Document:

exv10w2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     This Employment Agreement, by and between SK2, Inc., a Delaware
corporation (the “Company”), and Susan Kuhlman, a resident of the State of Minnesota (the
"Executive”), is entered into on this 19th day of May, 2005 (the “Effective Date”).

INTRODUCTION

     A. The Company is a Delaware corporation that desires to employ Executive in accordance with
the terms and conditions stated in this employment agreement (the “Agreement”), and wishes to
obtain reasonable protection against unfair competition from Executive following a termination of
employment and to further protect against unfair use of its confidential business and technical
information; and Executive is willing to grant the Company the benefits of a covenant not to
compete for these same purposes.

     B. Executive wishes to receive compensation from the Company for Executive’s continued
services and desires to accept continued employment pursuant to the terms and conditions of this
Agreement.

AGREEMENT

     Now, Therefore, in consideration of the foregoing, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the Company and
Executive, each intending to be legally bound, hereby agree as follows:

     1. Employment.

     Subject to all of the terms and conditions of this Agreement, the Company hereby
agrees to employ Executive as the Company’s Director of Business Development, and Executive hereby
accepts such employment. Executive shall report to the Company’s Chief Executive Officer.

     2. Term.

     Unless terminated earlier according to the provisions of Section 5, Executive’s
employment shall commence as of the Effective Date and shall continue for a three (3)-year period
(the “Term”).

     3. Duties.

     Executive will devote substantially all of her business hours to and, during such time,
make the best use of her energy, knowledge, and training in advancing the Company’s interests. In
addition, Executive may: (i) serve as an executive officer or consultant to other affiliated
entities engaged in wholesale, retail or design activities; (ii) devote a reasonable amount of time
and attention to civic, charitable, or social organizations; (iii) engage in such other activities
as are specifically approved in writing by the Company’s Board of Directors (the “Board”); and

 

 

(iv) make passive personal investments which do not conflict with the Company’s business nor
require Executive to devote any significant amount of business time to such investment activity.
Executive’s duties and responsibilities shall include, without limitation, assisting in the
management of the Company’s routine day-to-day business operations, business development and
servicing of client accounts, and such other duties and responsibilities as may be assigned by the
Board.

     4. Compensation.

     (a) Base Salary. In consideration for Executive’s services under this Agreement, the
Company hereby agrees to pay Executive an annual salary of One Hundred Thousand Dollars
($100,000.00) per year (the “Base Salary”). The Base Salary shall be paid no less often
than monthly.

     (b) Bonus. Executive shall be entitled to a bonus of up to 100% of Executive’s Base
Salary (as set forth in Section 4(a) above), as determined by the Board, or a compensation
committee established by the Board.

     (c) Benefits. Executive shall be entitled to the employee benefits as provided to
other Company employees. In addition, Executive shall be entitled to a 20 year term life
insurance policy with a death benefit of $1,000,000.

     (d) Reimbursement. The Company shall reimburse Executive for all reasonable
out-of-pocket business expenses incurred by Executive on the Company’s behalf; provided,
however, that Executive properly accounts to the Company for all such expenses in
accordance with the rules and regulations of the Internal Revenue Service under the
Internal Revenue Code of 1986, as amended, and in accordance with any standard policies of
the Company relating to reimbursement of business expenses as such policies exist or may be
implemented in the future.

     5. Termination.

     Prior to the expiration of the Term, this Agreement may be terminated under the
provisions of this Section 5.

     (a) Voluntary Termination. Executive may voluntarily terminate her employment
hereunder for any reason and at any time after giving at least 30 days prior written notice
thereof to the Board.

     Upon such a voluntary termination, Executive shall have no further rights against the
Company hereunder, except for the right to receive: (i) any unpaid Base Salary with respect
to the period prior to the effective date of termination; and (ii) reimbursement of
expenses to which Executive is entitled under Section 4(d).

 

 

     (b) Termination Without Cause. If the Company terminates this Agreement without
cause, then the Company shall pay to Executive Executive’s then-current Base Salary for a
twenty-four (24) month period after the date of such termination, payable over a
twenty-four (24) month period in the same manner as Base Salary is paid and any
unreimbursed out-of-pocket business expenses incurred by Executive on the Company’s behalf
pursuant to Section 4(d).

     (c) Termination For Cause. The Company may terminate Executive’s employment and all
of the Company’s obligations under this Agreement at any time “For Cause” (as defined
below) by giving notice to Executive stating the basis for such termination. Any
Termination under this Section 5(c) shall be effective immediately upon delivery of the
above-described notice or at such other time thereafter as the Company may designate in the
notice. “For Cause” shall mean any of the following: (i) dishonesty, fraud, or material
and deliberate injury or attempted injury, in each case related to the Company or its
business; (ii) Executive’s conviction of a felony; or (iii) Executive’s continued failure
to satisfactorily perform the duties assigned to him pursuant to Section 3 of this
Agreement for a period of 60 days after a written demand by the Board for such satisfactory
performance, which demand specifically identifies the manner in which it is alleged that
Executive has not satisfactorily performed such duties.

     If Executive’s employment is terminated For Cause, Executive shall have no further
rights against the Company hereunder, except for the right to receive: (1) any unpaid Base
Salary with respect to the period prior to the effective date of termination, and (2)
reimbursement of expenses to which Executive is entitled under Section 4(d).

     6. Confidentiality and Noncompetition.

     (a) Confidentiality. As used in this Section 6, “Confidential Information” means
information that is not generally known and that is proprietary to the Company or that the
Company is obligated to treat as proprietary, but shall not include any information known
by Executive prior to the Effective Date. Any information that Executive reasonably
considers Confidential Information, or that the Company treats as Confidential Information,
will be presumed to be Confidential Information (whether the Executive or others originated
it and regardless of how the Executive obtained it).

     Except as specifically permitted by an authorized officer of the Company or by written
Company policies, Executive will not, either during or after her employment by the Company,
use Confidential Information for any purpose other than the business of the Company or
disclose it to any person who is not also an executive of the Company unless authorized by
the Board. When Executive’s employment with the Company ends, Executive will promptly
deliver to the

 

 

Company all records and any compositions, articles, devices, apparatuses and other
items that disclose, describe, or embody Confidential Information, including all copies,
reproductions, and specimens of the Confidential Information in Executive’s possession,
regardless of who prepared them and will promptly deliver any other property of the Company
in Executive’s possession (all such foregoing items, the “Materials”), whether or not
Confidential Information. The foregoing sentence shall not apply to any Materials produced
by Executive prior to the Effective Date.

     (b) Competitive Activities. Executive agrees that, during the Term and for a
twenty-four (24) month period afterwards, Executive will not alone or in any capacity with
another firm: directly engage in any commercial activity that competes with the Company’s
Business (as defined below) within any state in the United States or within any state in
which the Company directly markets or intends to market or services products or provides or
intends to provide services.

     Notwithstanding anything to the contrary in this Agreement, the provisions of this
Section 6(b) shall apply in the event that the Executive is terminated without cause for so
long as Executive is receiving installments of the Severance Payment. In addition, this
Section 6 shall not apply to any activity of the Executive from and after such time as the
Company (1) shall have ceased all Business activities for a period of 60 days, or (2) shall
have made a decision through its Board not to continue, or shall have ceased for a period
of 60 days, the Company’s Business activities.

     Notwithstanding anything to the contrary in this Agreement, the provisions of this
Section 6(b) shall not apply in the event the Executive is employed by or provides
consulting services to an “affiliated” entity formed for the purpose of developing, owning
and operating wholesale or retail clothing business. For purposes of this provision,
“affiliated” shall mean any entity which shares common ownership with the Company or is
wholly or partially owned by the Company.

     For purposes of this Section 6, “Business” shall mean the operation of retail
distributors of clothing and the design and marketing of men’s and women’s fashion apparel.
For the sake of clarity, “Business” does not include private label wholesaling.

     7. Conflicts
of Interest.

     Executive agrees that he will not, directly or indirectly, transact
business with the Company personally, or as agent, owner, partner or shareholder of any other
entity; provided, however, that any such transaction may be entered into if approved by the Board
so long as Executive’s ownership or relationship is disclosed to or otherwise known by the Board.

 

 

     8. General
Provisions.

     (a) Successors and Assigns. This Agreement is binding on and inures to the benefit of
the Company’s successors and assigns, all of which are included in the term the “Company”
as it is used in this Agreement; provided, however, that the Company may assign this
Agreement only in connection with a merger, consolidation, assignment, sale, or other
disposition of substantially all of its assets or business.

     (b) Amendment. This Agreement may be modified or amended only by a written agreement
signed by both the Company and Executive.

     (c) Governing Law and Forum. The laws of Minnesota will govern the validity,
construction, and performance of this Agreement. Any legal proceeding related to this
Agreement will be brought in an appropriate Minnesota court, and both the Company and
Executive hereby consent to the exclusive jurisdiction of Minnesota courts for this
purpose.

     (d) Construction. Wherever possible, each provision of this Agreement will be
interpreted so that it is valid under the applicable law. If any provision of this
Agreement is to any extent invalid under the applicable law, that provision will still be
effective to the extent it remains valid. The remainder of this Agreement also will
continue to be valid, and the entire Agreement will continue to be valid in other
jurisdictions.

     (e) No Waiver. No failure or delay by either the Company or Executive in exercising
or enforcing any right or remedy under this Agreement will waive any provision of the
Agreement. Nor will any single or partial exercise by either the Company or Executive of
any right or remedy under this Agreement preclude either of them from otherwise or further
exercising these rights or remedies, or any other rights or remedies granted by any law or
any related document.

     (f) Captions. The headings in this Agreement are for convenience only and shall not
affect this Agreement’s interpretation.

     (g) References. Except as otherwise required or indicated by the context, all
references to Sections in this Agreement refer to Sections of this Agreement.

     (h) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral
negotiations, commitments, writings, and understandings between the parties concerning the
matters in this Agreement.

     (i) Notices. All notices and other communications required or permitted under this
Agreement shall be in writing and shall be hand delivered or sent by registered or
certified first-class mail, postage prepaid, and shall be effective upon delivery if hand
delivered, or three days after mailing if mailed to the addresses stated below. These
addresses may be changed at any time by like notice:

 

 

	 	 	 
	If to the Company:

	 	SK2, Inc.

701 North Third Street

Minneapolis, MN 55401

Attention: Board of Directors
	 
	 	 
	If to Executive:

	 	Susan Kuhlman

5232 Clinton Avenue South

Minneapolis, MN 55419

     (j) Counterparts. This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement binding on all parties. Each party
shall become bound by this Agreement immediately upon signing any counterpart,
independently of the signature of any other party. In making proof of this Agreement,
however, it will be necessary to produce only one copy signed by the party to be charged.

     In Witness Whereof, the undersigned Executive and the Company have executed this
Agreement effective as of the Effective Date.

	 	 	 
	COMPANY:

	 	SK2, INC.,

a Delaware corporation
	 
	 	 
	 

	 	By
	 

	 	 
	 

	 	     Scott Kuhlman
	 
	 	 
	EXECUTIVE:

	 	Susan Kuhlmanexv10w3

 

EXHIBIT 10.3

KUHLMAN COMPANY, INC.

2005 STOCK OPTION PLAN

(as adopted by the Board of Directors May 19, 2005

and approved by the Shareholders May 27, 20051)

     1. Purpose.

     The purpose of the Kuhlman Company, Inc. 2005 Stock Option Plan (the “Plan”)
of Kuhlman Company, Inc. (the “Company”) is to increase stockholder value and to advance the
interests of the Company by furnishing a variety of economic incentives (“Incentives”) designed to
attract, retain and motivate employees, certain key consultants and directors of the Company.
Incentives may consist of opportunities to purchase or receive shares of Company common stock
(“Common Stock”), on terms determined under this Plan.

     2. Administration.

     The Plan shall be administered by the board of directors of the Company
(the “Board of Directors”) or by a stock option or compensation committee (the “Committee”) of the
Board of Directors. The Committee shall consist of not less than two directors of the Company and
shall be appointed from time to time by the Board of Directors. During any time period during
which the Company has a class of equity securities registered under Section 12 of the Securities
Exchange Act of 1934 (including the regulations promulgated thereunder, the “1934 Act”), each
member of the Committee shall be (i) a “non-employee director” within the meaning of Rule 16b-3 of
the 1934 Act (a “Non Employee Director”), and (ii) shall be an “outside director” within the
meaning of Section 162(m) under the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations promulgated thereunder. The Committee shall have complete authority to award
Incentives under the Plan, to interpret the Plan, and to make any other determination which it
believes necessary and advisable for the proper administration of the Plan. The Committee’s
decisions and matters relating to the Plan shall be final and conclusive on the Company and its
participants. If at any time there is no stock option or compensation committee, the term
“Committee,” as used in the Plan, shall refer to the Board of Directors.

     3. Eligible
Participants.

     Officers of the Company, employees of the Company or its
subsidiaries, members of the Board of Directors, and consultants or other independent contractors
who provide services to the Company or its subsidiaries shall be eligible to receive Incentives
under the Plan when designated by the Committee. Participants may be designated individually or by
groups or categories (for example, by pay grade) as the Committee deems appropriate. Participation
by officers of the Company or its subsidiaries and any performance objectives relating to such
officers must be approved by the Committee. Participation by others and any performance objectives
relating to others may be approved by groups or categories (for example, by pay grade) and
authority to designate participants who are not officers and to set or modify such targets may be
delegated.

     4. Types
of Incentives.

 

			
	1	 	Approved by the respective Board of Directors and Shareholders of SK2, Inc., a Delaware corporation
which merged into the Company and assumed the Plan.

 

 

     Incentives under the Plan may be granted in any one or a combination of the following forms:
(a) incentive stock options and non-statutory stock options (Section 6); (b) stock appreciation
rights (“SARs”) (Section 7); (c) stock awards (Section 8); (d) restricted stock (Section 8); and
(e) performance shares (Section 9).

     5. Shares
Subject to the Plan.

     5.1.
Number of Shares.

     Subject to adjustment as provided in Section 10.6, the
number of shares of Common Stock which may be issued under the Plan shall not exceed
1,500,000 shares of Common Stock. Shares of Common Stock that are issued under the Plan or
are subject to outstanding Incentives will be applied to reduce the maximum number of shares
of Common Stock remaining available for issuance under the Plan.

     5.2.
Cancellation.

     To the extent that cash in lieu of shares of Common Stock is
delivered upon the exercise of an SAR pursuant to Section 7.4, the Company shall be deemed,
for purposes of applying the limitation on the number of shares, to have issued the greater
of the number of shares of Common Stock which it was entitled to issue upon such exercise or
on the exercise of any related option. In the event that a stock option or SAR granted
hereunder expires or is terminated or canceled unexercised as to any shares of Common Stock,
such shares may again be issued under the Plan either pursuant to stock options, SARs or
otherwise. In the event that shares of Common Stock are issued as restricted stock or
pursuant to a stock award and thereafter are forfeited or reacquired by the Company pursuant
to rights reserved upon issuance thereof, such forfeited and reacquired shares may again be
issued under the Plan, either as restricted stock, pursuant to stock awards or otherwise.
The Committee may also determine to cancel, and agree to the cancellation of, stock options
in order to make a participant eligible for the grant of a stock option at a lower price
than the option to be canceled.

     5.3.
Type of Common Stock.

     Common Stock issued under the Plan in connection with
stock options, SARs, performance shares, restricted stock or stock awards, may be authorized
and unissued shares or treasury stock, as designated by the Committee.

     6. Stock
Options.

     A stock option is a right to purchase shares of Common Stock from the
Company. Each stock option granted by the Committee under this Plan shall be subject to the
following terms and conditions:

     6.1.
Price.

     The option price per share shall be determined by the Committee,
subject to adjustment under Section 10.6.

     6.2.
Number.

     The number of shares of Common Stock subject to the option shall be
determined by the Committee, subject to adjustment as provided in Section 10.6. The number
of shares of Common

2

 

Stock subject to a stock option shall be reduced in the same proportion that the holder
thereof exercises a SAR if any SAR is granted in conjunction with or related to the stock
option.

     6.3.
Duration and Time for Exercise.

     Subject to earlier termination as provided in
Section 10.4, the term of each stock option shall be determined by the Committee but shall
not exceed ten years and one day from the date of grant. Each stock option shall become
exercisable at such time or times during its term as shall be determined by the Committee at
the time of grant. The Committee may accelerate the exercisability of any stock option.
Subject to the foregoing and with the approval of the Committee, all or any part of the
shares of Common Stock with respect to which the right to purchase has accrued may be
purchased by the Company at the time of such accrual or at any time or times thereafter
during the term of the option.

     6.4.
Manner of Exercise.

     A stock option may be exercised, in whole or in part, by
giving written notice to the Company, specifying the number of shares of Common Stock to be
purchased and accompanied by the full purchase price for such shares. The option price
shall be payable:

     (a) in United States dollars upon exercise of the option and may be paid by
cash, uncertified or certified check or bank draft;

     (b) at the discretion of the Committee, by delivery of shares of Common Stock
in payment of all or any part of the option price, which shares shall be valued for
this purpose at the Fair Market Value on the date such option is exercised; or

     (c) at the discretion of the Committee, by instructing the Company to withhold
from the shares of Common Stock issuable upon exercise of the stock option shares of
Common Stock in payment of all or any part of the exercise price and/or any related
withholding tax obligations, which shares shall be valued for this purpose at the
Fair Market Value or in such other manner as may be authorized from time to time by
the Committee.

     The shares of Common Stock delivered by the participant pursuant to Section 6.4(b) must
have been held by the participant for a period of not less than six months prior to the
exercise of the option, unless otherwise determined by the Committee. Prior to the issuance
of shares of Common Stock upon the exercise of a stock option, a participant shall have no
rights as a stockholder.

     6.5.
Incentive Stock Options.

     Notwithstanding anything in the Plan to the contrary,
the following additional provisions shall apply to the grant of stock options which are
intended to qualify as Incentive Stock Options (as such term is defined in Section 422 of
the Code):

     (a) The aggregate Fair Market Value (determined as of the time the option is
granted) of the shares of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by any single participant during any calendar
year (under all of the Company’s plans) shall not exceed $100,000. The determination
will be made by taking Incentive Stock Options into account in the order in which
they were granted.

3

 

     If such excess only applies to a portion of an Incentive Stock Option, the
Committee, in its discretion, will designate which shares will be treated as shares
to be acquired upon exercise of an Incentive Stock Option.

     (b) Any Incentive Stock Option certificate/agreement authorized under the Plan
shall contain such other provisions as the Committee shall deem advisable, but shall
in all events be consistent with and contain all provisions required in order to
qualify the options as Incentive Stock Options.

     (c) All Incentive Stock Options must be granted within ten years from the
earlier of the date on which this Plan was adopted by Board of Directors or the date
this Plan was approved by the stockholders.

     (d) Unless sooner exercised, all Incentive Stock Options shall expire no later
than ten years after the date of grant.

     (e) The option price for Incentive Stock Options shall be not less than the
Fair Market Value of the Common Stock subject to the option on the date of grant.

     (f) If Incentive Stock Options are granted to any participant who, at the time
such option is granted, would own (within the meaning of Section 422 of the Code)
stock possessing more than 10% of the total combined voting power of all classes of
stock of the employer corporation or of its parent or subsidiary corporation, (i)
the option price for such Incentive Stock Options shall be not less than 110% of the
Fair Market Value of the Common Stock subject to the option on the date of grant and
(ii) such Incentive Stock Options shall expire no later than five years after the
date of grant.

     6.6.
Right of Redemption.

     The agreement with the recipient evidencing a stock
option grant may include a provision whereby the Company may elect, prior to the date of the
first registration of an equity security of the Company pursuant to the 1934 Act, to
repurchase from a former Company employee, director, consultant, advisor or other
independent contractor, and their respective successors and assigns, all or any part of the
shares of Common Stock received by a participant pursuant to the exercise of a stock option.
Any such repurchase must be made no earlier than six months following the termination of the
holder’s relationship with the Company giving rise to the stock option grant and at fair
market value, as determined by the Committee, on such date of redemption.

     7. Stock
Appreciation Rights.

     An SAR is a right to receive, without payment to the
Company, a number of shares of Common Stock, cash or any combination thereof, the amount of which
is determined pursuant to the formula set forth in Section 7.4. An SAR may be granted (a) with
respect to any stock option granted under this Plan, either concurrently with the grant of such
stock option or at such later time as determined by the Committee (as to all or any portion of the
shares of Common Stock subject to the stock option), or (b) alone, without reference to any related
stock option. Each SAR granted by the Committee under this Plan shall be subject to the following
terms and conditions:

4

 

     7.1.
Number.

     Each SAR granted to any participant shall relate to such number of shares of Common Stock
as shall be determined by the Committee, subject to adjustment as provided in Section 10.6.
In the case of an SAR granted with respect to a stock option, the number of shares of Common
Stock to which the SAR pertains shall be reduced in the same proportion that the holder of
the option exercises the related stock option.

     7.2.
Duration.

     Subject to earlier termination as provided in Section 10.4, the term
of each SAR shall be determined by the Committee but shall not exceed ten years and one day
from the date of grant. Unless otherwise provided by the Committee, each SAR shall become
exercisable at such time or times, to such extent and upon such conditions as the stock
option, if any, to which it relates is exercisable. The Committee may in its discretion
accelerate the exercisability of any SAR.

     7.3.
Exercise.

     An SAR may be exercised, in whole or in part, by giving written
notice to the Company, specifying the number of SARs which the holder wishes to exercise.
Upon receipt of such written notice, the Company shall, within 90 days thereafter, deliver
to the exercising holder certificates for the shares of Common Stock or cash or both, as
determined by the Committee, to which the holder is entitled pursuant to Section 7.4.

     7.4.
Payment.

     Subject to the right of the Committee to deliver cash in lieu of
shares of Common Stock (which, as it pertains to officers and directors of the Company,
shall comply with all requirements of the 1934 Act), the number of shares of Common Stock
which shall be issuable upon the exercise of an SAR shall be determined by dividing:

     (a) the number of shares of Common Stock as to which the SAR is exercised
multiplied by the amount of the appreciation in such shares (for this purpose, the
“appreciation” shall be the amount by which the Fair Market Value of the shares of
Common Stock subject to the SAR on the exercise date exceeds (1) in the case of an
SAR related to a stock option, the purchase price of the shares of Common Stock
under the stock option or (2) in the case of an SAR granted alone, without reference
to a related stock option, an amount which shall be determined by the Committee at
the time of grant, subject to adjustment under Section 10.6); by

     (b) the Fair Market Value of a share of Common Stock on the exercise date.

     In lieu of issuing shares of Common Stock upon the exercise of a SAR, the Committee may
elect to pay the holder of the SAR cash equal to the Fair Market Value on the exercise date
of any or all of the shares which would otherwise be issuable. No fractional shares of
Common Stock shall be issued upon the exercise of an SAR; instead, the holder of the SAR
shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market
Value of a share of Common Stock on the exercise date or to purchase the portion necessary
to make a whole share at its Fair Market Value on the date of exercise.

5

 

     8. Stock
Awards and Restricted Stock.

     A stock award consists of the transfer by the Company to a participant of shares of Common
Stock, without other payment therefor, as additional compensation for services to the Company. A
share of restricted stock consists of shares of Common Stock which are sold or transferred by the
Company to a participant at a price determined by the Committee (which price shall be at least
equal to the minimum price required by applicable law for the issuance of a share of Common Stock)
and subject to restrictions on their sale or other transfer by the participant. The transfer of
Common Stock pursuant to stock awards and the transfer and sale of restricted stock shall be
subject to the following terms and conditions:

     8.1.
Number of Shares.

     The number of shares to be transferred or sold by the
Company to a participant pursuant to a stock award or as restricted stock shall be
determined by the Committee.

     8.2.
Sale Price.

     The Committee shall determine the price, if any, at which shares
of restricted stock shall be sold to a participant, which may vary from time to time and
among participants and which may be below the Fair Market Value of such shares of Common
Stock at the date of sale.

     8.3.
Restrictions.

     All shares of restricted stock transferred or sold hereunder
shall be subject to such restrictions as the Committee may determine, including, without
limitation any or all of the following:

     (a) a prohibition against the sale, transfer, pledge or other encumbrance of
the shares of restricted stock, such prohibition to lapse at such time or times as
the Committee shall determine (whether in annual or more frequent installments, at
the time of the death, disability or retirement of the holder of such shares, or
otherwise);

     (b) a requirement that the holder of shares of restricted stock forfeit, or (in
the case of shares sold to a participant) resell back to the Company at his or her
cost, all or a part of such shares in the event of termination of his or her
employment or consulting engagement during any period in which such shares are
subject to restrictions;

     (c) such other conditions or restrictions as the Committee may deem advisable.

     8.4.
Escrow.

     In order to enforce the restrictions imposed by the Committee pursuant
to Section 8.3, the participant receiving restricted stock shall enter into an agreement
with the Company setting forth the conditions of the grant. Shares of restricted stock
shall be registered in the name of the participant and deposited, together with a stock
power endorsed in blank, with the Company. Each such certificate shall bear a legend in
substantially the following form:

The transferability of this certificate and the shares of Common
Stock represented by it are subject to the terms and conditions
(including conditions of forfeiture) contained in the Kuhlman
Company, Inc. 2005 Stock Option Plan (the “Company”), and an
agreement entered into between the registered owner and the Company.
A copy of the Plan and the agreement is on file in the office of
the secretary of the Company.

6

 

     8.5.
End of Restrictions.

     Subject to Section 10.5, at the end of any time period
during which the shares of restricted stock are subject to forfeiture and restrictions on
transfer, such shares will be delivered free of all restrictions to the participant or to
the participant’s legal representative, beneficiary or heir.

     8.6.
Stockholder.

     Subject to the terms and conditions of the Plan, each participant
receiving restricted stock shall have all the rights of a stockholder with respect to shares
of stock during any period in which such shares are subject to forfeiture and restrictions
on transfer, including without limitation, the right to vote such shares. Dividends paid in
cash or property other than Common Stock with respect to shares of restricted stock shall be
paid to the participant currently.

     9. Performance
Shares.

     A performance share consists of an award which shall be paid in
shares of Common Stock, as described below. The grant of performance share shall be subject to
such terms and conditions as the Committee deems appropriate, including the following:

     9.1.
Performance Objectives.

     Each performance share will be subject to performance
objectives for the Company or one of its operating units to be achieved by the end of a
specified period. The number of performance shares granted shall be determined by the
Committee and may be subject to such terms and conditions, as the Committee shall determine.
If the performance objectives are achieved, each participant will be paid in shares of
Common Stock or cash. If such objectives are not met, each grant of performance shares may
provide for lesser payments in accordance with formulas established in the award.

     9.2.
Not Stockholder.

     The grant of performance shares to a participant shall not
create any rights in such participant as a stockholder of the Company, until the payment of
shares of Common Stock with respect to an award.

     9.3.
No Adjustments.

     No adjustment shall be made in performance shares granted on
account of cash dividends which may be paid or other rights which may be issued to the
holders of Common Stock prior to the end of any period for which performance objectives were
established.

     9.4.
Expiration of Performance Share.

     If any participant’s employment or consulting
engagement with the Company is terminated for any reason other than normal retirement, death
or disability prior to the achievement of the participant’s stated performance objectives,
all the participant’s rights on the performance shares shall expire and terminate unless
otherwise determined by the Committee. In the event of termination of employment or
consulting by reason of death, disability, or normal retirement, the Committee, in its own
discretion may determine what portions, if any, of the performance shares should be paid to
the participant.

7

 

     10. General.

     10.1.
Effective Date.

     The Plan will become effective upon its approval by the
Company’s Board of Directors. Unless approved by the stockholders within one year after the
date of the Plan’s adoption by the Board of Directors, no Incentive Stock Options shall be
issued under the Plan.

     10.2.
Duration.

     The Plan shall remain in effect until all Incentives granted under
the Plan have either been satisfied by the issuance of shares of Common Stock or the payment
of cash or been terminated under the terms of the Plan and all restrictions imposed on
shares of Common Stock in connection with their issuance under the Plan have lapsed. No
Incentives may be granted under the Plan after the tenth anniversary of the date the Plan is
approved by the stockholders of the Company.

     10.3.
Limited Transferability of Incentives.

     No stock option, SAR, restricted stock
or performance award may be transferred, pledged or assigned by the holder thereof (except,
in the event of the holder’s death, by will or the laws of descent and distribution to the
limited extent provided in the Plan or the Incentive); and the Company shall not be required
to recognize any attempted assignment of such rights by any participant. Notwithstanding
the preceding sentence, the following transfers and exercises of stock options or SARs are
permitted under this Plan:

     (a) stock options may be transferred by the holder thereof to Employee’s
spouse, children, grandchildren or parents (collectively, the “Family Members”), to
trusts for the benefit of Family Members, to partnerships or limited liability
companies in which Family Members are the only partners or shareholders, or to
entities exempt from federal income taxation pursuant to Section 501(c)(3) of the
Code; or

     (b) any Incentives held by a participant may be assigned by court order to the
participant’s former spouse in connection with a dissolution of their marriage, but
only if the Committee determines, in its sole discretion, that the order satisfies
such requirements of a “qualified domestic relations order” as are set forth in
paragraphs (1) through (3) of Code Section 414(p), as if the Plan were a plan
described in Code Section 401(a)(13). The federal income and payroll taxation of
any Incentives assigned as provided in the preceding sentence shall be governed by
the Code, Revenue Rulings 2002-22 and 2004-60 (as applicable), or any other
applicable guidance published by the Internal Revenue Service or the Department of
the Treasury.

     (c) During a participant’s lifetime, a stock option or SAR may be exercised
only by him or her, by his or her guardian or legal representative or by any of the
transferees permitted by the preceding two paragraphs (a) and (b).

     10.4.
Effect of Termination or Death.

     In the event that a participant ceases to be
an employee of or consultant to the Company for any reason, including death or disability,
any Incentives may be exercised or shall expire at such times as may be determined by the
Committee.

8

 

     10.5.
Additional Condition.

     Notwithstanding anything in this Plan to the contrary:
(a) the Company may, if it shall determine it necessary or desirable for any reason, at the
time of award of any Incentive or the issuance of any shares of Common Stock pursuant to any
Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or
to the receipt of shares of Common Stock issued pursuant thereto, to deliver to the Company
a written representation of present intention to acquire the Incentive or the shares of
Common Stock issued pursuant thereto for his or her own account for investment and not for
distribution; and (b) if at any time the Company further determines, in its sole discretion,
that the listing, registration or qualification (or any updating of any such document) of
any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on any
securities exchange or under any federal or state securities or blue sky law, or that the
consent or approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with the award of any Incentive, the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares,
such Incentive shall not be awarded or such shares of Common Stock shall not be issued or
such restrictions shall not be removed, as the case may be, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.

     10.6.
Adjustment.

     In the event of any recapitalization, stock dividend, stock
split, combination of shares or other change in the Common Stock, the number of shares of
Common Stock then subject to the Plan, including shares subject to restrictions, options or
achievements of performance shares, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such adjustments, the purchase
price of any option, the performance objectives of any Incentive, and the shares of Common
Stock issuable pursuant to any Incentive shall be adjusted as and to the extent appropriate,
in the discretion of the Committee, to provide participants with the same relative rights
before and after such adjustment.

     10.7.
Incentive Plans and Agreements.

     Except in the case of stock awards, the terms
of each Incentive shall be stated in a plan or agreement approved by the Committee. The
Committee may also determine to enter into agreements with holders of options to reclassify
or convert certain outstanding options, within the terms of the Plan, as Incentive Stock
Options or as non-statutory stock options and in order to eliminate SARs with respect to all
or part of such options and any other previously issued options.

     10.8. Withholding.

     (a) The Company shall have the right to withhold from any payments made under
the Plan or to collect as a condition of payment, any taxes required by law to be
withheld. At any time when a participant is required to pay to the Company an
amount required to be withheld under applicable income tax laws in connection with a
distribution of Common Stock or upon exercise of an option or SAR, the participant
may satisfy this obligation in whole or in part by electing (the “Election”) to have
the Company withhold from the distribution shares of Common Stock having a value up
to the minimum amount of withholding taxes required to be collected on the
transaction. The value of the shares to be withheld shall be based on the Fair
Market Value of the

9

 

Common Stock on the date that the amount of tax to be withheld shall be
determined (“Tax Date”).

     (b) Each Election must be made prior to the Tax Date. The Committee may
disapprove of any Election, may suspend or terminate the right to make Elections, or
may provide with respect to any Incentive that the right to make Elections shall not
apply to such Incentive. An Election is irrevocable.

     10.9.
No Continued Employment, Engagement or Right to Corporate Assets.

     No
participant under the Plan shall have any right, because of his or her participation, to
continue in the employ of the Company for any period of time or to any right to continue his
or her present or any other rate of compensation. Nothing contained in the Plan shall be
construed as giving an employee, a consultant, such persons’ beneficiaries or any other
person any equity or interests of any kind in the assets of the Company or creating a trust
of any kind or a fiduciary relationship of any kind between the Company and any such person.

     10.10.
Deferral Permitted.

     Payment of cash or distribution of any shares of Common
Stock to which a participant is entitled under any Incentive shall be made as provided in
the Incentive. Payment may be deferred at the option of the participant if provided in the
Incentive.

     10.11.
Amendment of the Plan.

     The Board may amend or discontinue the Plan at any
time. However, no such amendment or discontinuance shall adversely change or impair,
without the consent of the recipient, an Incentive previously granted. Further, no such
amendment shall, without approval of the shareholders of the Company, (a) increase the
maximum number of shares of Common Stock which may be issued to all participants under the
Plan, (b) change or expand the types of Incentives that may be granted under the Plan, (c)
change the class of persons eligible to receive Incentives under the Plan, or (d) materially
increase the benefits accruing to participants under the Plan.

     10.12.
Sale, Merger, Exchange or Liquidation.

     Unless otherwise provided in the
agreement for an Incentive, in the event of an acquisition of the Company through the sale
of substantially all of the Company’s assets or through a merger, exchange, reorganization
or liquidation of the Company or a similar event as determined by the Committee
(collectively a “transaction”), the Committee shall be authorized, in its sole discretion,
to take any and all action it deems equitable under the circumstances, including but not
limited to any one or more of the following:

     (a) providing that the Plan and all Incentives shall terminate and the holders
of (i) all outstanding vested options shall receive, in lieu of any shares of Common
Stock they would be entitled to receive under such options, such stock, securities
or assets, including cash, as would have been paid to such participants if their
options had been exercised and such participant had received Common Stock
immediately prior to such transaction (with appropriate adjustment for the exercise
price, if any), (ii) performance shares and/or SARs that entitle the participant to
receive Common Stock shall receive, in lieu of any shares of Common Stock each
participant was entitled to receive as of the date

10

 

of the transaction pursuant to the terms of such Incentive, if any, such stock,
securities or assets, including cash, as would have been paid to such participant if
such Common Stock had been issued to and held by the participant immediately prior
to such transaction, and (iii) any Incentive under this Agreement which does not
entitle the participant to receive Common Stock shall be equitably treated as
determined by the Committee.

     (b) providing that participants holding outstanding vested Common Stock based
Incentives shall receive, with respect to each share of Common Stock issuable
pursuant to such Incentives as of the effective date of any such transaction, at the
determination of the Committee, cash, securities or other property, or any
combination thereof, in an amount equal to the excess, if any, of the Fair Market
Value of such Common Stock on a date within ten days prior to the effective date of
such transaction over the option price or other amount owed by a participant, if
any, and that such Incentives shall be cancelled, including the cancellation without
consideration of all options that have an exercise price below the per share value
of the consideration received by the Company in the transaction.

     (c) providing that the Plan (or replacement plan) shall continue with respect
to Incentives not cancelled or terminated as of the effective date of such
transaction and provide to participants holding such Incentives the right to earn
their respective Incentives on a substantially equivalent basis (taking into account
the transaction and the number of shares or other equity issued by such successor
entity) with respect to the equity of the entity succeeding the Company by reason of
such transaction.

     (d) providing that all unvested, unearned or restricted Incentives, including
but not limited to restricted stock for which restrictions have not lapsed as of the
effective date of such transaction, shall be void and deemed terminated, or, in the
alternative, for the acceleration or waiver of any vesting, earning or restrictions
on any Incentive.

     The Board may restrict the rights of participants or the applicability of this Section
10.12 to the extent necessary to comply with Section 16(b) of the 1934 Act, the Internal
Revenue Code or any other applicable law or regulation. The grant of an Incentive award
pursuant to the Plan shall not limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.

     10.13.
Definition of Fair Market Value.

     For purposes of this Plan, the “Fair Market
Value” of a share of Common Stock at a specified date shall, unless otherwise expressly
provided in this Plan, be the amount which the Committee or the Board of Directors
determines in good faith to be 100% of the fair market value of such a share as of the date
in question; provided, however, that notwithstanding the foregoing, if such shares are
listed on a U.S. securities exchange or are quoted on the Nasdaq National Market or Nasdaq
Small-Cap Market (“Nasdaq”), then Fair Market Value shall be determined by reference to the
last sale price of a share of Common Stock on such U.S. securities exchange or Nasdaq on the
applicable date. If such U.S. securities exchange or Nasdaq is closed for trading on such
date, or if the Common Stock does not trade on such date, then the last sale price used
shall be the one on the date the Common Stock last traded on such U.S. securities exchange
or Nasdaq.

11

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