Document:

Exhibit 10.24

 

MASTER LEASE AGREEMENT

No. 4281828

Part I

 

The Master Lease agreement between the undersigned Lessor and the
undersigned Lessee, is in consideration of the mutual covenants, terms and
conditions herein contained, and shall apply to certain property, together with
all components, parts, additions and attachments now or hereafter incorporated
therein and substitutions therefore (hereinafter collectively, “Equipment”)
described in the scheduled(s) to be executed pursuant hereto (each a “Schedule”).  Each Schedule shall be deemed to
incorporate by reference all terms and conditions of this Master Lease
Agreement.  This Master Lease Agreement,
together with every Schedule, shall be referred to as the “Lease,” and shall be
subject to the additional terms and conditions set forth in the Schedules.  All Schedules held by the same Lessor shall
constitute one lease.  The Lease shall be
effective with respect to each Schedule from and after the date said Schedule is
fully executed.  The term of this Lease
with respect to any item of Equipment shall commence a Lessor’s discretion on
either the date the Equipment is accepted by Lessee or the date the Schedule is
fully executed.  The term shall be set
forth in the applicable Schedule. 
Payments shall be made in the amounts specified in each Schedule along
with such amounts specified in this Master Lease Agreement.  Lessee must notify Lessor of Equipment to be
included in any proposed Schedule and Lessor reserves the right to accept
or reject such Equipment.  Lessor’s
acceptance of each Schedule shall be evidenced by Lessor’s execution of
such schedule at its office indicated below.  Lessor may refuse to pay for Equipment,
whether or not the Equipment has been delivered to Lessee, if (a) Lessee
fails to execute or cause to be executed, or fails to release or cause to be
released, any documents, instruments or agreements, including but not limited
to releases, subordinations, UCC filings, and landlord’s / mortgagee’s waivers,
as reasonably required by Lessor, or (b) there shall be in Lessor’s
reasonable judgment a material adverse change in the financial condition or
credit standing of Lessee, any guarantor, or any other party deemed material to
the transaction by respective parent companies, owns directly or indirectly,
now or at any time hereafter, majority voting stock or other controlling
interest) on an ongoing basis, Lessor and Lessee agree that any Schedule may
be supplemented or amended special written terms and conditions set forth in
such Schedule for that particular transaction and country only and may be
executed by any two authorized signatories of both Lessor (or affiliate of
Lessor) and Lessee (or Affiliate of Lessee). 
The Lessee shall, without notice, be jointly and severally liable for
the due performance of the obligations of its Affiliates under all Schedules
including, without limitation, all special terms and conditions negotiated by
such Affiliates

 

Part II

 

IMPORTANT:  NO SUPPLIER OR ANY
SALESPERSON IS AN AGENT OF LESSOR NOR ARE THEY AUTHORIZED TO WAIVE OR ALTER THE
LEASE.  THEIR REPRESENTATIONS OR
ASSURANCES OF CURE SHALL IN NO WAY AFFECT THE RIGHTS OR OBLIGATIONS OF LESSOR.

 

1.  TERMS AND CONDITIONS.  In consideration of Lessor’s purchase of the
Equipment selected by Lessee, Lessee leases from Lessor the Equipment
identified on each Schedule pursuant to the terms and conditions set forth
herein.  Lessee authorizes Lessor to
insert in each Schedule serial numbers and other identification data when
determined.  THIS LEASE CONSTITUTES THE
FULL AND COMPLETE AGREEMENT between the Lessor and Lessee in connection with
the equipment and MERGES ANY OTHER UNDERSTANDING.  In no case shall the Lessee’s or Supplier’s
transactional documentation (e.g. order forms and invoices) be deemed to apply
to Lessor.  Lessee agrees to pay Lessor a
documentation fee to be billed with the first lease payment of each Schedule to
cover account setup and administrative costs.

 

2.  LESSEE’S WARRANTIES AND
COVENANTS.  Lessee represents, warrants,
and covenants upon execution of this Master Lease Agreement and each Schedule that:
a) Lessee has read and understood each part of the Lease before it is signed;
b) Lessee selects and is fully satisfied with both the Equipment and the
Supplier and is advised of Lessee’s right to contact Supplier for a copy of
Supplier’s contract; c) Lessee will authorize Lessor to pay for the Equipment
only after Lessee receives and accepts the Equipment as fully operable for
Lessee’s purposes; d) financial information and other statements provided to Lessor
are accurate and complete and will be updated consistent with past practices
upon Lessor’s request during the Lease term e) Lessee hereby authorizes Lessor
to share and exchange with any of its affiliates and subsidiaries credit and
other information Lessor has obtained on lessee’s operations; f) Lessee is
currently meeting all debts as such come due; g) the Equipment is leased
exclusively for Lessee’s established business purposes and not for starting a
new business or for personal family or household purposes; h) Lessee has
unrestricted power to enter into the Lease, has duly authorized the person
executing it, and certifies that all signatures re authentic; i) Lessee will
pay all costs, fees and expenses connected with the Equipment, including teas, insurance,
repairs, shipping, credit fees, filing fees, termination fees, collection costs
(including reasonable attorney fees), licenses and other expenses normally paid
in a net lease and, to the extent Lessor pays any of the same, will reimburse
Lessor therefore promptly upon demand; j) Lessee has made an assessment of the
microchip and computer based systems and the software used in its business and
based upon such assessment represents that it is “Year 2000 Compliant” means
that all software, embedded microchips and other processing capabilities
utilized by, and material to the business operation or financial condition of
Lessee are able to interpret, store, transmit, receive and manipulate data
involving all calendar dates correctly and without causing any abnormal ending
scenarios in relation to dates after December 31, 1999.

 

1

 

3.  LESSEE’S WAIVER OF DAMAGES,
REMEDIES AND WARRANTIES FROM LESSOR, QUIET ENJOYMENT, a) Lessee leases the
Equipment from Lessor “AS IS/WHERE IS.” 
So long as no Event of Default exists, Lessor shall not interfere with
Lessee’s quiet enjoyment and use of the Equipment during the Lease term.  LESSOR MAKES ABSOLUTELY NO WARRANTIES,
EXPRESSED OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANT ABILITY OR FITNESS FOR
A PARTICULAR PURPOSE. B) IF THE EQUIIPMENT DOES NOT OPERATE AS REPRESENTED OR
WARRANTED BY SUPPLIER OR IS UNSATISFACTORY FOR ANY REASON WHATSOEVER, LESSEE
HEREBY WAIVES ANY CLAIM ON ACCOUNT THEREOF AGAINST LESSOR, ITS AFFILIATES AND
EMPLOYEES/AGENTS, BUT RESERVES SUCH CLAIMS AGAINST SUPPLIER.  Lessor herby grants Lessee the non-exclusive
right to exercise, at Lessee’s expense for the term of the Lease, all promises
and warranties from Supplier to Lessor. 
In no case shall Lessor have any duty toot enforce such warranties; c)
IN NO CASE SHALL LESSOR BE LIABLE TO LESSEE FOR SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL, OR PUNITIVE DAMAGES.  D)
To the extent permitted by applicable law, Lessee hereby waives Lessee’s right
to: 1) cancel or repudiate this Lease; 2) revoke acceptance of or reject the
Equipment; 3) claim a security interest in the Equipment; 4) accept partial
delivery of the Equipment; 5) sell or dispose of the Equipment upon rejection
or revocation; 6) seek “cover” in substation for the Lease from Lessor; and 7)
claim an agency relationship between Supplier and Lessor.

 

4.  PAYMENTS.  Lessee agrees to make lease payments in
advance and to pay per diem interim rent (at 1/3d of monthly rent per day) from
data of Equipment acceptance until the first regular payment and to pay such
other charges as provided herein.  THE
LEASE PAYMENTS MAY BE ADJUSTED PROPORTIONATELY UPWARD OR DOWNWARD BY UP TO
TWENTY (20%) PERCENT IF THE ACTUAL COST OF THE EQUIPMENT VARIES FROM THE
APPLICATION ESTIMATE.  Unless Lessor
gives written notice of a new address, all payments under this Lease shall be
sent to Lessor at the address provided below or in the Schedule.  Each payment received, at Lessor’s
discretion, will be applied first to the oldest charge due under the
Lease.  LESSEE AGREES THAT TIME IS OF THE
ESSENCE; AND TO MAKE PAYMENTS REGARDLESS OF AY PROBLEMS LESSEE MIGHT HAVE WITH
THE EQUIPMENT, INCLUDING ITS POERATIN, CAPABILITY, INSTALLATION, OR REPAIR REGARDLESS
OF ANY CLAIM, SETOFF, COUNTERCLAIM OR DEFENSE LESSEE MIGHT HAVE AGAINST THE
VENDOR, DISTRIBUTOR, OR MANUFACTURERE (“SUPPLIER”), AND ANY SALESPERSON OR
OTHER THIRD PARTY.  In the event Lessee
fails to apply any amounts due hereunder or to perform any of its other
obligations under this Lease, Lessor may, at its option, pay such amounts or
perform such obligations, and Lessee shalL reimburse Lessor the amount of such
payment or cost of such performance upon demand, together with interest
pursuant to Section 12.  Without
Lessor’s prior written consent, any payment to Lessor’s bank lock box of a
smaller sum than due at any time under the Lease shall not constitute a release
or an accord and satisfaction for any greater sum due, or to become due,
regardless of any endorsement restriction, unless otherwise agreed by both
parties in a signed writing.  Advance
payments and security deposits shall not bear interest and may be commingled
with other funds.  Unless the application
is rejected by Lessor, if the applicable Schedule is never finalized, any
advance payment will be retained by Lessor in liquidation of documentation and
processing expenses.

 

5.  TAXES, ASSESSMENTS AND
FEES.  Lessee agrees to pay all
licensing, filing and registration fees: 
to keep the Equipment free of all liens and encumbrances; TO SHOW THE
EQUIPMENT AS “LEASED EQUIPMENT” ON TAX RETURNS; TO PAY ALL PERSONAL PROPERTY
TAXES ASSESSED AGAINST THE EQUIPMENT; to pay all other taxes, assessments, fees
and penalties which may be levied or assessed in respect to the Equipment, its use
or any interest therein, or any lease payments, including but not limited to
all federal, state, and local taxes, however designated, levied or assessed,
whether upon Lessee or Lessor or the Equipment or upon the sale, ownership, use
or operation, excepting only income taxes levied on the Lessor.  Lessor may, at its option, pay on Lessee’s
behalf such taxes and other amounts, file applicable returns, and collect full
reimbursement plus reasonable costs incurred in collecting taxes, assessments,
or fees for which lessee is liable. 
Lessee agrees that Lessor is entitled to all tax benefits resulting from
ownership of the Equipment.  Lessee
agrees that, should any such tax benefits be disallowed, Lessee shall indemnify
Lessor for such loss by paying Lessor an amount equal to the value of the last
benefits.  LESSOR MAKES NO WARRANTY,
EXPRESS OR IMPLIED, REGARDING LESSEE’S TAX OR ACCOUNTING TREATMENT OF THE
LEASE.

 

6.  NOTICE.  Any notices required to be given hereunder
shall be given in writing by either (a) hand delivery, (b) overnight
courier, (c) certified mail, or (d) facsimile, and directed to the
address of each party set forth in the Lease or to such other address as either
party may substitute by written notice from time to time.  In any legal action, Lessee waives personal
service and agrees to service of process by certified or registered mail,
return receipt requested, postage prepaid, at deemed complete five (5) days
after posting.

 

7.  SUCCESSORS AND
ASSIGNMENTS.  LESSEE AGREES NOT TO
TRANSFER, SELL, SUBLEASE, OR ENCUMBER EITHER THE EQUIPMENT OR ANY RIGHTS UNDER
THIS LEASE WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, which consent will not
be unreasonably withheld.  Even with
Lessor’s consent, Lessee shall remain jointly and severally liable with any
assignee.  In all cases, the provisions
of this Lease bind all heirs, executors, administrators, successor, trustees,
and assigns of the Lessee.  LESSOR MAY,
AT ITS OPTION, ASSIGN ITS RIGHTS AND INTERESTS AT ANY TIME UNDER THIS LEASE
WITHOUT NOTICE.  Lessee agrees that
Lessor’s assigns will have the same rights and remedies as Lessor.  Lessee agrees that Lessor shall remain
responsible for all Lessor obligations and that the rights of Lessor’s assigns
will not be subject to defenses or seloffs that Lessee may have against
Lessor.  Lessee agrees that Lessor is not
an agent of any assigns and that such assigns are not agents of Lessor.  Lessee stipulates that any such assignment by
Lessor shall not materially change Lessee’s duties, obligations or risks under
this Lease.

 

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8.  OWNERSHIP AND TITILE. Except
for licenses and intellectual property. 
Lessor is the sole owner of the Equipment, has sole title and all
residual rights, has the right to inspect the Equipment, and has the right to
affix and display notice of Lessor’s ownership thereon.  Lessee acknowledges that any licenses or
other intellectual property, included or funded with the Equipment, is not
provided by or owned by Lessor, and therefore is not included in any purchase
option under this lease.  The Equipment
shall remain Lessor’s personal property whether or not affixed to realty and
shall not be part of any real property on which it is placed.  Lessee agrees to maintain the Equipment so
that it may be removed from the property or building where located without
damage.  At Lessor request, Lessee shall
obtain a landlord and/or mortgagee waiver for the Equipment.  Unless removed before Lease termination, all
additions, attachments, and accessories placed on the Equipment become part of
the Equipment and Lessor’s property. 
Copyrighted materials and materials subject to other intellectual
property rights may be used only in accordance with the terms of the license
relating thereto.  Lessee authorizes Lessor
to file at Lessor’s option informational financing statements and/or fixture
filings without Lessee’s signature and, if a signature is required by law,
Lessee appoints Lessor as Lessee’s attorney-in-fact to execute such statements
and filings.  For purposes of any filing
and without contravening any claim of title or true lease status, Lessee hereby
grants Lessor a security interest in the Lease and equipment, and any licenses
of intellectual property used with the Equipment and all interest of Lessee therein,
an all proceeds and products thereof to secure all obligations to Lessor  (and its affiliates and subsidiaries) whether
arising in connection with this Lease or otherwise.

 

9.  OPERATION AND
TERMINATION.  Lessee shall be solely
responsible for the installation, operation, and maintenance of the Equipment;
shall keep it in good condition and running order, and shall use and operate
the Equipment in compliance with applicable laws and vendor licenses.  If the Equipment is of the type not normally
maintainable by the Lessee, the Lessee shall maintain at its own expense
throughout the Lease term a maintenance contract acceptable to Lessor.  Upon return to Lessor, the Equipment must be
eligible, without further cost or expense, for immediate continuation of
maintenance coverage.  Lessee agrees to
keep and use the Equipment only at the business address identified in writing
by Lessee to Lessor, to never abandon the Equipment, and to never relinquish
possession of the Equipment except to Seller’s agent.  At the end of the Lease term, if Lessee
exercises no purchase option, Lessee must contact Lessor, who will designate
the return location within the continental United States.  Lessee shall immediately crate, insure and
ship all returned equipment to the designated location at is own expense in the
same condition as when received, excepting only reasonable wear and tear.  Unless Lessee exercises the purchase option
or return option under the Lease with ninety (90) days written notice prior to
Lease expiration and, in case of returns, unless Lessor actually receives the
Equipment at the return location within ten (10) days of Lease
termination, the Lease renews automatically from month to month, and Lessee
agrees to make a full monthly lease payment at the last effective rate under
the Lease for each holdover month or part thereof until Lessor receives the
Equipment.  Lessee agrees to accept and
pay a separate billing for all damaged and missing Equipment, including any components
and peripheral parts.

 

10.  RISK OF LOSS AND
INSURANCE.  Commencing on the date
Equipment is delivered to Lessee and until Lessee has returned the Equipment to
the designated location, Lessee bears the entire risk of loss or damage to the
Equipment, regardless how arising. 
Lessee shall immediately notify Lessor of the occurrence of any loss or
other occurrence affecting Lessor’s interests and shall repair or replace the
Equipment at Lessee’s expense.  In such
event, Lessee agrees to continue to meet all payment ant other obligations under
the lease.  Lessee agrees, at its cost,
to a) keep the Equipment insured against all risks of physical loss or damage
for its full replacement value, naming Lessor as loss payee; and b) maintain
public liability insurance, covering personal injury and property damage for
not less than $300,000 per occurrence, or in such other amount as Lessor may
request or accept, naming Lessor as an additional insured.  Such insurance policy must 1) be issued by an
insurance carrier rated B+ or better by A.M Best and Company, 2) provide Lessor
with not less than 15 days prior written notice of cancellation, non-renewal or
amendment, and 3) provide deductibles not in excess of amounts acceptable to
Lessor.  Lessee must provide Lessor with
evidence of coverage within 30days after (i) delivery of the Equipment to
Lessee, or (ii) any notice Lessor may send Lessee requesting evidence of
coverage, whichever is earlier.  Lessee
acknowledges that Lessor cannot advise Lessee on insurance adequacy or
coverage, as Lessor is not licensed as an insurance agency or insurance
company.  If Lessee fails to provide
evidence of coverage meeting the foregoing requirements, Lessor may, but is not
obligated to, for its interest only, (A) include the Equipment under
Lessor’s risk management program for the loss, damage or destruction of the
Equipment and to charge Lessee a fee which Lessee will be required to pay
Lessor or (B) obtain property and/or liability insurance coverage, from
any authorized insurance carrier of Lessor’s choice, including affiliates, and
Lessee must repay to Lessor over the term of the applicable Lease the insurance
premiums Lessor paid for such coverage. 
Such premiums may be repaid by Lessor, and Lessor’s insurance policy
will cover such risks and include such deductibles, and if any, as Lessor any
request from its insurance provider. 
Lessee may wish to acquire may be higher or lower than the cost of
Lessor’s policy.  At Lessee’s sole
discretion and expense, it may wish to obtain insurance coverage from its
insurance company for any interest it may have in the Equipment or the
applicable Leas.  The proceeds of
insurance shall be applied at Lessor’s sole, election toward the replacement or
repair of the Equipment or payment towards Lessee’s obligation.  If there has been a Lessee Event of Default,
Lessee appoints Lessor as attorney in fact to make any claim for, receive
payment of, or execute or endorse all documents, checks or drafts for loss or
damage or return of premium under such insurance.

 

11.  INDEMNITY.  Lessee agrees to indemnify, defend and hold
Lessor harmless from and against, any and all damages (including special,
indirect, incidental and consequential damages), liabilities (including
liabilities for death and personal injury), penalties, claims and expenses (a
Claim”), including any and all attorney’s fees and legal expenses, arising from
or caused directly or indirectly by any actual or alleged use, selection,
possession, maintenance, condition (whether or not latent or discoverable),
operation, location, delivery or transportation of any item or Equipment.  Should Lessee be entitled under applicable
law to revoke its acceptance of the 

 

3

 

Equipment. Lessee agrees to pay and indemnify Lessor for any payment by
Lessor to the Supplier of the Equipment. 
The provisions of this Section 11 shall survive the expiration or
other termination of the Lease.

 

12.  COLLECTION CHARGES AND
ATTORNEY’S FEES.  If any part of any sum
is not paid when due, Lessee agrees to pay Lessor; a) in the first month, a
late charge to compensate Lessor for collecting and processing the late sum,
stipulated and liquidated to be the greater of $.10 per dollar of each delayed
sum or $25; plus b) a charge for every month after the first month in which the
sum is late to compensate Lessor for the inability to reinvest the sum,
stipulated and liquidated at 1 1⁄2% per month, or when less, the maximum allowed
by applicable law; plus c) all costs of collection, including collectors’
contingency fees, Lessor’s reasonable attorney fees as damages and net costs in
all proceeding s arising under this Lease, including any arbitration,
bankruptcy proceeding, civil action, mediation, counterclaim or post-judgment
action or appeal with respect to any of the foregoing; plus d) a returned-check
or non-sufficient fund (“NSF”) charge to reimburse Lessor for its time and
expense incurred with respect to a check that is returned for any reason,
stipulated and liquidated at the greater of $50 or actual bank charges to Lessor,
plus other amounts allowed by law.

 

13.  DEFAULT.  Lessee shall be in default of this Lease on
any of the following events (Lessee Event of Default”); a) Lessee fails to pay
any month’s rent within ten (10) days after it first becomes due; b)
Lessee assigns, moves, pledges, subleases, sells or relinquishes possession of
the Equipment, or attempts to do so, without Lessor’s prior written
authorization; c) Lessee breaches any of its warranties or other obligations
under this Lease, or any other agreement with Lessor, and fails to cure such
breach within ten (t10) days after Lessor sends notice of the existence of such
breach; d) any execution or writ of process is issued in any action or
proceeding to seize or detain the Equipment; e) Lessee or any guarantor dies,
becomes insolvent or unable to pay any debts when due; stops doing business as
a going concern; merges, consolidates, transfers all or substantially all of
its assets; makes an assignment for the benefit of creditors, appoints a
trustee or receiver or undergoes a substantial deterioration of financial
health or; f) Lessee or any guarantor fails to assume or reaffirm this Lease
obligation within sixty (60 days of the filing of any petition of protection
under the United States Bankruptcy Code.

 

14.  REMEDIES.  Upon the occurrence of any Lessee Event of
Default, Lessor has the right to be made whole by collecting or exercising any
or all of the following: a) without notice, accelerate under the Lease and any
other agreement between Lessor and Lessee all sums that are already due and the
discounted value (see 15a below) of those that will become due, including the
lease and fir market value of the Equipment (subject to 15b below), all lost or
recaptured tax benefits to Lessor, and any renewal and purchase obligations
which Lessee has contracted to pay; b) retake possession of the Equipment
without court order or other process of law, and for such purpose may enter
upon any premises where the Equipment may be, remove the same and apply any
proceeds as provided below, with Lessee being liable for all reasonable costs
and expenses incurred in the repossession, recover, storage, repair, sale,
release or other disposition of the Equipment; and/or c) exercise any remedy at
law or equity, notice thereof being expressly waived by Lessee.  In any proceeding under the Lease, all of
Lessee’s directors, officers, employees and agents shall be deemed authorized
or managing agents of Lessee for purposes of applicable law and court rules,
and Lessor may examine such persons as if under cross examination, and any
discovery evidence or disposition of them shall be admissible as evidence in
such proceeding.  Lessor’s action or
failure to act on one remedy constitutes neither an election to be limited
thereto nor a waiver of any other remedy or a release of Lessee from the
liability to return the Equipment or for any loss or Claim with respect
thereto.  The provisions of this Lease
are severable and shall not be affected or impaired if any provision is held
unenforceable, invalid, or illegal.  Any
provisions held in conflict with any statute or rule of law shall be
deemed inoperative only to the extent of such conflict and shall be modified to
the extent possible to conform with such statutes or rule.

 

15.  MITIGATION OF DAMAGES.  In furtherance of the mitigation of damages,
Lessee agrees and stipulates; a) Each accelerated sum and lease-and fair market
value shall have a discounted or present value computed at 6% per annum; b)
Should Lessor use or dispose of any returned or repossessed Equipment, Lessor
will credit the amount that Lessee owes (see 14a above) with any excess which
Lessor actually recovers over the cost of retaking and disposing of the
Equipment.  Such credit shall not be deemed
to be an equity offset but shall be in full mitigation of Lessor’s repossession
of the Equipment before the end of the Lease; c) To encourage and facilitate
settlement of any dispute, and to apportion litigation costs associated
therewith, any deposition of any witness, whether a party or not, shall be
taken by telephone and/or by video tape in the county where the witness works
or resides.  Such deposition may be used
for any purpose including any discovery, trial, or proceeding as long as the
deponent resides or works more than 100 miles away therefrom.  No party shall require any witness to attend
any deposition, trial, or proceeding more than 100 miles from where that
witness resides or works without first tendering to that witness full payment
of all costs reasonably necessary to allow such attendance including travel,
transportation, lodging ad meal; d) Any action under or in connection with this
Lease by Lessee for claims against Lessor, its affiliates, or employees or
against shall be commenced within one (1) year after any such cause of
action accrues.

 

16.  CONSENT TO MICHIGAN LAW,
JURISDICTION, VENUE, AND NON-JURY TRIAL. 
Lessee consents, agrees, and stipulates that:  a) this Lease shall be deemed fully executed
and performed in the State of Michigan and shall be governed by and construed
in accordance with the laws thereof (All parties stipulate that no conventions
of the United Nations, including the Convention on contracts for the
International sale of Goods, shall apply ant any time to the Lease, unless
expressly agreed to in the applicable Schedule and then only for that
schedule); and b) in any action, proceeding, or appeal on any matter related to
or arising out of this Lease, Lessor and Lessee 1) SHALL BE SOLELY SUBJECT TO
THE PERSONAL JURISDICTION OF THE COURTS OF THE ABOVE STATE, including any state
or federal court sitting therein, and all court rules therefrom; and 2)
SHALL ACCEPT 

 

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VENUE SOLELY IN ANY FEDERAL OR STATE COURT IN THE COUNTY OF LESSOR’S
ADMINISTRATIVE OFFICE.  LESSOR AND LESSEE
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY.

 

5Exhibit 10.25

 

AVIZA TECHNOLOGY, INC.

 

2003 EQUITY INCENTIVE
PLAN

 

1.             Purposes
of the Plan.  The purposes of the Aviza Technology, Inc. 2003
Equity Incentive Plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company’s
business.  Options granted under the Plan
may be Incentive Stock Options or Non-Qualified Stock Options, as determined by
the Administrator at the time of grant. 
Stock Purchase Rights may also be granted under the Plan.

 

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

 

(a)           “Acquisition”
means (1) a dissolution, liquidation or sale of all or substantially all
of the assets of the Company; (2) a merger or consolidation in which the
Company is not the surviving corporation; or (3) a reverse merger in which
the Company is the surviving corporation but the shares of the Company’s common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise.

 

(b)           “Administrator”
means the Board or the Committee responsible for conducting the general
administration of the Plan, as applicable, in accordance with Section 4
hereof.

 

(c)           “Applicable
Laws” means the requirements relating to the administration of stock option
plans 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 Options or Stock Purchase Rights are granted under the Plan.

 

(d)           “Board”
means the Board of Directors of the Company.

 

(e)           “Code”
means the Internal Revenue Code of 1986, as amended, or any successor statute
or statutes thereto.  Reference to any
particular Code section shall include any successor section.

 

(f)            “Committee”
means a committee appointed by the Board in accordance with Section 4
hereof.

 

(g)           “Common
Stock” means the common stock of the Company.

 

(h)           “Company”
means Aviza Technology, Inc., a Delaware corporation.

 

 

(i)            “Consultant”
means any consultant or adviser if: (i) the consultant or adviser renders bona fide services to the Company or any Parent or
Subsidiary of the Company; (ii) the services rendered by the consultant or
adviser are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities; and (iii) the consultant
or adviser is a natural person who has contracted directly with the Company or
any Parent or Subsidiary of the Company to render such services.

 

(j)            “Director”
means a member of the Board.

 

(k)           “Employee”
means any person, including an Officer or Director, who is an employee (as
defined in accordance with Section 3401(c) of the Code) of the
Company or any Parent or Subsidiary of the Company.  A Service Provider shall 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,
its Parent, any Subsidiary, or any successor. 
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.  Neither service as
a Director nor payment of a director’s fee by the Company shall be sufficient,
by itself, to constitute “employment” by the Company.

 

(l)            “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto. 
Reference to any particular Exchange Act section shall include any
successor section.

 

(m)          “Fair
Market Value” means, as of any date, the value of a share of Common Stock
determined as follows:

 

(i)            If the
Common Stock is listed on any established stock exchange or a national market
system, including, without limitation, The Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for a share of such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

 

(ii)           If the
Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the
high bid and low asked prices for a share of the Common Stock on the last
market trading day prior to the day of determination; or

 

(iii)          In
the absence of an established market for the Common Stock, the Fair Market
Value thereof shall be determined in good faith by the Administrator.

 

2

 

(n)           “Holder”
means a person who has been granted or awarded an Option or Stock Purchase
Right or who holds Shares acquired pursuant to the exercise of an Option or
Stock Purchase Right.

 

(o)           “Incentive
Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Administrator.

 

(p)           “Independent
Director” means a Director who is not an Employee of the Company.

 

(q)           “Non-Qualified
Stock Option” means an Option (or portion thereof) that is not designated
as an Incentive Stock Option by the Administrator, or which is designated as an
Incentive Stock Option by the Administrator but fails to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

 

(r)            “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.

 

(s)           “Option”
means a stock option granted pursuant to the Plan.

 

(t)            “Option
Agreement” means a written agreement between the Company and a Holder
evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms
and conditions of the Plan.

 

(u)           “Parent”
means any corporation, whether now or hereafter existing (other than the
Company), in an unbroken chain of corporations ending with the Company if each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing more than fifty percent of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

(v)           “Plan”
means this 2003 Equity Incentive Plan.

 

(w)          “Public
Trading Date” means the first date upon which Common Stock of the Company
is listed (or approved for listing) upon notice of issuance on any securities
exchange or designated (or approved for designation) upon notice of issuance as
a national market security on an interdealer quotation system.

 

(x)            “Restricted
Stock” means Shares acquired pursuant to the exercise of an unvested Option
in accordance with Section 10(h) below or pursuant to a Stock
Purchase Right granted under Section 12 below.

 

(y)           “Rule 16b-3”
means that certain Rule 16b-3 under the Exchange Act, as such Rule may
be amended from time to time.

 

3

 

(z)            “Section 16(b)”
means Section 16(b) of the Exchange Act, as such Section may be
amended from time to time.

 

(aa)         “Securities
Act” means the Securities Act of 1933, as amended, or any successor statute
or statutes thereto.  Reference to any
particular Securities Act section shall include any successor section.

 

(bb)         “Service
Provider” means an Employee, Director or Consultant.

 

(cc)         “Share”
means a share of Common Stock, as adjusted in accordance with Section 13
below.

 

(dd)         “Stock
Purchase Right” means a right to purchase Common Stock pursuant to Section 12
below.

 

(ee)         “Subsidiary”
means any corporation, whether now or hereafter existing (other than the
Company), in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing more than fifty percent of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

 

3.             Stock
Subject to the Plan.  Subject to the
provisions of Section 13 of the Plan, the shares of stock subject to Options
or Stock Purchase Rights shall be Common Stock. 
Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of Shares which may be issued upon exercise of such Options or
Stock Purchase Rights is 2,000,000 Shares. 
Shares issued upon exercise of Options or Stock Purchase Rights may be
authorized but unissued, or reacquired Common Stock.  If an Option or Stock Purchase Right expires
or becomes unexercisable without having been exercised in full, the unpurchased
Shares which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated).  Shares which are delivered by the Holder or
withheld by the Company upon the exercise of an Option or Stock Purchase Right
under the Plan, in payment of the exercise price thereof or tax withholding
thereon, may again be optioned, granted or awarded hereunder, subject to the
limitations of this Section 3.  If
Shares of Restricted Stock are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan (unless the Plan has terminated). 
Notwithstanding the provisions of this Section 3, no Shares may
again be optioned, granted or awarded if such action would cause an Incentive
Stock Option to fail to qualify as an Incentive Stock Option under Code Section 422.

 

4.             Administration
of the Plan.

 

(a)           Administrator.  Unless and until the Board delegates
administration to a Committee as set forth below, the Plan shall be
administered by the Board.  The Board may
delegate administration of the Plan to a Committee or Committees of one or more
members of the Board, and the term “Committee” shall apply to any person or
persons to whom such

 

4

 

authority has been
delegated.  If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board.  Notwithstanding the foregoing, however, from
and after the Public Trading Date, a Committee of the Board shall administer
the Plan and the Committee shall consist solely of two or more Independent
Directors each of whom is an “outside director,” within the meaning of Section 162(m)
of the Code, a “non-employee director” within the meaning of Rule 16b-3,
and qualifies as “independent” within the meaning of any applicable stock
exchange listing requirements.  Members
of the Committee shall also satisfy any other legal requirements applicable to
membership on the Committee, including requirements under the Sarbanes-Oxley
Act of 2002 and other Applicable Laws. 
Within the scope of such authority, the Board or the Committee may (i) delegate
to a committee of one or more members of the Board who are not Independent
Directors the authority to grant awards under the Plan to eligible persons who
are either (1) not then “covered employees,” within the meaning of Section 162(m)
of the Code and are not expected to be “covered employees” at the time of
recognition of income resulting from such award or (2) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the
Code and/or (ii) delegate to a committee of one or more members of the
Board who are not “non-employee directors,” within the meaning of Rule 16b-3,
the authority to grant awards under the Plan to eligible persons who are not
then subject to Section 16 of the Exchange Act.  The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan.  Appointment of Committee members shall be
effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board.  Vacancies in the Committee may only be filled
by the Board.

 

(b)           Powers
of the Administrator.  Subject to the
provisions of the Plan and the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its sole discretion:

 

(i)            to
determine the Fair Market Value;

 

(ii)           to select
the Service Providers to whom Options and Stock Purchase Rights may from time
to time be granted hereunder;

 

(iii)          to
determine the number of Shares to be covered by each such award granted
hereunder;

 

(iv)          to approve
forms of agreement for use under the Plan;

 

(v)           to
determine the terms and conditions of any Option or Stock Purchase Right
granted hereunder (such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
vest or be

 

5

 

exercised (which may be
based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine);

 

(vi)          to
determine whether to offer to buyout a previously granted Option as provided in
subsection 10(i) and to determine the terms and conditions of such
offer and buyout (including whether payment is to be made in cash or Shares);

 

(vii)         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 qualifying for preferred tax treatment under foreign tax laws;

 

(viii)        to
allow Holders to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option or
Stock Purchase Right that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld based on the statutory withholding
rates for federal and state tax purposes that apply to supplemental taxable
income.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined.  All
elections by Holders to have Shares withheld for this purpose shall be made in
such form and under such conditions as the Administrator may deem necessary or
advisable;

 

(ix)           to amend
the Plan or any Option or Stock Purchase Right granted under the Plan as provided
in Section 15; and

 

(x)            to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan and to exercise such powers and perform such acts as the Administrator
deems necessary or desirable to promote the best interests of the Company which
are not in conflict with the provisions of the Plan.

 

(c)           Effect
of Administrator’s Decision.  All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Holders.

 

5.             Eligibility.  Non-Qualified Stock Options and Stock
Purchase Rights may be granted to Service Providers. Incentive Stock Options
may be granted only to Employees.  If
otherwise eligible, a Service Provider who has been granted an Option or Stock
Purchase Right may be granted additional Options or Stock Purchase Rights.

 

6.             Limitations.

 

(a)           Each
Option shall be designated by the Administrator in the Option Agreement as
either an Incentive Stock Option or a Non-Qualified Stock Option.  However, notwithstanding such designations,
to the extent that the aggregate Fair Market Value of Shares subject to a
Holder’s Incentive Stock Options and other incentive stock options granted by
the Company, any Parent or Subsidiary, which become exercisable for the first
time during any

 

6

 

calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options or other options shall be treated as Non-Qualified Stock Options.

 

For
purposes of this Section 6(a), Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time of grant.

 

(b)           Neither
the Plan, any Option nor any Stock Purchase Right shall confer upon a Holder
any right with respect to continuing the Holder’s employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Holder’s right or the Company’s right to terminate such employment or
consulting relationship at any time, with or without cause.

 

(c)           No Service
Provider shall be granted, in any calendar year, Options or Stock Purchase
Rights to purchase more than 2,000,000 Shares; provided,
however, that the foregoing limitation shall not apply prior to the
Public Trading Date and, following the Public Trading Date, the foregoing
limitation shall not apply until the earliest of: (i) the first material
modification of the Plan (including any increase in the number of shares
reserved for issuance under the Plan in accordance with Section 3); (ii) the
issuance of all of the shares of Common Stock reserved for issuance under the
Plan; (iii) the expiration of the Plan; (iv) the first meeting of
stockholders at which Directors of the Company are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security of the Company under Section 12
of the Exchange Act; or (v) such other date required by Section 162(m)
of the Code and the rules and regulations promulgated thereunder.  The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company’s capitalization
as described in Section 13.  For
purposes of this Section 6(c), if an Option is canceled in the same
calendar year it was granted (other than in connection with a transaction
described in Section 13), the canceled Option will be counted against the
limit set forth in this Section 6(c). 
For this purpose, if the exercise price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option.

 

7.             Term
of Plan.  The Plan shall become
effective upon its initial adoption by the Board and shall continue in effect
until it is terminated under Section 15 of the Plan.  No Options or Stock Purchase Rights may be
issued under the Plan after the tenth (10th) anniversary of the earlier of (i) the
date upon which the Plan is adopted by the Board or (ii) the date the Plan
is approved by the stockholders.

 

8.             Term
of Option.  The term of each Option
shall be stated in the Option Agreement; provided, however,
that the term shall be no more than ten (10) years from the date of grant
thereof.  In the case of an Incentive
Stock Option granted to a Holder who, at the time the Option is granted, owns
(or is treated as owning under Code Section 424) 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 term of the Option shall be five (5) years
from the date of grant or such shorter term as may be provided in the Option
Agreement.

 

7

 

9.             Option
Exercise Price and Consideration.

 

(a)           Except as
provided in Section 13, the per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

 

(i)            In the
case of an Incentive Stock Option

 

(A)          granted to
an Employee who, at the time of grant of such Option, owns (or is treated as
owning under Code Section 424) 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 shall be no less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of grant.

 

(B)           granted to
any other Employee, the per Share exercise price shall be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(ii)           In the
case of a Non-Qualified Stock Option

 

(A)          granted to
a Service Provider who, at the time of grant of such Option, 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 exercise price shall be
no less than one hundred ten percent (110%) of the Fair Market Value per Share
on the date of the grant.

 

(B)           granted to
any other Service Provider, the per Share exercise price shall be no less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

 

(iii)          Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other
than as required above pursuant to a merger or other corporate transaction.

 

(b)           The consideration
to be paid for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Administrator (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, a full recourse
promissory note bearing interest (at no less than such rate as is a market rate
of interest and which then precludes the imputation of interest under the
Code), payable upon such terms as may be prescribed by the Administrator, and
structured to comply with Applicable Laws, (4) with the consent of the
Administrator, other Shares which (x) in the case of Shares acquired from
the Company, have been owned by the Holder for more than six (6) months on
the date of surrender, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which such
Option shall be exercised, (5) with the consent of the Administrator,
surrendered Shares then issuable upon exercise of the Option having a Fair

 

8

 

Market Value on the date
of exercise equal to the aggregate exercise price of the Option or exercised
portion thereof, (6) with the consent of the Administrator, property of
any kind which constitutes good and valuable consideration, (7) with the
consent of the Administrator, delivery of a notice that the Holder has placed a
market sell order with a broker with respect to Shares then issuable upon
exercise of the Options and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price, provided, that
payment of such proceeds is then made to the Company upon settlement of such
sale, or (8) with the consent of the Administrator, any combination of the
foregoing methods of payment.

 

10.           Exercise
of Option.

 

(a)           Vesting;
Fractional Exercises.  Except as
provided in Section 13, Options granted hereunder shall be vested and
exercisable according to the terms hereof at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement; provided, however, that, except with
regard to Options granted to Officers, Directors or Consultants, in no event
shall an Option granted hereunder become vested and exercisable at a rate of
less than twenty percent (20%) per year over five (5) years from the date
the Option is granted, subject to reasonable conditions, such as continuing to
be a Service Provider.  An Option may not
be exercised for a fraction of a Share.

 

(b)           Deliveries
upon Exercise.  All or a portion of
an exercisable Option shall be deemed exercised upon delivery of all of the
following to the Secretary of the Company or his or her office:

 

(i)            A written
or electronic notice complying with the applicable rules established by
the Administrator stating that the Option, or a portion thereof, is
exercised.  The notice shall be signed by
the Holder or other person then entitled to exercise the Option or such portion
of the Option;

 

(ii)           Such
representations and documents as the Administrator, in its sole discretion,
deems necessary or advisable to effect compliance with Applicable Laws.  The Administrator may, in its sole
discretion, also take whatever additional actions it deems appropriate to
effect such compliance, including, without limitation, placing legends on share
certificates and issuing stop transfer notices to agents and registrars;

 

(iii)          Upon
the exercise of all or a portion of an unvested Option pursuant to Section 10(h),
a Restricted Stock purchase agreement in a form determined by the Administrator
and signed by the Holder or other person then entitled to exercise the Option
or such portion of the Option; and

 

(iv)          In the
event that the Option shall be exercised pursuant to Section 10(f) by
any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option.

 

9

 

(c)           Conditions
to Delivery of Share Certificates. 
The Company shall not be required to issue or deliver any certificate or
certificates for Shares purchased upon the exercise of any Option or portion
thereof prior to fulfillment of all of the following conditions:

 

(i)            The
admission of such Shares to listing on all stock exchanges on which such class
of stock is then listed;

 

(ii)           The
completion of any registration or other qualification of such Shares under any
state or federal law, or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body which the
Administrator shall, in its sole discretion, deem necessary or advisable;

 

(iii)          The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its sole discretion,
determine to be necessary or advisable;

 

(iv)          The lapse
of such reasonable period of time following the exercise of the Option as the
Administrator may establish from time to time for reasons of administrative
convenience; and

 

(v)           The
receipt by the Company of full payment for such Shares, including payment of
any applicable withholding tax, which in the sole discretion of the
Administrator may be in the form of consideration used by the Holder to pay for
such Shares under Section 9(b).

 

(d)           Termination
of Relationship as a Service Provider. 
If a Holder ceases to be a Service Provider other than by reason of the
Holder’s disability or death, such Holder may exercise his or her Option within
such period of time as is specified in the Option Agreement to the extent that
the Option is vested on the date of termination; provided,
however, that prior to the Public
Trading Date, such period of time shall not be less than thirty (30) days (but
in no event later than the expiration of the term of the Option as set forth in
the Option Agreement).  In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Holder’s termination.  If, on the date of termination, the Holder is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option immediately cease to be issuable under the Option and shall
again become available for issuance under the Plan.  If, after termination, the Holder does not
exercise his or her Option within the time period specified herein, the Option
shall terminate, and the Shares covered by such Option shall again become
available for issuance under the Plan.

 

(e)           Disability
of Holder.  If a Holder ceases to be
a Service Provider as a result of the Holder’s disability, the Holder may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of termination; provided, however, that
prior to the Public Trading Date, such period of time shall not be less than
six (6) months (but in no event later than the expiration of the term of
such

 

10

 

Option as set forth in
the Option Agreement).  In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for twelve (12) months following the Holder’s termination.  If such disability is not a “disability” as
such term is defined in Section 22(e)(3) of the Code, in the case of
an Incentive Stock Option such Incentive Stock Option shall automatically cease
to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Non-Qualified Stock Option from and after the day which is three (3) months
and one (1) day following such termination.  If, on the date of termination, the Holder is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan.  If, after termination, the Holder does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall again become available
for issuance under the Plan.

 

(f)            Death
of Holder.  If a Holder dies while a
Service Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement provided, however, that prior to the Public Trading Date, such period
of time shall not be less than six (6) months (but in no event later than
the expiration of the term of such Option as set forth in the Notice of Grant),
by the Holder’s estate or by a person who acquires the right to exercise the
Option by bequest or inheritance, but only to the extent that the Option is
vested on the date of death.  In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Holder’s termination.  If, at the time of death, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan.  The Option may be exercised by the executor
or administrator of the Holder’s estate or, if none, by the person(s) entitled
to exercise the Option under the Holder’s will or the laws of descent or
distribution.  If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under
the Plan.

 

(g)           Regulatory
Extension.  A Holder’s Option
Agreement may provide that if the exercise of the Option following the
termination of the Holder’s status as a Service Provider (other than upon the
Holder’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 shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in Section 8 or (ii) the
expiration of a period of three (3) months after the termination of the
Holder’s status as a Service Provider during which the exercise of the Option
would not be in violation of such registration requirements.

 

(h)           Early
Exercisability.  The Administrator
may provide in the terms of a Holder’s Option Agreement that the Holder may, at
any time before the Holder’s status as a Service Provider terminates, exercise
the Option in whole or in part prior to the full vesting of the Option; provided, however, that subject to Section 20, Shares
acquired upon exercise of an Option which has not fully vested may be subject
to any forfeiture, transfer or other restrictions as the Administrator may
determine in its sole discretion.

 

11

 

(i)            Buyout
Provisions.  The Administrator may at
any time offer to buyout for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Holder at the time that such offer is made.

 

11.           Non-Transferability
of Options and Stock Purchase Rights. 
Options and Stock Purchase Rights 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 Holder, only by the Holder.

 

12.           Stock
Purchase Rights.

 

(a)           Rights
to Purchase.  Stock Purchase Rights
may be issued either alone, in addition to, or in tandem with Options granted
under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer; provided, however,
that to the extent required to comply with applicable securities laws, the
purchase price of such Shares shall not be less than the purchase price
requirements set forth in Section 260.140.42 of Title 10 of the California
Code of Regulations.  The offer
shall be accepted by execution of a Restricted Stock purchase agreement in the
form determined by the Administrator.

 

(b)           Repurchase
Right.  Unless the Administrator
determines otherwise, the Restricted Stock purchase agreement shall grant the
Company the right to repurchase Shares acquired upon exercise of a Stock
Purchase Right upon the termination of the purchaser’s status as a Service
Provider for any reason.  Subject to Section 20,
the purchase price for Shares repurchased by the Company pursuant to such
repurchase right and the rate at which such repurchase right shall lapse shall
be determined by the Administrator in its sole discretion, and shall be set
forth in the Restricted Stock purchase agreement.

 

(c)           Other
Provisions.  The Restricted Stock
purchase agreement shall contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by the Administrator in its
sole discretion.

 

(d)           Rights
as a Shareholder.  Once the Stock
Purchase Right is exercised, the purchaser shall have rights equivalent to
those of a shareholder and shall be a shareholder when his or her purchase is
entered upon the records of the duly authorized transfer agent of the
Company.  No adjustment shall be made for
a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 13 of the
Plan.

 

12

 

13.           Adjustments
upon Changes in Capitalization, Merger or Asset Sale.

 

(a)           In the
event that the Administrator determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator’s
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended by the Company to be
made available under the Plan or with respect to any Option, Stock Purchase
Right or Restricted Stock, then the Administrator shall, in such manner as it
may deem equitable, adjust any or all of:

 

(i)            the
number and kind of shares of Common Stock (or other securities or property)
with respect to which Options or Stock Purchase Rights may be granted or
awarded (including, but not limited to, adjustments of the limitations in Section 3
on the maximum number and kind of shares which may be issued and adjustments of
the maximum number of Shares that may be purchased by any Holder in any
calendar year pursuant to Section 6(c));

 

(ii)           the number
and kind of shares of Common Stock (or other securities or property) subject to
outstanding Options, Stock Purchase Rights or Restricted Stock; and

 

(iii)          the
grant or exercise price with respect to any Option or Stock Purchase Right.

 

(b)           In the
event of any transaction or event described in Section 13(a), the
Administrator, in its sole discretion, and on such terms and conditions as it
deems appropriate, either by the terms of the Option, Stock Purchase Right or
Restricted Stock or by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Holder’s request, is hereby
authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Option,
Stock Purchase Right or Restricted Stock granted or issued under the Plan or to
facilitate such transaction or event:

 

(i)            To
provide for either the purchase of any such Option, Stock Purchase Right or
Restricted Stock for an amount of cash equal to the amount that could have been
obtained upon the exercise of such Option or Stock Purchase Right or
realization of the Holder’s rights had such Option, Stock Purchase Right or
Restricted Stock been currently exercisable or payable or fully vested or the
replacement of such Option, Stock Purchase Right

 

13

 

or Restricted Stock with
other rights or property selected by the Administrator in its sole discretion;

 

(ii)           To provide
that such Option or Stock Purchase Right shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in the Plan or the
provisions of such Option or Stock Purchase Right;

 

(iii)          To
provide that such Option, Stock Purchase Right or Restricted Stock be assumed
by the successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering the
stock of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
prices;

 

(iv)          To make
adjustments in the number and type of shares of Common Stock (or other
securities or property) subject to outstanding Options and Stock Purchase
Rights, and/or in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding Options, Stock Purchase
Rights or Restricted Stock or Options, Stock Purchase Rights or Restricted
Stock which may be granted in the future; and/or

 

(v)           To provide
that immediately upon the consummation of such event, such Option or Stock
Purchase Right shall not be exercisable and shall terminate; provided, that for a specified period of time prior to such
event, such Option or Stock Purchase Right shall be exercisable as to all
Shares covered thereby, and the restrictions imposed under an Option Agreement
or Restricted Stock purchase agreement upon some or all Shares may be
terminated and, in the case of Restricted Stock, some or all shares of such
Restricted Stock may cease to be subject to repurchase, notwithstanding
anything to the contrary in the Plan or the provisions of such Option, Stock
Purchase Right or Restricted Stock purchase agreement.

 

(c)           If the
Company undergoes an Acquisition, then any surviving corporation or entity or
acquiring corporation or entity, or affiliate of such corporation or entity,
may assume any Options, Stock Purchase Rights or Restricted Stock outstanding
under the Plan or may substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the transaction
described in this subsection 13(c)) for those outstanding under the
Plan.  In the event any surviving
corporation or entity or acquiring corporation or entity in an Acquisition, or
affiliate of such corporation or entity, does not assume such Options, Stock
Purchase Rights or Restricted Stock or does not substitute similar stock awards
for those outstanding under the Plan, then with respect to (i) Options,
Stock Purchase Rights or Restricted Stock held by participants in the Plan
whose status as a Service Provider has not terminated prior to such event, the
vesting of such Options, Stock Purchase Rights or Restricted Stock (and, if
applicable, the time during which such awards may be exercised) shall be
accelerated and made fully exercisable and all restrictions thereon shall lapse
at least ten (10) days prior to the closing of the Acquisition (and the
Options or Stock Purchase Rights terminated if not exercised prior to the
closing of such Acquisition), and (ii) any other Options or Stock Purchase
Rights outstanding

 

14

 

under the Plan, such
Options or Stock Purchase rights shall be terminated if not exercised prior to
the closing of the Acquisition.

 

(d)           Subject to
Section 3, the Administrator may, in its sole discretion, include such
further provisions and limitations in any Option, Stock Purchase Right,
Restricted Stock agreement or certificate, as it may deem equitable and in the
best interests of the Company.

 

(e)           The
existence of the Plan, any Option Agreement or Restricted Stock purchase
agreement and the Options or Stock Purchase Rights granted hereunder shall not
affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to
or affect the Common Stock or the rights thereof or which are convertible into
or exchangeable for Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

 

14.           Time
of Granting Options and Stock Purchase Rights.  The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or Stock Purchase Right, or such
other date as is determined by the Administrator.  Notice of the determination shall be given to
each Employee or Consultant to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.

 

15.           Amendment
and Termination of the Plan.

 

(a)           Amendment
and Termination.  The Board may at
any time wholly or partially amend, alter, suspend or terminate the Plan.  However, without approval of the Company’s
stockholders given within twelve (12) months before or after the action by the
Board, no action of the Board may, except as provided in Section 13,
increase the limits imposed in Section 3 on the maximum number of Shares
which may be issued under the Plan or extend the term of the Plan under Section 7.

 

(b)           Stockholder
Approval.  The Board shall 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 shall impair the
rights of any Holder, unless mutually agreed otherwise between the Holder and
the Administrator, which agreement must be in writing and signed by the Holder
and the Company.  Termination of the Plan
shall not affect the Administrator’s ability to exercise the powers granted to
it hereunder with respect to Options, Stock Purchase Rights or Restricted Stock
granted or awarded under the Plan prior to the date of such termination.

 

15

 

16.           Stockholder
Approval.  The Plan will be submitted
for the approval of the Company’s stockholders within twelve (12) months after
the date of the Board’s initial adoption of the Plan.  Options, Stock Purchase Rights or Restricted
Stock may be granted or awarded prior to such stockholder approval, provided
that such Options, Stock Purchase Rights and Restricted Stock shall not be
exercisable, shall not vest and the restrictions thereon shall not lapse prior
to the time when the Plan is approved by the stockholders, and provided further
that if such approval has not been obtained at the end of said twelve-month
period, all Options, Stock Purchase Rights and Restricted Stock previously
granted or awarded under the Plan shall thereupon be canceled and become null
and void.

 

17.           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, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

 

18.           Reservation
of Shares.  The Company, during the
term of this Plan, shall at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan.

 

19.           Information
to Holders and Purchasers.  Prior to
the Public Trading Date and to the extent required by Section 260.140.46
of Title 10 of the California Code of Regulations, the Company shall provide to
each Holder and to each individual who acquires Shares pursuant to the Plan,
not less frequently than annually during the period such Holder or purchaser
has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements.  Notwithstanding the preceding sentence, the
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.

 

20.           Repurchase
Provisions.  The Administrator in its
sole discretion may provide that the Company may repurchase Shares acquired
upon exercise of an Option or Stock Purchase Right upon the occurrence of
certain specified events, including, without limitation, a Holder’s termination
as a Service Provider, divorce, bankruptcy or insolvency; provided,
however, that any such repurchase right shall be set forth in the
applicable Option Agreement or Restricted Stock purchase agreement or in
another agreement referred to in such agreement and, provided further, that to
the extent required by Section 260.140.41 and Section 260.140.42 of
Title 10 of the California Code of Regulations, any such repurchase right set
forth in an Option or Stock Purchase Right granted prior to the Public Trading
Date to a person who is not an Officer, Director or Consultant shall be upon
the following terms:  (i) if the
repurchase option gives the Company the right to repurchase the shares upon
termination as a Service Provider at not less than the Fair Market Value of the
shares to be purchased on the date of termination of status as a Service
Provider, then (A) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of status as a

 

16

 

Service Provider (or in
the case of shares issued upon exercise of Options or Stock Purchase Rights
after such date of termination, within ninety (90) days after the date of the
exercise) or such longer period as may be agreed to by the Administrator and
the Plan participant and (B) the right terminates when the shares become
publicly traded; and (ii) if the repurchase option gives the Company the
right to repurchase the Shares upon termination as a Service Provider at the
original purchase price for such Shares, then (A) the right to repurchase
at the original purchase price shall lapse at the rate of at least twenty
percent (20%) of the shares per year over five (5) years from the date the
Option or Stock Purchase Right is granted (without respect to the date the
Option or Stock Purchase Right was exercised or became exercisable) and (B) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within ninety (90) days of termination of
status as a Service Provider (or, in the case of shares issued upon exercise of
Options or Stock Purchase Rights, after such date of termination, within ninety
(90) days after the date of the exercise) or such longer period as may be
agreed to by the Company and the Plan participant.

 

21.           Investment
Intent.  The Company may require a
Plan participant, as a condition of exercising or acquiring stock under any
Option or Stock Purchase Right, (i) to give written assurances
satisfactory to the Company as to the participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option or Stock Purchase Right; and (ii) to give written
assurances satisfactory to the Company stating that the participant is
acquiring the stock subject to the Option or Stock Purchase Right for the
participant’s own account and not with any present intention of selling or
otherwise distributing the stock.  The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (A) the issuance of the shares upon the exercise
or acquisition of stock under the applicable Option or Stock Purchase Right has
been registered under a then currently effective registration statement under
the Securities Act or (B) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the stock.

 

22.           Governing
Law.  The validity and enforceability
of this Plan shall be governed by and construed in accordance with the laws of
the State of Delaware without regard to otherwise governing principles of
conflicts of law.

 

17

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