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		Exhibit 10.3

			

		

		
			Materials Monitoring Technologies, Inc.

					2109 East Palm Avenue, Tampa, Florida 33605 

			

			

			

			Consulting Agreement

		

		

		This Consulting Agreement is made and effective this August 18, 2006, by and between Materials Monitoring Technologies, Inc., offices located at 2109 East Palm Avenue, Tampa, Florida 33605 (“Client”), and Mannur J. Sundaresan, PhD residing at 4212 Shoal Creek Drive, Greensboro, NC  27410 (Consultant) Now, therefore, Consultant and Client agree as follows:

		

		1. Engagement:

				Client hereby engages Consultant, and Consultant accepts engagement, to provide the Client the following services when and as requested:

			Review, evaluate and make recommendations regarding the development, application, and testing of

			US Patent 6,399,939 “Sensor Array System”

			
	US Patent 7,075,424 “System for Damage Location Using a Single Channel Continuous Acoustic Emission Sensor”

		

		
			developed at the North Carolina Agricultural and Technical State University.  Consultant will provide recommendations to the Client with regards to implementation and improvement of the new technology and the integration of this technology with the Client’s current products.

			

			It is the intention of Materials Monitoring Technologies, Inc. to effectuate a merger with a technology company that will introduce the invention into the marketplace. Upon the consummation of this merger, Dr. Sundaresan will provide the services described under this Consulting Agreement to this technology company.

			

			2. Term:

				Consultant shall provide services to the Client pursuant to this Agreement for a term commencing on August 10, 2006 and ending on August 9, 2007, unless otherwise modified or extended by mutual agreement.

			

			3.  Place of Work:

				Consultant shall render services at Consultant’s offices, but will, upon request, provide services at Client’s office for the performance of particular services. Travel expenses incurred, as a result of the Client’s request of the Consultant to travel will be paid by the Client.  

			

			4. Time:

				Consultant shall provide 80 hours of consulting time to Client under the terms of this Agreement. Client relies upon Consultant to devote his best efforts to fulfill the spirit and purpose of this Agreement.  If more than 80 hours is required, an extension can be added based on a mutually agreeable rate of compensation.

		

		

		

		

		

		

		

		

		

		5.  Payment:

			The payment for the consulting Agreement will be $10,000.  This consulting fee is in consideration of 80 hours of consulting services (based on an hourly rate of $125/hour) to be provided within twelve (12) months of the effective date of this Agreement.  If payment is not received by consultant within ten (10) working days of client executing this Agreement, this Agreement will be null and void.

		

		6. Confidentiality:

			During the term of this Agreement, Consultant shall not, without the prior written consent of the Client, disclose to anyone any confidential information which consultant has learned from his consulting status with the Client. “Confidential Information” for the purposes of this Agreement shall include Client’s proprietary and confidential information such as, but not limited to, technology plans, research and development plans, designs, models, software, product specifications, marketing plans, production plans, and new concepts.

		

		Confidential information shall not include any information that:

			Is disclosed by the Client without restriction.

			
	Becomes publicly available through no act of the Consultant.

			
	Is rightfully received by the Consultant from a third party.

			
	Is required by the Client to be disseminated for the purposes of this agreement.

		

		7. Independent Contractor:

				Consultant is and throughout this Agreement an Independent Contractor.  While performing work for the Client, Consultant may use the title of “Scientific Advisor.”

			

			8. Termination:

				This Agreement may be terminated by the Client as follows:

		

			If Consultant is unable to provide the consulting services by reason of temporary or permanent illness, disability, incapacity or death.

			
	Breach or default of any obligation of the Consultant as described in this Agreement, which breech or default is not cured within five (5) days of written notice from Client.
		

		

		

		Consultant may terminate this Agreement as follows:

		

			Breach or default of any material obligation of the Client as described in this Agreement, which breech or default is not cured within five (5) days of written notice from Consultant.
		

		Upon termination of this Agreement by the Client or the Consultant for any of the above listed reasons, Consultant will return any pro-rated, pre-paid refundable monies not utilized during the term of this Agreement.

			

			9. Controlling Law:

				This Agreement shall be governed by and be construed in accordance with the laws of the State of California.

		

		

		

		

		

		

		
			2

		

		

		

		

		

		

		10. Headings:

			The headings in this Agreement are inserted for convenience only and shall not be used to define, limit or describe the scope of this Agreement or any of the obligations herein.

		

		11. Final Agreement:

			This Agreement constitutes the final understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings and agreements between the parties, whether written or oral. This Agreement may be amended, supplemented or changed, only by an Agreement in writing, signed by both of the parties.

		

		12. Notices:

			Any notice to be given or otherwise given pursuant to this Agreement shall be in writing and shall be hand delivered, mailed by certified mail, return receipt requested or sent by overnight courier service as follows:

		

		If to Consultant:

		

		Mannur J. Sundaresan, Ph. D.

		4212 Shoal Creek Drive,

		Greensboro, NC  27410

		Phone: (336) 605-3655

		

		If to Client:

		

		Materials Monitoring Technologies, Inc.

		2109 East Palm Avenue

		Tampa, Florida 33605

		Phone: (813) 754-4330

		

		13. Severability:

			If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.

		

		

		IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first above written.

			

			

		Materials Monitoring Technologies, Inc.                        Dr. Mannur J. Sundaresan

			

			

		/s/ Joel Edelson                                                                  /s/ M. J. Sundaresan              

			Joel Edelson                                                                         Dr. Mannur J. Sundaresan

		President                                                                              Consultant

		

		

		
			3Exhibit 10.15

    
      

    

    Exhibit
      10.15

    

    APA
      ENTERPRISES, INC.

    

    2007
      STOCK COMPENSATION PLAN

    

    
      	 	
              1.

            	
              Purpose;
                Definitions.

            

    

    

    The
      purpose of the APA Enterprises, Inc. 2007 Stock Compensation Plan (the "Plan")
      is to enable APA Enterprises, Inc. (the "Company"), and its Parents,
      Subsidiaries, and Affiliates, to attract, retain, and reward employees and
      to
      strengthen the mutuality of interests between such employees and the Company's
      shareholders, by offering such employees stock options and/or other equity-based
      incentives.

    

    In
      addition to definitions that may be contained elsewhere in this Plan, for
      purposes of the 2007 Plan, the following terms shall be defined as set forth
      below:

    

    (a)    "Affiliate"
      means any entity other than the Company and its Parents and Subsidiaries that
      is
      designated by the Board as a participating employer under the 2007 Plan,
      provided that the Company directly or indirectly owns at least 20% of the
      combined voting power of all classes of stock of such entity or at least 20%
      of
      the ownership interests in such entity.

    

    (b)    "Award"
      means any Option, Stock Appreciation Right, or Other Stock-Based Award, or
      any
      other right, interest, or option relating to Stock or other securities of the
      Company granted pursuant to the provisions of this Plan.

    

    (c)    "Award
      Agreement" means any written agreement, contract or other instrument or document
      evidencing any Award granted by the Committee hereunder and signed by both
      the
      Company and the Participant.

    

    (d)    "Board"
      means the Board of Directors of the Company.

    

    (e)    "Code"
      means the Internal Revenue Code of 1986, as amended from time to time, and
      any
      successor thereto.

    

    (f)     "Committee"
      means the Committee referred to in Section 2 of the 2007 Plan. If at any time
      no
      Committee shall be in office, then the functions of the Committee specified
      in
      the 2007 Plan shall be exercised by the Board. Where the Board has retained
      administrative authority with respect to the 2007 Plan, references herein to
      the
      "Committee" shall refer to the Board.

    

    (g)    "Company"
      means APA Enterprises, Inc., a corporation organized under the laws of the
      State
      of Minnesota, or any successor corporation.

    

    (h)    "Disability"
      means disability as determined under procedures established by the Committee
      for
      purposes of this Plan or, as applied to Incentive Stock Options, as defined
      in
      Section 22(e)(3) of the Code.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)     "Exchange
      Act" means the Securities Exchange Act of 1934, as amended from time to
      time.

    

    (j)    "Fair
      Market Value" means as of any given date, unless otherwise determined by the
      Committee in good faith, the closing bid price of the Stock as reported in
      the
      over-the-counter market or, if the Stock is then traded on NASDAQ or a national
      or regional securities exchange, the closing price of the Stock on NASDAQ or
      such exchange.

    

    (k)    "Incentive
      Stock Option" means any Stock Option intended to be and designated as
      an "Incentive
      Stock Option" within the meaning of Section 422 of the Code.

    

    (l)     "Nonqualified
      Stock Option" means any Stock Option that is not an Incentive Stock
      Option.

    

    (m)    "Other
      Stock-Based Award" means an Award under Section 7 below that is valued in whole
      or in part by reference to, or is otherwise based on, Stock.

    

    (n)    "Parent"
      means any corporation (other than the Company) in an unbroken chain of
      corporations ending with the Company if, at the time of granting of an Award,
      each of the corporations other than the Company owns stock
      possessing 50%
      or
      more of the total combined voting power of all classes of
      stock
      in one of the other corporations in the chain.

    

    (o)   "Participant"
      means any person who is selected by the Committee to receive an Award under
      the
      2007 Plan.

    

    (p)    "Plan"
      means this APA Enterprises, Inc. 2007 Stock Compensation Plan, as hereafter
      amended from time to time.

    

    (q)    "Stock"
      means the common stock, $.01 par value per share, of the Company.

    

    (r)     "Stock
      Appreciation Right" or "SAR" means the right to receive a payment in cash or
      Stock as determined by the Committee.

    

    (s)    "Stock
      Option" or "Option" means any option to purchase shares of stock granted
      pursuant to Section 5 below.

    

    (t)     "Subsidiary"
      means any corporation (other than the Company) in an unbroken chain of
      corporations beginning with the Company if, at the time of the granting of
      an
      Award, each of the corporations other than the last corporation in the unbroken
      chain owns stock possessing 50% or more of the total combined voting power
      of
      all classes of stock in one of the other corporations in the chain.

    

    In
      addition, the term "Change in Control" shall have the meaning set forth in
      Section 8(b) below.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              2.

            	
              Administration.

            

    

    

    The
      Plan
      shall be administered by a Committee of not fewer than two members of the Board,
      who shall be appointed by the Board and serve at the pleasure of the Board.
      The
      functions of the Committee specified in the 2007 Plan shall be exercised by
      the
      Board, if and to the extent that no Committee exists that has the authority
      to
      so administer the 2007 Plan, or to the extent that the Board retains authority
      to administer the 2007 Plan under specified circumstances. As to the selection
      of and grants of Awards to persons who are not subject to Sections 16(a) and
      16(b) of the Exchange Act, the Committee may delegate any or all of its
      responsibilities to members of the Company's administration. The grants of
      Awards and determination of the terms thereof to persons who are subject to
      Sections 16(a) and 16(b) of the Exchange Act shall be made in a manner that
      satisfies the requirements of Rule 16b-3 under the Exchange Act, or any
      successor rule.

    

    The
      Committee shall have full power and authority, consistent with the provisions
      of
      the 2007 Plan and subject to such orders or resolutions not inconsistent with
      the provisions of the 2007 Plan as may be adopted by the Board:

    

    (a)   to
      select
      the employees of the Company and any Parent, Subsidiary, or Affiliate to whom
      Awards may from time to time be granted hereunder;

    

    (b)   to
      determine the type or types of Awards to be granted to employees
      hereunder;

    

    (c)   to
      determine the number of shares of Stock to be covered by each Award granted
      hereunder:

    

    (d)    to
      determine the terms and conditions, not inconsistent with the terms of the
      2007
      Plan, of any Award granted hereunder;

    

    (e)    to
      determine whether, to what extent, and under what circumstances an Award may
      be
      settled in cash, Stock
      or
      other property or canceled or suspended;

    

    (f)    to
      determine whether, to what extent, and under what circumstances
      cash, Stock,
      and other property and other amounts payable with respect to an Award shall
      be
      deferred either automatically or at the election of the
      Participant;

    

    (g)    to
      interpret and administer the 2007 Plan and any instrument or agreement entered
      into thereunder;

    

    (h)    to
      establish such rules and regulations and appoint such agents as it shall deem
      appropriate for proper administration of the 2007 Plan; and

    

    (i)     to
      make
      any other determination and take any other action that the Committee deems
      necessary or desirable for administration of the 2007 Plan.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Members
      of the Board and of the Committee acting under the 2007 Plan shall be fully
      protected in relying in good faith upon the advice of counsel and shall incur
      no
      liability except for gross negligence or willful misconduct in the performance
      of their duties.

    

    Decisions
      of the Committee shall be made in the Committee's sole discretion and shall
      be
      final, conclusive, and binding on all persons, including the Company, any
      Participant, any shareholder, and any employee of the Company or any Parent,
      Subsidiary, or Affiliate.

    

    
      	 	
              3.

            	
              Stock
                Subject to Plan.

            

    

    

    The
      total
      number of shares of Stock reserved and available for distribution under the
      2007
      Plan shall be 750,000 shares of Stock. Such shares may consist, in whole or
      in
      part, of authorized and unissued shares or treasury shares.

    

    Subject
      to the possible adjustments described in the last paragraph of this Section
      3,
      the total number of shares of Stock reserved and authorized for issuance upon
      exercise of Incentive Stock Options shall be 750,000. To the extent that such
      shares are not used for Incentive Stock Options, they shall be available for
      other Awards to be granted under the 2007 Plan.

    

    If
      any
      shares of Stock subject to an Award are not issued to a Participant because
      an
      Option or SAR is not exercised or an Award is otherwise forfeited or any such
      Award otherwise terminates without a payment being made to the Participant
      in
      the form of Stock, such shares shall again be available for distribution in
      connection with future Awards under the 2007 Plan.

    

    In
      the
      event of any merger, reorganization, consolidation, recapitalization, Stock
      dividend, Stock split, or other change in corporate structure affecting the
      Stock, such substitution or adjustment shall be made in the aggregate number
      of
      shares reserved for issuance under the 2007 Plan, in the number and option
      price
      of shares subject to outstanding options granted under the 2007 Plan, and in
      the
      number of shares subject to other outstanding Awards granted under the 2007
      Plan
      as may be determined to be appropriate by the Board, in its sole discretion,
      provided that the number of shares subject to any Award shall always be a whole
      number. Any such adjusted option price shall also be used to determine the
      amount payable by the Company upon the exercise of any Stock Appreciation Right
      associated with any Stock Option.

    

    
      	 	
              4.

            	
              Eligibility.

            

    

    

    Employees
      of the Company and any Subsidiary, Parent, or Affiliate are eligible to be
      granted Awards under the 2007 Plan. 

    

    
      	 	
              5.

            	
              Stock
                Options.

            

    

    

    Stock
      Options may be granted alone, in addition to, or in tandem with other Awards
      granted under the 2007 Plan. Any Stock Option granted under the 2007 Plan shall
      be in such form as the Committee may from time to time approve.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Stock
      Options granted under the 2007 Plan may be of two types: (i) Incentive Stock
      Options and (ii) Nonqualified Stock Options. Options may be issued with or
      without Stock Appreciation Rights.

    

    Options
      granted under the 2007 Plan shall be subject to the following terms and
      conditions and shall contain such additional terms and conditions, not
      inconsistent with the terms of the 2007 Plan, as the Committee shall deem
      desirable:

    

    (a)    Exercise
      Price. Except as provided in Section 5(i), the exercise price per share of
      Stock
      purchasable under a Stock Option shall be determined by the Committee at the
      time of grant but shall be not less than 100% of the Fair Market Value of the
      Stock on the date of grant.

    

    (b)    Option
      Term. Except as provided in Section 5(i) hereof, the term of each Stock Option
      shall be fixed by the Committee.

    

    (c)    Exercisability.
      Stock Options shall be exercisable at such time or times and subject to such
      terms and conditions as shall be determined by the Committee at or after grant;
      provided, however, that, except as provided in Sections 5(f), (g), and (h)
      and
      Section 8, unless otherwise determined by the Committee at or after grant,
      no
      Stock Option shall be exercisable prior to the first anniversary date of the
      granting of the Option. If the Committee provides, in its sole discretion,
      that
      any Stock Option is exercisable only in installments, the Committee may waive
      such installment exercise provisions at any time at or after grant in whole
      or
      in part, based on such factors as the Committee shall determine, in its sole
      discretion.

    

    (d)    Method
      of
      Exercise. Subject to whatever installment exercise provisions apply under
      Section 5(c), Stock Options may be exercised in whole or in part at any time
      during the option period. Payment of the exercise price may be made by check,
      note (if approved by the Board), or such other instrument or method as the
      Committee may accept. If so provided in the related Award Agreement, payment
      in
      full or in part may also be made by delivery of Stock owned by the optionee
      for
      at least six months prior to the exercise of the Option (based on the Fair
      Market Value of the Stock on the date the option is exercised, as determined
      by
      the Committee). Payment of the exercise price may be made through exercise
      of
      either Tandem SARs or Freestanding SARs held by the optionee. No shares of
      Stock
      shall be issued until full payment therefor has been made. An optionee shall
      generally have the rights to dividends or other rights of a shareholder with
      respect to shares subject to the Option after the optionee has given written
      notice of exercise, has paid in full for such Stock, and, if requested, has
      given the representation described in Section 11(a).

    

    (e)    Nontransferability
      of Options. Subject to Section 5(i) hereof, unless otherwise provided in the
      related Award Agreement, no Stock Option shall be transferable by the optionee
      otherwise than by will or by the laws of descent and distribution or pursuant
      to
      a qualified domestic relations order as defined by the Code or Title I of the
      Employee Retirement Income Security Act, or the rules and regulations
      thereunder, and all Stock Options shall be exercisable during the optionee's
      lifetime only by the optionee.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f)     Termination
      by Death. Subject to Section 5(i), if an optionee's employment by the Company
      or
      any Subsidiary, Parent, or Affiliate terminates by reason of death, any Stock
      Option held by such optionee may thereafter be exercised, to the extent such
      option was exercisable at the time of death or on such accelerated basis as
      the
      Committee may determine at or after grant (or as may be determined in accordance
      with procedures established by the Committee), by the legal representative
      of
      the optionee's estate or by any person who acquired the Option by will or the
      laws of descent and distribution, for a period of one year (or such other period
      as the Committee may specify at grant) from the date of such death or until
      the
      expiration of the stated term of such Stock Option, whichever period is the
      shorter.

    

    (g)    Termination
      by Reason of Disability. Subject to Section 5(i), if an optionee's employment
      by
      the Company or any Subsidiary, Parent, or Affiliate terminates by reason of
      Disability, any Stock Option held by such optionee may thereafter be exercised
      by the optionee, to the extent it was exercisable at the time of termination
      or
      on such accelerated basis as the Committee may determine at or after grant
      (or
      as may be determined in accordance with procedures established by the
      Committee), until the expiration of the stated term of such Stock Option (unless
      otherwise specified by the Committee at the time of grant); provided, however,
      that, if the optionee dies prior to such expiration (or within such other period
      as the Committee shall specify at grant), any unexercised Stock Option held
      by
      such optionee shall thereafter be exercisable to the extent to which it was
      exercisable at the time of death for a period of one year from the date of
      such
      death or until the expiration of the stated term of such Stock Option, whichever
      period is the shorter.

    

    (h)    Other
      Termination. Subject to Section 5(i), unless otherwise determined by the
      Committee (or pursuant to procedures established by the Committee) at or after
      grant, if an optionee's employment by the Company or any Subsidiary, Parent,
      or
      Affiliate terminates for any reason other than death or Disability, the Stock
      Option shall be exercisable, to the extent otherwise then exercisable, for
      the
      lesser of three months from the date of termination of employment or the balance
      of such Stock Option's term.

    

    (i)     Incentive
      Stock Options. Anything in the 2007 Plan to the contrary notwithstanding, no
      term of this Plan relating to Incentive Stock Options shall be interpreted,
      amended, or altered, nor shall any discretion or authority granted under the
      2007 Plan be exercised, so as to disqualify the 2007 Plan under Section 422
      of
      the Code or, without the consent of the optionee(s) affected, to disqualify
      any
      Incentive Stock Option under such Section 422. To the extent required for
      "incentive stock option" status under Section 422 of the Code (taking into
      account applicable Internal Revenue Service regulations and pronouncements
      and
      court decisions), the 2007 Plan shall be deemed to provide as
      follows:

    

    (i)     Incentive
      Stock Options may be granted only to employees of the Company or any Parent
      or
      Subsidiary of the Company.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii)    The
      exercise price of any Incentive Stock Option shall not be less than 100% of
      the
      Fair Market Value of the Stock as of the date of grant (110% for an optionee
      who
      owns stock possessing more than 10% of the voting power of all classes of stock
      of the Company or of a Parent or Subsidiary).

    

    (iii)    The
      maximum term of exercise for any Incentive Stock Option shall not exceed ten
      years (five years in the case of an optionee who owns stock possessing more
      than
      10% of the voting power of all classes of stock of the Company or of a Parent
      or
      Subsidiary).

    

    (iv)    Incentive
      Stock Options shall not be transferable by the optionee otherwise than by will
      or the laws of descent and distribution and shall be exercisable, during the
      optionee's lifetime, only by the optionee.

    

    (v)    If
      a
      Participant's employment is terminated by reason of death or Disability and
      the
      portion of any Incentive Stock Option that becomes exercisable during the
      post-termination period specified in Section 5(f) or (g) hereof exceeds the
      $100,000 limitation contained in Section 422(d) of the Code, such excess shall
      be treated as a Nonqualified Stock Option.

    

    (vi)        
       If
      the
      exercise of an Incentive Stock Option is accelerated by reason of a Change
      in
      Control, any portion of such option that exceeds the $100,000 limitation
      contained in Section 422(d) of the Code shall be treated as a Nonqualified
      Stock
      Option.

    

    (j)     No
      Tandem
      Options. Options consisting of both an Incentive Stock Option and a Nonqualified
      Stock Option shall not be granted under the 2007 Plan.

    

    
      	 	
              6.

            	
              Stock
                Appreciation Rights.

            

    

    

    (a)    Grant
      and
      Exercise. Stock Appreciation Rights may be granted either alone ("Freestanding
      SAR") or in addition to other Awards granted under the 2007 Plan and may, but
      need not, relate to all or part of any Stock Option granted under the 2007
      Plan
      ("Tandem SAR"). In the case of a Nonqualified Stock Option, a Tandem SAR may
      be
      granted either at or after the time of the grant of such Stock Option. In the
      case of an Incentive Stock Option, a Tandem SAR may be granted only at the
      time
      of the grant of such Stock Option. A Tandem SAR shall terminate and no longer
      be
      exercisable upon the termination or exercise of the related Stock Option,
      subject to such provisions as the Committee may specify at grant where a Tandem
      SAR is granted with respect to less than the full number of shares covered
      by a
      related Stock Option. Stock Options relating to exercised Tandem SARs shall
      no
      longer be exercisable to the extent that the related Tandem SARs have been
      exercised. A Stock Appreciation Right may be exercised, subject to section
      6(b),
      in accordance with the procedures established by the Committee for such purpose
      and as set forth
      in
      the related Award Agreement. Upon such exercise, the optionee shall be entitled
      to receive an amount determined in the manner prescribed in Section
      6(b).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)    Terms
      and
      Conditions. Stock Appreciation Rights shall be subject to such terms and
      conditions, not inconsistent with the provisions of the 2007 Plan, as shall
      be
      determined from time to time by the Committee, including the
      following:

    

    (i)    The
      exercise price of a Tandem SAR shall be the exercise price of the related
      Option. The exercise price of a Freestanding SAR shall be not less than 100%
      of
      the Fair Market Value of the Stock on the date of grant of the Freestanding
      SAR.
      Notwithstanding the foregoing, the Committee may unilaterally limit the
      appreciation in value of Stock attributable to an SAR at any time prior to
      its
      exercise.

    

    (ii)    Stock
      Appreciation Rights shall be exercisable only at such time or times and to
      the
      extent provided in the related Award Agreement; provided, however, that the
      exercise provisions of an SAR granted in tandem with an Incentive Stock option
      shall be the same as the related Option.

    

    (iii)    Upon
      the
      exercise of a Stock Appreciation Right, the holder shall be entitled to receive
      an amount in cash or shares of Stock equal in value to the excess of the Fair
      Market Value of one share of Stock on the date of exercise, or such other date
      as the Committee shall specify in the Award Agreement, over the exercise price
      per share specified in the related Award Agreement multiplied by the number
      of
      shares in respect of which the Stock Appreciation Right shall have been
      exercised, with the Committee having the right to determine the form of payment.
      When payment is to be made in Stock, the number of shares to be paid shall
      be
      calculated on the basis of the Fair Market Value of the Stock on the date of
      exercise.

    

    (iv)    Unless
      otherwise provided in the related Award Agreement, Stock Appreciation Rights
      shall not be transferable except under the laws of descent and distribution
      or
      pursuant to a qualified domestic relations order as defined by the Code or
      Title
      I of the Employee Retirement Income Security Act, or the rules thereunder,
      and
      shall be exercisable during the lifetime of the Participant only by the
      Participant.

    

    (v)    Upon
      the
      exercise of a Stock Appreciation Right, any related Stock Option or part thereof
      to which such Stock Appreciation Right is related shall be deemed to have been
      exercised for the purpose of the limitation set forth in Section 3 of the 2007
      Plan on the number of shares of Stock to be issued under the 2007
      Plan.

    

    
      	 	
              7.

            	
              Other
                Stock-Based Awards.

            

    

    

    (a)    Administration.
      Other Awards of Stock or that are valued in whole or in part by reference to,
      or
      are otherwise based on, Stock ("Other Stock-Based Awards"), including, without
      limitation, performance shares, convertible preferred stock, convertible
      debentures, or exchangeable securities, may be granted either alone or in
      addition to or in tandem with Stock Options or Stock Appreciation Rights granted
      under the 2007 Plan.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Subject
      to the provisions of the 2007 Plan, the Committee shall have authority to
      determine the persons to whom and the time or times at which such Awards shall
      be made, the number of shares of Stock to be awarded pursuant to such Awards,
      and all other conditions of the Awards. The Committee may also provide for
      the
      grant of Stock upon the completion of a specified performance
      period.

    

    The
      provisions of Other Stock-Based Awards need not be the same with respect to
      each
      recipient.

    

    (b)    Terms
      and
      Conditions. Unless otherwise provided in the related Award Agreement, Stock
      subject to Awards made under this Section 7 may not be sold, assigned,
      transferred, pledged, or otherwise encumbered prior to the date on which the
      Stock is issued or, if later, the date on which any applicable restriction,
      performance, or deferral period lapses.

    

    The
      Participant shall be entitled to receive, currently or on a deferred basis,
      interest or dividends or interest or dividend equivalents with respect to the
      Stock covered by the Award, as determined at the time of the Award by the
      Committee, in its sole discretion, and the Committee may provide that such
      amounts (if any) shall be deemed to have been reinvested in additional Stock
      or
      otherwise reinvested.

    

    Any
      Award
      under Section 7 and any Stock covered by any such Award shall vest or be
      forfeited to the extent so provided in the Award Agreement, as determined by
      the
      Committee, in its sole discretion.

    

    In
      the
      event of the Participant's retirement, Disability, 
      or
      death, or in cases of special circumstances, the Committee may, in its sole
      discretion, waive in whole or in part any or all of the remaining limitations
      imposed with respect to any or all of an Award under this Section
      7.

    

    Each
      Award under this Section 7 shall be confirmed by, and subject to the terms
      of,
      an Award Agreement or other instrument entered into by the Company and the
      Participant.

    

    Stock
      (including securities convertible into Stock) issued on a bonus basis under
      this
      Section 7 may be issued for no cash consideration. The purchase price of any
      Stock (including securities convertible into stock) subject to a purchase right
      awarded under this Section 7 shall be at least 85% of the Fair Market Value
      of
      the Stock on the date of grant.

    

    
      	 	
              8.

            	
              Change
                in Control Provisions.

            

    

    

    (a)    Impact
      of
      Event. In the event of a "Change in Control" as defined in Section 8(b), any
      Award granted under this Plan shall become fully exercisable and vested, and
      shall terminate 60 days thereafter, unless otherwise determined by the Board
      of
      Directors prior to the "Change of Control."

    

    (b)    Definition
      of "Change in Control." For purposes of Section 8(a), a "Change in Control"
      means the happening of any of the following:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)    A
      majority of the directors of the Company shall be persons other than persons
      

    

    (A)   For
      whose election
      proxies shall have been solicited by the Board, or

    

    (B)    Who
      are then
      serving as directors
      appointed by the Board to fill vacancies on the Board caused by death or
      resignation (but not by removal) or to fill newly-created
      directorships,

    

    (ii)   30%
      or
      more of the outstanding voting stock of the Company is acquired or beneficially
      owned (as defined in Rule 13d-3 under the Exchange Act or any successor rule
      thereto) by any person (other than the Company or a subsidiary of the Company)
      or group of persons acting in concert (other than the acquisition and beneficial
      ownership by a parent corporation or its wholly-owned subsidiaries, as long
      as
      they remain wholly-owned subsidiaries, of 100% of the outstanding voting stock
      of the Company as a result of a merger which complies with paragraph (iii)(A)(2)
      hereof in all respects), or

    

    (iii)   The
      shareholders of the Company approve a definitive agreement or plan
      to

    

    (A)   Merge
      or
      consolidate the Company with or into another corporation other than

    

    (1)  
 a
      merger or
      consolidation with a subsidiary of the Company or

    

    (2)    
a
      merger in
      which

    

    (a)     the
      Company is the surviving corporation, 

    

    (b)    no
      outstanding voting stock of the Company (other than fractional shares) held
      by
      shareholders immediately prior to the merger is converted into cash, securities,
      or other property (except (i) voting stock of a parent corporation owning
      directly, or indirectly through wholly owned subsidiaries, both beneficially
      and
      of record 100% of the voting stock of the Company immediately after the merger
      and (ii) cash upon the exercise by holders of voting stock of the Company of
      statutory dissenters' rights),

    

    (c)     the
      persons who were the beneficial owners, respectively, of the outstanding common
      stock and outstanding voting stock of the Company immediately prior to such
      merger beneficially own, directly or indirectly, immediately after the merger,
      more than 70% of, respectively, the then outstanding common stock and the then
      outstanding voting stock of the surviving corporation or its parent corporation,
      and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)     if
      voting
      stock of the parent corporation is exchanged for voting stock of the Company
      in
      the merger, all holders of any class or series of voting stock of the Company
      immediately prior to the merger have the right to receive substantially the
      same
      per share consideration in exchange for their voting stock of the Company as
      all
      other holders of such class or series,

    

    (B)    exchange,
      pursuant to a statutory exchange of shares of voting stock of the Company held
      by shareholders of the Company immediately prior to the exchange, shares of
      one
      or more classes or series of voting stock of the Company for cash, securities,
      or other property, 

    

    (C)    sell
      or
      otherwise dispose of all or substantially all of the assets of the Company
      (in
      one transaction or a series of transactions), or

    

    (D)   
      liquidate or
      dissolve the Company.

    

    
      	 	
              9.

            	
              Amendments
                and Termination.

            

    

    

    The
      Board
      may amend, alter, discontinue, or terminate the 2007 Plan, or any portion
      thereof, but no amendment, alteration, or discontinuation shall be made which
      would impair the vested rights of a Participant under any Award theretofore
      granted without the Participant's consent or which, without the approval of
      the
      Company's shareholders, would:

    

    (a)    except
      as
      expressly provided in this Plan, increase the total number of shares reserved
      for the purpose of the 2007 Plan;

    

    (b)    authorize
      an increase in the total number of shares reserved for issuance upon exercise
      of
      Incentive Stock Options;

    

    (c)   decrease
      the option price of any Incentive Stock Option to less than 100% of the Fair
      Market Value on the date of grant;

    

    (d)   permit
      the issuance of Stock prior to payment in full therefor;

    

    (e)    change
      the employees or class of employees eligible to participate in the 2007 Plan;
      or

    

    (f)    extend
      the maximum option period under Section 5(i) of the 2007 Plan.

    

    The
      Committee may amend the terms of any Award theretofore granted, prospectively
      or
      retroactively, but, subject to Section 3 above, no such amendment shall impair
      the vested rights of any holder without the holder's consent. The Committee
      may
      also substitute new Stock options for previously granted Stock Options (on
      a
      one-for-one or other basis), including previously granted Stock options having
      higher option exercise prices.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Subject
      to the above provisions, the Board shall have broad authority to amend the
      2007
      Plan to take into account changes in applicable securities and tax laws and
      accounting rules, as well as other developments.

    

    
      	 	
              10.

            	
              Unfunded
                Status of Plan.

            

    

    

    The
      Plan
      is intended to constitute an "unfunded" plan for incentive and deferred
      compensation. With respect to any payments not yet made to a Participant by
      the
      Company, nothing contained herein shall give any such Participant any rights
      that are greater than those of a general creditor of the Company. In its sole
      discretion, the Committee may authorize the creation of trusts or other
      arrangements to meet the obligations created under the 2007 Plan to deliver
      Stock or payments in lieu of or with respect to Awards hereunder; provided,
      however, that, unless the Committee otherwise determines with the consent of
      the
      affected Participant, the existence of such trusts or other arrangements is
      consistent with the "unfunded" status of the 2007 Plan.

    

    
      	 	
              11.

            	
              General
                Provisions.

            

    

    

    (a)   The
      Committee may require each person purchasing shares pursuant to a Stock Option
      or receiving shares pursuant to any other Award under the 2007 Plan to represent
      to and agree with the Company in writing that the Participant is acquiring
      the
      shares without a view to distribution thereof. The certificates for such shares
      may include any legend which the Committee deems appropriate to reflect any
      restrictions on transfer.

    

    All
      certificates for shares of Stock or other securities delivered under the 2007
      Plan shall be subject to such stop transfer orders and other restrictions as
      the
      Committee may deem advisable under the rules, regulations, and other
      requirements of the Securities and Exchange Commission, any over-the-counter
      market on which the Stock is quoted, any stock exchange upon which the Stock
      is
      then listed, and any applicable federal or state securities law, and the
      Committee may cause a legend or legends to be put on any such certificates
      to
      make appropriate reference to such restrictions.

    

    (b)    The
      Committee may at any time offer to buy out for a payment in cash or Stock an
      Award previously granted, based on such terms and conditions as the Committee
      shall establish and communicate to the Participant at the time that such offer
      is made.

    

    (c)    Nothing
      contained in this Plan shall prevent  the
      Board
      from adopting other or additional compensation arrangements, subject to
      shareholder approval if such approval is required; and such arrangements may
      be
      either generally applicable or applicable only in specific cases.

    

    (d)    Neither
      the adoption of this Plan nor the grant of any Award hereunder shall confer
      upon
      any employee of the Company or any Subsidiary, Parent, or Affiliate any right
      to
      continued employment with the Company or a Subsidiary, Parent, or Affiliate,
      as
      the case may be, or interfere in any way with the right of the Company or a
      Subsidiary, Parent, or Affiliate to terminate the employment of any of its
      employees at any time.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)   No
      later
      than the date as of which an amount first becomes includable in the gross income
      of the Participant for federal income tax purposes with respect to any Award
      under the 2007 Plan, the Participant shall pay to the Company, or make
      arrangements satisfactory to the Committee regarding the payment of, any
      federal, state, or local taxes of any kind required by law to be withheld with
      respect to such amount. The obligations of the Company under the 2007 Plan
      shall
      be conditional on such payment or arrangements, and the Company and any
      Subsidiary, Parent, or Affiliate shall, to the extent permitted by law, have
      the
      right to deduct any such taxes from any payment of any kind otherwise due to
      the
      Participant. If so provided in the related Award Agreement, a Participant may
      authorize the withholding of shares of Stock otherwise deliverable upon exercise
      of an option or the grant or vesting of an Award to satisfy any tax obligations
      arising from such exercise, grant, or vesting.

    

    (f)    
The
      actual or deemed reinvestment of dividends or dividend equivalents in additional
      Stock at the time of any dividend payment shall only be permissible if
      sufficient shares of Stock are available under Section 3 for such reinvestment
      (taking into account then outstanding Stock Options and other Plan
      Awards).

    

    (g)    To
      the
      extent that federal laws (such as the Code, the Exchange Act, or the Employee
      Retirement Income Security Act of 1974) do not otherwise control, this Plan
      and
      all Awards made and actions taken hereunder shall be governed by and construed
      in accordance with the laws of the State of Minnesota.

    

    (h)   Unless
      otherwise provided in the related Award Agreement, no rights granted hereunder
      may be assigned, transferred, pledged, or hypothecated (whether by operation
      of
      law or otherwise) or be subject to execution, attachment, or similar
      process, and
      any
      attempted assignment, transfer, pledge, hypothecation, or other disposition
      or
      levy of attachment or similar process upon any such right will be null and
      void
      and without effect.

    

    (i)     If
      any
      term, provision, or portion of this Plan or any Award granted hereunder shall
      be
      deemed unenforceable or in violation of applicable law, such term, provision,
      or
      portion of the 2007 Plan or the Award shall be deemed severable from all other
      terms, provisions, or portions of this Plan or the Award or any other Awards
      granted hereunder, which shall otherwise continue in full force and
      effect.

    

    
      	 	
              12.

            	
              Effective
                Date of Plan.

            

    

    

    The
      Plan
      shall be effective as of June 8, 2006 subject to the approval of the 2007 Plan
      by a majority of the votes cast by the holders of the Company's common stock
      at
      the annual shareholders' meeting next following adoption of the 2007 Plan.
      Any
      grants made under the 2007 Plan prior to such approval shall be effective when
      made (unless otherwise  specified
      by the Committee at the time of grant), but shall be conditioned on, and subject
      to, such approval of the 2007 Plan by such shareholders.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              13.

            	
              Term
                of Plan.

            

    

    

    No
      Incentive Stock Option shall be granted pursuant to the 2007 Plan on or after
      the tenth anniversary of the date of adoption of the 2007 Plan, but Incentive
      Stock Options granted prior to such tenth anniversary may extend beyond that
      date. All other Awards may be granted at any time and for any period unless
      otherwise provided by the 2007 Plan.

    

    Approved
      and adopted by the Board of Directors of APA Enterprises, Inc. as of June 8,
      2006 and approved by the shareholders on August 17, 2006.

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