Exhibit 10.1


 


CASELLA WASTE SYSTEMS, INC.


 


2006 STOCK INCENTIVE PLAN, AS AMENDED


 


1.                                      Purpose


 


The purpose of this 2006 Stock Incentive Plan (the “Plan”) of Casella
Waste Systems, Inc., a Delaware corporation (the “Company”), is to advance
the interests of the Company’s stockholders by enhancing the Company’s ability
to attract, retain and motivate persons who are expected to make important
contributions to the Company and by providing such persons with equity
ownership opportunities and performance-based incentives that are intended to
align their interests with those of the Company’s stockholders. Except where
the context otherwise requires, the term “Company” shall include any of the
Company’s present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the “Code”) and any other
business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as
determined by the Board of Directors of the Company (the “Board”).


 


2.                                      Eligibility


 


All of the Company’s employees, officers, directors, consultants and
advisors are eligible to receive options, stock appreciation rights, restricted
stock, restricted stock units and other stock-based awards (each, an “Award”)
under the Plan. Each person who receives an Award under the Plan is deemed a “Participant”.


 


3.                                      Administration
and Delegation


 


(a)                                 Administration
by Board of Directors.  The Plan will
be administered by the Board. The Board shall have authority to grant Awards
and to adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable. The Board may
construe and interpret the terms of the Plan and any Award agreements entered
into under the Plan. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be
the sole and final judge of such expediency. All decisions by the Board shall
be made in the Board’s sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board
shall be liable for any action or determination relating to or under the Plan
made in good faith.


 


(b)                                Appointment
of Committees.  To the extent
permitted by applicable law, the Board may delegate any or all of its powers
under the Plan to one or more committees or subcommittees of the Board (a “Committee”).
All references in the Plan to the “Board” shall mean the Board or a Committee
of the Board to the extent that the Board’s powers or authority under the Plan
have been delegated to such Committee. During such time as the Class A
Common Stock, $0.01 par value per share, of the Company (the “Common Stock”) is
registered under the Securities Exchange Act of 1934 (the “Exchange Act”), the
Board shall appoint one such Committee of not less than two members, each
member of which shall be an “outside director” within the meaning of Section 162(m) of
the Code and a “non-employee director” as defined in Rule 16b-3
promulgated under the Exchange Act. Grants of Awards intended to comply with Section 162(m) shall
be made only by such Committee.


 


(c)                                 Delegation
to Officers.  To the extent permitted
by applicable law, the Board may delegate to one or more officers of the
Company the power to grant Awards to employees or officers of the Company or
any of its present or future subsidiary corporations and to exercise such other
powers under the Plan as the Board may determine, provided that the Board shall
fix the terms of the Awards to be granted by such officers (including the
exercise price of such Awards, which may include a formula by which the
exercise price will be determined) and the maximum number of shares subject to
Awards that the officers may grant; provided further, however, that no officer
shall be authorized to


 


1

















 


grant Awards to any “executive
officer” of the Company (as defined by Rule 3b-7 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of
the Company (as defined by Rule 16a-1 under the Exchange Act).


 


4.                                      Stock
Available for Awards


 


(a)                                 Number
of Shares.  Subject to adjustment
under Section 10, Awards may be made under the Plan for up to such number
of shares of Common Stock as is equal to the sum of: (i) 1,275,000 shares
of Common Stock (of which 275,000 shares are reserved for issuance to
non-employee directors pursuant to Section 6 below), plus (ii) such
additional number of shares of Common Stock as is equal to the aggregate number
of shares subject to Awards granted under the Company’s 1993 Incentive Stock
Option Plan, 1994 Nonstatutory Stock Option Plan, 1996 Stock Option Plan, and
1997 Stock Inventive Plan which are not actually issued because such awards
expire or otherwise result in shares not being issued. For purposes of counting
the number of shares available for the grant of Awards under the Plan, (i) shares
of Common Stock covered by independent SARs shall be counted against the number
of shares available for the grant of Awards under the Plan; provided, however,
that independent SARs that may be settled in cash only shall not be so counted;
(ii) if any Award (A) expires or is terminated, surrendered or
canceled without having been fully exercised or is forfeited in whole or in
part (including as the result of shares of Common Stock subject to such Award
being repurchased by the Company at the original issuance price pursuant to a
contractual repurchase right) or (B) results in any Common Stock not being
issued (including as a result of an independent SAR that was settleable either
in cash or in stock actually being settled in cash), the unused Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan; provided, however, in the case of Incentive Stock Options (as
hereinafter defined), the foregoing shall be subject to any limitations under
the Code; and (iii) shares of Common Stock tendered to the Company by a
Participant to (A) purchase shares of Common Stock upon the exercise of an
Award or (B) satisfy tax withholding obligations (including shares
retained from the Award creating the tax obligation) shall not be added back to
the number of shares available for the future grant of Awards under the Plan.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.


 


(b)                                Sub-limits.  Subject to adjustment under Section 10,
the maximum number of shares of Common Stock with respect to which Awards may
be granted to any Participant under the Plan shall be 200,000 per fiscal year.
For purposes of the foregoing limit, the combination of an Option in tandem
with a SAR (as each is hereafter defined) shall be treated as a single Award.
The per-Participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code or
any successor provision thereto, and the regulations thereunder (“Section 162(m)”).


 


(c)                                 Substitute
Awards.  In connection with a merger
or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Board may grant Awards in
substitution for any options or other stock or stock-based awards granted by
such entity or an affiliate thereof. Substitute Awards may be granted on such
terms as the Board deems appropriate in the circumstances, notwithstanding any
limitations on Awards contained in the Plan. Substitute Awards shall not count
against the overall share limit set forth in Section 4(a), except as may
be required by reason of Section 422 and related provisions of the Code.


 


5.                                      Stock
Options


 


(a)                                 General.  The Board may grant options to purchase
Common Stock (each, an “Option”) and determine the number of shares of Common
Stock to be covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option, including
conditions relating to applicable federal or state securities laws, as it
considers necessary or advisable. An Option that is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory
Stock Option.”


 


2

















 


(b)                                Incentive
Stock Options.  An Option that the
Board intends to be an “incentive stock option” as defined in Section 422
of the Code (an “Incentive Stock Option”) shall only be granted to employees of
the Company, any of the Company’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the Code,
and any other entities the employees of which are eligible to receive Incentive
Stock Options under the Code, and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the Code. The Company
shall have no liability to a Participant, or any other party, if an Option (or
any part thereof) that is intended to be an Incentive Stock Option is not an
Incentive Stock Option or for any action taken by the Board, including without
limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock
Option.


 


(c)                                 Exercise
Price.  The Board shall establish the
exercise price of each Option and specify such exercise price in the applicable
option agreement; provided, however, that the exercise price shall be not less
than 100% of the Fair Market Value (as defined below) on the date the Option is
granted.


 


(d)                                Duration
of Options.  Each Option shall be
exercisable at such times and subject to such terms and conditions as the Board
may specify in the applicable option agreement, provided, however, that no
Option will be granted for a term in excess of 10 years.


 


(e)                                 No
Reload Rights.  No Option granted
under the Plan shall contain any provision entitling the optionee to the
automatic grant of additional Options in connection with any exercise of the
original Option.


 


(f)                                   Exercise
of Option.  Options may be exercised
by delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Board, together with payment in full as specified in Section 5(g) for
the number of shares for which the Option is exercised. Shares of Common Stock
subject to the Option will be delivered by the Company following exercise
either as soon as practicable or, subject to such conditions as the Board shall
specify, on a deferred basis (with the Company’s obligation to be evidenced by
an instrument providing for future delivery of the deferred shares at the time
or times specified by the Board).


 


(g)                                Payment
Upon Exercise.  Common Stock
purchased upon the exercise of an Option granted under the Plan shall be paid
for as follows:


 


(1)                                 in
cash or by check, payable to the order of the Company;


 


(2)                                 except
as may otherwise be provided in the applicable option agreement, by (i) delivery
of an irrevocable and unconditional undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price and
any required tax withholding or (ii) delivery by the Participant to the
Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price and any required tax withholding;


 


(3)                                 to
the extent provided for in the applicable option agreement or approved by the
Board, in its sole discretion, by delivery (either by actual delivery or
attestation) of shares of Common Stock owned by the Participant valued at their
fair market value as determined by (or in a manner approved by) the Board (“Fair
Market Value”), provided (i) such method of payment is then permitted
under applicable law, (ii) such Common Stock, if acquired directly from
the Company, was owned by the Participant for such minimum period of time, if
any, as may be established by the Board in its discretion and (iii) such
Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements;


 


(4)                                 to
the extent permitted by applicable law and provided for in the applicable
option agreement or approved by the Board, in its sole discretion, by (i) delivery
of a promissory note of


 


3

















 


the
Participant to the Company on terms determined by the Board, or (ii) payment
of such other lawful consideration as the Board may determine; or


 


(5)                                 by
any combination of the above permitted forms of payment.


 


(h)                                Limitation
on Repricing.  Unless such action is
approved by the Company’s stockholders: (i) no outstanding Option granted
under the Plan may be amended to provide an exercise price per share that is
lower than the then-current exercise price per share of such outstanding Option
(other than adjustments pursuant to Section 10) and (ii) the Board
may not cancel any outstanding option (whether or not granted under the Plan)
and grant in substitution therefor new Awards under the Plan covering the same
or a different number of shares of Common Stock and having an exercise price
per share lower than the then-current exercise price per share of the cancelled
option.


 


6.                                      Director
Options.


 


(a)                                 Initial
Grant.  Upon the commencement of
service on the Board by any individual who is not then an employee of the
Company or any subsidiary of the Company, the Company shall grant to such
person a Nonstatutory Stock Option to purchase 7,500 shares of Common Stock
(subject to adjustment under Section 10).


 


(b)                                Annual
Grant.  On the date of each annual
meeting of stockholders of the Company, the Company shall grant to each member
of the Board of Directors of the Company who is both serving as a director of
the Company immediately prior to and immediately following such annual meeting
and who is not then an employee of the Company or any of its subsidiaries, a
Nonstatutory Stock Option to purchase 7,500 shares of Common Stock (subject to
adjustment under Section 10); provided, however, that a director shall not
be eligible to receive an option grant under this Section 6(b) until
such director has served on the Board for at least twelve months.


 


(c)                                 Terms
of Director Options.  Options granted
under this Section 6 shall (i) have an exercise price equal to the
closing sale price (for the primary trading session) of the Common Stock on The
Nasdaq Stock Market or the national securities exchange on which the Common
Stock is then traded on the trading date immediately prior to the date of grant
(and if the Common Stock is not then traded on The Nasdaq Stock Market or a
national securities exchange, the Fair Market Value of the Common Stock on such
date), (ii) vest in three equal annual installments beginning on the first
anniversary of the date of grant provided that the individual has continued to
serve on the Board until at least the Annual Meeting of Stockholders
immediately preceding such vesting date provided that no additional vesting
shall take place after the Participant ceases to serve as a director and
further provided that the Board may provide for accelerated vesting in the case
of death, disability, attainment of mandatory retirement age or retirement
following at least 10 years of service, (iii) expire on the earlier
of 10 years from the date of grant or 90 days following cessation of
service on the Board and (iv) contain such other terms and conditions as
the Board shall determine.


 


4

















 


7.                                      Stock
Appreciation Rights.


 


(a)                                 General.  The Board may grant Awards consisting of a
Stock Appreciation Right (“SAR”) entitling the holder, upon exercise, to
receive an amount in Common Stock or cash or a combination thereof (such form
to be determined by the Board) determined by reference to appreciation, from
and after the date of grant, in the fair market value of a share of Common
Stock. The date as of which such appreciation or other measure is determined
shall be the exercise date.


 


(b)                                Grants.  Stock Appreciation Rights may be granted
in tandem with, or independently of, Options granted under the Plan.


 


(1)                                 Tandem
Awards.  When Stock Appreciation
Rights are expressly granted in tandem with Options, (i) the Stock
Appreciation Right will be exercisable only at such time or times, and to the
extent, that the related Option is exercisable (except to the extent designated
by the Board in connection with a Reorganization Event) and will be exercisable
in accordance with the procedure required for exercise of the related Option; (ii) the
Stock Appreciation Right will terminate and no longer be exercisable upon the
termination or exercise of the related Option, except to the extent designated
by the Board in connection with a Reorganization Event and except that a Stock
Appreciation Right granted with respect to less than the full number of shares
covered by an Option will not be reduced until the number of shares as to which
the related Option has been exercised or has terminated exceeds the number of
shares not covered by the Stock Appreciation Right; (iii) the Option will
terminate and no longer be exercisable upon the exercise of the related Stock
Appreciation Right; and (iv) the Stock Appreciation Right will be
transferable only with the related Option.


 


(2)                                 Independent
SARs.  A Stock Appreciation Right not
expressly granted in tandem with an Option will become exercisable at such time
or times, and on such conditions, as the Board may specify in the SAR Award.


 


(c)                                 Grant
Price.  The grant price or exercise
price of an SAR shall not be less than 100% of the Fair Market Value per share
of Common Stock on the date of grant of the SAR.


 


(d)                                Term.  The term of an SAR shall not be more than
10 years from the date of grant.


 


(e)                                 Exercise.  Stock Appreciation Rights may be exercised by
delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Board, together with any other documents required by the Board.


 


8.                                      Restricted
Stock; Restricted Stock Units.


 


(a)                                 General.  The Board may grant Awards entitling
recipients to acquire shares of Common Stock (“Restricted Stock”), subject to
the right of the Company to repurchase all or part of such shares at their
issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established by the Board
for such Award. Instead of granting Awards for Restricted Stock, the Board may
grant Awards entitling the recipient to receive shares of Common Stock to be
delivered at the time such shares of Common Stock vest (“Restricted Stock Units”)
(Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted
Stock Award”).


 


(b)                                Limitations
on Vesting.


 


(1)                                 Restricted
Stock Awards that vest based on the passage of time alone shall be zero percent
vested prior to the first anniversary of the date of grant, no more than 331/3% vested prior to the second anniversary
of the date of grant, and no more than 662/3%
vested prior to the third anniversary of the date of grant. Restricted Stock
Awards that vest upon the passage of time and


 


5

















 


provide for accelerated vesting based on performance shall not vest
prior to the first anniversary of the date of grant. This
subsection (8)(b)(1) shall not apply to Awards granted pursuant to Section 11(i).


 


(2)                                 Notwithstanding
any other provision of this Plan, the Board may, in its discretion, either at
the time a Restricted Stock Award is made or at any time thereafter, waive its
right to repurchase shares of Common Stock (or waive the forfeiture thereof) or
remove or modify any part or all of the restrictions applicable to the
Restricted Stock Award, provided that the Board may only exercise such rights
in extraordinary circumstances which shall include, without limitation, death
or disability of the Participant; estate planning needs of the Participant; a
merger, consolidation, sale, reorganization, recapitalization, or change in
control of the Company; or any other nonrecurring significant event affecting
the Company, a Participant or the Plan.


 


(c)                                 Terms
and Conditions for all Restricted Stock Awards.  The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for vesting
and repurchase (or forfeiture) and the issue price, if any.


 


(d)                                Additional
Provisions Relating to Restricted Stock.


 


(1)                                 Dividends.  Participants holding shares of Restricted
Stock will be entitled to all ordinary cash dividends paid with respect to such
shares, unless otherwise provided by the Board. If any dividends or distributions
are paid in shares, or consist of a dividend or distribution to holders of
Common Stock other than an ordinary cash dividend, the shares, cash or other
property will be subject to the same restrictions on transferability and
forfeitability as the shares of Restricted Stock with respect to which they
were paid. Each dividend payment will be made no later than the end of the
fiscal year in which the dividends are paid to shareholders of that class of
stock or, if later, the 15th day of the third month following the date the
dividends are paid to shareholders of that class of stock.


 


(2)                                 Stock
Certificates.  The Company may
require that any stock certificates issued in respect of shares of Restricted
Stock shall be deposited in escrow by the Participant, together with a stock
power endorsed in blank, with the Company (or its designee). At the expiration
of the applicable restriction periods, the Company (or such designee) shall
deliver the certificates no longer subject to such restrictions to the Participant
or if the Participant has died, to the beneficiary designated, in a manner
determined by the Board, by a Participant to receive amounts due or exercise
rights of the Participant in the event of the Participant’s death (the “Designated
Beneficiary”). In the absence of an effective designation by a Participant, “Designated
Beneficiary” shall mean the Participant’s estate.


 


(e)                                 Additional
Provisions Relating to Restricted Stock Units.


 


(1)                                 Settlement.  Upon the vesting of and/or lapsing of any
other restrictions (i.e., settlement) with respect to each Restricted
Stock Unit, the Participant shall be entitled to receive from the Company one
share of Common Stock or an amount of cash equal to the Fair Market Value of
one share of Common Stock, as provided in the applicable Award agreement. The
Board may, in its discretion, provide that settlement of Restricted Stock Units
shall be deferred, on a mandatory basis or at the election of the Participant.


 


(2)                                 Voting
Rights.  A Participant shall have no
voting rights with respect to any Restricted Stock Units.


 


(3)                                 Dividend
Equivalents.  To the extent provided
by the Board, in its sole discretion, a grant of Restricted Stock Units may
provide Participants with the right to receive an amount equal to any dividends
or other distributions declared and paid on an equal number of outstanding
shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be
paid currently or


 


6

















 


credited to an account for the Participants, may be settled in cash
and/or shares of Common Stock and may be subject to the same restrictions on
transfer and forfeitability as the Restricted Stock Units with respect to which
paid, as determined by the Board in its sole discretion, subject in each case
to such terms and conditions as the Board shall establish, in each case to be
set forth in the applicable Award agreement.


 


9.                                      Other
Stock Unit Awards.


 


Other Awards of shares of Common Stock, and other Awards that are
valued in whole or in part by reference to, or are otherwise based on, shares
of Common Stock or other property, may be granted hereunder to Participants (“Other
Stock Unit Awards”), including without limitation Awards entitling recipients
to receive shares of Common Stock to be delivered in the future and Awards
providing cash bonuses based solely on achievement of the performance goals set
forth in Section 11(i). Such Other Stock Unit Awards shall also be
available as a form of payment in the settlement of other Awards granted under
the Plan or as payment in lieu of compensation to which a Participant is
otherwise entitled. Other Stock Unit Awards may be paid in shares of Common
Stock or cash, as the Board shall determine. Subject to the provisions of the
Plan, the Board shall determine the terms and conditions of each Other Stock
Unit Award, including any purchase price applicable thereto.


 


10.                                Adjustments
for Changes in Common Stock and Certain Other Events.


 


(a)                                 Changes
in Capitalization.  In the event of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, or any dividend or distribution to holders
of Common Stock other than an ordinary cash dividend, (i) the number and
class of securities available under this Plan, (ii) the sub-limits set
forth in Section 4(b), (iii) the number and class of securities and
exercise price per share of each outstanding Option and each Option issuable
under Section 6, (iv) the share- and per-share provisions and the
exercise price of each Stock Appreciation Right, (v) the number of shares
subject to and the repurchase price per share subject to each outstanding
Restricted Stock Award and (vi) the share- and per-share-related
provisions and the purchase price, if any, of each outstanding Other Stock Unit
Award, shall be appropriately adjusted by the Company (or substituted Awards
may be made, if applicable) to the extent determined by the Board. Without
limiting the generality of the foregoing, in the event the Company effects a
split of the Common Stock by means of a stock dividend and the exercise price
of and the number of shares subject to such Option are adjusted as of the date
of the distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.


 


(b)                                Reorganization
Events.


 


(1)                                 Definition.  A “Reorganization Event” shall mean: (a) any
merger or consolidation of the Company with or into another entity as a result
of which all of the Common Stock of the Company is converted into or exchanged
for the right to receive cash, securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash, securities or
other property pursuant to a share exchange transaction or (c) any
liquidation or dissolution of the Company.


 


(2)                                 Consequences
of a Reorganization Event on Awards Other than Restricted Stock Awards.  In connection with a Reorganization Event,
the Board shall take any one or more of the following actions as to all or any
outstanding Awards other than Restricted Stock Awards on such terms as the
Board determines: (i) provide that Awards shall be assumed, or
substantially equivalent Awards shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), 


 


7

















 


(ii) upon written notice to a Participant, provide that the
Participant’s unexercised Options or other unexercised Awards will terminate
immediately prior to the consummation of such Reorganization Event unless
exercised by the Participant within a specified period following the date of such
notice, (iii) provide that outstanding Awards shall become exercisable,
realizable, or deliverable, or restrictions applicable to an Award shall lapse,
in whole or in part prior to or upon such Reorganization Event, (iv) in
the event of a Reorganization Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share
surrendered in the Reorganization Event (the “Acquisition Price”), make or
provide for a cash payment to a Participant equal to the excess, if any, of (A) the
Acquisition Price times the number of shares of Common Stock subject to the
Participant’s Options or other Awards (to the extent the exercise price does
not exceed the Acquisition Price) over (B) the aggregate exercise price of
all such outstanding Options or other Awards, in exchange for the termination
of such Options or other Awards and any applicable tax withholdings, (v) provide
that, in connection with a liquidation or dissolution of the Company, Awards
shall convert into the right to receive liquidation proceeds (if applicable,
net of the exercise price thereof) and (vi) any combination of the
foregoing.


 


For purposes of clause (i) above, an Option shall be
considered assumed if, following consummation of the Reorganization Event, the
Option confers the right to purchase, for each share of Common Stock subject to
the Option immediately prior to the consummation of the Reorganization Event,
the consideration (whether cash, securities or other property) received as a
result of the Reorganization Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the Reorganization
Event (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a
result of the Reorganization Event is not solely common stock of the acquiring
or succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Reorganization Event.


 


(3)                                 Consequences
of a Reorganization Event on Restricted Stock Awards.  Upon the occurrence of a Reorganization Event
other than a liquidation or dissolution of the Company, the repurchase and
other rights of the Company under each outstanding Restricted Stock Award shall
inure to the benefit of the Company’s successor and shall, unless the Board
determines otherwise, apply to the cash, securities or other property which the
Common Stock was converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Common Stock subject to such Restricted Stock Award. Upon the occurrence
of a Reorganization Event involving the liquidation or dissolution of the
Company, except to the extent specifically provided to the contrary in the
instrument evidencing any Restricted Stock Award or any other agreement between
a Participant and the Company, all restrictions and conditions on all
Restricted Stock Awards then outstanding shall automatically be deemed
terminated or satisfied.


 


8

















 


11.                                General
Provisions Applicable to Awards


 


(a)                                 Transferability
of Awards.  Awards shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except by will or the
laws of descent and distribution or, other than in the case of an Incentive
Stock Option, pursuant to a qualified domestic relations order, and, during the
life of the Participant, shall be exercisable only by the Participant;
provided, however, that the Board may permit or provide in an Award for the
gratuitous transfer of the Award by the Participant to or for the benefit of
any immediate family member, family trust or other entity established for the
benefit of the Participant and/or an immediate family member thereof if, with
respect to such proposed transferee, the Company would be eligible to use a Form S-8
for the registration of the sale of the Common Stock subject to such Award
under the Securities Act of 1933, as amended; provided, further, that the
Company shall not be required to recognize any such transfer until such time as
the Participant and such permitted transferee shall, as a condition to such
transfer, deliver to the Company a written instrument in form and substance
satisfactory to the Company confirming that such transferee shall be bound by
all of the terms and conditions of the Award. References to a Participant, to
the extent relevant in the context, shall include references to authorized
transferees.


 


(b)                                Documentation.  Each Award shall be evidenced in such form
(written, electronic or otherwise) as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.


 


(c)                                 Board
Discretion.  Except as otherwise
provided by the Plan, each Award may be made alone or in addition or in
relation to any other Award. The terms of each Award need not be identical, and
the Board need not treat Participants uniformly.


 


(d)                                Termination
of Status.  The Board shall determine
the effect on an Award of the disability, death, termination of employment,
authorized leave of absence or other change in the employment or other status
of a Participant and the extent to which, and the period during which, the
Participant, or the Participant’s legal representative, conservator, guardian
or Designated Beneficiary, may exercise rights under the Award.


 


(e)                                 Withholding.  The Participant must satisfy all applicable
federal, state, and local or other income and employment tax withholding
obligations before the Company will deliver stock certificates or otherwise
recognize ownership of Common Stock under an Award. The Company may decide to
satisfy the withholding obligations through additional withholding on salary or
wages. If the Company elects not to or cannot withhold from other compensation,
the Participant must pay the Company the full amount, if any, required for
withholding or have a broker tender to the Company cash equal to the
withholding obligations. Payment of withholding obligations is due before the
Company will issue any shares on exercise or release from forfeiture of an
Award or, if the Company so requires, at the same time as is payment of the
exercise price unless the Company determines otherwise. If provided for in an
Award or approved by the Board in its sole discretion, a Participant may
satisfy such tax obligations in whole or in part by delivery of shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value; provided, however, except as
otherwise provided by the Board, that the total tax withholding where stock is
being used to satisfy such tax obligations cannot exceed the Company’s minimum
statutory withholding obligations (based on minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes, that are
applicable to such supplemental taxable income). Shares surrendered to satisfy
tax withholding requirements cannot be subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.


 


(f)                                   Amendment
of Award.  Except as otherwise
provided in Section 5(h), the Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an 


 


9

















 


Incentive Stock Option to a
Nonstatutory Stock Option, provided either (i) that the Participant’s
consent to such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant or (ii) that the change is permitted
under Section 10 hereof.


 


(g)                                Conditions
on Delivery of Stock.  The Company
will not be obligated to deliver any shares of Common Stock pursuant to the
Plan or to remove restrictions from shares previously delivered under the Plan
until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel,
all other legal matters in connection with the issuance and delivery of such
shares have been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations, and (iii) the
Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements
of any applicable laws, rules or regulations.


 


(h)                                Acceleration.  The Board may at any time provide that any
Award shall become immediately exercisable in full or in part, free of some or
all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be.


 


(i)                                    Performance
Awards.


 


(1)                                 Grants.  Restricted Stock Awards and Other Stock Unit
Awards under the Plan may be made subject to the achievement of performance
goals pursuant to this Section 11(i) (“Performance Awards”). With
respect to Other Stock Unit Awards providing a cash bonus, the maximum amount
of such cash bonus paid to any Participant in any fiscal year shall not exceed
$2,000,000.


 


(2)                                 Committee.  Grants of Performance Awards to any Covered
Employee intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based
Compensation”) shall be made only by a Committee (or subcommittee of a
Committee) comprised solely of two or more directors eligible to serve on a
committee making Awards qualifying as “performance-based compensation” under Section 162(m).
In the case of such Awards granted to Covered Employees, references to the
Board or to a Committee shall be deemed to be references to such Committee or
subcommittee. “Covered Employee” shall mean any person who is a “covered
employee” under Section 162(m)(3) of the Code.


 


(3)                                 Performance
Measures.  For any Award that is
intended to qualify as Performance-Based Compensation, the Committee shall
specify that the degree of granting, vesting and/or payout shall be subject to
the achievement of one or more objective performance measures established by
the Committee, which shall be based on the relative or absolute attainment of
specified levels of one or any combination of the following: net income,
revenue or earnings each before or after, or otherwise adjusted for,
discontinued operations, cost of operations, general and administrative costs,
working capital, property plant and equipment, goodwill and intangible assets,
interest, taxes, depreciation and/or amortization; operating profit before or
after discontinued operations and/or taxes; sales or sales growth; earnings
growth; cash flow or cash position; gross margins; stock price; market share;
return on sales, assets, equity or investment, with or without adjustment for
working capital; improvement of financial ratings; achievement of balance sheet
or income statement objectives; or total shareholder return. Such goals may
reflect absolute entity or business unit performance or a relative comparison
to the performance of a peer group of entities or other external measure of the
selected performance criteria and may be absolute in their terms or measured
against or in relationship to other companies comparably, similarly or
otherwise situated. The Committee may specify that such performance measures
shall be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains
or losses on the dispositions of discontinued operations, (iii) the
cumulative effects of changes in accounting principles, (iv) the writedown
of any asset, and (v) charges for restructuring and rationalization
programs. Such performance


 


10

















 


measures: (i) may vary by Participant and may be different for
different Awards; (ii) may be particular to a Participant or the
department, branch, line of business, subsidiary or other unit in which the
Participant works and may cover such period as may be specified by the
Committee; and (iii) shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of, Section 162(m).
Awards that are not intended to qualify as Performance-Based Compensation may
be based on these or such other performance measures as the Board may
determine.


 


(4)                                 Adjustments.  Notwithstanding any provision of the Plan,
with respect to any Performance Award that is intended to qualify as
Performance-Based Compensation, the Committee may adjust downwards, but not
upwards, the cash or number of Shares payable pursuant to such Award, and the
Committee may not waive the achievement of the applicable performance measures
except in the case of the death or disability of the Participant.


 


(5)                                 Other.  The Committee shall have the power to impose
such other restrictions on Performance Awards as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for Performance-Based
Compensation.


 


12.                                Miscellaneous


 


(a)                                 No
Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company. The Company
expressly reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under the
Plan, except as expressly provided in the applicable Award.


 


(b)                                No
Rights As Stockholder.  Subject to
the provisions of the applicable Award, no Participant or Designated
Beneficiary shall have any rights as a stockholder with respect to any shares
of Common Stock to be distributed with respect to an Award until becoming the
record holder of such shares.


 


(c)                                 Effective
Date and Term of Plan.  The Plan
shall become effective on the date the Plan is approved by the Company’s
stockholders (the “Effective Date”). No Awards shall be granted under the Plan
after the completion of 10 years from the Effective Date, but Awards
previously granted may extend beyond that date.


 


(d)                                Amendment
of Plan.  The Board may amend,
suspend or terminate the Plan or any portion thereof at any time provided that (i) to
the extent required by Section 162(m), no Award granted to a Participant
that is intended to comply with Section 162(m) after the date of such
amendment shall become exercisable, realizable or vested, as applicable to such
Award, unless and until such amendment shall have been approved by the Company’s
stockholders if required by Section 162(m) (including the vote
required under Section 162(m)); (ii) no amendment that would require
stockholder approval under the rules of the NASDAQ Stock Market (“NASDAQ”)
may be made effective unless and until such amendment shall have been approved
by the Company’s stockholders; and (iii) if the NASDAQ amends its
corporate governance rules so that such rules no longer require
stockholder approval of material amendments to equity compensation plans, then,
from and after the effective date of such amendment to the NASDAQ rules, no
amendment to the Plan (A) materially increasing the number of shares
authorized under the Plan (other than pursuant to Section 10), (B) expanding
the types of Awards that may be granted under the Plan, or (C) materially
expanding the class of participants eligible to participate in the Plan shall
be effective unless stockholder approval is obtained. In addition, if at any time
the approval of the Company’s stockholders is required as to any other
modification or amendment under Section 422 of the Code or any successor
provision with respect to Incentive Stock Options, the Board may not effect
such modification or amendment without such approval. No Award shall be made
that is conditioned upon stockholder approval of any amendment to the Plan.


 


11

















 


(e)                                 Provisions
for Foreign Participants.  The Board
may modify Awards or Options granted to Participants who are foreign nationals
or employed outside the United States or establish subplans or procedures under
the Plan to recognize differences in laws, rules, regulations or customs of
such foreign jurisdictions with respect to tax, securities, currency, employee
benefit or other matters.


 


(f)                                   Compliance
with Section 409A of the Code. 
Except as provided in individual Award agreements initially or by
amendment, if and to the extent any portion of any payment, compensation or
other benefit provided to a Participant in connection with his or her
employment termination is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and the
Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of
the Code, as determined by the Company in accordance with its procedures, by
which determination the Participant (through accepting the Award) agrees that
he or she is bound, such portion of the payment, compensation or other benefit
shall not be paid before the day that is six months plus one day after the date
of “separation from service” (as determined under Code Section 409A) (the “New
Payment Date”), except as Code Section 409A may then permit. The aggregate
of any payments that otherwise would have been paid to the Participant during
the period between the date of separation from service and the New Payment Date
shall be paid to the Participant in a lump sum on such New Payment Date, and
any remaining payments will be paid on their original schedule.


 


The Company makes no representations or
warranty and shall have no liability to the Participant or any other person if
any provisions of or payments, compensation or other benefits under the Plan
are determined to constitute nonqualified deferred compensation subject to Code
Section 409A but do not to satisfy the conditions of that section.”


 


(g)                                Governing
Law.  The provisions of the Plan and
all Awards made hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware, excluding choice-of-law principles of
the law of such state that would require the application of the laws of a
jurisdiction other than such state.


 


12