Document:

Exhibit 10.19(27)

 

AXT, INC.

 

FISCAL 2015 EXECUTIVE INCENTIVE
BONUS PLAN

 

The following are the terms of
the 2015 Executive Bonus Plan approved by the Compensation Committee of the Board of Directors of AXT, Inc. (the “Company”)
on February 20, 2015 (the “Plan”).

 

A.          Purpose

 

1.          
The terms of the Plan have been established to attract, motivate, retain and reward the Company’s executive officers
and other officers of the Company for driving the Company to achieve specific corporate objectives.

 

2.          
The Plan provides for the payment of quarterly cash bonuses based upon Company financial targets and individual performance
target objectives.

 

B.          Eligibility

 

1.          
Those eligible to participate in the Plan are the officers of the Company subject to Section 16 of the Securities Exchange
Act of 1934, as amended and any other officers of the Company designated by the Compensation Committee (each, an “Officer”
and collectively, the “Officers”).

 

C.          Determination of Bonus Amounts

 

1.          
The Compensation Committee has determined that each individual Officer will have an “Individual Bonus Percentage”
and an “Individual Target Bonus” as defined below, which will vary depending on such Officer’s
position and responsibilities in the Company.

 

2.           Bonuses
payable will be determined based upon achievement of corporate financial targets (the “Corporate
Targets”) and individual targets established for each Officer (the “Individual
Targets”). Achievement of the Corporate Targets will represent 70% of the total bonus, and achievement of the
Individual Targets will represent 30% of the total bonus. The Corporate Targets shall be comprised of four financial targets:
(1) total revenue (“Total Revenue Target”), (2) gross profit (“Gross Profit
Target”), (3) operating expense (“Operating Expense Target”) and (4) net income
(“Net Income Target”). The actual quarterly Corporate Targets are set forth in the operating plan
for the year ending December 31, 2015, and approved by the Board of Directors (the “2015 Operating
Plan”).

 

3.          
The Corporate Targets are weighted 10% for each of the Total Revenue Target, Gross Profit Target and Operating Expense Target
and 40% for the Net Income Target for a total of 70% of the total bonus. The Individual Bonus Earned (as defined below) for each
quarter will depend on the “Corporate Target Achievement Multiplier” which shall equal the sum of: (a)
actual total revenue for such quarter divided by the Total Revenue Target for the quarter multiplied by 0.10; (b) actual gross
profit for such quarter divided by the Gross Profit Target for the quarter multiplied by 0.10; (c) actual operating expense for
such quarter divided by Operating Expense Target multiplied by 0.10; and (e) actual net income for such quarter divided by the
Net Income Target multiplied by 0.40 (subject to Section 6 below).

 

    	 

    	 

    

4.          
 The determination of the quarterly bonus based on the achievement of the Total Revenue Target, Gross Profit Target and
Operating Expense Target shall be subject to the following:

 

		·	The
percentage of the bonus resulting from the achievement of the Total Revenue, Gross Profit Target and Operating Expense Target
ranges from 80% to 120%.
	 	 	 

		·	No
portion of the quarterly bonus with respect to such Corporate Target will be paid if the achievement of such Corporate Target
is less than 90% of the 2015 Operating Plan amount for such Corporate Target.
	 	 	 

		·	At
90% achievement of the 2015 Operating Plan for such Corporate Target, 80% of the Quarterly Individual Target Bonus with respect
to such Corporate Target shall be payable.
	 	 	 

		·	At
120% achievement of the 2015 Operating Plan for such Corporate Target, 100% of the Quarterly Individual Target Bonus with respect
to such Corporate Target shall be payable.
	 	 	 

		·	At
150% achievement or greater of the 2015 Operating Plan for such Corporate Target, 120% of the Quarterly Individual Target Bonus
with respect to such Corporate Target shall be payable. This will be the maximum amount payable for each such Corporate Target.
	 	 	 

		·	Accordingly,
for each 1.5% increase in the performance for each Corporate Target against the 2015 Operating Plan over the minimum 90% threshold,
the bonus will increase by 1% until a maximum bonus equal to 120% of the Quarterly Individual Target Bonus relating to such Corporate
Target is earned.
	 	 	 

		·	The
parameters described above are summarized in the following table:

 

	
        Total Revenue, Gross Profit,
Operating Expense 

	If achieve	<90%	90%	100%	120%	150%
	Bonus	0%	80%	86.67%	100%	120%

 

4.          
The determination of the quarterly bonus based on the achievement of the Net Income Target shall be subject to the following:

 

		·	The
quarterly bonus based on the achievement of the Net Income Target shall be 0% of the Quarterly Individual Target Bonus (with respect
to Net Income) when actual Net Income is less than 70% of the budgeted Net Income for such quarter under the 2015 Operating Plan.
	 	 	 

		·	The
quarterly bonus based on the achievement of the Net Income Target shall be 100% of the Quarterly Individual Target Bonus (with
respect to Net Income) when actual Net Income is 100% of the budgeted Net Income for such quarter under the 2015 Operating Plan.
	 	 	 

		·	For
each percentage improvement in the actual Net Income for the quarter over the minimum 70% threshold, the percentage of the Quarterly
Individual Target Bonus payable will increase by 1% up to a maximum total bonus payable of 120% of the Quarterly Individual Target
Bonus (relating to Net Income) when actual Net Income is 120% or greater than the budgeted Net Income for such quarter set forth
in the 2015 Operating Plan.
	 	 	 

		·	The
parameters described above are summarized in the following table:

 

	Net Income
	If achieve	<70%	70%	100%	120%
	Bonus	0%	70%	100%	120%

 

    	 

    	 

    

5.          
The determination of the quarterly bonus shall also be subject to the following:

 

		·	In the event that actual Net Income is negative for any particular quarter, no bonus shall be
payable for such quarter.

 

		·	In no event shall the achievement of any individual Corporate Target represent more than 120%
of such Corporate Target for such quarter. This means that the achievement of each of the Total Revenue Target, Gross Profit Target
and Operating Expense Target shall not result in the payment of a bonus relating to such Corporate Target exceeding 12% of the
Quarterly Individual Bonus Target in any quarter. The Individual Targets shall not represent more than 30% of the Individual Bonus
Earned by any Officer in any quarter. Therefore, the maximum total quarterly bonus earned by any Officer in any quarter is 114%
of the Quarterly Individual Target Bonus (the sum of 12% 12% 12% 48% and 30 %).

 

6.          
Achievement of the Individual Targets, representing 30% of the Plan, shall be determined each quarter by the Chief Executive
Officer for all Officers other than the Chief Executive Officer, pursuant to objectives established by the Chief Executive Officer
for each such Officer. Achievement of the Individual Targets by the Chief Executive Officer shall be determined each quarter by
the Compensation Committee, based upon objectives established by the Compensation Committee each quarter for the Chief Executive
Officer.

 

D.          Individual Target Percentages

 

1.          
“Individual Bonus Percentage” means the percentage of a respective Officer’s base salary
that is targeted as a bonus payment under the Plan assuming exactly one hundred percent achievement by the Company of each of the
Corporate Targets and Individual Targets (as defined below). The Individual Bonus Percentage for each Officer is set as a percentage
of base salary and varies based upon the Officer’s position and responsibilities. The Individual Bonus Percentage for each
Officer under the Plan is as follows:

 

	Name	Target Bonus
	Morris S. Young	75
	Davis Zhang	50
	Gary Fischer	50
	Robert Ochrym	45

 

2.          
“Individual Target Bonus” for each fiscal year means the amount equal to a respective Officer’s
base salary multiplied by such Officer’s Individual Bonus Percentage. The “Quarterly Individual Target Bonus”
shall be the Individual Target Bonus divided by four. The “Individual Bonus Earned” means the amount
equal to Individual Target Bonus multiplied by the Corporate Target Achievement Multiplier.

 

3.          
In the 2015 Plan, the Individual Targets would represent 30% of the total bonus.

 

E.          Plan Changes

 

1.          
The Board or the Compensation Committee may modify the financial performance goals at any time based on changes in business
conditions during the year and may grant bonuses to Officers even if the financial performance goals are not met. In its discretion,
the Compensation Committee may, either at the time it grants an award under the Plan or at any time thereafter, provide for the
adjustment of the award formula applicable to an award granted to any participant under the Plan to reflect such participant’s
individual performance in his or her position with the Company or such other factors as the Compensation Committee may determine.
Notwithstanding the attainment of any performance goal under the Plan, the Compensation Committee shall have the discretion, on
the basis of such criteria as it may establish, to reduce the amount of or to eliminate any final award that would otherwise be
paid, and retains the absolute discretion to amend, modify or terminate the Plan at any time.

 

2.          
Nothing in this Plan will interfere with or limit in any way the right of the Company or the right of any individual to
terminate the employment relationship at any time, with or without cause.Exhibit 10.27

 

	 	Corporate Office: 4281 Technology Drive Fremont, CA 94538 Ph: 510-438-4700 Fax: 510-353-0668
www.axt.com

 

 

 

August 11, 2014

 

Gary L. Fischer

 

Dear Gary:

 

It is my pleasure to
offer you a permanent employment position with AXT, Inc. (“AXT” or the “Company”), as contemplated
by the Consulting Agreement between you and the AXT dated June 2, 2014 (the “Consulting Agreement”), on the
following terms set forth in this letter (the “Offer Letter”).

 

		1.	Employment and Duties

 

You will be employed
by AXT as its Vice President and Chief Financial Officer (“CFO”). You will be employed on a full-time basis
and will report to AXT’s Chief Executive Officer (“CEO”). Your duties and responsibilities will be consistent
with your title and position as AXT’s CFO, and any other duties assigned or requested by the CEO, including, without limitation,
responsibility for AXT’s accounting, tax, insurance, human resources, legal, facilities, and investor relations functions,
as well as for the reports required of AXT as a public company and compliance with the Sarbanes-Oxley Act. In addition, you will
assist the CEO with corporate activities, including, without limitation, mergers and acquisitions, investments and strategic and
financial planning. You will devote your full time, ability, attention, energy, knowledge, skill, and productive employment time
solely to performing your duties as an employee of AXT. You will comply with all of AXT’s rules and policies.

 

		2.	Start Date

 

If you accept this
offer, you will assume your role as CFO on August 11, 2014.

 

		3.	Compensation

 

(a) Base
Salary. In consideration for your services to AXT under this Offer Letter, you will receive an annual base salary of
$250,000, paid in United States dollars in equal biweekly installments in accordance with AXT’s normal payroll
practices, from which AXT will withhold and deduct all applicable taxes to the extent required by law. Your base salary will
be annually reviewed by the Company, which may be adjusted based upon various factors including, but not limited to, your and
the Company’s performance.

 

    	 

    	 

    

(b) Stock
Option. The Compensation Committee (the “Committee”) of the Board of Directors (the
“Board”) of AXT has granted to you a stock option award (the “Option”) to purchase
200,000 shares of AXT common stock (“Shares”) pursuant to AXT’s 2007 Equity Incentive Plan and the
standard form of stock option agreement thereunder. The exercise price per Share of the Option is equal to the closing price
of AXT common stock on August 4, 2014, the effective grant date of the Option. The Option will be scheduled to vest as to
twenty-five percent (25%) of the Shares subject to the Option on June 2, 2015, and, thereafter, 1/48th of the Shares subject
to the Option will vest on the second day of each month thereafter, subject to your continued employment with AXT through
each applicable vesting date. No right to any Shares is earned or accrued until such time that vesting occurs, nor does the
grant confer any right to continue vesting or employment.

 

(c) Annual
Bonus. You will be eligible to participate in bonus plans as approved for your position by the Board or Committee.

 

(d) Business
Expenses. AXT will reimburse you for customary, ordinary, and necessary business expenses as are incurred by you in the performance
of your duties and activities associated with promoting or doing AXT’s business, in accordance with AXT’s expense reimbursement
policy as may be in effect from time to time. All expenses as described in this paragraph will be subject to presentation by you
of such documentation as may be reasonably necessary to substantiate that all such expenses were incurred in the performance of
your duties.

 

(e) Directors
and Officers Insurance. Directors and Officers Insurance currently is maintained by AXT and, to the extent that such insurance
remains available to AXT upon terms acceptable to AXT, AXT will use its best commercial efforts to continue to maintain such insurance
at such levels as the Board may approve from time to time.

 

(f) Vacation
and Sick Leave. You will be eligible to accrue up to fifteen (15) days of vacation each year of your employment. Your accrual
of vacation and sick leave will be pursuant to AXT’s policies on the same terms as other, similarly situated executives,
provided that at no time will you be permitted to have accrued more than thirty (30) days of vacation. At any time you accrue this
amount of vacation, you will not earn additional vacation until you use vacation time so that your accrual drops below this thirty
(30) day maximum. You agree to schedule your vacations at times that are approved by the CEO.

 

(g) Benefits.
You will be eligible for health insurance, retirement, and other benefits on the same basis as other similarly situated
employees of AXT. Your participation in the Company’s 401(k) plan will, to the extent allowed by the terms of the plan,
be fully vested from the commencement of your employment.

    	-2-

    	 

    

 

		4.	Outside Activities

 

		(a)	While employed by AXT, and unless otherwise agreed in writing, you will not:

 

(i) undertake any
other form of employment or other activity that may negatively affect the performance of your duties as an employee of AXT; and

 

(ii) directly or
indirectly, either as an employee, employer, consultant, agent, principal, partner, shareholder, corporate officer, director,
or in any other capacity, engage or assist any third party in engaging in any business competitive with the business of AXT
or any parent, subsidiary or affiliate.

 

(b) During the
ninety (90) period immediately after you assume your role as CFO, you are permitted to continue to provide limited consulting
services to Trivium Corporate Solutions, provided that

 

(i) such limited
consulting services do not conflict with Section 4(a) and your duties, obligations and responsibilities as an employee of
AXT; and

 

(ii) you do not
perform such limited consulting services during regular work hours.

 

		5.	Proprietary Rights and Confidentiality, Code of Business Conduct and Ethics, and Insider Trading
Policy

 

If you have not already
done so, you will be required to sign and comply with AXT’s Proprietary Information and Inventions Agreement (the “PIIA”),
Code of Business Conduct and Ethics, and Insider Trading Policy.

 

		6.	Termination of Employment

 

(a) At-will
Employment. The Company is excited about your joining and looks forward to a beneficial and productive relationship.
Nevertheless, you should be aware that your employment with the Company is for no specified period and constitutes at-will
employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free
to conclude its employment relationship with you at any time, with or without cause, and with or without notice. We request
that, in the event of resignation, you give the Company at least six weeks’ notice.

 

(b) Resignation
from All Positions. Upon termination of your employment for any reason whatsoever, you automatically will deemed to have
resigned from all offices and directorships then held with AXT or any of its affiliates.

 

    	-3-

    	 

    

 (c) Change in Control
Severance. If a Change in Control of AXT (as defined in Appendix A attached hereto) takes place, and within twelve
(12) months thereafter you incur an Involuntary Termination, as defined in Appendix A, then, subject to the terms and
conditions set forth in Appendix A, AXT will provide you with the following:

 

(i) Accrued
Payments. All accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to you under any AXT-provided
plans, policies, and arrangements as of the date of Involuntary Termination (the “Termination Date”);

 

(ii) Cash
Severance. A lump sum cash severance payment in a gross amount equal to twelve (12) months of your then-current annual
base salary;

 

(iii) Health
Benefits. If you, and any of your spouse and/or dependents (“Family Members”), have coverage on the Termination
Date under a group health plan sponsored by the Company, the Company will reimburse you the total applicable premium cost for continued
group health plan coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”)
for a period of twelve (12) months following the Involuntary Termination, provided that you validly elect and are eligible to continue
coverage under COBRA for you and your Family Members, and, provided further, that if the Company determines in its sole discretion
that it cannot provide the COBRA reimbursement benefits without potentially violating applicable laws (including, without limitation,
Section 2716 of the Public Health Service Act and the Employee Retirement Income Security Act of 1974, as amended), the Company
in lieu thereof will provide to you a taxable lump sum payment in an amount equal to the monthly COBRA premium that you would be
required to pay to continue the group health coverage in effect on the Termination Date (which amount will be based on the premium
for the first month of COBRA coverage) for a period of twelve (12) months following the Termination Date, which payment will be
made regardless of whether you elect COBRA continuation coverage; and

 

(iv) Equity
Award Vesting Acceleration. One hundred percent (100%) vesting acceleration of your then-outstanding and unvested equity awards
granted by AXT as of immediately prior to the Involuntary Termination.

 

		7.	Arbitration

 

(a) Arbitration
Required. Any dispute, claim, or controversy arising out of or related to your employment with AXT or the termination of
that employment shall be resolved exclusively through final and binding arbitration. This agreement to arbitrate includes all
state, federal and foreign statutory or common law claims, including but not limited to discrimination claims arising under
the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, and the Age Discrimination in Employment Act, or under the California Labor Code. Any demand for arbitration must be
made within one (1) year of the termination of employment, provided, however, that if a claim arose under a statute providing
for a longer time to file a claim, that statute shall govern.

 

(b) Costs or
Fees. All administrative costs of the arbitration, such as arbitrator and court reporting fees, shall be divided equally between
AXT and you, unless otherwise required by law. Each party shall bear its other costs of arbitration, including attorney’s
fees, provided, however, that the arbitrator(s) may award attorney’s fees to the prevailing party under the provisions of
any applicable law.

 

    	-4-

    	 

    

(c) Representation.
You may, but are not required to, have an attorney represent you in preparation for and during the arbitration. If you decide
to use an attorney, you shall be solely responsible for the payment of attorney’s fees and costs, subject to any
statutory authority of the arbitrator to order reimbursement by AXT.

 

(d) Arbitration
Procedure. All disputes subject to arbitration under this Offer Letter shall be resolved by a single arbitrator selected
by the parties, and judgment on the award rendered by the arbitrator(s) may be entered by any court having jurisdiction
thereof. The arbitrator shall have the authority to make any award that would be made by a court, but the arbitrator shall
not have the authority to amend, modify, supplement or change the terms and conditions of employment set forth in this Offer
Letter or AXT’s policies.

 

(e) Location.
The location of the arbitration shall be Alameda County or San Francisco, California.

 

(f) Waiver of
Right to Jury Trial. You agree that if for any reason any dispute or controversy between you and AXT arising from or related
to your employment or the termination of your employment is resolved in court rather than through arbitration, then, to the extent
permitted by law, trial of that dispute will be to a judge sitting without a jury, and you specifically waive any right you may
have to trial by jury of any such dispute or controversy.

 

(g) Survival.
Your agreement to arbitrate and the terms of this Section will survive the termination of your employment with AXT.

 

(h) Employee
Acknowledgment. YOU UNDERSTAND THAT YOU ARE ELECTING TO RESOLVE ANY DISPUTE, CLAIM OR CONTROVERSY DESCRIBED IN SECTION 7(a),
ABOVE, IN AN ARBITRAL FORUM RATHER THAN A JUDICIAL FORUM AND THAT YOU ARE GIVING UP THE RIGHT TO A JURY TRIAL OF ANY SUCH DISPUTE,
CLAIM, OR CONTROVERSY.

 

		8.	Miscellaneous

 

(a) Modification.
Any modification of the terms of this Offer Letter will be effective only if and to the extent such modification is in a
writing and signed by you and by the CEO.

 

(b) Assignment.
In view of the personal nature of the services you will perform by AXT, you cannot assign or transfer any of your rights or
obligations under this Offer Letter.

 

(c) Severability.
If any of the provisions (or any part of any provision) of this Offer Letter are found to be unenforceable, then the
remaining provisions (or part(s) thereof) shall nonetheless remain in full force and effect.

 

(d) Entire
Agreement. The terms of this Offer Letter (which includes the Appendix A attached hereto), along with the
PIIA and any other agreements relating to proprietary rights between you and the Company, constitute the entire agreement
between AXT and you pertaining to the subject matter hereof and supersede all prior or contemporaneous written or verbal
agreements and understandings in connection with the subject matter hereof, including, without limitation, the Consulting
Agreement (except as to any proprietary rights).

 

    	-5-

    	 

    

(e) Governing
Law. Your rights and obligations as an employee of AXT will be governed by the laws of the State of California without regard
to the choice-of-law provisions thereof. In any action relating to your employment by AXT, including one to compel arbitration
or to enforce an arbitration award under Section 7, AXT and you specifically consent to the jurisdiction of the federal and state
courts located in Alameda County, California.

 

If you wish to accept
this offer of employment, please sign and date this Offer Letter in the space provided below. By signing below, you acknowledge
that you have received no inducements or representations other than those contained in this Offer Letter that caused you to accept
this offer of employment.

 

We look forward to
your continued contributions to AXT.

 

	 	Sincerely,
	 	 
	 	/s/ Morris S. Young
	 	Dr. Morris S. Young

Chief Executive Officer

 

 

Agreed to and accepted:

 

	Signature:	/s/ Gary L. Fischer	 
	 	 	 
	Printed Name:	Gary L. Fischer	 
	 	 	 
	Date:	August 11, 2014	 
	 	 	 

 

    	-6-

    	 

    

Appendix A

 

The
following additional provisions will apply to your Offer Letter, including with respect to the severance benefits set forth in
Sections 6(c)(ii) through 6(c)(iv)
(the “Severance”) of your Offer Letter. 

 

A. “Cause”
Definition. For purposes of your Offer Letter, “Cause” means any one or more of the following:

 

(i) You commit
any act of fraud, misappropriation, theft, dishonesty, or other act of moral turpitude;

 

(ii) You breach
or neglect the duties you are required to perform under the terms of the Offer Letter;

 

(iii) You
engage in willful misconduct in the performance of your duties hereunder, commit insubordination (in the sole, reasonable
discretion of the CEO or the Board), or otherwise fail to perform your duties hereunder as directed by the CEO or the Board;
and

 

(iv) You are
guilty of, convicted of, or plead guilty or nolo contendere to, a felony, crime of moral turpitude or other serious
offense.

 

B. “Change
in Control” Definition. For purposes of your Offer Letter, “Change in Control” means the
occurrence of any of the following events:

 

(i) Change
in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one person, or
more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that,
together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company;
or

 

(ii) Change
in Effective Control of the Company. If the Company has a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, a change in the effective control of the Company which occurs on the date that a majority of
members of the Board is replaced during any twelve (12) month period by members of the Board whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection
(ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company
by the same Person will not be considered a Change in Control; or

 

(iii) Change
in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of
the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair
market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior
to such acquisition or acquisitions. For purposes of this subsection (iii), gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such
assets.

 

    	 

    	 

    

For purposes of this
Section B, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with the Company.

 

Notwithstanding the
foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within
the meaning of Section 409A (as defined below).

 

C. “Good
Reason” Definition. For purposes of your Offer Letter, “Good Reason” means the occurrence of one
or more of the following, without your written consent:

 

(i) A material
diminution in your base compensation, other than as part of a general reduction in the base compensation of all similarly situated
employees;

 

(ii) A material
diminution in your authority, duties or responsibilities;

 

(iii)
A material diminution in the authority, duties or responsibilities of the CEO or the requirement that you report to
a corporate officer or employee other than the CEO or the Board; 

 

(iv) A material
diminution in the budget over which you retain authority;

 

(v) A material
change in the geographic location at which you must perform services; and

 

(vi) Any other
action or inaction that constitutes a material breach by the Company of this Offer Letter.

 

Notwithstanding any
other provision of this Offer Letter to the contrary, your resignation will not be for Good Reason unless: (a) you notify the Company
in writing of the condition that you believe constitutes Good Reason within ninety (90) days after the initial existence thereof
(which notice reasonably identifies such condition and the details regarding its existence), (b) the Company fails to remedy such
condition within thirty (30) days after the date on which it receives such notice (the “Cure Period”), and (c)
you terminate employment with the Company (and its subsidiaries and affiliates) within twelve (12) months of the initial existence
of the conditions giving rise to Good Reason.

 

D. “Involuntary
Termination” Definition. For purposes of your Offer Letter, “Involuntary Termination” means
either (i) the Company terminates your employment without Cause; or (ii) you resign for Good Reason.

 

E. Release
of Claims. As a condition to receiving the Severance, you will be required to sign a waiver and release of all claims
arising out of your employment with AXT and its subsidiaries and affiliates (the “Release”). The Release
will be in a form specified by AXT. The Release will include specific information regarding the amount of time you will have
to consider the terms of the Release and return the signed agreement to AXT; provided, however, that in all cases the Release
must become effective and irrevocable no later than the sixtieth (60th) day following the date of termination of your
employment with AXT (the “Release Deadline Date”). If the Release does not become effective and
irrevocable by the Release Deadline Date, you will forfeit any right to the Severance. In no event will the Severance be paid
to you until the Release becomes effective and irrevocable.

 

    	 

    	 

    

F. Severance
Payment Timing. Provided that the Release becomes effective and irrevocable by the Release Deadline Date and subject to
Section G below, the Severance will be paid, or in the case
of installments, will commence, within ten (10) days following the date that the Release becomes effective and irrevocable
(such payment date, the “Severance Start Date”), and any Severance otherwise payable to you during the
period immediately following your termination of employment with AXT through the Severance Start Date will be paid in a lump
sum to you on the Severance Start Date, with any remaining payments to be made as provided in your Offer Letter.

 

G. Section
409A.

 

(i)
Notwithstanding anything to the contrary in your Offer Letter (including this Appendix A), no Severance to be paid to
you, if any, that, when considered together with any other severance payments or separation benefits, are considered deferred
compensation under Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any
guidance promulgated thereunder (“Section 409A”) (together, the “Deferred
Payments”) will be paid or provided until you have a “separation from service” within the meaning of
Section 409A. Similarly, no Severance payable to you, if any, that otherwise would be exempt from Section 409A pursuant
to Treasury Regulation Section 1.409A-1(b)(9) will be payable until you have a “separation from service”
within the meaning of Section 409A.

 

(ii) It is
intended that the Severance will not constitute Deferred Payments but rather will be exempt from Section 409A as a payment
that would fall within the “short-term deferral period” as described in subsection (iv) below or resulting from
an involuntary separation from service as described in subsection (v) below. In no event will you have discretion to
determine the taxable year of payment of any Deferred Payment. Any Severance that would be considered Deferred Payments will
be paid on, or in the case of installments, commence on, the sixty-first (61st) day following your separation from service,
or if later, such time as required by subsection (iii) below. Further, except as required by subsection (iii)
below, any Severance that otherwise would have been paid to you during the sixty (60) day period immediately following your
separation from service but for the preceding sentence will be paid to you on the sixty-first (61st) day following your
separation from service and any remaining payments will be made as provided in your Offer Letter.

 

(iii)
Notwithstanding anything to the contrary in your Offer Letter (including this Appendix A), if you are a “specified
employee” within the meaning of Section 409A at the time of your separation from service (other than due to death),
then the Deferred Payments, if any, that are payable within the first six (6) months following your separation from service,
will become payable on the date six (6) months and one (1) day following the date of your separation from service. All
subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, in the event of your death following your separation from service,
but before the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this
paragraph will be payable in a lump sum as soon as administratively practicable after the date of your death and all other
Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment
and benefit payable under your Offer Letter is intended to constitute a separate payment under Section 1.409A-2(b)(2) of
the Treasury Regulations.

 

    	 

    	 

    

(iv) Any amount
paid under your Offer Letter that satisfies the requirements of the “short-term deferral” rule set forth in Section
1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments for purposes of subsection (i) above.

 

(v) Any amount
paid under your Offer Letter that qualifies as a payment made as a result of an involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not
constitute Deferred Payments for purposes of subsection (i) above.

 

The foregoing provisions
are intended to comply with or be exempt from the requirements of Section 409A so that none of the payments and benefits to be
provided under your Offer Letter will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will
be interpreted to so comply or be exempt. Notwithstanding anything to the contrary in your Offer Letter, AXT reserves the right
to amend the Offer Letter as it deems necessary or advisable, in its sole discretion and without your consent, to comply with Section 409A
or to avoid income recognition under Section 409A prior to the actual payment of the Severance or imposition of any additional
tax. In no event will AXT reimburse you for any taxes that may be imposed on you as result of Section 409A.

 

For
purposes of this Section G, “Section 409A Limit”
means two (2) times the lesser of: (a) your annualized compensation based upon the annual rate of pay paid to you during your taxable
year preceding your taxable year of your termination of employment as determined under, and with such adjustments as are set forth
in, Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto;
or (b) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended, for the year in which your employment is terminated.

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