Document:

EXHIBIT 10.19

 

AMENDMENT NO. 2 TO LEASE

 

THIS AMENDMENT
NO. 2 to Lease (“Amendment No. 2”) is made and entered into as of November 29,
2004, between Stan Koch & Sons Trucking, Inc. (“Lessor”) and Winmark
Corporation (“Tenant”).

 

WHEREAS,
Tenant and Lessor entered into a Lease dated July 10, 2000, for the premises
located at 4200 Dahlberg Drive, Golden Valley, Minnesota 55422 (the “Lease”);
and

 

WHEREAS,
Tenant and Lessor entered into an Amendment to Lease dated June 25, 2003
(Amendment);

 

WHEREAS,
Tenant and Lessor desire to amend certain terms and conditions of the Lease and
Amendment including (without limitation) changing the term of the Lease and
Amendment and increasing the square footage of the Leased Premises to include
the Original Space (“Original Space”) and Phase I (“Phase I”) as of September
1, 2003 and the Original  Space, Phase I,
Phase II (“Phase II”) as of February 1, 2005. 
Each the Original Space, Phase I, Phase II are delineated on Exhibit A,
attached hereto and incorporated herein by reference; and

 

WHEREAS, the
terms and conditions of this Amendment No. 2 supersede any and all conflicting
terms and conditions of the Lease and Amendment.

 

NOW,
THEREFORE, for one dollar and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

1.                                       VARIABLE
TERMS:

 

a.               Section 2 (a).

 

(i)                                                             Effective
September 1, 2003 through January 31, 2005, 
Section 2 (a) of the Lease is amended
and restated in its entirety as follows:

 

“Leased Premises: 30,903 usable square feet located in the building at
4200 Dahlberg Drive, Golden Valley, Minnesota 55422 (the “Building”), labeled
as the Original Space and Phase I, as set forth in revised Exhibit A, attached
hereto and incorporated herein by reference. 
The building shall include the office building, appurtenances, parking
lot and land.  Tenant and its invitees
shall be entitled to but not use more than 90 parking spaces.”

 

(ii)                                                            Effective February 1, 2005 through August
31, 2009, Section 2 (a) of the Lease is amended
and restated in its entirety as follows:

 

“Leased Premises:
34,184 usable square feet located in the building at 4200 Dahlberg Drive,
Golden Valley, Minnesota 55422 (the “Building”).  The Building shall include the office building,
appurtenances, parking lot and land. 
Tenant and its invitees shall be entitled to but not use more than 110
parking spaces.”

 

 

b.              Section
2 (c).

 

Effective the date
hereof, Section 2 (c) of the Lease is amended
and restated in its entirety as follows:

 

“Annual Base Rent:
$218,979.60 per annum, payable in equal monthly installments of $18,248.30 on
the first day of each month during the Lease Term provided, however, that if
the term of this Lease shall commence on a day other than the first day of the month,
or shall be terminated on a day other than the last day of the month, or both,
the rent payable during such first or last month, or both, shall be adjusted on
a pro rata basis.”

 

2.                                       ADDITIONAL
RENT:

 

Section 3 (a).

 

Phase I Expansion.  Effective September 1, 2003 through January
31, 2005, Section 3 (b) of the lease is amended
and restated in its entirety as follows:

 

“It is agreed by
Tenant and Lessor, for purposes of calculating Tenant’s pro rata share, that
the usable area in the Building is 47,328 square feet and that the proposed
usable area of the Leased Premises is 30,903 square feet (which includes the
Original Space and Phase I as indicated on Exhibit A), and is subject to
adjustment if (i) the actual usable square feet of the Leased Premises is
different than the anticipated square feet of the Leased Premises after Lessor’s
improvements set forth in Section 3 hereof; or (ii) the usable square footage
in the building should change during the lease term.

 

Section
3 (b).

 

Phase II Expansion.  Effective February 1, 2005 through August 31,
2009, Section 3 (b) of the Lease is amended
and restated in its entirety as follows:

 

“It is agreed by
Tenant and Lessor, for purposes of calculating Tenant’s pro rata share, that
the usable area in the Building is 47,328 square feet and that the proposed
usable area of the Leased Premises is 34,184 square feet (which includes the
Original Space, Phase I and Phase II as indicated on Exhibit A), and is subject
to adjustment if (i) the actual usable square feet of the Leased Premises is
different that the anticipated square feet of the Lease Premises after Lessor’s
improvements set forth in Section 3 hereof: or (ii) the usable square footage
in the building should change during the lease term.”

 

3.                                       LEASEHOLD
IMPROVEMENTS:                                        Section
7.

 

The
last sentence of Section 7 is amended and restated in its entirety as follows:

 

In consideration
of Tenant’s Phase II expansion, Lessor agrees to construct the tenant
improvements on the attached floor plan EXHIBIT “B” and as detailed on the
estimated of construction costs provided by Delly Construction Inc. attached
EXHIBIT “C”.  Lessor agrees to make all
improvement in compliance with applicable law. 
Lessor or Lessor’s contractor shall consult Tenant on Construction
issues including but not limited to location of switches and outlets, paint
color and HVAC coverage.  Lessor agrees
that all Phase II expansion improvements shall be completed on or before
February 1, 2005.  Tenant will be
responsible for Tenant telephone and data lines, connections and any special
electrical requirements.  Lessor will

 

 

contract with
Delly Construction Inc. for the entire project as shown on EXHIBIT “C” in the
amount of $163,590.00.  The Landlord will
pay the entire invoice upon completion of the project and Tenant will pay the
Landlord $50,000 upon completion of the project.  The landlord will provide a written
request/invoice to Tenant for payment to Landlord.

 

4.                                       OPTION
FOR FURTHER EXPANSION:

 

During the term of
the Lease, Tenant shall have the option to lease the remaining unleased space
in the Building (an additional 13,144 square feet) upon twelve (12) months
written notice to Lessor.  Tenant shall
pay base rent on the additional 13,144 square feet at the rate of $8.40 per
square foot for the remainder of the term of the Lease beginning the date of
occupancy.

 

5.                                       EFFECT
OF AMENDMENT NO. 2

 

Except as set
forth above, the Lease and Amendment to Lease shall remain in full force and
effect to the extent of its original terms.

 

IN WITNESS
WHEREOF, the parties hereof have caused this Amendment to be signed the day and
year first written above.

 

	
  “TENANT”

  	
  “LESSOR”

  
	
   

  	
   

  
	
  WINMARK
  CORPORATION

  	
  STAN
  KOCH & SONS TRUCKING, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark T. Hooley

  	
   

  	
  By:

  	
  /s/ Randy Koch

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice President

  	
   

  	
  Its:

  	
  PresidentEXHIBIT 10
(a)-1998 STOCK OPTION AND INCENTIVE COMPENSATION PLAN

 

 

FIRST FINANCIAL SERVICE CORPORATION

1998 STOCK OPTION AND INCENTIVE COMPENSATION PLAN

 

                First Financial
Service Corporation (the “Company”) hereby establishes a stock option and
incentive plan for the benefit of its employees and the employees of its
subsidiaries as set forth below.

 

 Section 1 —  PURPOSE

 

                The Company adopts
this compensation program for certain key employees to (a) increase the
profitability and growth of the Company; (b) provide competitive  compensation to employees while obtaining the
benefits of tax deferral, (c) attract and 
retain exceptional personnel and encourage excellence in the performance
of individual responsibilities; and (d) motivate key employees to contribute to
the Company’s success.

 

Section 2 —  DEFINITIONS

 

                For purposes of
the Plan, the following terms shall have the meanings below unless the context
clearly indicates otherwise:

 

                2.1           “Award”
means an Incentive Stock Option, a Nonqualified Stock Option, a Stock
Appreciation Right, a Restricted Stock Award, or a Performance Share Award
granted under the Plan.

 

                2.2           “Award
Agreement” means a written agreement between a Participant and the
Company covering the specific terms and conditions of an Award.

 

                2.3           “Board”
means the Board of Directors of the Company.

 

                2.4           “Change
of Control” of the Company means (i) an event or series of events
which have the effect of any “person” as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), other than any trustee or other fiduciary holding
securities of the Company under any employee benefit plan of the Company,
becoming the “beneficial owner” as defined in Rule 13d-3 under the
Exchange Act, directly or indi­rectly, of securities of the Company repre­senting
50% or more of the combined voting power of the Company’s then outstanding
stock;  (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute a majority thereof,
unless the election, or the nomina­tion for election by the stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period; (iii)  the shareholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another company
(other than a merger or consolidation that would result in the voting securities
of the Company outstanding immediately prior to such transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such transaction) or to sell or otherwise ­­­­­transfer all
or substantially all of the Company’s assets or to adopt a plan of
liquidation.  A Change of Control shall
also be deemed to occur if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change of Control,
(ii) any person (including the Company) publicly announces an intention to
take actions which upon consummation would constitute a Change of Con­trol, or
(iii) the Board adopts a resolu­tion to the effect that a Change of
Control for purposes of this Plan has occurred.

 

 

                2.5           “Code”
means the Internal Revenue Code of 1986, as it may be amended from time to
time.

 

 

2.6           “Committee” means the committee appointed by
the Board pursuant to Section 4.1 to administer the Plan.

 

2.7           “Company” shall mean First Financial Service
Corporation and its successors.

 

2.8           “Director” means a voting member of the
board of directors of the Company, excluding any person who serves solely in an
advisory capacity or as a director emeritus.

 

2.9           “Disability” means permanent disability
within the meaning of Section 22(e)(3) of the Code.

 

2.10         “Effective Date” shall have the meaning set
forth in Section 15.

 

2.11         “Employee” means a salaried employee of the
Company or a Subsidiary.

 

2.12         “Fair Market Value” means the closing market
price per share of Stock as reported on the date as of which Fair Market Value
is to be determined, or, if no trades were reported on that date, the closing
price on the most recent trading day immediately preceding such date for which
closing price information is available.

 

2.13         “Grant Date” means, with respect to an
Award, the date as of which the Award is granted as stated in the Award
Agreement.

 

2.14         “Incentive Stock Option” means an option to
pur­chase Stock granted under Section 6 of the Plan which is desig­nated by the
Committee as an Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.

 

2.15    “Independent
Director” means a Director who is not a current or former employee
or officer of the Company or a Subsidiary and who does not receive any
remuneration from the Company or any Subsidiary for service to the Company or a
Subsidiary in any capacity other than as a Director.

 

 

2.16         “Nonqualified Stock Option” means an option
to purchase Stock granted under Sections 6 or 11 of the Plan which is not
intended to be an Incentive Stock Option.

 

2.17         “Option” means an Incentive Stock Option or a
Nonqualified Stock Option.

 

2.18         “Option Period”
means the period from the Grant Date of an Option to the date the period for
exercise of the Option expires as stated in the Award Agreement.

 

2.19         “Participant” means an Employee who has been
granted an Award under the Plan.

 

2.20         “Performance Share”
means the grant of con­tingent shares of Stock under Section 10 of the Plan.

 

 

	
   

  	
   

  	
  2.21

  	
   

  	
  “Plan” means this First Financial Service
  Corporation 1998 Stock Option and Incentive .

  
	
  Compensation

  
	
   

  	
   

  	
  2.22

  	
   

  	
  “Restriction Period” means the period of
  time from ­the Grant Date of a Restricted Stock

  
	
  Award
  to the date when the restrictions placed on the Stock in the Award Agreement
  lapse.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.23

  	
   

  	
  “Restricted Stock Award” or “Restricted
  Stock” means a Restricted Stock Award granted 

  
	
  under
  Section 9 of the Plan.

  
	
   

  
	
   

  	
   

  	
  2.24

  	
   

  	
  “Retirement” means a Participant’s
  Termination of Employment with the Company or a 

  
	
  Subsidiary
  after attaining age 60 (or earlier with the Company’s or the Subsidiary’s
  consent).

  
	
   

  
	
   

  	
   

  	
  2.25

  	
   

  	
  “Stock” means the Company’s voting common
  stock of no par value per share, or such other 

  
	
  securities
  into which the Stock may be converted, by merger or otherwise.

  
	
   

  
	
   

  	
   

  	
  2.26

  	
   

  	
  “Stock Appreciation Right” or “SAR”
  means a Stock Appreciation Right granted under

  
	
  Section
  7 of the Plan.

  
	
   

  
	
   

  	
   

  	
  2.27

  	
   

  	
  “Subsidiary” means any corporation which
  at the time qualifies as a subsidiary of the 

  
	
  Company
  under the definition of “subsidiary corporation” in Section 424(f) of the
  Code.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.28

  	
   

  	
  “Termination of Employment” shall be
  deemed to have occurred at the close of business on

  
	
  the
  last day on which an Employee is carried as an active employee on the records
  of the Company or a Subsidiary.  The Committee shall deter­mine in
  accordance with Section 12.2 whether an authorized leave of absence, or other
  absence on military or government service, constitutes severance of the
  employment relationship between the Company or a Subsidiary and the Employee.

  
							

 

Section 3 — STOCK SUBJECT TO THE PLAN

 

                3.1           Authorized
Stock.  Subject to adjustment
as provided in Section 3.3, the aggregate number of shares of Stock that may be
issued pursuant to Awards under the Plan shall be equal to the greater of
166,000 shares or 4% of the Stock outstanding from time to time (the “Aggregate
Maximum”), and shall be increased automatically upon increase of the
outstanding shares of Stock, provided that the number of shares that may be
issued pursuant to Incentive Stock Option Awards shall not exceed 166,000
shares.  The Aggregate Maximum shall not
be decreased except pursuant to Section 3.3 or an amendment to this Plan.  To the extent that any shares of Stock
subject to an Award are not delivered because the Award is settled in cash,
such shares shall not be deemed to have been issued for purposes of determining
the Aggregate Maximum.  Stock delivered
under the Plan may consist, in whole or in part, of authorized and unissued
shares or shares acquired from shareholders upon such terms as the Board deems
appropriate for reserve in connection with exercise hereunder.

 

                3.2           Effect
of Expirations.  If any Award
granted under the Plan expires or terminates without exercise, the Stock no
longer subject to such Award shall be available to be re-awarded under the
Plan.

 

                3.3           Adjustments
in Authorized Shares.  In the
event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, split-up, share combina­tion, or other
change in the corporate structure of the Company affecting the number of shares
of Stock or the kind of shares or securities issuable upon exercise of an
Award, an appropriate and proportionate adjustment shall be made by the
Committee in the number and kind of shares which may be delivered under the
Plan, and in the number and kind of or price of shares subject to outstanding
Awards, so that no Award shall be diluted or increased; provided that the
number of shares subject to any Award shall always be a whole number.  Any adjust­ment of an Incentive Stock Option
under this Section shall be made in such a manner so as not to constitute a “modification”
within the meaning of Section 424(h) of the Code.  If the Company shall at any time merge,
consolidate with or into another corporation or association, or enter into a
statutory share exchange or any other similar transaction in which shares of
Stock are converted as a matter of law into securities and/or other property,
each Participant will thereafter receive, upon the exercise of an Award, the
securities or property to which a holder of the number of shares of Stock then
deliverable upon the exercise of such Award would have been entitled if such
Award had been exercised immediately prior to such merger, consolidation, or
share exchange and the Company shall take such steps in connection with such
merger, consolidation or share exchange as may be necessary to assure that the
provisions of this Plan shall thereafter be applicable, as nearly as is reason­ably
possible, in relation to any securities or property thereafter deliverable upon
the exercise of such Award.  Any
restrictions applicable under a Restricted Stock Award Agreement shall apply to
any

 

 

replacement shares received by a Participant under this Section 3.3 as
a result of a reorganization, merger, consolidation or similar transaction.

 

Section 4 —  ADMINISTRATION

 

                4.1           Committee
Governance.   This Plan shall
be adminis­tered by the Committee which shall consist of two or more
Independent Directors appointed by the Board. 
The number of Committee members shall be determined by the Board. The
Board shall add or remove members from the Committee as the Board sees fit, and
vacancies shall be filled by the Board. 
The Committee shall select one of its mem­bers as the chairperson of the
Committee and shall hold meetings at such times and places as it may determine.  The Committee may appoint a secretary and,
subject to the provisions of the Plan and to poli­cies determined by the Board,
may make such rules and regulations for the conduct of its business as it shall
deem advisable.  Writ­ten action of the
Committee may be taken by a majority of its mem­bers, and actions so taken
shall be fully effective as if taken by a vote of a majority of the members at
a meeting duly called and held.  A
majority of Committee members shall constitute a quorum for purposes of
meeting.  The act of a majority of the
members present at any meeting for which there is a quorum shall be a valid act
of the Committee.

 

                4.2           Committee
to Interpret Plan.  Subject to
the provi­sions of the Plan and the approval of the Board, the Committee shall
have the power to (i) construe and interpret the Plan; (ii) establish, amend or
waive rules and regulations for its administration; (iii) to determine and
accelerate the exercisability of any Award or the termination of any
Restriction Period; (iv) to correct inconsistencies in the Plan or in any Award
Agreement, or any other instrument relating to an Award; and (v) subject to the
provisions of Section 11, to amend the terms and conditions of any Award to the
extent such terms and conditions are within the discretion of the Committee as
provided in the Plan.  Notwithstanding
the foregoing, no action of the Committee may, without the consent of the
person or persons entitled to exercise any outstanding Award, adversely affect
the rights of such person or persons.

 

                4.3           Exculpation.  No member of the Board or the
Committee shall be liable for actions or determinations made in good faith with
respect to the Plan, or for Awards under it.

 

                4.4           Selection
of Participants.  The Board
shall have the exclusive authority to grant Awards from time to time to such
Employees as may be selected by the Board or recommended by the Committee.

 

                4.5           Decisions
Binding.   All determinations
and decisions made by the Board pursuant to the Plan, including factual determinations,
shall be final, conclusive and binding on all persons, including the Company,
its Subsidiaries, its shareholders, Participants and their estates and
assignees.

 

                4.6           Award
Agreements.  Each Award under
the Plan shall be evidenced by an Award Agreement, which shall be signed by the
Chairman or Secretary of the Committee and by the Participant and shall contain
such terms and conditions as may be recommended by the Committee and approved
by the Board, which need not be the same in all cases.  Any Award Agreement may be supplemented or
amended in writing from time to time as recommended by the Committee and
approved by the Board, provided that the terms of the Agreement as amended or
supplemented, as well as the terms of the original Award Agreement, are not
inconsistent with the provisions of the Plan. 
An Employee who receives an Award under the Plan shall not, with respect
to the Award, be deemed to have become a Participant, or to have any rights
with respect to the Award, unless and until the Award Agreement has been signed
by the Chairman or Secretary of the Committee and by the Employee and delivered
to the Committee, and the Employee has otherwise complied with the applicable
terms and conditions of the Award.  Any
Award may be conditioned upon the agreement by the Participant to such
confidentiality, non-competition, and non-solicitation covenants as the
Committee deems appropriate.

 

                4.7           Limitation
on Awards.   No part of any
Option or SAR Award may be exercised, no Performance Share shall be issued, and
no Restriction Period will lapse to the extent the exercise, issuance or lapse
would cause the Participant to have compensation from the Company and its
affiliated companies for any year in excess of one million dollars and which is
nondeductible by the Company and its affiliated companies pursuant to Code
Section 162(m).  Any portion of an Award
that is not exercisable, not issued or for which a Restriction Period does not
lapse because of this limitation shall continue to be exercisable or shall be
issued, or the Restriction Period shall lapse, in any subsequent year in which
the exercise, issuance or lapse would not cause the loss of the Company’s or
its affiliated companies’ compensation tax deduction, provided such exercise or
issuance occurs before the Award expires, and otherwise complies with the terms
and conditions of the Plan and the Award Agreement

 

 

Section 5  —  AWARDS UNDER THE PLAN

 

                Subject to the
limitations of the Plan, the Board may in its sole and absolute discretion
grant Awards in such numbers, upon such terms and at such times as the Board
shall determine, based on the recommendation of the Committee.  Employees who are expected to contribute
substantially to the growth and profit­ability of the Company or a Subsidiary
are eligible for selection by the Board under Section 4.4 to receive Awards.

 

Section 6 — STOCK OPTIONS

 

                6.1           Grant.  Both Incentive Stock Options and
Nonqualified Stock Options may be granted under the Plan.  If an Option is designated as an Incentive
Stock Option but does not qualify as such under Section 422 of the Code, the
Option (or portion thereof) shall be treated as a Nonqualified Stock Option,
and governed by Section 83 of the Code. All Options granted under the Plan
shall be evidenced by an Award Agreement in such form as the Committee may from
time to time approve.  All Options are
subject to the terms and conditions of this Section 6 and such additional terms
and conditions contained in the Award Agreement, which need not be the same in
each case, not inconsistent with the provisions of the Plan, as the Committee
finds desirable and the Board approves pursuant to Section 5.

 

                6.2           Exercise
Price.   The exercise price
per share of Stock covered by an Option shall be determined by the Committee,
provided that the exercise price for an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of the Stock on the Grant Date, unless
the Incentive Stock Option granted to a person who on the Grant Date owns
(within the meaning of Sec­tion 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 Subsidiary, in which case the exercise price shall be at least 110% of the
Fair Market Value of the Stock on the Grant Date.

 

                6.3           Option
Period.  The Option
Period  shall be determined by the
Committee, and unless otherwise specifically provided in the Award Agreement,
no Option shall be exercisable later than ten years from the Grant Date.   No Incentive Stock Option shall be exercisable
later than ten years from the Grant Date, provided that in the case of an
Employee who on the Grant Date owns or is deemed to own (within the meaning of
Section 425(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary, the Incentive Stock
Option shall not be exercisable later than five years from the Grant Date.   Options may expire prior to the end of the
Option Period due to the Participant’s Termination of Employment or Termination
of Service as provided in Section 8, or in accordance with any provision of the
Award Agreement.  No Option may be
exercised at any time unless the Option is valid and outstanding.

 

                6.4           Limitation
on Amount of Incentive Stock Options.   The
aggregate Fair Market Value (determined as of each Option Grant Date) of Stock
with respect to which a Participant’s Incentive Stock Options are exercisable
for the first time during any calendar year (under this and all other stock
option plans of the Company and any Subsidiary) shall not exceed $100,000.

 

                6.5           Nontransferability
of Options.  Except as
otherwise provided in this Section 6.5, no Option shall be transferable by a
Participant otherwise than by will or the laws of descent and distribution, and
an Option shall be exer­cisable, during the Participant’s lifetime, only by the
Participant (or, in the event of the Participant’s legal incapacity or
incompetency, the Participant’s guardian or legal representative).  The Committee may in an Award Agreement allow
a Participant, subject to any restrictions under Section 16(b) of the Exchange
Act, to transfer all or part of a Nonqualified Stock Option to (i) the
Participant’s spouse or lineal descendants (“Immediate Family Members”), (ii)
trusts for the exclusive benefit of the Participant and/or his Immediate Family
Members, or (iii) a partnership or limited liability company in which the
Participant and/or his Immediate Family Members are the only partners or
members, as applicable.  Such transfer
may be made by a Participant only if there is no consideration for the
transfer, and subsequent transfers of any Option shall be prohibited other than
in accordance with this Section 6.5 and by will or the laws of descent and
distribution.  Following a transfer of an
Option, the Option shall continue to be subject to the same terms and
conditions as were applicable immediately before the transfer, and Termination
of Employment or Service, Retirement, Disability, satisfaction of service
requirements or performance objectives, and other conditions to exercise of an
Option shall be applied with respect to the original Participant.  However, for purposes of exercising the
Option, the term Participant shall refer to the transferee.  In addition, for purposes of the death benefit
provisions of Section 8, the Participant’s Representative shall be deemed to
refer to

 

 

the transferee, the personal representative of the transferee’s estate,
or after final settlement of the transferee’s estate, the successor or
successors entitled thereto by law.

 

                6.6           Exercise.   An Option may be exercised, so
long as it is valid and outstanding, from time to time in part or as a whole,
subject to any limitations with respect to the number of shares for which the
Option may be exercised at a particular time and to such other conditions (e.g.,
exercise could be condi­tioned on performance) as the Committee in its
discretion may specify upon granting the Option or as otherwise provided in
this Section 6.

 

                6.7           Method
of Exercise.  To exercise an Option,
the Participant or the other person(s) entitled to exercise the Option shall
deliver to the Committee (i) a written notice of exercise in such form as the
Committee may prescribe, specifying the number of full shares to be purchased;
(ii) payment in full of the exercise price in accordance with Section 6.8; and
(iii) in the case of Nonqualified Stock Options, any required withholding taxes
as provided in Section 13.  No shares of
Stock shall be issued unless the Participant has fully complied with the
provisions of this Section 6.7.

 

                6.8           Payment
of Exercise Price.    To the
extent provided in the Award Agreement for an Option and subject to the rules
of Section 16 of the Exchange Act and any exchange on which the Stock is traded
at any relevant time, payment of the exercise price may be made (i) in cash;
(ii) in shares of Stock (based on the Fair Market Value of the Stock on the
date the Option is exercised) acceptable to the Committee and owned by the
Participant (or jointly by the Participant and his spouse) for at least six
months evidenced by negotiable certificates or by a written attestation of
ownership and consent to issuance, in satisfaction of the Option or portion
thereof being exercised, of only the net shares of Stock (those equal in value
to the difference between the exercise price and the then Fair Market Value);
(iii) by a written election to have the Company retain that number of shares of
Stock subject to the Option having an aggregate Fair Market Value equal to the
aggregate exercise price of the Option, provided that for Incentive Stock
Options, this right must be granted by the Committee at the time the Option is
granted and may not be added in any modification of the Award Agreement; or
(iv) by any combination thereof.  If
permitted in the Award Agreement, Restricted Stock (valued as if it were not
subject to restrictions on transfer or possibilities of forfeiture) issued to
the Participant may be tendered as payment of the exercise price of an Option.  If Restricted Stock is tendered as the
exercise price of an Option, a number of shares of Stock issued on exercise of
such Option, equal to the number of shares of Restricted Stock tendered as
consideration thereof, shall be subject to the same restrictions as the
Restricted Stock so tendered and shall be held by the secretary of the Company
pursuant to Section 9.1.

 

Section 7 —  STOCK APPRECIATION RIGHTS

 

                7.1           Grant.  All Stock Appreciation Rights (“SAR’s”)
granted under the Plan shall be evidenced by an Award Agreement in such form as
the Committee may from time to time approve. 
All SARs are subject to the terms and conditions of this Section 7 and
such additional terms and conditions contained in the Award Agreement, which
need not be the same in each case, not inconsistent with the Plan, as the
Committee finds desirable and the Board shall approve pursuant to Section 5.

 

                7.2           Exercise
Price.  The exercise price per
share of Stock subject to a SAR shall be determined by the Committee at the
time of grant and specified in the Award Agreement.

 

                7.3           Exercise
Period.   The exercise period
shall be determined by the Committee, and unless otherwise specified in the
Award Agreement, no SAR shall be exercisable later than ten years from the
Grant Date.  No SAR may be exercised at
any time unless such SAR is valid and outstanding as provided in this Section
7.

 

                7.4           Nontransferability.
 No SAR shall  be transferable other than by will or by the
laws of descent and distribution, and SAR’s shall be exer­cisable, during the
Participant’s lifetime, only by the Participant (or, in the event of the
Participant’s legal incapacity or incompetency, the Participant’s guardian or
legal representative).

 

                7.5           Exercise.  An SAR may be exercised, so long
as it, is valid and outstanding, from time to time in part or as a whole,
subject to any limitations with respect to the number of shares for which the
SAR may be exercised at a particular time and to such other conditions (e.g.,
exercise could be condi­tioned on performance) as the Committee in its discretion
may specify upon granting the SAR or as otherwise provided in this Section 7.

 

                7.6           Method
of Exercise.  To exercise an
SAR, the Participant or the other person(s) entitled to exercise the SAR shall
give written notice of exercise to the Committee, specifying the number of full
shares with respect to which the

 

 

SAR is being exercised, and, if the Award Agreement provides that the
Participant may elect the method of payment, whether the SAR is to be paid in
cash or Stock.

 

                7.7             Payment
Upon Exercise.  Upon the
exercise of an SAR, a Participant shall be entitled to receive an amount, in
cash or whole shares of Stock (or a com­bination thereof) as provided in the
Award Agreement, equal to the amount by which the then Fair Market Value of one
share of Stock exceeds the exercise price per share specified in the Award
Agreement, multiplied by the number of shares with respect to which the SAR is
exercised. The number of shares of Stock to be delivered to the Participant
upon exercise of an SAR shall be based on the Fair Market Value of the Stock on
the date of exercise.  Payment of an SAR
shall be made in cash, shares of Stock, or a combination of cash and shares of
Stock, as provided in the Award Agreement, which may provide the Participant a
choice regarding the form of payment.  A
certificate or certificates for shares of Stock acquired upon exercise of an
SAR shall be issued in the name of the Participant and distributed to the
Participant as soon as practicable following exercise, subject to Section 12.3.  No fractional shares of Stock will be
issuable upon exercise of an SAR and, unless otherwise provided in the Award
Agreement, the Participant will receive cash in lieu of fractional shares.

 

Section 8 — LIMITATIONS ON EXERCISE OF OPTIONS AND
SARs

AFTER TERMINATION OF EMPLOYMENT OR SERVICE

 

                8.1           Exercise
After Termination.  After a
Participant’s Termination of Employment, an Option or SAR may be exercised,
subject to adjustment as provided in Section 3.3, only to the extent that the
Option or SAR was exercisable immediately before the Termination of Employment,
but in no event after the expiration date of the Option or SAR as specified in
the Award Agreement. Except to the extent that shorter or longer periods are
provided in the Award Agreement, a Participant’s right to exercise an Option or
SAR upon Termi­nation of Employment shall terminate:

 

                                                (i)            At the expiration of three months
(Incen­tive Stock Options) or one year (Nonqualified Stock Options and SARs)
after the Participant’s Retirement; provided, however, if an Incentive Stock
Option is not exercised after three months, it will remain exercisable as if it
were a Nonqualified Stock Option and will be a Nonqualified Stock Option when
exercised; or

 

                                                (ii)           At the expiration of one year in the
event of Disability of the Participant; or

 

                                                (iii)
         At the expiration of one year
after the Participant’s death if the Participant’s Termination of Employment
occurs by reason of death; any Option or SAR exercised under this subparagraph
(iii) may be exercised by the legal representative of the estate of the
Participant or by the person or persons who acquire the right to exercise such
Option or SAR by bequest or inheritance; or

 

                                                (iv)          No later than three months after the
Participant’s Termination of Employment for any reason other than those
described in (i) through (iii) above or termination for “Cause” as described in
Section 8.2.

 

                8.2           Termination
for Cause.  In the event the
Committee determines that an Employee’s employment has been terminated for
Cause, the Employee shall forfeit any and all unexercised Option and Stock
Appreciation Rights Awards immediately upon the Termination of Employment.  For purposes of this Plan, “Cause” shall mean
the Employee’s (i) willful failure to substantially perform such Employee’s
reasonably assigned duties, (ii) repeated gross negligence in performing
such Employee’s duties, (iii) illegal conduct in performing such Employee’s
duties, (iv) willful actions contrary to the Company’s interest, (v) repeated
refusal to comply with the reasonable and lawful instructions of management of
the Company or a Subsidiary, or (vi) violation of the obligations imposed on
the Employee under any confidentiality or solicitation covenants to which the
Employee is bound under the terms of the Stock Option Agreement or otherwise.

 

Section 9 — RESTRICTED STOCK AWARDS

 

                9.1           Grant.  All Restricted Stock Awards
granted under the Plan shall be evidenced by an Award Agreement in such form as
the Committee may from time to time approve. All Restricted Stock Awards are
subject to the terms and conditions in this Section 9, and such additional
terms and conditions contained in the Award Agreement, which need not be the
same in each case, not inconsistent with the provisions of the Plan, as the
Committee finds desirable and the Board approves pursuant to Section 5.   The Company shall issue, in the name of each
Participant who is granted a Restricted Stock Award, a certificate for the
shares of Stock granted in the Award (subject to Section 13.3), as soon as
practicable after the

 

 

Grant Date.  The Secretary of the
Company shall hold such certificates for the Participant’s benefit until the
Restriction Period lapses or the Restricted Stock is forfeited to the Company
in accordance with the Award Agreement.

 

                9.2           Restriction
Period.  The Restriction
Period shall be determined by the Committee, and shall commence on the Grant
Date and expire at the time spec­ified in the Award Agreement.  The Committee may provide in an Award
Agreement that a Restriction Period that has not otherwise expired will expire
immediately upon the Retirement, death or Disability of the Participant.   Unless otherwise provided in the Award
Agreement, in the event of a Participant’s Termination of Employment during the
Restriction Period for any reason, the Par­ticipant’s rights to the Stock
subject to the Restricted Stock Award shall be forfeited and all such Stock
shall immediately be surrendered
to the Company.

 

                9.3           Rights
of Participant.  During the
Restriction Period, the Participant may not sell, transfer, pledge, assign or
otherwise dispose of shares of Restricted Stock.  Any attempt by a Participant to sell,
transfer, pledge, assign or otherwise dispose of Restricted Stock shall cause
immediate forfeiture of the Award. 
Except as provided in the previous sentence and as otherwise provided in
the Award Agreement, a Participant shall have, with respect to Restricted
Stock, all of the rights of a stockholder of the Company, including the right
to vote the shares and the right to receive all dividends and other
distributions with respect to such shares, provided that the Participant has
become the holder of record of the Stock. 
The Committee may provide in an Award Agreement that dividends paid on
Restricted Stock must be reinvested in shares of Stock, which may or may not be
subject to the same Restriction Period applicable to the original Restricted
Stock Award.  In the event of any
adjustment as provided in Section 3.3 or if any securities are received as a
dividend on Restricted Stock, new or additional shares or securities shall be
subject to the same terms and conditions as the original Restricted Stock.

 

                9.4           Expiration
of Restriction Period.  At the
expiration of the Restriction Period, the restrictions contained in Section 9.3
and in the Award Agreement shall, except as otherwise specifically provided in
the Award Agreement, expire, and the Company shall, subject to the provi­sions
of Section 12.3 and the Award Agreement, deliver to the Participant a
certificate evidencing the Participant’s ownership of the Stock free of the
restrictions.

 

                9.5           Nontransferability.   No Restricted Stock Award shall
be transferable other than by will or the laws of descent and distribution
until any restrictions applicable to such Award have lapsed and a certificate
evidencing the Participant’s ownership of the stock free of restrictions has
been issued.

 

Section 10 — PERFORMANCE SHARE AWARDS

 

10.1                         Grant.   All
Performance Share Awards granted under the Plan shall be evidenced by an Award
Agreement in such form as the Committee may from time to time approve.  All Performance Share Awards are subject to
the terms and conditions of this
Section 10 and such additional terms and conditions contained in the Award
Agreement, which terms and conditions need not be the same in each case, not
inconsistent with the Plan, as the Committee finds desirable and the Board
approves pursuant to Section 5.

 

                10.2         Performance
Criteria.  The performance
criteria for each Performance Share Award shall be determined by the Committee,
and shall consist of service requirements and any measures of performance of
the Com­pany or any Subsidiary or such other criteria as the Committee
specifies.   At the times specified in
the Award Agreement, the Committee shall evaluate actual performance during
such performance period com­pared to the performance criteria established for
the Award, and shall determine the extent to which a cash or stock payment is
to be made pursuant to the Performance Share Award.  The Committee may provide in an Award
Agreement that one or more performance criteria under an Award will be deemed
to have been met upon the Retirement, death or Disability of the
Participant.   Unless otherwise provided
in the Award Agreement, in the event of a Participant’s Termination of Employ­ment
or Termination of Service for any reason before performance criteria have been
met, the Par­ticipant’s rights to payment of a Performance Share Award shall be
forfeited.

 

                10.3         Payment.  Performance Share Awards will be
paid only after the Committee determines, in its sole discretion, that the
performance criteria established under Section 10.2  have been achieved, subject to such other
terms and conditions as may be included in the Award Agreement and to the
Committee’s right to waive any performance criteria in its discretion.  Payment shall be made, as provided in the
Award Agreement (which may provide the Participant a choice regarding the form
of payment), in cash or whole shares of Stock (or a combination thereof) having
a Fair Market Value equal to the number of shares of Stock represented by the
Performance Share Award.  A certificate
or certificates for shares of Stock to be issued pursuant to a Performance
Share Award shall be issued in the name of the Participant and distributed to

 

 

the Participant as soon as practicable following the Committee’s
determination that performance criteria have been met, subject to Section
12.3.  No fractional shares of Stock will
be issued in connection with a Performance Share Award and, unless otherwise
provided in the Award Agreement, the Participant will receive cash in lieu of
fractional shares.

 

                10.4         Rights
of Participant.  A Participant
shall not, with respect to a Performance Share Award or any Stock that may in
the future be issued under it, have any rights as a stockholder of the Company,
such as the right to vote the shares or the right to receive dividends and
other distributions, at any time before the Participant has become the holder
of record of the Stock.

 

                10.5         Nontransferability.  No Performance Share Award shall  be transferable other than by will or by the
laws of descent and distribution.

 

Section 11 — AMENDMENTS AND TERMINATION

 

                11.1         Amendments
and Termination. The Committee or the Board may terminate, suspend,
amend or alter the Plan, but no action of the Committee or the Board may:

 

                                (a)           Impair or adversely affect the rights
of a Participant under an outstanding Award thereto­fore granted, without the
Participant’s consent, other than as provided in Section 12.3; or,

 

                                (b)           Without the approval of the
stockholders:

 

(i)            Increase the total
amount of Stock which may be delivered under the Plan pursuant to Incentive
Stock Options, except as is provided in Section 3.3 of the Plan;

(ii)           Decrease the
exercise price of any Incentive Stock Option to less than the exercise price on
the date the Option was granted;

 

(iii)          Change the class of
Employees eligible to receive Incentive Stock Option Awards under the Plan; or

 

(iv)                              Extend the
period during which Incentive Stock Option Awards may be granted, as specified
in Section 15.

 

                11.2         Conditions
on Awards.  Subject to the
approval of the Board, in granting an Award, the Com­mittee may establish any
conditions that it determines are con­sistent with the purposes and provisions
of the Plan, including, without limitation, a condition that the granting of an
Award is subject to the surrender for cancellation of any or all outstand­ing
Awards held by the Participant. Any new Award made under this Section may contain such terms and conditions as the
Commit­tee may determine, including an exercise price that is lower than that
of any surrendered Award.

 

                11.3         Selective
Amendments.  Any amendment or
alteration of the Plan may be limited to, or may exclude from its effect, par­ticular
classes of Participants.

 

Section 12 —  GENERAL PROVISIONS

 

                12.1         Unfunded
Status of Plan. The Plan is intended to constitute an “unfunded”
plan for incentive compensation, and the Plan is not intended to constitute a
plan subject to the provi­sions of the Employee Retirement Income Security Act
of 1974, as amended, and shall not extend, with respect to any payments not yet
made to a Participant, any rights that are greater than those of a general
creditor of the Company.

 

                12.2         Transfers,
Leaves of Absence and Other Changes in Employment Status.  For purposes of the Plan (i) a
transfer of an Employee from the Company to a Subsidiary or vice versa, or from
one Subsidiary to another, or (ii) a leave of absence not in excess of 90 days
duly authorized in writing by the Company or a Subsidiary for mili­tary
service, sickness or any other purpose approved by the Company or a Subsidiary,
shall not be Termination of Employment. The Committee, in its sole discretion
subject to the terms of the Award Agreement, shall determine the disposition of
all Awards made under the Plan in all cases involving any substantial change in
employment status other than an event described in this Section 12.2.

 

 

                12.3         Restrictions
on Distribution of Stock.  The
Committee may require Participants receiving Stock pursuant to any Award under
the Plan to represent to and agree with the Com­pany in writing that the
Participant is acquiring the Stock for investment without a view to
distribution thereof. No Stock shall be issued or transferred pursuant to an
Award unless the Committee determines, in its sole discretion, that such
issuance or transfer complies with all relevant provisions of law, including
but not limited to, the (i) limitations, if any, imposed in the state of
issuance or transfer, (ii) restrictions, if any, imposed by the Securities Act
of 1933, as amended, the Exchange Act, and the rules and regulations promulgated thereunder, and
(iii) requirements of any stock exchange upon which the Stock may then be
listed. The certificates for Stock issued pursuant to an Award may include any
legend that the Committee deems appropriate to reflect any restrictions on
transfer.  The Company shall not be
obligated to register any securities covered hereby or to take any affirmative
action in order to cause the issuance of Stock pursuant to an Award to comply
with any law or regulation of any governmental authority.

 

                12.4         Assignment
Prohibited.  Subject to the
provisions of the Plan and the Award Agreement, no Award shall be assigned,
transferred, pledged or otherwise encumbered by the Participant otherwise than
by will or by the laws of descent and distribu­tion, and an Award shall be
exercisable, during the Partici­pant’s lifetime, only by the Participant.  Awards shall not be pledged or hypothecated
in any way, and shall not be subject to any execution, attachment, or similar
process.  Any attempted transfer,
assignment, pledge, hypothecation or other disposition of an Award contrary to
the provisions of the Plan, or the levy of any process upon an Award, shall be
null, void and without effect.

 

                12.5         Other
Compensation Plans.  Nothing
contained in the Plan shall prevent the Company from adopting other
compensation arrangements, subject to stockholder approval if such approval is
required.

 

12.6       Limitation of Authority.  No person shall at any time have
any right to receive an Award hereunder and no per­son other than a duly
authorized member of the Committee shall have authority to enter into an
agreement on behalf of the Company for the granting of an Award or to make any represen­tation or warranty with respect
thereto.  Participants shall have no
rights in respect to any Award
except as set forth in the Plan and the applicable Award Agreement.

 

                12.7         No
Right to Employment.  Neither
the action of the Company in establishing the Plan, nor any action taken by it
or by the Board or the Committee under the Plan or any Award Agreement, nor any
provision of the Plan, shall be con­strued as giving to any person the right to
be retained in the employ or service of the Company or any other entity as an
employee, director or independent contractor or to interfere in any way with
the right of the Company or any other entity to terminate any person’s service
or employment at any time.

 

                12.8         Change
of Control.  In the event of a
Change of Control, (i) Awards of Options and SARs under the Plan shall become
exercisable in full whether or not otherwise exercisable at such time, and any
such Option or SAR shall remain exercisable in full thereafter until it expires
pursuant to its terms; and (ii) the Restriction Period for Restricted Stock
Awards shall lapse.

 

                12.9         Pooling.  Notwithstanding anything in the
Plan to the contrary, if any right under or feature of the Plan would cause to
be ineligible for the pooling of interests accounting method a transaction that
would, but for the right or feature hereunder, be eligible for such accounting
method, the Board, upon  recommendation
of the Committee, may modify or adjust the right or feature so that the
transaction will be eligible for pooling of interest accounting.  Such modification or adjustment may include
payment of cash or issuance to a Participant of Stock having a Fair Market
Value equal to the cash value of such right or feature.

 

                12.10       Not a
Shareholder.  The person or
persons entitled to exercise, or who have exercised, an Option or SAR shall not
be entitled to any rights as a shareholder of the Company with respect to any
Stock to be issued upon such exercise 
until such persons or persons shall have become the holder of record of
such Stock.

 

                12.11       Severability.  If any provision of this Plan is
found to be illegal or unenforceable by any court of law in any jurisdiction,
the remaining provisions hereof and thereof shall be severable and enforceable
in accordance with their terms, and all provisions shall remain enforceable in
any other jurisdiction.

 

                12.12       Headings.  The headings in this Plan have
been inserted solely for convenience of reference and shall not be considered
in the interpretation or construction of this Plan.

 

 

                12.13       Governing
Law.  The validity,
interpretation, construction and administration of this Plan shall be governed
by the laws of the Company’s state of incorporation, as it may change from time
to time.

 

Section 13 —  TAXES

 

                13.1         Tax
Withholding.  All Participants
shall make arrangements sat­isfactory to the Committee to pay to the Company or
a Subsidiary, any federal, state or local taxes required to be withheld with
respect to an Award issued under the Plan at the time such taxes are required
to be withheld.  If a Participant fails
to make such tax payments, the Company and its Sub­sidiary shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant, including a payment related to any
Award under the Plan.

 

                13.2         Share
Withholding.  If permitted by
the Committee in an Award Agreement, a tax withholding obligation may be
satisfied by the Company retaining shares of Stock with a fair market value
equal to the amount required to be withheld. 
Any Stock so withheld will not be counted against the number of shares
available for issuance under Section 3.1 of the Plan.

 

Section 14 —  EFFECTIVE DATE OF PLAN

 

                The Plan shall be
effective on the date (the “Effective Date”) when the Board adopts the Plan,
subject to approval of the Plan by
a majority of the total votes eligible to be cast at a meeting of shareholders
following by Effective Date, which vote shall be taken within 12 months of the
Effective Date.  Awards may be granted
before obtaining shareholder approval of the Plan, but any such Awards shall be contingent upon such shareholder
approval being obtained and may not be exercised before such approval.

 

 Section 15 —  TERM OF PLAN

 

                The
Plan has no termination date, provided that no Incentive Stock Option may be
issued on or after the tenth anniversary of the Effective Date as defined in
Section 14.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}]]