Document:

exv10w17

 

EXHIBIT 10.17

FOURTH AMENDMENT TO LEASE

	 	 	 
	*STATE OF TEXAS	 	 
	 	 	
*KNOW ALL MEN BY THESE PRESENTS
	*COUNTY OF DALLAS	 	 

     THIS FOURTH AMENDMENT TO LEASE AGREEMENT is made and entered into by and
between MARKISON VISTA JOINT VENTURE (“LANDLORD”) and AETRIUM — WEB TECHNOLOGY,
LP (“TENANT”).

WITNESSETH

     WHEREAS, on or about December 19, 1987, Crow-Markison 22-27, Limited
Partnership and Web Technology, Inc. entered into that certain Lease Agreement
(the “Lease”) pertaining to approximately 13,430 square feet of space (the
“Leased Premises”) the Leased Premises being located at 10501 Markison Road,
Dallas, Texas; and

     WHEREAS, on or about April 22, 1993 Crow-Markison 22-27 Limited
Partnership and Web Technology, Inc. entered into that First Amendment to Lease
Agreement whereby among other things, the Lease Term was extended and the
Leased Premises were increased to 27,830 square feet of space; and

     WHEREAS, all rights, title, and interest in the property and said Lease
have been assigned to Markison Vista Joint Venture; and

     WHEREAS, on or about December 5, 1996 Landlord and Web Technology, Inc.
entered into that Second Amendment to lease agreement whereby among other
things, the Lease Term was extended; and

     WHEREAS, on or about April 1, 1998 Web Technology, Inc. assigned the Lease
to Aetrium – Web Technology, LP; and

     WHEREAS, on or about December 27, 1999 Landlord and Tenant entered into
that Third Amendment to lease agreement whereby among other things, the Lease
Term was extended; and

     WHEREAS, the parties hereto desire to amend the Lease upon the terms and
conditions set forth below:

     NOW THEREFORE, For Ten and no/l00 dollars ($10.00) in hand paid to each
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree to amend the Lease as follows:

	1)	 	The Lease term shall be extended so that the expiration date of the Lease
will be April 30, 2006.
	 
	2)	 	The Base Rent as described in Paragraph 2C(1) shall be as follows:-

	 	 	 	 	 	 	 
	 	 	
a)
	 	May 1, 2003 – April 30, 2004
	 	$11,017.00 per month
	 	 	 	 	 	 	 
	 	 	
b)
	 	May 1, 2004 – April 30, 2005
	 	$11,596.00 per month

 

 

	 	 	 	 	 	 	 
	 	 	
c)
	 	May 1, 2006 – April 30, 2006
	 	$12,176.00 per month

	3)	 	Option to Extend Term: Provided Tenant at the end of the primary term of
this lease not be in default of any term, condition or covenant contained
in this lease, Tenant (but not any assignee or subtenant) shall have the
right and option to renew this lease, by written notice delivered to
Landlord no later than 180 days prior to the expiration of the primary
term, for the additional term of two (2) years, under the same terms,
conditions, and covenants contained herein, except:

	 	i)	 	Tenant shall have no further renewal options unless granted
by Landlord in writing: and
	 
	 	ii)	 	The Base Rent as described in Paragraph 2C(1) for the renewal
term shall be $12,176.00 per month.

	4)	 	Landlord will provide Tenant with an allowance of up to $27,830.00 for
Tenant Improvements to be installed in the Leased Premises. All Tenant
Improvements are subject to the prior written consent of Landlord which
consent shall not be unreasonably withheld. Unless Landlord notifies
Tenant at the time the Tenant Improvements are submitted to Landlord that
they are to be removed at the termination of the Lease and restored to the
existing condition, then Tenant shall have no obligation to remove the
Tenant Improvements at the termination of the Lease. Upon the receipt of a
notarized Affidavit stating that payment has been made for all work and
materials and which includes (1) true and correct copies of releases from
all contractors and suppliers of work and materials and (2) other
construction costs, Landlord will pay to Tenant such amount within thirty
(30) days.
	 
	5)	 	Landlord hereby agrees to pay a real estate fee in the amount of
$18,786.06 to The Staubach Company, payable upon Landlord’s return
delivery to Tenant of fully executed originals of this Fourth Amendment to
Lease. In the event Tenant exercises its Option to Extend Term, Landlord
hereby agrees to pay a real estate fee in the amount of $13,150.08 to The
Staubach Company, payable upon Tenant’s notice to extend the term.
	 
	6)	 	Except as modified herein, the Lease remains in full force and effect.
	 
	 	 	Executed this 27th day of January, 2003.

	 	 	 	 	 
	 	MARKISON VISTA JOINT VENTURE	 
	 	 	 	 	 
	 	
BY:	 	 	 
	 	 	 	
	 
	 	 	 	Roy H. Greenberg, Board Member	 
	 	 	 	 	 
	 	AETRIUM-WEB TECHNOLOGY, LP	 
	 	
BY:
	 	AETRIUM-WEB TECHNOLOGY, INC.	 
	 	
ITS:
	 	GENERAL PARTNER	 
	 	 	 	 	 
	 	
BY:	 	 	 
	 	 	 	
	 
	 	 	 	KEITH E. WILLIAMS	 
	 	
ITS:
	 	VICE PRESIDENTexv10w18

 

EXHIBIT 10.18

AETRIUM INCORPORATED

2003 STOCK INCENTIVE PLAN

1.     Purpose of Plan.

     The purpose of the Aetrium Incorporated Stock Incentive Plan (the “Plan”)
is to advance the interests of Aetrium Incorporated (the “Company”) and its
shareholders by enabling the Company and its Subsidiaries to attract and retain
persons of ability to perform services for the Company and its Subsidiaries by
providing an incentive to such individuals through equity participation in the
Company and by rewarding such individuals who contribute to the achievement by
the Company of its economic objectives.

2.     Definitions.

     The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:

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

     2.2 “Broker Exercise Notice” means a written notice pursuant to which a
Participant, upon exercise of an Option, irrevocably instructs a broker or
dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.

     2.3 “Change in Control” means an event described in Section 13.1
of the Plan.

     2.4 “Code” means the Internal Revenue Code of 1986, as amended.

     2.5 “Committee” means the group of individuals administering the
Plan, as provided in Section 3 of the Plan.

     2.6 “Common Stock” means the common stock of the Company, $.001
par value, or the number and kind of shares of stock or other
securities into which such common stock may be changed in accordance
with Section 4.3 of the Plan.

     2.7 “Disability” means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the meaning of Section
22(e)(3) of the Code.

     2.8 “Eligible Recipients” means all employees of the Company or any
Subsidiary, any non-employee directors, and individual consultants and
independent contractors of the Company or any Subsidiary, other than
consultants or independent contractors providing financial services.

 

 

     2.9 “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

     2.10 “Fair Market Value” means, with respect to the Common Stock, as of
any date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote) (a) the mean between
the reported high and low sale prices of the Common Stock if the Common Stock
is listed, admitted to unlisted trading privileges or reported on any foreign
or national securities exchange or on the Nasdaq National Market or SmallCap
Market or an equivalent foreign market on which sale prices are reported; (b)
if the Common Stock is not so listed, admitted to unlisted trading privileges
or reported, the closing bid price as reported by the OTC Bulletin Board or the
National Quotation Bureau, Inc. or other comparable service; or (c) if the
Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.

     2.11 “Incentive Award” means an Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit or Stock Bonus granted to an Eligible
Recipient pursuant to the Plan.

     2.12 “Incentive Stock Option” means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an “incentive stock option” within the meaning of Section 422 of
the Code.

     2.13 “Non-Statutory Stock Option” means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that does
not qualify as an Incentive Stock Option.

     2.14 “Option” means an Incentive Stock Option or a Non-Statutory
Stock Option.

     2.15 “Participant” means an Eligible Recipient who receives one or
more Incentive Awards under the Plan.

     2.16 “Performance Unit” means a right granted to an Eligible Recipient
pursuant to Section 9 of the Plan to receive a payment from the Company, in the
form of stock, cash or a combination of both, upon the achievement of
established employment, service, performance or other goals.

     2.17 “Previously Acquired Shares” means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.

     2.18 “Restricted Stock Award” means an award of Common Stock granted to an
Eligible Recipient pursuant to Section 8 of the Plan that is subject to the
restrictions on transferability and the risk of forfeiture imposed by the
provisions of such Section 8.

     2.19 “Retirement” means termination of employment or service pursuant to
and in accordance with the regular (or, if approved by the Board for purposes
of the Plan, early) retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the Participant is
not covered by any such plan or practice, the Participant will be deemed to be
covered by the Company’s plan or practice for purposes of this determination.

     2.20 “Securities Act” means the Securities Act of 1933, as
amended.

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     2.21 “Stock Appreciation Right” means a right granted to an Eligible
Recipient pursuant to Section 7 of the Plan to receive a payment from the
Company, in the form of stock, cash or a combination of both, equal to the
difference between the Fair Market Value of one or more shares of Common Stock
and the exercise price of such shares under the terms of such Stock
Appreciation Right.

     2.22 “Stock Bonus” means an award of Common Stock granted to an Eligible
Recipient pursuant to Section 10 of the Plan.

     2.23 “Subsidiary” means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.

     2.24 “Tax Date” means the date any withholding tax obligation arises under
the Code or other applicable tax statute for a Participant with respect to an
Incentive Award.

3.     Plan Administration.

     3.1 The Committee. The Plan will be administered by the Board or by a
committee of the Board. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, any committee
administering the Plan will consist solely of two or more members of the Board
who are “non-employee directors” within the meaning of Rule 16b-3 under the
Exchange Act and, if the Board so determines in its sole discretion, who are
“outside directors” within the meaning of Section 162(m) of the Code. Such a
committee, if established, will act by majority approval of the members (but
may also take action with the written consent of a majority of the members of
such committee), and a majority of the members of such a committee will
constitute a quorum. As used in the Plan, “Committee” will refer to the Board
or to such a committee, if established; provided, however, that with respect to
the grant of any Incentive Award to a Participant who is then a Committee
Member, and to any action that may be taken hereunder by the Committee
regarding any such Incentive Award for so long as such Participant is a
Committee Member, such action may be taken only by the Board. To the extent
consistent with corporate law, the Committee may delegate to any officers of
the Company the duties, power and authority of the Committee under the Plan
pursuant to such conditions or limitations as the Committee may establish;
provided, however, that only the Committee may exercise such duties, power and
authority with respect to Eligible Recipients who are subject to Section 16 of
the Exchange Act. The Committee may exercise its duties, power and authority
under the Plan in its sole and absolute discretion without the consent of any
Participant or other party, unless the Plan specifically provides otherwise.
Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will be final, conclusive and
binding for all purposes and on all persons, including, without limitation, the
Company, the shareholders of the Company, the participants and their respective
successors-in-interest. No member of the Committee will be liable for any
action or determination made in good faith with respect to the Plan or any
Incentive Award granted under the Plan.

     3.2 Authority of the Committee.

		
	 	     (a) In accordance with and subject to the provisions of the Plan,
the Committee will have the authority to determine all provisions of
Incentive Awards as the Committee may deem necessary or desirable and as
consistent with the terms of the Plan,

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	 	including, without limitation, the following: (i) the Eligible
Recipients to be selected as Participants; (ii) the nature and extent of
the Incentive Awards to be made to each Participant (including the number
of shares of Common Stock to be subject to each Incentive Award, any
exercise price, the manner in which Incentive Awards will vest or become
exercisable and whether Incentive Awards will be granted in tandem with
other Incentive Awards) and the form of written agreement, if any,
evidencing such Incentive Award; (iii) the time or times when Incentive
Awards will be granted; (iv) the duration of each Incentive Award; and
(v) the restrictions and other conditions to which the payment or vesting
of Incentive Awards may be subject. In addition, the Committee will have
the authority under the Plan in its sole discretion to pay the economic
value of any Incentive Award in the form of cash, Common Stock or any
combination of both.
	 
	 	     (b) The Committee will have the authority under the Plan to amend or
modify the terms of any outstanding Incentive Award in any manner,
including, without limitation, the authority to modify the number of
shares or other terms and conditions of an Incentive Award, extend the
term of an Incentive Award, accelerate the exercisability or vesting or
otherwise terminate any restrictions relating to an Incentive Award,
accept the surrender of any outstanding Incentive Award or, to the extent
not previously exercised or vested, authorize the grant of new Incentive
Awards in substitution for surrendered Incentive Awards; provided,
however that the amended or modified terms are permitted by the Plan as
then in effect and that any Participant adversely affected by such
amended or modified terms has consented to such amendment or
modification. No amendment or modification to an Incentive Award,
however, whether pursuant to this Section 3.2 or any other provisions of
the Plan, will be deemed to be a re-grant of such Incentive Award for
purposes of this Plan.
	 
	 	     (c) In the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock
split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in corporate
structure or shares, (ii) any purchase, acquisition, sale or disposition
of a significant amount of assets or a significant business, (iii) any
change in accounting principles or practices, or (iv) any other similar
change, in each case with respect to the Company or any other entity
whose performance is relevant to the grant or vesting of an Incentive
Award, the Committee (or, if the Company is not the surviving corporation
in any such transaction, the board of directors of the surviving
corporation) may, without the consent of any affected Participant, amend
or modify the vesting criteria of any outstanding Incentive Award that is
based in whole or in part on the financial performance of the Company (or
any Subsidiary or division thereof) or such other entity so as equitably
to reflect such event, with the desired result that the criteria for
evaluating such financial performance of the Company or such other entity
will be substantially the same (in the sole discretion of the Committee
or the board of directors of the surviving corporation) following such
event as prior to such event; provided, however, that the amended or
modified terms are permitted by the Plan as then in effect.
	 
	 	     (d) Notwithstanding any other provision of this Plan other than
Section 4.3, the Committee may not, without prior approval of the
Company’s stockholders, seek to effect any re-pricing of any previously
granted, “underwater” Option by: (i) amending or modifying the terms of
the Option to lower the exercise price; (ii) canceling the

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Incentive Stock Plan

		
	 	underwater Option and granting either (A) replacement Options having
a lower exercise price; or (B) Restricted Stock Awards; or (C)
Performance Stock Awards in exchange; or (iii) repurchasing the
underwater Options and granting new Incentive Awards under this Plan. For
purposes of this Section 3.2(d) and Section 10.4, an Option will be
deemed to be “underwater” at any time when the Fair Market Value of the
Common Stock is less than the exercise price of the Option.

4.     Shares Available for Issuance.

     4.1 Maximum Number of Shares Available The maximum number of shares of
Common Stock for which Options may be granted on any date in the aggregate is
equal to twenty percent (20%) of the aggregate number of shares of Common Stock
outstanding on such date less the aggregate number of shares of Common Stock
then issuable (as if all vesting and other conditions to issuance were then
met) either (a) upon conversion of convertible securities of the Company
outstanding to Eligible Recipients on such date, or (b) upon exercise of
Options and other rights to purchase Common Stock outstanding to Eligible
Recipients on such date (exclusive of Options to be granted on such date);
provided, that without limiting the foregoing but subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of shares of Common
Stock that will be available for issuance upon exercise of Incentive Stock
Options is 1,050,000, and no more than 250,000 shares of Common Stock may be
granted as Restricted Stock Awards or Stock Bonuses or pursuant to Performance Units under
the Plan. Notwithstanding any other provisions of the Plan to the contrary, no
Participant in the Plan may be granted any Options or Stock Appreciation Rights
or any other Incentive Awards with a value based solely on an increase in the
value of the Common Stock after the date of grant relating to more than 200,000
shares of Common Stock in the aggregate in any fiscal year of the Company
(subject to adjustment as provided in Section 4.3 of the Plan); provided,
however, that a Participant who is first appointed or elected as an officer,
hired as an employee or retained as a consultant by the Company or who receives
a promotion that results in an increase in responsibilities or duties may be
granted, during the fiscal year of such appointment, election, hiring,
retention or promotion, Options or Stock Appreciation Rights or other Incentive
Awards relating to up to 400,000 shares of Common Stock (subject to adjustment
as provided in Section 4.3 of the Plan)..

     4.2 Accounting for Incentive Awards. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock
that are subject to an Incentive Award that is settled or paid in cash or any
form other than shares of Common Stock will automatically again become
available for issuance under the Plan. Any shares of Common Stock that
constitute the forfeited portion of a Restricted Stock Award, however, will not
become available for further issuance under the Plan.

     4.3 Adjustments to Shares and Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be

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 conclusive) as to the number and kind of securities or other property
(including cash) available for issuance or payment under the Plan and, in order
to prevent dilution or enlargement of the rights of Participants, (a) the
number and kind of securities or other property (including cash) subject to
outstanding Options, and (b) the exercise price of outstanding Options.

5.     Participation.

     Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected
to contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion.
Incentive Awards will be deemed to be granted as of the date specified in the
grant resolution of the Committee, which date will be the date of any related
agreement with the Participant.

6.     Options.

     6.1 Grant. An Eligible Recipient may be granted one or more Options under
the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may designate whether an
Option is to be considered an Incentive Stock Option or a Non-Statutory Stock
Option. To the extent that any Incentive Stock Option granted under the Plan
ceases for any reason to qualify as an “incentive stock option” for purposes of
Section 422 of the Code, such Incentive Stock Option will continue to be
outstanding for purposes of the Plan but will thereafter be deemed to be a
Non-Statutory Stock Option.

     6.2 Exercise Price. The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its discretion at
the time of the Option grant; provided, however, that (a) such price will not
be less than 100% of the Fair Market Value of one share of Common Stock on the
day preceding the date of grant with respect to an Incentive Stock Option (110%
of the Fair Market Value if, at the time the Incentive Stock Option is granted,
the Participant owns, directly or indirectly, more than 10% of the total
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation of the Company), and (b) such price will not be less
than 85% of the Fair Market Value of one share of Common Stock on the day
preceding the date of grant with respect to a Non-Statutory Stock Option.

     6.3 Exercisability and Duration. An Option will become exercisable at
such times and in such installments as may be determined by the Committee in
its sole discretion at the time of grant; provided, however, that no Option may
be exercisable after 10 years from its date of grant (five years from its date
of grant of an Incentive Stock Option if, at the time the Incentive Stock
Option is granted, the Participant owns, directly or indirectly, more than 10%
of the total combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation of the Company).

     6.4 Payment of Exercise Price. The total purchase price of the shares to
be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order); provided, however, (a) that the
Committee, in its sole discretion and upon terms and conditions established by
the Committee, may allow such payments to be made, in whole or in part, by
tender of a Broker Exercise Notice, Previously Acquired Shares, a promissory
note (on

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 terms acceptable to the Committee in its sole discretion) or by a
combination of such methods; and (b) that if such payments are made by tender
of a Broker Exercise Notice or Previously Acquired Shares, or by a combination
of such methods, the Fair Market Value on the day preceding the date of
exercise will be used for the purpose of valuing the tendered shares of Common
Stock.

     6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company (Attention: Chief Financial Officer) at its principal
executive office in North St. Paul, Minnesota and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance
with Section 6.4 of the Plan.

     6.6 Aggregate Limitation of Stock Subject to Incentive Stock Options. To
the extent that the aggregate Fair Market Value (determined as of the day
preceding the date an Incentive Stock Option is granted) of the shares of
Common Stock with respect to which incentive stock options (within the meaning
of Section 422 of the Code) are exercisable for the first time by a Participant
during any calendar year (under the Plan and any other incentive stock option
plans of the Company or any subsidiary or parent corporation of the Company
(within the meaning of the Code)) exceeds $100,000 (or such other amount as may
be prescribed by the Code from time to time), such excess Options will be
treated as Non-Statutory Stock Options. The determination will be made by
taking incentive stock options into account in the order in which they were
granted. 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.

7.     Stock Appreciation Rights.

     7.1 Grant. An Eligible Recipient may be granted one or more Stock
Appreciation Rights under the Plan, and such Stock Appreciation Rights will be
subject to such terms and conditions, consistent with the other provisions of
the Plan, as may be determined by the Committee in its sole discretion. The
Committee will have the sole discretion to determine the form in which payment
of the economic value of Stock Appreciation Rights will be made to a
Participant (i.e., cash, Common Stock or any combination thereof) or to consent
to or disapprove the election by a Participant of the form of such payment.

     7.2 Exercise Price. The exercise price of a Stock Appreciation Right will
be determined by the Committee, in its discretion, at the date of grant but may
not be less than 100% of the Fair Market Value of one share of Common Stock on
the day preceding the date of grant.

     7.3 Exercisability and Duration. A Stock Appreciation Right will become
exercisable at such time and in such installments as may be determined by the
Committee in its sole discretion at the time of grant; provided, however, that
no Stock Appreciation Right may be exercisable after 10 years from its date of
grant. A Stock Appreciation Right will be exercised by giving notice in the
same manner as for Options, as set forth in Section 6.5 of the Plan.

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8.     Restricted Stock Awards.

     8.1 Grant. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject
to such terms and conditions, consistent with the other provisions of the Plan,
as may be determined by the Committee in its sole discretion. The Committee
may impose such restrictions or conditions, not inconsistent with the
provisions of the Plan, to the vesting of such Restricted Stock Awards as it
deems appropriate, including, without limitation, that the Participant remain
in the continuous employ or service of the Company or a Subsidiary for a
certain period or that the Participant or the Company (or any Subsidiary or
division thereof) satisfy certain performance goals or criteria.

     8.2 Rights as a Stockholder; Transferability. Except as provided in
Sections 8.1, 8.3 and 14.3 of the Plan, a Participant will have all voting,
dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Restricted Stock Award under this Section 8 upon
the Participant becoming the holder of record of such shares as if such
Participant were a holder of record of shares of unrestricted Common Stock.

     8.3 Dividends and Distributions. Unless the Committee determines
otherwise in its sole discretion (either in the agreement evidencing the
Restricted Stock Award at the time of grant or at any time after the grant of
the Restricted Stock Award), any dividends or distributions (including regular
quarterly cash dividends) paid with respect to shares of Common Stock subject
to the unvested portion of a Restricted Stock Award will be subject to the same
restrictions as the shares to which such dividends or distributions relate. In
the event the Committee determines not to pay dividends or distributions
currently, the Committee will determine in its sole discretion whether any
interest will be paid on such dividends or distributions. In addition, the
Committee in its sole discretion may require such dividends and distributions
to be reinvested (and in such case the Participant consents to such
reinvestment) in shares of Common Stock that will be subject to the same
restrictions as the shares to which such dividends or distributions relate.

     8.4 Enforcement of Restrictions. To enforce the restrictions referred to
in this Section 8, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant, until the
restrictions have lapsed, to keep the stock certificates, together with duly
endorsed stock powers, in the custody of the Company or its transfer agent or
to maintain evidence of stock ownership, together with duly endorsed stock
powers, in a certificateless book-entry stock account with the Company’s
transfer agent.

9.     Performance Units.

     An Eligible Recipient may be granted one or more Performance Units under
the Plan, and such Performance Units will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee may impose
such restrictions or conditions, not inconsistent with the provisions of the
Plan, to the vesting of such Performance Units as it deems appropriate,
including, without limitation, that the Participant remain in the continuous
employ or service of the Company or any Subsidiary for a certain period or that
the Participant or the Company (or any Subsidiary or division thereof) satisfy
certain performance goals or criteria. The Committee will have the sole
discretion to determine the form in which payment of the economic value of
Performance Units will be made to a Participant (i.e., cash, Common Stock or
any combination thereof) or to consent to or disapprove the election by a
Participant of the form of such payment.

8

 

10.     Stock Bonuses.

     An Eligible Recipient may be granted one or more Stock Bonuses under the
Plan, and such Stock Bonuses will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee. The Participant will have all voting, dividend, liquidation and
other rights with respect to the shares of Common Stock issued to a Participant
as a Stock Bonus under this Section 10 upon the Participant becoming the holder
of record of such shares; provided, however, that the Committee may impose such
restrictions on the assignment or transfer of a Stock Bonus as it deems
appropriate.

11.     Effect of Termination of Employment or Other Service.

     11.1 Termination Due to Death or Disability. Unless otherwise provided by
the Committee in its sole discretion in the agreement evidencing an Incentive
Award, in the event a Participant’s employment or other service with the
Company and all Subsidiaries is terminated by reason of death or Disability:

		
	 	     (a) All outstanding Options and Stock Appreciation Rights then held
by the Participant will remain exercisable, to the extent exercisable as
of the date of such termination, for a period of one year after such
termination (but in no event after the expiration date of any such Option
or Stock Appreciation Right);
	 
	 	     (b) All Restricted Stock Awards then held by the Participant that
have not vested as of such termination will be terminated and forfeited;
and
	 
	 	     (c) All Performance Units and Stock Bonuses then held by the
Participant will vest and/or continue to vest in the manner determined by
the Committee and set forth in the agreement evidencing such Performance
Units or Stock Bonuses.

     11.2 Termination for Reasons Other than Death or Disability.

		
	 	     (a) Unless otherwise provided by the Committee in its sole
discretion in the agreement evidencing an Incentive Award, in the event a
Participant’s employment or other service is terminated with the Company
and all Subsidiaries for any reason other than death or Disability
(including Retirement), or a Participant is in the employ or service of a
Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company
(unless the Participant continues in the employ or service of the Company
or another Subsidiary), all rights of the Participant under the Plan and
any agreements evidencing an Incentive Award will immediately terminate
without notice of any kind, and no Options or Stock Appreciation Rights
then held by the Participant will thereafter be exercisable, all
Restricted Stock Awards then held by the Participant that have not vested
will be terminated and forfeited, and all Performance Units and Stock
Bonuses then held by the Participant will vest and/or continue to vest in
the manner determined by the Committee and set forth in the agreement
evidencing such Performance Units or Stock Bonuses; provided, however,
that if such termination is due to any reason other than termination by
the Company or any Subsidiary for “cause,” all outstanding Options and
Stock Appreciation Rights then held by such Participant will remain
exercisable, to the extent exercisable as of such termination, for a
period of three months after such termination

9

 

		
	 	(but in no event after the expiration date of any such Option or
Stock Appreciation Right).
	 
	 	     (b) For purposes of this Section 11.2, “cause” (as determined by the
Committee) will be as defined in any employment or other agreement or
policy applicable to the Participant or, if no such agreement or policy
exists, will mean (i) dishonesty, fraud, misrepresentation, embezzlement
or deliberate injury or attempted injury, in each case related to the
Company or any Subsidiary, (ii) any unlawful or criminal activity of a
serious nature, (iii) any intentional and deliberate breach of a duty or
duties that, individually or in the aggregate, are material in relation
to the Participant’s overall duties, or (iv) any material breach of any
employment, service, confidentiality or non-compete agreement entered
into with the Company or any Subsidiary.

     11.3 Modification of Rights Upon Termination. Notwithstanding the other
provisions of this Section 11, upon a Participant’s termination of employment
or other service with the Company and all Subsidiaries, the Committee may, in
its sole discretion (which may be exercised at any time on or after the date of
grant, including following such termination), cause Options and Stock
Appreciation Rights (or any part thereof) then held by such Participant to
become or continue to become exercisable and/or remain exercisable following
such termination of employment or service and Restricted Stock Awards,
Performance Units and Stock Bonuses then held by such Participant to vest
and/or continue to vest or become free of transfer restrictions, as the case
may be, following such termination of employment or service, in each case in
the manner determined by the Committee; provided, however, that no Incentive
Award may become or remain exercisable or continue to vest beyond its
expiration date.

     11.4 Exercise of Incentive Stock Options Following Termination. Any
Incentive Stock Option that remains unexercised more than one year following
termination of employment by reason of Disability or more than three months
following termination for any reason other than death or Disability will
thereafter be deemed to be a Non-Statutory Stock Option.

     11.5 Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a Participant’s
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the
Company or the Subsidiary for which the Participant provides employment or
other service, as determined by the Committee in its sole discretion based upon
such records.

12.     Payment of Withholding Taxes.

     12.1 General Rules. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all foreign, federal, state and local withholding and
employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Incentive Award or a disqualifying disposition of
stock received upon exercise of an Incentive Stock Option, or (b) require the
Participant promptly to remit the amount of such withholding to the Company
before taking any action, including issuing any shares of Common Stock, with
respect to an Incentive Award.

10

 

     12.2 Special Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 12.1 of the Plan by
electing to tender Previously Acquired Shares, a Broker Exercise Notice or a
promissory note (on terms acceptable to the Committee in its sole discretion),
or by a combination of such methods; provided that if such payments are made by
tender of a Broker Exercise Notice or Previously Acquired Shares, or by a
combination of such methods, the Fair Market Value on the day preceding the
date of exercise will be used for the purpose of valuing the tendered shares of
Common Stock.

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13.     Change in Control.

     13.1 Change in Control. For purposes of this Section 13, a “Change in
Control” of the Company will mean the following:

		
	 	     (a) the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person or entity
that is not controlled by the Company;
	 
	 	     (b) the approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company;
	 
	 	     (c) any person becomes after the effective date of the Plan the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 40% or more of the combined voting power of
the Company’s outstanding securities ordinarily having the right to vote
at elections of directors;
	 
	 	     (d) a merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to effective date of such
merger or consolidation have “beneficial ownership” (as defined in Rule
13d-3 under the Exchange Act), immediately following the effective date
of such merger or consolidation, of securities of the surviving
corporation representing 80% or less of the combined voting power of the
surviving corporation’s then outstanding securities ordinarily having the
right to vote at elections of directors;
	 
	 	     (e) the Continuity Directors cease for any reason to constitute at
least a majority of the Board; or
	 
	 	     (f) any other change in control of the Company of a nature that
would be required to be reported pursuant to Section 13 or 15(d) of the
Exchange Act, whether or not the Company is then subject to such
reporting requirement.

     13.2 Continuity Directors. For purposes of this Section 13, “Continuity
Directors” of the Company will mean any individuals who are members of the
Board on the effective date of the Plan and any individual who subsequently
becomes a member of the Board whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
Continuity Directors (either by specific vote or by approval of the Company’s
proxy statement in which such individual is named as a nominee for director
without objection to such nomination).

     13.3 Acceleration of Vesting. Without limiting the authority of the
Committee under Sections 3.2 and 4.3 of the Plan, if a Change in Control of the
Company occurs, then, unless otherwise provided by the Committee in its sole
discretion either in the agreement evidencing an Incentive Award at the time of
grant or at any time after the grant of an Incentive Award, (a) all outstanding
Options and Stock Appreciation Rights will become immediately exercisable in
full and will remain exercisable for the remainder of their terms, regardless
of whether the Participant to whom such Options or Stock Appreciation Rights
have been granted remains in the employ or service of the Company or any
Subsidiary; (b) all outstanding Restricted Stock Awards and Performance Units
will become immediately fully vested and non-forfeitable; and

12

 

(c) all outstanding Stock Bonuses then held by the Participant will vest
and/or continue to vest in the manner determined by the Committee and set forth
in the agreement evidencing such Stock Bonuses.

     13.4 Cash Payment for Options. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or at
any time after the grant of an Incentive Award, and without the consent of any
Participant affected thereby, may determine that some or all Participants
holding outstanding Options will receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options (or, in the event there is no such excess, that such Options will be
terminated).

     13.5 Limitation on Change in Control Payments. Notwithstanding anything
in Section 13.3 or 13.4 of the Plan to the contrary, if, with respect to a
Participant, the acceleration of the vesting of an Incentive Award as provided
in Section 13.3 or the payment of cash in exchange for all or part of an
Incentive Award as provided in Section 13.4 (which acceleration or payment
could be deemed a “payment” within the meaning of Section 280G(b)(2) of the
Code), together with any other “payments” that such Participant has the right
to receive from the Company or any corporation that is a member of an
“affiliated group” (as defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which the Company is a member, would constitute
a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the
“payments” to such Participant pursuant to Section 13.3 or 13.4 of the Plan
will be reduced to the largest amount as will result in no portion of such
“payments” being subject to the excise tax imposed by Section 4999 of the Code;
provided, however, that if a Participant is subject to a separate agreement
with the Company or a Subsidiary that expressly addresses the potential
application of Sections 280G or 4999 of the Code (including, without
limitation, that “payments” under such agreement or otherwise will be reduced,
that the Participant will have the discretion to determine which “payments”
will be reduced, that such “payments” will not be reduced or that such
“payments” will be “grossed up” for tax purposes), then this Section 13.5 will
not apply, and any “payments” to a Participant pursuant to Section 13.3 or 13.4
of the Plan will be treated as “payments” arising under such separate
agreement.

14.     Rights of Eligible Recipients and Participants; Transferability.

     14.1 Employment or Service. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.

     14.2 Rights as a Shareholder. As a holder of Incentive Awards (other than
Restricted Stock Awards and Stock Bonuses), a Participant will have no rights
as a stockholder unless and until such Incentive Awards are exercised for, or
paid in the form of, shares of Common Stock and the Participant becomes the
holder of record of such shares. Except as otherwise provided in the Plan, no
adjustment will be made for dividends or distributions with respect to such
Incentive

13

 

 Awards as to which there is a record date preceding the date the
Participant becomes the holder of record of such shares, except as the
Committee may determine in its discretion.

     14.3 Restrictions on Transfer. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly permitted by the
Plan, unless approved by the Committee in its sole discretion, no right or
interest of any Participant in an Incentive Award prior to the exercise or
vesting of such Incentive Award will be assignable or transferable, or
subjected to any lien, during the lifetime of the Participant, either
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise. A Participant will, however, be entitled to designate a beneficiary
to receive an Incentive Award upon such Participant’s death, and in the event
of a Participant’s death, payment of any amounts due under the Plan will be
made to, and exercise of any Options (to the extent permitted pursuant to
Section 11 of the Plan) may be made by, the Participant’s legal
representatives, heirs and legatees.

     14.4 Breach of Confidentiality or Non-Compete Agreements. Notwithstanding
anything in the Plan to the contrary, in the event that a Participant
materially breaches the terms of any confidentiality or non-compete agreement
entered into with the Company or any Subsidiary, whether such breach occurs
before or after termination of such Participant’s employment or other service
with the Company or any Subsidiary, the Committee in its sole discretion may
immediately terminate all rights of the Participant under the Plan and any
agreements evidencing an Incentive Award then held by the Participant without
notice of any kind.

     14.5 Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.

15.     Securities Law and Other Restrictions.

     Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Incentive Awards granted under the Plan, unless (a) there is in effect with
respect to such shares a registration statement under the Securities Act and
any applicable state or foreign securities laws or an exemption from such
registration under the Securities Act and applicable state or foreign
securities laws, and (b) there has been obtained any other consent, approval or
permit from any other regulatory body which the Committee, in its sole
discretion, deems necessary or advisable. The Company may condition such
issuance, sale or transfer upon the receipt of any representations or
agreements from the parties involved, and the placement of any legends on
certificates representing shares of Common Stock, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or other
restrictions.

16.     Plan Amendment, Modification and Termination.

     The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board
may deem advisable in order that Incentive Awards under the Plan will conform
to any change in applicable laws or regulations or in any other respect the
Board may deem to be in the best interests of the Company; provided,

14

 

 however, that no amendments to the Plan will be effective without approval
of the shareholders of the Company if stockholder approval of the amendment is
then required pursuant to Section 422 of the Code or the rules of any stock
exchange or Nasdaq or similar regulatory body. No termination, suspension or
amendment of the Plan may adversely affect any outstanding Incentive Award
without the consent of the affected Participant; provided, however, that this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.2, 4.3 and 13 of the Plan.

17.     Effective Date and Duration of the Plan.

     The Plan is effective as of March 1, 2003, the date it was adopted by the
Board. The Plan will terminate at midnight on February 28, 2013, and may be
terminated prior to such time to by Board action, and no Incentive Award will
be granted after such termination. Incentive Awards outstanding upon
termination of the Plan may continue to be exercised, or become free of
restrictions, in accordance with their terms.

18.     Miscellaneous.

     18.1 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in
accordance with the laws of the State of Minnesota, notwithstanding the
conflicts of laws principles of any jurisdictions.

     18.2 Successors and Assigns. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Participants.

15

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