exercise of an Option such limitations and conditions as the Committee deems appropriate in its sole discretion.

13.Termination, Modification, Change.  

(a) If not sooner terminated by the Board, this Plan shall terminate at the close of business on the day prior to the tenth anniversary of the Effective Date.  The Board may at any time terminate, suspend, or modify the Plan; provided that the Board shall not, without stockholder approval, make any revision or amendment that would cause the Plan to fail to comply with any requirement of applicable law, regulation, or rule if such amendment were not approved by the stockholders of the Company including, (1) increasing the total number of shares of Company Stock reserved for issuance pursuant to Awards granted under the Plan (except pursuant to Section 14), (2) expanding the class of persons eligible to receive Awards, or (3) materially increasing the benefits accruing to Participants under the Plan.  Notwithstanding the foregoing, the Board may unilaterally amend the Plan and Awards as it deems appropriate to ensure compliance with Rule 16b-3 and to cause Incentive Stock Options to meet the requirements of the Code and regulations thereunder.

(b)No Awards shall be made under the Plan after its termination, and no termination or amendment of the Plan shall, without the consent of the Participant or his representative, adversely affect a Participant’s rights under an Award previously granted to him, but it shall be conclusively presumed that any adjustment to cause Incentive Stock Options to meet the requirements of the Code and regulations thereunder or any adjustment pursuant to Section 14, does not adversely affect any such right.

(c)Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or Other Stock-Based Awards or cancel outstanding Options or Other Stock-Based Awards in exchange for cash, other Awards or Options or Other Stock-Based Awards with an exercise price that is less than the exercise price of the original Options or Other Stock-Based Awards without shareholder approval.

14.Change in Capital Structure.

(a)In the event of a stock dividend, stock split or combination of shares, spin-off, reorganization, recapitalization or merger in which the Company is the surviving corporation, or other change in the Company’s capital stock (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the Company), the number and kind of shares of stock or securities of the Company to be issued under the Plan (under outstanding Awards and Awards to be granted in the future), the exercise price of options, and other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons.  If the adjustment would produce fractional shares with respect to any Award, the Committee may adjust appropriately the number of shares covered by the Award so as to eliminate the fractional shares.

(b)In the event of a reorganization, recapitalization or merger in which the Company is the surviving corporation, the result of which is that the Company becomes a majority owned subsidiary of another entity (the “Parent”), then the Committee may take such actions with respect to Awards as the Committee deems appropriate (whose determination shall be binding on all persons), including without limitation causing any such Award then outstanding to be assumed, or new rights substituted therefor, by the Parent.

* As Amended April 22, 2020Page 8 of 11

 

(c)In the event the Company distributes to its stockholders a dividend, or sells or causes to be sold to a person other than the Company or a subsidiary shares of stock in any corporation (a “Spinoff Company”) which, immediately before the distribution or sale, was a majority owned subsidiary of the Company, the Committee shall have the power, in its sole discretion, to make such adjustments as the Committee deems appropriate.  The Committee may make adjustments in the number and kind of shares or other securities to be issued under the Plan (under outstanding Awards and Awards to be granted in the future), the exercise price of Options, and other relevant provisions, and, without limiting the foregoing, may substitute securities of a Spinoff Company for securities of the Company.  The Committee shall make such adjustments as it determines to be appropriate, considering the economic effect of the distribution or sale on the interests of the Company’s shareholders and the Participants in the businesses operated by the Spinoff Company.  The Committee’s determination shall be binding on all persons.  If the adjustment would produce fractional shares with respect to any Award, the Committee may adjust appropriately the number of shares covered by the Award so as to eliminate the fractional shares.

(d)Notwithstanding anything in the Plan to the contrary, the Committee may take the foregoing actions without the consent of any Participant, and the Committee’s determination shall be conclusive and binding on all persons for all purposes.  The Committee shall make its determinations consistent with Rule 16b-3 and the applicable provisions of the Code.

(e)To the extent required to avoid a charge to earnings for financial accounting purposes, adjustments made by the Committee pursuant to this Section 14 to outstanding Awards shall be made so that both (i) the aggregate intrinsic value of an Award immediately after the adjustment is not greater than or less than the Award’s aggregate intrinsic value before the adjustment and (ii) the ratio of the exercise price per share to the market value per share is not reduced.

15.Change in Control.  In the event of a Change in Control of the Company, the Committee may take such actions with respect to Awards as the Committee deems appropriate.  These actions may include, but shall not be limited to, the following:

(a)At the time the Award is made, provide for the acceleration of the vesting schedule relating to the exercise or realization of the Award so that the Award may be exercised or realized in full on or before a date initially fixed by the Committee;

(b)Provide for the purchase or settlement of any such Award by the  Company for any amount of cash equal to the amount which could have been obtained upon the exercise of such Award or realization of a Participant’s rights had such Award been currently exercisable or payable;

(c)Make adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Change in Control; provided, however, that to the extent required to avoid a charge to earnings for financial accounting purposes, such adjustments shall be made so that both (i) the aggregate intrinsic value of an Award immediately after the adjustment is not less than or greater than the Award’s aggregate intrinsic value before the Award and (ii) the ratio of the exercise price per share to the market value per share is not reduced; or

(d)Cause any such Award then outstanding to be assumed, or new rights substituted therefore, by the acquiring or surviving corporation in such Change in Control.

16.Administration of the Plan.

(a)The Plan shall be administered by the Committee, who shall be appointed by the Board.  The Board initially designates the Compensation Committee of the Board to be the Committee for purposes of the Plan.  If, at any time, the Compensation Committee is not designated as the Committee and no Committee is appointed, the Plan shall be administered by the Board.  To the extent required by Rule 16b-3, all Awards shall be made by members of the Committee who are “Non-Employee Directors” as that term is defined in Rule 16b-3, or by the Board.  Awards that are intended to be performance-based for purposes of Code Section 162(m) shall be made by the Committee, or subcommittee of the Committee, comprised solely of two or more “outside directors” as that term is defined for purposes of Code Section 162(m).

* As Amended April 22, 2020Page 9 of 11

 

(b)Subject to the express provisions of the Plan, the Committee shall have full and final authority to impose such limitations or conditions upon an Award as the Committee deems appropriate to achieve the objectives of the Award and the Plan.  Without limiting the foregoing and in addition to the powers set forth elsewhere in the Plan, the Committee shall have the power and complete discretion to determine (i) which eligible persons shall receive an Award and the nature of the Award, (ii) the number of shares of Company Stock to be covered by each Award, (iii) whether Options shall be Incentive Stock Options or Nonstatutory Stock Options, (iv) the Fair Market Value of Company Stock, (v) the time or times when an Award shall be granted, (vi) whether an Award shall become vested over a period of time, according to a performance-based vesting schedule or otherwise, and when it shall be fully vested, (vii) the terms and conditions under which restrictions imposed upon an Award shall lapse, (viii) to the extent permissible under Code Section 409A, whether a Change in Control exists, (ix) factors relevant to the lapse of restrictions on Restricted Stock or Options, (x) when Options may be exercised, (xi) whether to approve a Participant’s election with respect to Applicable Withholding Taxes, (xii) conditions relating to the length of time before disposition of Company Stock received in connection with an Award is permitted, (xiii) notice provisions relating to the sale of Company Stock acquired under the Plan, and (xiv) any additional requirements relating to Awards that the Committee deems appropriate.  To the extent permitted by applicable law, the Committee may delegate to the President and/or Chief Executive Officer of the Company the power to designate other officers and employees of the Company who will receive Awards and to determine the extent of the Awards to be received by such Participant. Such delegation must be made by a resolution of the Committee that specifies the maximum number of shares that may be allocated as part of the Awards and such other terms and conditions as may be established by the Committee.

(c)The Committee shall have the power to amend the terms of previously granted Awards so long as the terms as amended are consistent with the terms of the Plan and, where applicable, consistent with the qualification of an Option as an Incentive Stock Option.  The consent of the Participant must be obtained with respect to any amendment that would adversely affect the Participant’s rights under the Award, except that such consent shall not be required if such amendment is for the purpose of complying with Rule 16b-3 or any requirement of the Code applicable to the Award.

(d)The Committee may adopt rules and regulations for carrying out the Plan.  The Committee shall have the express discretionary authority to construe and interpret the Plan and the Award agreements, to resolve any ambiguities, to define any terms, and to make any other determinations required by the Plan or an Award agreement.  The interpretation and construction of any provisions of the Plan or an Award agreement by the Committee shall be final and conclusive.  The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.

(e)A majority of the members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present.  Any action may be taken by a written instrument signed by all of the members, and any action so taken shall be fully effective as if it had been taken at a meeting.

17.Notice.  All notices and other communications required or permitted to be given under this Plan shall be in writing and shall be deemed to have been duly given if delivered personally, electronically, or mailed first class, postage prepaid, as follows: (a) if to the Company - at its principal business address to the attention of the Secretary; (b) if to any Participant - at the last address of the Participant known to the sender at the time the notice or other communication is sent.

18.Compliance with Code Section 409A.  To the extent applicable, this Plan is intended to comply with Section 409A of the Code, and the Committee shall interpret and administer the Plan in accordance therewith.  In addition, any provision, including, without limitation, any definition, in this Plan document that is determined to violate the requirements of Section 409A of the Code shall be void and without effect and any provision, including, without limitation, any definition, that is required to appear in this Plan document under Section 409A of the Code that is not expressly set forth shall be deemed to be set forth herein, and the Plan shall be administered in all respects as if such provisions were expressly set forth.  In addition, the timing of certain payment of benefits provided for under this Plan shall be revised as necessary for compliance with Section 409A of the Code.

19.Clawback.  Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and 

* As Amended April 22, 2020Page 10 of 11

 

clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company or any Affiliate pursuant to any such law, government regulation or stock exchange listing requirement).

20.Section 162(m).  To the extent the Committee issues any Award that is intended to be exempt from the deduction limitation of Section 162(m) of the Code, the Committee may, without shareholder or grantee approval, amend the Plan or the relevant agreement for the Award retroactively or prospectively to the extent it determines necessary in order to comply with any subsequent clarification of Section 162(m) of the Code required to preserve the Company’s federal income tax deduction for compensation paid pursuant to any such Award.

21.Rights Under the Plan.  Title to and beneficial ownership of all benefits described in the Plan shall at all times remain with the Company.  Participation in the Plan and the right to receive payments under the Plan shall not give a Participant any proprietary interest in the Company or any Affiliate or any of their assets.  No trust fund shall be created in connection with the Plan, and there shall be no required funding of amounts that may become payable under the Plan.  A Participant shall, for all purposes, be a general creditor of the Company or the Affiliate.  The interest of a Participant in the Plan cannot be assigned, anticipated, sold, encumbered or pledged and shall not be subject to the claims of his creditors.

22.Interpretation and Governing Law.  The terms of this Plan and Awards granted pursuant to the Plan shall be governed, construed and administered in accordance with the laws of the Commonwealth of Virginia, excluding any choice of law rules or principles that might otherwise refer construction or interpretation of any provision of the Plan or an Agreement to the substantive law of another jurisdiction.  The Plan and Awards are subject to all present and future applicable provisions of the Code and, to the extent applicable; they are subject to all present and future rulings of the Securities and Exchange Commission with respect to Rule 16b-3.  If any provision of the Plan or an Award conflicts with any such Code provision or ruling, the Committee shall cause the Plan to be amended, and shall modify the Award, so as to comply, or if for any reason amendments cannot be made, that provision of the Plan or the Award shall be void and of no effect.

* As Amended April 22, 2020Page 11 of 11

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