Document:

exv10wdd

 

Exhibit 10.dd

FOURTH AMENDMENT

TO JOINT VENTURE AGREEMENT

     THIS FOURTH AMENDMENT TO JOINT VENTURE AGREEMENT is dated the 27th day of
March, 2006 (the “Fourth Amendment”) and is between Polaris Industries Inc., a Minnesota
corporation (“Polaris”), and GE Commercial Distribution Finance Corporation (f/k/a
Transamerica Commercial Finance Corporation), a Delaware corporation (“CDF”) (collectively,
Polaris and CDF, the “Parties” and individually, a “Party”) and amends, in
part, the Joint Venture Agreement (the “JV Agreement”) dated the 7th day of February,
1996 between Polaris and CDF and as previously amended. All capitalized terms herein shall have
the same meaning as in the JV Agreement unless otherwise defined herein.

RECITALS

     WHEREAS, Polaris and CDF caused their respective subsidiaries, Polaris Acceptance Inc., a
Minnesota corporation (“PAI”) and CDF Joint Ventures, Inc. (f/k/a Transamerica Joint
Ventures, Inc.) (“CDFJV”), a Delaware corporation (collectively, PAI and CDFJV the
“Partners”), to enter into a Partnership Agreement dated February 7, 1996, as it may be
amended from time to time (the “Partnership Agreement”) to form an Illinois general
partnership (the “Partnership” or
“PA” or “Polaris Acceptance ”) for the
ownership and operation of a commercial finance business and related finance businesses within the
United States and other countries supporting the business of Polaris and its affiliates from time
to time and such other businesses as the Parties subsequently may agree, as further described
therein; and

     WHEREAS, PA desires to extend the initial term of the Partnership Agreement and of the JV
Agreement; and

     WHEREAS, it is a condition of the extension of the initial term of the JV Agreement that
Polaris and CDF amend the terms of the JV Agreement as set forth in this Fourth Amendment; and

     WHEREAS, the Parties or their affiliates are also executing amendments to other of the Amended
Definitive Agreements; and

     NOW, THEREFORE, in consideration of the premises, recitals and mutual covenants, undertakings
and obligations hereinafter set forth or referred to herein, the Parties mutually covenant and
agree as set forth below.

AGREEMENT

     1. Definitions.

          (a) The definition of the following term, when used in the JV Agreement, shall, from and after
the effective date of this Fourth Amendment, be hereby amended as follows:

     (i) “Agreement” shall mean the Joint Venture Agreement as amended by
this Fourth Amendment as well as by all previous amendments to the extent not
modified by this Fourth Amendment.

          (b) The following new terms shall be added to the JV Agreement as of the effective date of
this Fourth Amendment:

 

 

     (i) “Fourth Amendment” shall mean the Fourth Amendment to the JV Agreement executed by
Polaris and CDF dated the 27th day of March 2006;

     (ii) “Amended Definitive Agreements” shall have the same meaning as in
the First Amendment, and shall also include the Second and Third Amendments and this
Fourth Amendment and the various amendments to the Definitive Agreements being
executed concurrently with this Fourth Amendment and as any of those Definitive
Agreements may be amended from time to time;

          (c) The name of Transamerica Joint Ventures, Inc. has been changed to CDF Joint Ventures, Inc.
Accordingly, all references in the Services Agreement to “Transamerica Joint Ventures, Inc.” and
to “TJV” shall be deemed to refer to “CDF Joint Ventures, Inc.” and to “CDFJV” respectively. Also,
the name of Transamerica Commercial Finance Corporation has been changed to GE Commercial
Distribution Finance Corporation. Accordingly, all references in the Services Agreement to
“Transamerica Commercial Finance Corporation” and to “TCFC” shall be deemed to refer to “GE
Commercial Distribution Finance Corporation” and to “CDF” respectively.

     2. Amended Term. Section 1.4 is hereby deleted in its entirety and is
replaced with the following new Section 1.4:

1.4 Term. Polaris and CDF hereby agree that the initial term of the
Partnership which began on March 1, 1996, shall hereby be extended for a new five
(5) year period commencing on March 1, 2007, and unless sooner dissolved or
terminated under the provisions of the Partnership Agreement, shall continue until
February 29, 2012, and thereafter shall be extended automatically for additional
one-year terms unless at least one year prior to the expiration of the initial or
additional term (as applicable) either Partner gives notice to the other Partner of
its intention not to extend the term, in which event the Partnership shall dissolve
in accordance with the terms of the Partnership Agreement upon expiration of the
then current term.

     3. Representations and Warranties. Each Party represents and warrants to the other
Party with respect to itself and its respective Partner subsidiary that all representations and
warranties in the JV Agreement made as of the Closing (as defined in the JV Agreement) are made
again as of the effective date of this Fourth Amendment.

     4. Governing Law. This Fourth Amendment shall be governed by, and construed and
enforced under, the laws of the State of Illinois without regard to conflict of law principles.

     5. Ratification. Except as otherwise set forth herein, all terms and conditions of
the JV Agreement are hereby ratified and shall remain in full force and effect.

Balance of Page Intentionally Left Blank

Signature Page Follows

2

 

     IN WITNESS WHEREOF, the parties have executed this Fourth Amendment to Joint Venture
Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	GE COMMERCIAL DISTRIBUTION FINANCE 

CORPORATION, a Delaware corporation	 	POLARIS INDUSTRIES INC., a Minnesota
corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Robert M. Martin	 	By:	 	/s/ Michael W. Malone
	 	 	 	 	 	 	 
	 

	 	Name:
	 	Robert M. Martin
	 	 	 	Name:
	 	Michael W. Malone
	 

	 	Title:
	 	President
	 	 	 	Title:
	 	Vice
President—Finance,
Chief Financial
Officer and Secretary

3exv4w1

 

Exhibit 4.1

AEHR TEST SYSTEMS

2006 EQUITY INCENTIVE PLAN

1. Purposes of the Plan. The purposes of this Plan are:

	 	•	 	to attract and retain the best available personnel for positions of
substantial responsibility,
	 
	 	•	 	to provide incentives to individuals who perform services to the Company, and
	 
	 	•	 	to promote the success of the Company’s business.

     The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares and
other stock or cash awards as the Administrator may determine.

2. Definitions. As used herein, the following definitions will apply:

	 	a)	 	“Administrator” means the Board or any of its Committees as will be
administering the Plan, in accordance with Section 4 of the Plan.
	 
	 	b)	 	“Affiliate” means any corporation or any other entity (including, but not
limited to, partnerships and joint ventures) controlling, controlled by, or under common
control with the Company.
	 
	 	c)	 	“Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock is listed
or quoted and the applicable laws of any foreign country or jurisdiction where Awards are,
or will be, granted under the Plan.
	 
	 	d)	 	“Award” means, individually or collectively, a grant under the Plan of Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units,
Performance Shares and other stock or cash awards as the Administrator may determine.
	 
	 	e)	 	“Award Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement
is subject to the terms and conditions of the Plan.
	 
	 	f)	 	“Board” means the Board of Directors of the Company.
	 
	 	g)	 	“Change in Control” means the occurrence of any of the following events:

	 	i.	 	Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities;
	 
	 	ii.	 	The consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;
	 
	 	iii.	 	A change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” means directors who either (A) are Directors as
of the effective date of the Plan,

 

 

	 	 	 	or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but will not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company); or
	 
	 	iv.	 	The consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.

	 	h)	 	“Code” means the Internal Revenue Code of 1986, as amended. Any reference to a
section of the Code herein will be a reference to any successor or amended section of the
Code.
	 
	 	i)	 	“Committee” means a committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4 hereof.
	 
	 	j)	 	“Common Stock” means the common stock of the Company.
	 
	 	k)	 	“Company” means Aehr Test Systems, Inc., a California corporation, or any
successor thereto.
	 
	 	l)	 	“Consultant” means any person, including an advisor, engaged by the Company or
its Affiliates to render services to such entity.
	 
	 	m)	 	“Determination Date” means the latest possible date that will not jeopardize
the qualification of an Award granted under the Plan as “performance-based compensation”
under Section 162(m) of the Code.
	 
	 	n)	 	“Director” means a member of the Board.
	 
	 	o)	 	“Disability” means total and permanent disability as defined in Section
22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock
Options, the Administrator in its discretion may determine whether a permanent and total
disability exists in accordance with uniform and non-discriminatory standards adopted by
the Administrator from time to time.
	 
	 	p)	 	“Employee” means any person, including Officers and Directors, employed by the
Company or its Affiliates. Neither service as a Director nor payment of a director’s fee
by the Company will be sufficient to constitute “employment” by the Company.
	 
	 	q)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
	 
	 	r)	 	“Fair Market Value” means, as of any date, the value of Common Stock as the
Administrator may determine in good faith by reference to the price of such stock on any
established stock exchange or a national market system on the day of determination if the
Common Stock is so listed on any established stock exchange or a national market system.
If the Common Stock is not listed on any established stock exchange or a national market
system, the value of the Common Stock will be determined by the Administrator in good
faith.
	 
	 	s)	 	“Fiscal Year” means the fiscal year of the Company.

 

 

	 	t)	 	“Incentive Stock Option” means an Option that by its terms qualifies and is
otherwise intended to qualify as an incentive stock option within the meaning of Section
422 of the Code and the regulations promulgated thereunder.
	 
	 	u)	 	“Nonstatutory Stock Option” means an Option that by its terms does not qualify
or is not intended to qualify as an Incentive Stock Option.
	 
	 	v)	 	“Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
	 
	 	w)	 	“Option” means a stock option granted pursuant to the Plan.
	 
	 	x)	 	“Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
	 
	 	y)	 	“Participant” means the holder of an outstanding Award.
	 
	 	z)	 	“Performance Goals” will have the meaning set forth in Section 11 of the Plan.
	 
	 	aa)	 	“Performance Period” means any Fiscal Year of the Company or such other period
as determined by the Administrator in its sole discretion.
	 
	 	bb)	 	“Performance Share” means an Award denominated in Shares which may be earned in
whole or in part upon attainment of Performance Goals or other vesting criteria as the
Administrator may determine pursuant to Section 10.
	 
	 	cc)	 	“Performance Unit” means an Award which may be earned in whole or in part upon
attainment of Performance Goals or other vesting criteria as the Administrator may
determine and which may be settled for cash, Shares or other securities or a combination of
the foregoing pursuant to Section 10.
	 
	 	dd)	 	“Period of Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are subject to a
substantial risk of forfeiture. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events as
determined by the Administrator.
	 
	 	ee)	 	“Plan” means this 2006 Equity Incentive Plan.
	 
	 	ff)	 	“Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock
under Section 8 of the Plan, or issued pursuant to the early exercise of an Option.
	 
	 	gg)	 	“Restricted Stock Unit” means a bookkeeping entry representing an amount equal
to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted
Stock Unit represents an unfunded and unsecured obligation of the Company.
	 
	 	hh)	 	“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.
	 
	 	ii)	 	 “Section 16(b)” means Section 16(b) of the Exchange Act.
	 
	 	jj)	 	 “Service Provider” means an Employee, Director or Consultant.

 

 

	 	kk)	 	“Share” means a share of the Common Stock, as adjusted in accordance with
Section 14 of the Plan.
	 
	 	ll)	 	“Stock Appreciation Right” means an Award, granted alone or in connection with
an Option, that pursuant to Section 7 is designated as a Stock Appreciation Right.
	 
	 	mm)	 	“Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.
	 
	 	nn)	 	“Successor Corporation” has the meaning given to such term in Section 14(c) of
the Plan.

3. Stock Subject to the Plan.

	 	a)	 	Stock Subject to the Plan. Subject to the provisions of Section 14 of the
Plan, the maximum aggregate number of Shares that may be awarded and sold under the Plan is
600,000 Shares plus (i) any Shares that, as of the date the Company’s Amended and Restated
1996 Stock Option Plan (the “1996 Plan”) terminated, were reserved but not issued
pursuant to any award granted thereunder, and were not subject to any awards granted
thereunder, and (ii) any Shares subject to stock options or similar awards granted under
the 1996 Plan that expire or otherwise terminate without having been exercised in full and
Shares issued pursuant to awards granted under the 1996 Plan that are forfeited to or
repurchased by the Company. The Shares may be authorized, but unissued, or reacquired
Common Stock.
	 
	 	b)	 	Full Value Awards. Any Shares subject to Awards granted with an exercise price
less than the Fair Market Value on the date of grant of such Awards will be counted against
the numerical limits of this Section 3 as two Shares for every one Share subject thereto.
Further, if Shares acquired pursuant to any such Award are forfeited or repurchased by the
Company and would otherwise return to the Plan pursuant to Section 3(c), two times the
number of Shares so forfeited or repurchased will return to the Plan and will again become
available for issuance.
	 
	 	c)	 	Lapsed Awards. If an Award expires or becomes unexercisable without having
been exercised in full, or, with respect to Restricted Stock, Restricted Stock Units,
Performance Shares or Performance Units, is forfeited to or repurchased by the Company, the
unpurchased Shares (or for Awards other than Options and Stock Appreciation Rights, the
forfeited or repurchased Shares) which were subject thereto will become available for
future grant or sale under the Plan (unless the Plan has terminated). With respect to
Stock Appreciation Rights, all of the Shares covered by the Award (that is, Shares actually
issued pursuant to a Stock Appreciation Right, as well as the Shares that represent payment
of the exercise price) will cease to be available under the Plan. However, Shares that
have actually been issued under the Plan under any Award will not be returned to the Plan
and will not become available for future distribution under the Plan; provided, however,
that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units are repurchased by the Company or are forfeited to the Company, such
Shares will become available for future grant under the Plan. Shares used to pay the tax
and exercise price of an Award will not become available for future grant or sale under the
Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such
cash payment will not result in reducing the number of Shares available for issuance under
the Plan. Notwithstanding the foregoing and, subject to adjustment provided in Section 14,
the maximum number of Shares that may be issued upon the exercise of Incentive Stock
Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent
allowable under Section 422 of the Code, any Shares that become available for issuance
under the Plan under this Section 3(c).

 

 

4. Administration of the Plan.

     (a) Procedure.

	 	i.	 	Multiple Administrative Bodies. Different Committees with respect to different
groups of Service Providers may administer the Plan.
	 
	 	ii.	 	Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation” within
the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of
two or more “outside directors” within the meaning of Section 162(m) of the Code.
	 
	 	iii.	 	Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to
satisfy the requirements for exemption under Rule 16b-3.
	 
	 	iv.	 	Other Administration. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be constituted to
satisfy Applicable Laws.

     (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its discretion:

	 	i.	 	to determine the Fair Market Value;
	 
	 	ii.	 	to select the Service Providers to whom Awards may be granted hereunder;
	 
	 	iii.	 	to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any Award granted hereunder;
	 
	 	iv.	 	to construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan;
	 
	 	v.	 	to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying
applicable foreign laws;
	 
	 	vi.	 	to modify or amend each Award (subject to Section 19(c) of the Plan). Notwithstanding
the previous sentence, the Administrator may not modify or amend an Option or Stock
Appreciation Right to reduce the exercise price of such Option or Stock Appreciation Right
after it has been granted (except for adjustments made pursuant to Section 14), and neither
may the Administrator cancel any outstanding Option or Stock Appreciation Right and
immediately replace it with a new Option or Stock Appreciation Right with a lower exercise
price;
	 
	 	vii.	 	to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;
	 
	 	viii.	 	to allow a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an Award pursuant to such
procedures as the Administrator may determine; and
	 
	 	ix.	 	to make all other determinations deemed necessary or advisable for administering the
Plan.

 

 

     (c) Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants and any other
holders of Awards.

5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights, Performance Units, Performance Shares and such other cash or stock
awards as the Administrator determines may be granted to Service Providers. Incentive Stock
Options may be granted only to employees of the Company or any Parent or Subsidiary of the Company.

6. Stock Options.

	 	a)	 	Limitations. Each Option will be designated in the Award Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares with respect
to which Incentive Stock Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any Parent or Subsidiary)
exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes
of this Section 6(a), Incentive Stock Options will be taken into account in the order in
which they were granted. The Fair Market Value of the Shares will be determined as of the
time the Option with respect to such Shares is granted.
	 
	 	b)	 	Number of Shares. The Administrator will have complete discretion to determine
the number of Options granted to any Participant, provided that during any Fiscal Year, no
Participant will be granted Options covering more than 200,000 Shares. Notwithstanding the
foregoing limitation, in connection with a Participant’s initial service as an Employee, an
Employee may be granted Options covering up to an additional 200,000 Shares.
	 
	 	c)	 	Term of Option. The Administrator will determine the term of each Option in
its sole discretion. Any Option granted under the Plan will not be exercisable after the
expiration of ten (10) years from the date of grant or such shorter term as may be provided
in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock representing
more than ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be
five (5) years from the date of grant or such shorter term as may be provided in the Award
Agreement.
	 
	 	d)	 	Option Exercise Price and Consideration.

	 	i.	 	Exercise Price. The per share exercise price
for the Shares to be issued pursuant to exercise of an Option will be
determined by the Administrator, but will be no less than one hundred
percent (100%) of the Fair Market Value per Share on the date of grant.
In addition, in the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price will be no less than one hundred ten percent (110%) of the
Fair Market Value per Share on the date of grant. Notwithstanding the
foregoing provisions of this Section 6(c), Options may be granted with a
per Share exercise price of less than one hundred percent (100%) of the
Fair Market Value per Share on the date of grant pursuant to a transaction
described in, and in a manner consistent with, Section 424(a) of the Code.
The Administrator may not modify or amend an Option to reduce the
exercise price of such Option after it has been granted (except for
adjustments made pursuant to Section 14 of the Plan) nor may the
Administrator cancel any outstanding Option and replace it with a new
Option, 

 

 

	 	 	 	Stock Appreciation Right, or other Award with a lower exercise
price, unless, in either case, such action is approved by the Company’s
stockholders.
	 
	 	ii.	 	Waiting Period and Exercise Dates. At the
time an Option is granted, the Administrator will fix the period within
which the Option may be exercised and will determine any conditions that
must be satisfied before the Option may be exercised.
	 
	 	iii.	 	Form of Consideration. The Administrator
will determine the acceptable form(s) of consideration for exercising an
Option, including the method of payment, to the extent permitted by
Applicable Laws.

     e) Exercise of Option.

	 	i.	 	Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder will be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.
	 
	 	 	 	An Option will be deemed exercised when the Company receives: (i)
notice of exercise (in such form as the Administrator specify from time to
time) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised
(together with all applicable withholding taxes). No adjustment will be
made for a dividend or other right for which the record date is prior to
the date the Shares are issued, except as provided in Section 14 of the
Plan.
	 
	 	ii.	 	Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the
Participant’s termination as the result of the Participant’s death or
Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent that
the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement,
the Option will remain exercisable for three (3) months following the
Participant’s termination. Unless otherwise provided by the
Administrator, if on the date of termination the Participant is not vested
as to his or her entire Option, the Shares covered by the unvested portion
of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified
by the Administrator, the Option will terminate, and the Shares covered by
such Option will revert to the Plan.
	 
	 	iii.	 	Disability of Participant. If a Participant
ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent the
Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement,
the Option will remain exercisable for twelve (12) months following the
Participant’s termination. Unless otherwise provided by the
Administrator, if on the date of 

 

 

	 	 	 	termination the Participant is not vested
as to his or her entire Option, the Shares covered by the unvested portion
of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified
herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.
	 
	 	iv.	 	Death of Participant. If a Participant dies
while a Service Provider, the Option may be exercised following the
Participant’s death within such period of time as is specified in the
Award Agreement to the extent that the Option is vested on the date of
death (but in no event may the option be exercised later than the
expiration of the term of such Option as set forth in the Award
Agreement), by the Participant’s designated beneficiary, provided such
beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator. If no such beneficiary has been
designated by the Participant, then such Option may be exercised by the
personal representative of the Participant’s estate or by the person(s) to
whom the Option is transferred pursuant to the Participant’s will or in
accordance with the laws of descent and distribution. In the absence of a
specified time in the Award Agreement, the Option will remain exercisable
for twelve (12) months following Participant’s death. Unless otherwise
provided by the Administrator, if at the time of death Participant is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will immediately revert to the Plan. If the Option
is not so exercised within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.
	 
	 	v.	 	Other Termination. A Participant’s Award
Agreement may also provide that if the exercise of the Option following
the termination of Participant’s status as a Service Provider (other than
upon the Participant’s death or Disability) would result in liability
under Section 16(b), then the Option will terminate on the earlier of (A)
the expiration of the term of the Option set forth in the Award Agreement,
or (B) the 10th day after the last date on which such exercise would
result in such liability under Section 16(b). Finally, a Participant’s
Award Agreement may also provide that if the exercise of the Option
following the termination of the Participant’s status as a Service
Provider (other than upon the Participant’s death or Disability) would be
prohibited at any time solely because the issuance of Shares would violate
the registration requirements under the Securities Act, then the Option
will terminate on the earlier of (A) the expiration of the term of the
Option, or (B) the expiration of a period of three (3) months after the
termination of the Participant’s status as a Service Provider during which
the exercise of the Option would not be in violation of such registration
requirements.

7. Stock Appreciation Rights.

	 	a)	 	Grant of Stock Appreciation Rights. Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from
time to time as will be determined by the Administrator, in its sole discretion.
	 
	 	b)	 	Number of Shares. The Administrator will have complete discretion to determine
the number of Stock Appreciation Rights granted to any Participant, provided that during
any Fiscal Year, no Participant will be granted Stock Appreciation Rights covering more
than 200,000 Shares. Notwithstanding the foregoing limitation, in connection with a
Participant’s initial service as an 

 

 

	 	 	 	Employee, an Employee may be granted Stock Appreciation
Rights covering up to an additional 200,000 Shares.
	 
	 	c)	 	Exercise Price and Other Terms. The Administrator, subject to the provisions
of the Plan, will have complete discretion to determine the terms and conditions of Stock
Appreciation Rights granted under the Plan, provided, however, that the exercise price will
be not less than one hundred percent (100%) of the Fair Market Value of a Share on the date
of grant. The Administrator may not modify or amend a Stock Appreciation Right to reduce
the exercise price of such Stock Appreciation Right after it has been granted (except for
adjustments made pursuant to Section 14 of the Plan) nor may the Administrator cancel any
outstanding Stock Appreciation Right and replace it with a new Stock Appreciation Right,
Option, or other Award with a lower exercise price, unless, in either case, such action is
approved by the Company’s stockholders.
	 
	 	d)	 	Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will
be evidenced by an Award Agreement that will specify the exercise price, the term of the
Stock Appreciation Right, the conditions of exercise, and such other terms and conditions
as the Administrator, in its sole discretion, will determine.
	 
	 	e)	 	Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted
under the Plan will expire upon the date determined by the Administrator, in its sole
discretion, and set forth in the Award Agreement; provided, however, that no Stock
Appreciation Right will have a term greater than ten (10) years from its date of grant.
Notwithstanding the foregoing, the rules of Section 6(e) also will apply to Stock
Appreciation Rights.
	 
	 	f)	 	Payment of Stock Appreciation Right Amount. Upon exercise of a Stock
Appreciation Right, a Participant will be entitled to receive payment from the Company in
an amount determined by multiplying:

	 	i.	 	The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times
	 
	 	ii.	 	The number of Shares with respect to which the Stock Appreciation Right
is exercised.

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be
in cash, in Shares of equivalent value, or in some combination thereof.

8. Restricted Stock.

	 	a)	 	Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Shares of Restricted Stock
to Service Providers in such amounts as the Administrator, in its sole discretion, will
determine.
	 
	 	b)	 	Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced
by an Award Agreement that will specify the Period of Restriction, the number of Shares
granted, and such other terms and conditions as the Administrator, in its sole discretion,
will determine. Notwithstanding the foregoing sentence, during any Fiscal Year no
Participant will receive more than an aggregate of 75,000 Shares of Restricted Stock;
provided, however, that in connection with a Participant’s initial service as an Employee,
an Employee may be granted an aggregate of up to an additional 75,000 Shares of Restricted
Stock. Unless the Administrator determines otherwise, Shares of Restricted Stock will be
held by the Company as escrow agent until the restrictions on such Shares have lapsed.

 

 

	 	c)	 	Transferability. Except as provided in this Section 8, Shares of Restricted
Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction.
	 
	 	d)	 	Other Restrictions. The Administrator, in its sole discretion, may impose such
other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
	 
	 	e)	 	Removal of Restrictions. Except as otherwise provided in this Section 8,
Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will
be released from escrow as soon as practicable after the last day of the Period of
Restriction. The Administrator, in its discretion, may accelerate the time at which any
restrictions will lapse or be removed.
	 
	 	f)	 	Voting Rights. During the Period of Restriction, Service Providers holding
Shares of Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares, unless the Administrator determines otherwise.
	 
	 	g)	 	Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all dividends and
other distributions paid with respect to such Shares unless otherwise provided in the Award
Agreement. If any such dividends or distributions are paid in Shares, the Shares will be
subject to the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
	 
	 	h)	 	Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the
Company and again will become available for grant under the Plan.

9. Restricted Stock Units.

	 	a)	 	Grant. Restricted Stock Units may be granted at any time and from time to time
as determined by the Administrator. Each Restricted Stock Unit grant will be evidenced by
an Award Agreement that will specify such other terms and conditions as the Administrator,
in its sole discretion, will determine, including all terms, conditions, and restrictions
related to the grant, the number of Restricted Stock Units and the form of payout, which,
subject to Section 9(d), may be left to the discretion of the Administrator.
Notwithstanding anything to the contrary in this subsection (a), during any Fiscal Year of
the Company, no Participant will receive more than an aggregate of 75,000 Restricted Stock
Units; provided, however, that in connection with a Participant’s initial service as an
Employee, an Employee may be granted an aggregate of up to an additional 75,000 Restricted
Stock Units.
	 
	 	b)	 	Vesting Criteria and Other Terms. The Administrator will set vesting criteria
in its discretion, which, depending on the extent to which the criteria are met, will
determine the number of Restricted Stock Units that will be paid out to the Participant.
After the grant of Restricted Stock Units, the Administrator, in its sole discretion, may
reduce or waive any restrictions for such Restricted Stock Units. Each Award of Restricted
Stock Units will be evidenced by an Award Agreement that will specify the vesting criteria,
and such other terms and conditions as the Administrator, in its sole discretion, will
determine.
	 
	 	c)	 	Earning Restricted Stock Units. Upon meeting the applicable vesting criteria,
the Participant will be entitled to receive a payout as specified in the Award Agreement.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any vesting criteria that must
be met to receive a payout.

 

 

	 	d)	 	Form and Timing of Payment. Payment of earned Restricted Stock Units will be
made as soon as practicable after the date(s) set forth in the Award Agreement. The
Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash,
Shares, or a combination thereof. Shares represented by Restricted Stock Units that are
fully paid in cash again will be available for grant under the Plan.
	 
	 	e)	 	Cancellation. On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company.

10. Performance Units and Performance Shares.

	 	a)	 	Grant of Performance Units/Shares. Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion. The Administrator will have
complete discretion in determining the number of Performance Units/Shares granted to each
Participant provided that during any Fiscal Year, (a) no Participant will receive
Performance Units having an initial value greater than $250,000, and (b) no Participant
will receive more than 75,000 Performance Shares. Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee, an Employee
may be granted up to an additional 75,000 Performance Shares and additional Performance
Units having an initial value up to $250,000.
	 
	 	b)	 	Value of Performance Units/Shares. Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of grant. Each
Performance Share will have an initial value equal to the Fair Market Value of a Share on
the date of grant.
	 
	 	c)	 	Performance Objectives and Other Terms. The Administrator will set performance
objectives or other vesting provisions (including, without limitation, continued status as
a Service Provider) in its discretion which, depending on the extent to which they are met,
will determine the number or value of Performance Units/Shares that will be paid out to the
Participant. The Administrator may set performance objectives based upon the achievement
of Company-wide, divisional, or individual goals, or any other basis determined by the
Administrator in its discretion. Each Award of Performance Units/Shares will be evidenced
by an Award Agreement that will specify the Performance Period, and such other terms and
conditions as the Administrator, in its sole discretion, will determine.
	 
	 	d)	 	Earning of Performance Units/Shares. After the applicable Performance Period
has ended, the holder of Performance Units/Shares will be entitled to receive a payout of
the number of Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding performance
objectives or other vesting provisions have been achieved. After the grant of a
Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any
performance objectives or other vesting provisions for such Performance Unit/Share.
	 
	 	e)	 	Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the expiration of
the applicable Performance Period. The Administrator, in its sole discretion, may pay
earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate
Fair Market Value equal to the value of the earned Performance Units/Shares at the close of
the applicable Performance Period) or in a combination thereof.

 

 

	 	f)	 	Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the
Company, and again will be available for grant under the Plan.

11. Performance Goals. The granting and/or vesting of Awards of Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units and other incentives under the
Plan may be made subject to the attainment of performance goals relating to one or more business
criteria within the meaning of Section 162(m) of the Code and may provide for a targeted level or
levels of achievement (“Performance Goals”) including one or more of the following measures: (a)
business divestitures and acquisitions, (b) cash flow, (c) cash position, (d) earnings, (e)
earnings before interest and taxes, (f) earnings before interest, taxes, depreciation and
amortization, (g) earnings per Share, (h) economic profit, (i) economic value added, (j) equity or
stockholder’s equity, (k) expenses, (l)gross margin, (m) market share, (n) net income, (o) net
profit, (p) net sales, (q) new product development milestones, (r) number of customers, (s) orders
received, (t) backlog, (u) operating earnings, (v) operating income, (w) operating margin,
(x)profit after taxes, (y) profit before taxes, (z) ratio of debt to debt plus equity, (aa) ratio
of operating earnings to capital spending, (bb) return on capital, (cc) return on equity, (dd)
return on investments, (ee) return on net assets, (ff) return on sales, (gg) return on stockholder
equity, (hh) return to stockholders, (ii) revenue, (jj) sales, (kk) sales growth, (ll) time to
market, and (mm) working capital. Any Performance Goals may be used to measure the performance of
the Company as a whole or a business unit of the Company and may be measured relative to a peer
group or index. The Performance Goals may differ from Participant to Participant and from Award to
Award. Any criteria used may be (i) measured in absolute terms, (ii) compared to another company
or companies, (iii) measured against the performance of the Company as a whole or a segment of the
Company and/or (iv) measured on a pre-tax or post-tax basis (if applicable). Prior to the
Determination Date, the Administrator will determine whether any significant element(s) will be
included in or excluded from the calculation of any Performance Goal with respect to any
Participant.

12. Leaves of Absence/Transfer Between Locations. Unless the Administrator provides
otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of
absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the Company or between the
Company and its Affiliates. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the Company is not so
guaranteed, then three (3) months following the ninety-first (91st) day of such leave
any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option.

13. Transferability of Awards. Unless determined otherwise by the Administrator, an Award
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised, during the lifetime of
the Participant, only by the Participant. With the approval of the Administrator, a Participant
may, in a manner specified by the Administrator, (a) transfer an Award to a Participant’s spouse or
former spouse pursuant to a court-approved domestic relations order which relates to the provision
of child support, alimony payments or marital property rights, and (b) transfer an Option by bona
fide gift and not for any consideration, to (i) a member or members of the Participant’s immediate
family, (ii) a trust established for the exclusive benefit of the Participant and/or member(s) of
the Participant’s immediate family, (iii) a partnership, limited liability company of other entity
whose only partners or members are the Participant and/or member(s) of the Participant’s immediate
family, or (iv) a foundation in which the Participant and/or member(s) of the Participant’s
immediate family control the management of the foundation’s assets. For purposes of this Section
13, “immediate family” shall mean the Participant’s spouse, former spouse, children, grandchildren,
parents, grandparents, siblings, nieces, nephews, parents-in-law, sons-in-law, daughters-in-law,
brothers-in-law, sisters-in-law, including adoptive or step relationships and any person sharing
the Participant’s household (other than as a tenant or employee).

 

 

14. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

	 	a)	 	Adjustments. In the event that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the Shares occurs, the
Administrator, in order to prevent diminution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, shall adjust the number and class of
Shares that may be delivered under the Plan and/or the number, class, and price of Shares
covered by each outstanding Award, and the numerical Share limits set forth in Sections 3,
6, 7, 8, 9 and 10.
	 
	 	b)	 	Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. To the extent it has
not been previously exercised, an Award will terminate immediately prior to the
consummation of such proposed action.
	 
	 	c)	 	Change in Control. In the event of a Change in Control, each outstanding Award
will be assumed or an equivalent option or right substituted by the successor corporation
or a Parent or Subsidiary of the successor corporation (the “Successor
Corporation”). In the event that the Successor Corporation refuses to assume or
substitute for the Award, the Participant will fully vest in and have the right to exercise
all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to
which such Awards would not otherwise be vested or exercisable, all restrictions on
Restricted Stock will lapse, and, with respect to Restricted Stock Units, Performance
Shares and Performance Units, all Performance Goals or other vesting criteria will be
deemed achieved at target levels and all other terms and conditions met. In addition, if
the Successor Corporation refuses to assume or substitute an Option or Stock Appreciation
Right in the event of a Change in Control, the Administrator will notify the Participant in
writing or electronically that the Option or Stock Appreciation Right will be fully vested
and exercisable for a period of time determined by the Administrator in its sole
discretion, and the Option or Stock Appreciation Right will terminate upon the expiration
of such period.

          For the purposes of this subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each Share subject to
the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Performance Share or Performance Unit which the
Administrator can determine to pay in cash, the fair market value of the consideration received in
the merger or Change in Control by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided, however,
that if such consideration received in the Change in Control is not solely common stock of the
Successor Corporation, the Administrator may, with the consent of the Successor Corporation,
provide for the consideration to be received upon the exercise of an Option or Stock Appreciation
Right or upon the payout of a Restricted Stock Unit, Performance Share or Performance Unit, for
each Share subject to such Award (or in the case of an Award settled in cash, the number of implied
shares determined by dividing the value of the Award by the per share consideration received by
holders of Common Stock in the Change in Control), to be solely common stock of the Successor
Corporation equal in fair market value to the per share consideration received by holders of Common
Stock in the Change in Control.

          Notwithstanding anything in this Section 14(c) to the contrary, an Award that vests, is earned
or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed
if the Company or its successor modifies any of such Performance Goals without the Participant’s
consent;

 

 

provided, however, a modification to such Performance Goals only to reflect the Successor
Corporation’s post-Change in Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.

15. Tax Withholding

	 	a)	 	Withholding Requirements. Prior to the delivery of any Shares or cash pursuant
to an Award (or exercise thereof), the Company will have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, local, foreign or other taxes required to be withheld with respect
to such Award (or exercise thereof).
	 
	 	b)	 	Withholding Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a Participant
to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i)
paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or
Shares having a Fair Market Value equal to the amount required to be withheld, (iii)
delivering to the Company already-owned Shares having a Fair Market Value equal to the
amount required to be withheld, or (iv) selling a sufficient number of Shares otherwise
deliverable to the Participant through such means as the Administrator may determine in its
sole discretion (whether through a broker or otherwise) equal to the amount required to be
withheld. The amount of the withholding requirement will be deemed to include any amount
which the Administrator agrees may be withheld at the time the election is made, not to
exceed the amount determined by using the maximum federal, state or local marginal income
tax rates applicable to the Participant with respect to the Award on the date that the
amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to
be withheld or delivered will be determined as of the date that the taxes are required to
be withheld.

16. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a
Participant any right with respect to continuing the Participant’s relationship as a Service
Provider with the Company, nor will they interfere in any way with the Participant’s right or the
Company’s right to terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.

17. Date of Grant. The date of grant of an Award will be, for all purposes, the date on
which the Administrator makes the determination granting such Award, or such other later date as is
determined by the Administrator. Notice of the determination will be provided to each Participant
within a reasonable time after the date of such grant.

18. Term of Plan. Subject to Section 22 of the Plan, the Plan will become effective upon
its adoption by the Board. It will continue in effect for a term of ten (10) years unless
terminated earlier under Section 19 of the Plan.

19. Amendment and Termination of the Plan.

	 	a)	 	Amendment and Termination. The Administrator may at any time amend, alter,
suspend or terminate the Plan.
	 
	 	b)	 	Stockholder Approval. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.
	 
	 	c)	 	Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless mutually agreed
otherwise between the Participant and the Administrator, which agreement must be in writing
and signed by the Participant and the Company. Termination of the Plan will not affect the
Administrator’s ability to exercise the powers granted to it hereunder with respect to
Awards granted under the Plan prior to the date of such termination.

 

 

20. Conditions Upon Issuance of Shares.

	 	a)	 	Legal Compliance. Shares will not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such Shares will
comply with Applicable Laws and will be further subject to the approval of counsel for the
Company with respect to such compliance.
	 
	 	b)	 	Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.

21. Inability to Obtain Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

22. Stockholder Approval. The Plan will be subject to approval by the stockholders of the
Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval
will be obtained in the manner and to the degree required under Applicable Laws.

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