Document:

Exhibit 10.2

 

CASELLA
WASTE SYSTEMS, INC.

 

Casella Waste Systems, Inc.

2006 Stock
Incentive Plan

 

Performance Share
Unit Agreement

 

Cover Sheet

 

This Agreement evidences the grant by Casella Waste Systems, Inc.,
a Delaware corporation (the “Company”),
on the date set forth below (the “Grant Date”)
to the person named below (the “Participant”)
of a Performance Share Unit Award (the “Award”) of
the target number of performance share units listed below (“Target Performance Share Units”) up
to the maximum number of performance share units listed below (“Maximum Performance Share Units”)
for the Performance Period listed below (the “Performance
Period”). Each unit ultimately earned (a “Performance
Share Unit”) represents the right to receive one share of the
Company’s Class A Common Stock, $0.01 par value per share (“Common Stock”), or the value of such
Share. This Award is subject to the terms and conditions specified in the
Casella Waste Systems, Inc. 2006 Stock Incentive Plan, as amended, (the “Plan”), and in this Agreement,
consisting of this Cover Sheet and the attached Exhibit A.

 

	
  Participant Name:

  	
  <PARTICIPANT NAME>

  
	
  Grant Date:

  	
  <GRANT DATE>

  
	
  Performance Period:

  	
  3 years, beginning on the first day of the current fiscal year

  
	
  Number of Target

  	
   

  
	
  Performance Share Units:

  	
  <NUMBER OF SHARES>

  
	
  Maximum

  	
   

  
	
  Performance Share Units:

  	
  <PERCENT> of Target
  Performance Share Units

  

 

	
   

  	
  CASELLA WASTE SYSTEMS, INC.

  
	
   

  	
  25 Greens Hill Lane

  
	
   

  	
  Rutland, Vermont 05701

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
  <PARTICIPANT
  NAME>

  	
  Title:

  
				

 

By accepting this Award, the Participant hereby (i) acknowledges
that a copy of the Plan and a copy of the Plan prospectus have been delivered
to the Participant and additional copies thereof are available upon request
from the Company’s Human Resources Department, (ii) acknowledges receipt
of a copy of this Cover Sheet and Exhibit A thereto (collectively,
the “Agreement”) and accepts the Award subject to all the terms and conditions
of the Plan and the Agreement; (iii) represents that the Participant has
read and understands the Plan, the Plan prospectus and the Agreement, and (iv) acknowledges
that there are tax consequences related to the Award and that the Participant
should consult a tax advisor to determine his or her actual tax
consequences.  The
Participant must accept this Award by signing and returning it to the 

 

 

Company within 30 days following notification of
the grant, whereupon the Company will countersign the Award and return it to
the Participant; otherwise, the Company may, in its sole discretion, rescind
the Award in its entirety.

 

2

 

EXHIBIT A

 

CASELLA
WASTE SYSTEMS, INC.

 

Casella
Waste Systems, Inc. 2006 Stock Incentive Plan

 

Performance
Share Unit Agreement

 

Terms and
Conditions

 

1.             Grant of
Performance Share Units.

 

The Award is
granted pursuant to and is subject to and governed by the Plan and the terms of
this Agreement. It is a form of “Restricted Stock Unit”
as defined in the Plan.  Unless otherwise
defined in this Agreement, capitalized terms used herein shall have the same
meaning as in the Plan.  The shares of
Common Stock that are issuable after the Performance Share Units have been
earned are referred to in this Agreement as “Shares.”   The Performance Share Units shall be granted
to the Participant without payment of consideration (other than continuing
services).

 

2.             Range of Earned
Performance Share Units.

 

Depending on the
Company’s financial performance as provided in Section 3, the Participant
may earn up to the Maximum Performance Share Units (between <PERCENT> and <PERCENT>
of the Target Performance Share Units).

 

3.             Determination of
Earned Performance Share Units

 

(a)                                  Performance
Goal.  The performance goal is based
on <MEASURE>, with the targets for
the initial Performance Period (<DATE> to
<DATE>), set as follows:

 

	
   

  	
   

  	
  <MEASURE>

  	
   

  	
  Targeted Payout

  Percentage

  
	
  Threshold

  	
   

  	
  <PERCENT>

  	
   

  	
  <PERCENT>

  
	
  Targeted

  	
   

  	
  <PERCENT>

  	
   

  	
  <PERCENT>

  
	
  Maximum

  	
   

  	
  <PERCENT>

  	
   

  	
  <PERCENT>

  

 

(b)                                 No
shares will be earned for a Performance Period if the <MEASURE>
for the Performance Period is below the threshold number indicated above.  For purposes of this determination, the <MEASURE> shall be rounded to two decimal points, with
the thousandth decimal point rounded upwards if at 0.005 or higher. If the <MEASURE> is between two stated percentages above, the
Payout Percentage will be prorated accordingly.

 

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(c)           For purposes of this Agreement:

 

<DEFINITION OF MEASURE>

 

The elements of each financial measure are as defined
in the financial statements, notes to the financial statements, management’s
discussions and analysis, or other Company filings with the Securities and
Exchange Commission.

 

4.             Cessation of
Business Relationship.

 

(a)                                  Continuous
Service Relationship.  If the
Participant’s continuous service to the Company or one of its Affiliates as an
Employee or Director (a “Business Relationship”)
ceases for any reason before the end of the Performance Period, the Performance
Share Units will be forfeited, except as provided in this Section.  The Participant’s Business Relationship shall
be deemed to have ceased on the last day of active service to the Company or an
Affiliate and shall not be extended by any notice of termination period.  For purposes hereof, a Business Relationship shall
not be considered as having ceased during any leave of absence if such leave of
absence has been approved in writing by the Company.  Any change in the type of Business
Relationship the Participant has within or among the Company and its Affiliates
shall not result in the forfeiture of the Performance Share Units so long as
the Participant continuously maintains a Business Relationship.

 

(b)                                 Death
or Disability; Termination without Cause; Resignation for Good Reason.  If the Participant’s Business Relationship
ceases during the Performance Period as a result of the Participant’s (i) death,
(ii) Disability, (iii) termination of the employment without Cause or
(iv) resignation for Good Reason, the Participant (or the Participant’s
Beneficiary in the event of the Participant’s death) shall be entitled to
payment of a pro rata portion of the Performance Share Units, based on the
number of days elapsed in the Performance Period prior to the cessation of the
Business Relationship.  The number of
Performance Share Units for this purpose shall be determined after the
Performance Period based on <MEASURE>
for the period.

 

(c)                                  Definitions.  For purposes of this Section:

 

(i)                                     “Beneficiary” shall mean the last
person or persons designated as such by the Participant in writing prior to the
Participant’s death.  If no such person
survives the Participant, the Beneficiary shall be the Participant’s estate.

 

(ii)                                  “Cause” shall mean any of the
following with respect to the Participant, his or her

 

A.                                   being
convicted of a crime involving the Company (other than pursuant to actions
taken at the direction or with the approval of the Board),

 

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B.                                     being
found by reasonable determination of the Company, made in good faith, to have
engaged in (1) willful misconduct that has a material adverse effect on
the Company, (2) willful or gross neglect that has a material adverse
effect on the Company, (3) fraud, (4) misappropriation or (5) embezzlement
in the performance of his duties hereunder, or

 

C.                                     having
breached in any material respect the material terms and provisions of his or
her employment agreement or any other material contract between the Participant
and the Company and failed to cure such breach within 15 days following written
notice from the Company specifying such breach;

 

provided that the termination for Cause requires a
written notice given to the Participant at any time following the occurrence of
any of the events described in clauses A and B above and on written notice
given to the Participant at any time not less than 60 days following the
occurrence of any of the events described in clause C above.

 

(iii)                               “Disability” shall have the meaning
provided under Treasury Regulation Section 1.409A-3(i)(4)(i) and
(iii).

 

(iv)                              “Good Reason” shall mean the
occurrence of (x) a Change in 
Control, accompanied by, or followed within the twelve-month period
after a Change in Control by,: (y) (i) a material breach by the
Company of this Agreement or any applicable employment agreement, (ii) a
material diminution in the duties, title or responsibilities of the
Participant, or (iii) a material diminution in the Participant’s base
compensation.  However, in no event shall
the Participant be considered to have resigned for “Good Reason” unless the
Participant delivers a written notice of resignation to the Board identifying
in reasonable detail the acts or omissions constituting “Good Reason” within 90
days following the acts or omissions, and such acts or omissions are not cured
by the Company within 30 days of the receipt of such notice and the Participant
acts on his or her resignation within six months following the occurrence
giving rise to a Good Reason.

 

5.             Payment.

 

(a)                                  Within
60 days following the Committee’s certification in writing of the Performance
Share Units earned, the Company shall distribute to the Participant (or to the
Participant’s Beneficiary in the event of death) the Shares represented by
Performance Share Units that were earned, reduced by the number of Shares (if
any) that are withheld from the Award for the payment of Tax-Related Items (as
defined in Section 12 hereof) and upon the satisfaction of all other
applicable conditions as to the Performance Share Units; provided,
however, that the Shares shall be
distributed no later than the 15th day of the third month following the 

 

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later of (x) the end of the calendar year in
which the Performance Period ends or (y) the end of the Company’s taxable
year in which the Performance Period ends; provided further, however,
that the Shares may be distributed following the date contemplated in this Section to
the extent permitted under Section 409A (“Section 409A”)
of Internal Revenue Code of 1986, and the regulations, including the proposed
regulations thereunder (the “Code”)
without the payment becoming subject to, and being treated as “nonqualified
deferred compensation” within the meaning of Section 409A (such as where
the Company reasonably anticipates that the payment will violate federal
securities laws or other applicable laws). 
Payment of any earned Performance Share Units shall be made in whole
Shares.  Earned Performance Share Units
shall be rounded down to the nearest whole Share, and the Company shall pay the
value of any fractional Shares to the Participant in cash on the basis of the
Fair Market Value per share of Common Stock on the date of distribution.

 

(b)                                 The
Company shall not be obligated to issue Shares to the Participant  upon the earning of any Performance Share
Units unless the issuance and delivery of such Shares shall comply with all
relevant provisions of law and other legal requirements including, without
limitation, any applicable federal, state or foreign securities laws, any
applicable Tax-Related Items and the requirements of any stock exchange upon
which Shares may be listed.

 

(c)                                  Anything
in the foregoing to the contrary notwithstanding, Performance Share Units
granted under this Agreement may be suspended, delayed or otherwise deferred
for any of the reasons contemplated in Sections 4 and 5 only to the extent such
suspension, delay or deferral is permitted under Treas. Reg. §§1.409A-2(b)(7),
1.409A-1(b)(4)(ii) or successor provisions, or as otherwise permitted
under Section 409A.

 

6.             Option of Company
to Deliver Cash.

 

Notwithstanding any of the other provisions of this
Agreement, at the time when any Performance Share Units are payable pursuant to
Sections 5 or 11, the Company may elect, in the sole discretion of the
Committee, to deliver to the Participant in lieu of the Shares represented by
Performance Share Units that are then payable an equivalent amount of cash
(determined by reference to the closing price of the Shares on the principal
exchange on which the Shares trade on the applicable payment date or if such
date is not a trading date, on the next preceding trading date).  Such payments shall be made no later than the
deadline set forth in Section 5(a) hereof.  If the Company elects to deliver cash to the
Participant, the Company is authorized to retain such amount as is sufficient
to satisfy the withholding of Tax-Related Items (as defined in Section 12
hereof).

 

7.             Restrictions on
Transfer.

 

(a)                                  The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
encumber or dispose of any Performance Share Units, either voluntarily or by 

 

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operation of law. 
Any attempt to dispose of any Performance Share Units in contravention
of the above restriction shall be null and void and without effect.

 

(b)                                 The
Company shall not be required (i) to transfer on its books any of the
Performance Share Units that have been transferred in violation of any of the
provisions set forth herein or (ii) to treat as the owner of such
Performance Share Units any transferee to whom such Performance Share Units
have been transferred in violation of any of the provisions contained herein.

 

8.                                       No
Obligation to Continue Business Relationship.  Neither the Plan, this Agreement, nor the
grant of the Performance Share Units imposes any obligation on the Company or
its Affiliates to have or continue a Business Relationship with the
Participant.

 

9.                                       No
Rights as Stockholder.  The
Performance Share Units represent an unfunded, unsecured promise by the Company
to deliver Shares or the value thereof in accordance with the terms of this
Agreement.  The Participant shall have no
rights as a shareholder with respect to the Shares underlying the Performance
Share Units.  The Participant shall have
no right to vote or receive dividends with respect to any Shares underlying the
Performance Share Units unless and until such Shares are distributed to the
Participant.

 

10.                                 Adjustments
for Capital Changes.

 

The Plan contains
provisions covering the treatment of Restricted Stock Awards in a number of
contingencies such as stock splits and mergers. 
Provisions in the Plan for such adjustments are hereby made applicable
hereunder and are incorporated herein by reference.

 

11.           Change in Control.

 

(a)                                  Upon
a Change in Control of the Company during the Performance Period, Performance
Share Units shall be vested as though the maximum <MEASURE>
had been satisfied as of such date, and paid within five business days of a
Change in Control; provided that if such payment would result in the imposition
of a tax under Section 409A then such payment shall be made in accordance
with Section 5(a) above, following the end of the fiscal year in
which such Change in Control occurs.

 

(b)                                 For
purposes of this Agreement, a “Change in Control”
means any of the following events:

 

(i)                                     “Change in Control”
means any of the following events:

 

A.                                   Any
“person,”
as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (a  “Person”) or “Group” (within the meaning of Rule 13d-5
of the Exchange Act and Treas. Reg. § 1.409A-3(i)(5)(B)), is or becomes
the “beneficial owner,”
as defined in Rule 13d-3 under the Exchange Act (a “Beneficial Owner”),
directly or indirectly, of 

 

7

 

securities of the Company representing 40% or more of
the combined voting power of the Company’s then outstanding voting securities,
by acquisition or through merger, consolidation, or reorganization;

 

B.                                     Individuals
who, at the beginning of any 12 month period, constitute the Board of Directors
of Company (the “Incumbent
Board”), cease for any reason to constitute at least a majority
of the Board of Directors, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, is approved by a vote of at least a majority of the
directors shall, for the purposes of this Agreement, be considered as though
such person were a member of the Incumbent Board of the Company (provided that
this clause B does not apply if a majority shareholder of the Company is
another corporation); or

 

C.                                     The
consummation of a sale or other disposition by the Company of all or
substantially all (i.e., at least 85%) of the Company’s assets to a person or
Group (each as defined in clause A within a 12 month period ending on the then
most recent disposition of assets. There is no Change in Control event under
this clause C when the transfer is to (i) a shareholder of the
Company (immediately before the asset transfer) in exchange for or with respect
to such shareholder’s stock; (ii) an entity, 50% or more of the total
value or voting power of which is owned, directly or indirectly, by the
Company; (iii) a person, or more than one person acting as a Group, that
owns, directly or indirectly, 50% or more of the total value or voting power of
all the outstanding stock of the Company; or (iv) an entity, at least 50%
of the total value or voting power of which is owned, directly or indirectly, by
a person described in subclause (iii).

 

Notwithstanding the preceding provisions of this
definition, a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this definition is (1) an
underwriter or underwriting syndicate that has acquired the ownership of any of
the Company’s then outstanding voting securities solely in connection with a
public offering of the Company’s securities, (2) any subsidiary of the
Company or (3) to the extent permitted by Section 409A, an employee
stock ownership plan or other employee benefit plan maintained by the Company
(or any of its subsidiaries) that is qualified under the provisions of the
Code.  In addition, no Change in Control
shall have occurred unless the transaction or series of transactions results in
a Change in Control within the meaning of Code Section 409A and the
regulations thereunder. This Change in Control definition shall be interpreted
in a manner that is consistent with Code Section 409A and the regulations
thereunder, 

 

8

 

including with respect to any applicable limitations
on the kinds of events that would constitute a Change in Control.

 

12.           Withholding Taxes.

 

(a)                                  Regardless
of any action the Company and/or the Affiliate employing the Participant (the “Employer”) take with respect to any
or all income tax (including U.S. federal, state and local tax and/or non-U.S.
tax), social insurance, payroll tax or other tax-related items (“Tax-Related Items”), the Participant
hereby acknowledges that the ultimate liability for all Tax-Related Items
legally due by the Participant with respect to the Participant’s Award of
Performance Share Units, earning of the Performance Share Units, or the
issuance of Shares (or payment of cash) in settlement of earned Performance
Share Units is and remains the Participant’s responsibility and that the
Company and/or the Employer (i) make no representations or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect
of the Performance Share Units, including the award of the Performance Share
Units, the earning of the Performance Share Units, the issuance of Shares (or
payment of cash) in settlement of the Performance Share Units, the subsequent
sale of Shares acquired at earning and the receipt of any dividends and or
Dividend Equivalents; and (ii) do not commit to structure the terms of the
Award or any aspect of the Performance Share Units to reduce or eliminate the
Participant’s liability for Tax-Related Items.

 

(b)                                 Prior
to the relevant tax withholding event, as applicable, the Participant shall pay
or make adequate arrangements satisfactory to the Company and/or the Employer
to satisfy all withholding obligations of the Company and/or the Employer with
respect to Tax-Related Items.  In this
regard, the Participant hereby authorizes the Company and/or the Employer, in
their sole discretion and without any notice to or authorization by the
Participant, to withhold from the Shares being distributed under this Award
upon the determination of earned Performance Share Units that number of whole
Shares the fair market value of which (determined by reference to the closing
price of the Common Stock on the principal exchange on which the Common Stock trades
on the date the withholding obligation arises, or if such date is not a trading
date, on the next preceding trading date) is equal to the aggregate withholding
obligation as determined by the Company and/or Employer with respect to such
Award, provided that the Company only withholds the number of Shares necessary
to satisfy the minimum withholding obligation amount.  If the Company satisfies the withholding
obligation for Tax-Related Items by withholding a number of Shares being
distributed under the Award as described above, the Participant hereby
acknowledges that the Participant is deemed to have been issued the full number
of Shares subject to the Award of Performance Share Units, notwithstanding that
a number of the Shares is held back solely for the purpose of paying the
Tax-Related Items due as a result of the Award, earning and/or settlement of
the Performance Share Units.  In the
event the Tax-Related Items withholding obligation would result in a fractional
number of Shares to be withheld by the Company, such number of Shares to be
withheld 

 

9

 

shall be rounded up to the next nearest number of
whole Shares.  If, solely due to rounding
of Shares, the value of the number of Shares retained by the Company pursuant
to this provision is more than the amount required to be withheld, then the
Company may pay such excess amount to the relevant tax authority as additional
withholding with respect to the Participant.

 

(c)                                  Alternatively,
or in addition, the Company may (a) only to the extent and in the manner
permitted by all applicable securities laws, including making any necessary
securities registration or taking any other necessary actions, instruct the
broker whom it has selected for this purpose to sell on the Participant’s
behalf, the Shares to be issued upon the earning or settlement, as applicable,
of the Participant’s Performance Share Units to meet the withholding obligation
for Tax-Related Items, and/or (b) withhold all applicable Tax-Related Items
legally payable by Participant from Participant’s wages or other cash
compensation paid to Participant by the Company and/or the Employer.

 

(d)                                 Finally,
the Participant hereby acknowledges that the Participant is required to pay to
the Employer any amount of Tax-Related Items that the Employer may be required
to withhold as a result of the Participant’s Award of Performance Share Units,
earning of the Performance Share Units, or the issuance of Shares (of payment
of cash) in settlement of earned Performance Share Units that cannot be
satisfied by the means previously described. 
The Participant hereby acknowledges that the Company may refuse to
deliver the Shares in settlement of the earned Performance Share Units to the
Participant if the Participant fails to comply with the Participant’s
obligations in connection with the Tax-Related Items as described in this
Section.  The Participant shall have no
further rights with respect to any Shares that are retained by the Company
pursuant to this provision, and under no circumstances will the Company be
required to issue any fractional Shares.

 

(e)                                  The
Participant has reviewed and understands the tax withholding and payment
obligations as set forth in this Agreement and understands that the Company is
not providing any tax advice and that the Participant should consult with
Participant’s own tax advisors on the U.S. federal, state, foreign and local
tax and non-U.S. tax consequences of this investment and the transactions
contemplated by this Agreement.

 

13.           Nature of Grant.

 

In accepting the
Performance Share Units, Participant acknowledges that: (a) the grant of
the Performance Share Units is voluntary and occasional and does not create any
contractual or other right to receive future grants of Performance Share Units,
or benefits in lieu of Performance Share Units even if Performance Share Units
have been granted repeatedly in the past; (b) all decisions with respect
to future awards of Performance Share Units, if any, will be at the sole
discretion of the Company; (c) the future value of the underlying Shares
is unknown and cannot be predicted with certainty; (d) in consideration of
the award of Performance Share Units, no claim or entitlement to 

 

10

 

compensation or
damages shall arise from termination of the Performance Share Units or any
diminution in value of the Performance Share Units or Shares received when the
Performance Share Units are earned resulting from the Participant’s termination
of employment by the Company or any Affiliate (for any reason whatsoever and
whether or not in breach of local employment laws), and Participant irrevocably
releases the Company and/or the Affiliate from any such claim that may arise; (e) in
the event of involuntary termination of Participant’s employment (whether or
not in breach of local employment laws), Participant’s right to receive
Performance Share Units and vesting under the Plan, if any, will terminate
effective as of the date that Participant is no longer actively employed and
will not be extended by any notice period mandated under local law or contract,
and the Company shall have the exclusive discretion to determine when
Participant is no longer actively employed for purposes of the Performance
Share Units; (f) the Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding Participant’s
participation in the Plan, or Participant’s acquisition or sale of the
underlying Shares; and (g) Participant is hereby advised to consult with
his or her own personal tax, legal and financial advisors regarding Participant’s
participation in the Plan before taking any action related to the Plan.

 

14.           Miscellaneous.

 

(a)                                  Notices.  All
notices hereunder shall be in writing and shall be deemed given when sent by
certified or registered mail, postage prepaid, return receipt requested, if to
the Participant, to the address set forth on the cover sheet or at the most
recent address shown on the records of the Company, and if to the Company, to
the Company’s principal office, attention of the Corporate Secretary.

 

(b)                                 Entire Agreement; Modification. 
This Agreement (including the cover sheet) and the Plan constitutes the
entire agreement between the parties relative to the subject matter hereof, and
supersedes all other communications between the parties relating to the subject
matter of this Agreement.  This Agreement
may be modified, amended or rescinded by the Committee as it shall deem advisable,
subject to any requirement for shareholder approval imposed by applicable law
or other applicable rules, including, without limitation, the rules of the
stock exchange on which the Shares are listed. 
If the Committee determines that the Award terms could result in adverse
tax consequences to the Participant, the Committee may amend this Agreement
without the consent of the Participant in order to minimize or eliminate such
tax treatment.

 

(c)                                  Plan
Governs. This Agreement is subject to all terms and provisions of the
Plan.  In the event of a conflict between
one or more provisions of this Agreement and one or more provisions of the
Plan, the provisions of the Plan will govern.

 

(d)                                 Severability.  The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability of any other provision.

 

11

 

(e)                                  Successors and Assigns.  This
Agreement shall inure to the benefit of and be binding upon the heirs,
legatees, distributees, executors and administrators of the Participant and the
successors and assigns of the Company.

 

(f)                                    Participant’s
Acceptance.  The Participant is urged
to read this Agreement carefully and to consult with his or her own legal
counsel regarding the terms and consequences of this Agreement and the legal
and binding effect of this Agreement.  By
virtue of his or her acceptance of this Agreement, the Participant is deemed to
have accepted and agreed to all of the terms and conditions of this Award and
the provisions of the Plan, including as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan or this Award.

 

(g)                                 Section 409A.  This Agreement, the Performance Share Units
and payments made pursuant to this Agreement are intended to comply with or
qualify for an exemption from the requirements of Section 409A and shall
be construed consistently therewith and shall be interpreted in a manner
consistent with that intention.  Terms
defined in the Agreement shall have the meanings given such terms under Section 409A
if and to the extent required to comply with Section 409A.  Notwithstanding any other provision of this
Agreement, the Company reserves the right, to the extent the Company deems
necessary or advisable, in its sole discretion, to unilaterally amend the Plan
and/or this Agreement to ensure that all Performance Share Units are awarded in
a manner that qualifies for exemption from or complies with Section 409A,
provided, however, that the Company makes no undertaking to preclude Section 409A
from applying to this Award of Performance Share Units.  Any payments described in this Section 13(g) that
are due within the “short term deferral period” as defined in Section 409A
shall not be treated as deferred compensation unless applicable law requires
otherwise.  If and to the extent any
portion of any payment, compensation or other benefit provided to the
Participant in connection with his employment termination is determined to
constitute “nonqualified deferred compensation” within the meaning of Section 409A
and the Participant is a specified employee as defined in Section 409A(2)(B)(i) of
the Code, as determined by the Company in accordance with its procedures, by
which determination the Participant hereby agrees that he 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 Section 409A (the “New
Payment Date”)), except as 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. Notwithstanding the
foregoing, the Company, its Affiliates, Directors, Officers and Agents shall
have no liability to a Participant, or any other party, if an Award that is
intended to be exempt from, or compliant with, Section 409A is not so
exempt or compliant, or for any action taken by the Committee.

 

12

 

(h)                                 Governing Law/Choice of Venue. 
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware, without giving effect to the principles of
the conflicts of laws thereof.  For
purposes of litigating any dispute that arises directly or indirectly from the
relationship of the parties, evidenced by this Award or the Agreement, the
parties hereby submit to and consent to the exclusive jurisdiction of the State
of Vermont and agree that such litigation shall be conducted only in the courts
of Rutland County, Vermont, or the federal courts for the United States for the
District of Vermont, and no other courts, where this Award is made and/or to be
performed.

 

(i)                                     Administrator Authority.  The
Committee will have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or not any Performance Share
Units have been earned).  All actions taken and all interpretations and
determinations made by the Committee in good faith will be final and binding
upon Participant, the Company and all other interested persons.

 

13Exhibit 10.1

 

SEVENTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS SEVENTH AMENDMENT
to Loan and Security Agreement (this “Amendment”) is entered into this 29th day
of August, 2008, by and between Silicon Valley Bank (“Bank”) and XPLORE
TECHNOLOGIES CORPORATION OF AMERICA, a Delaware corporation (“Borrower”) whose
address is 14000 Summit Drive, Suite 900, Austin, Texas 78728.

 

RECITALS

 

A.                                    Bank and Borrower have entered
into that certain Loan and Security Agreement dated as of September 15,
2005, as amended by that certain First Amendment to Loan and Security Agreement
by and between Bank and Borrower dated as of November 28, 2005, that
certain Letter amending Loan and Security Agreement by and between Bank and
Borrower dated as of March 30, 2006, that certain Second Amendment to Loan
and Security Agreement by and between Bank and Borrower dated as of May 15,
2006, that certain Third Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of February 28, 2007, that certain
Fourth Amendment to Loan and Security Agreement by and between Bank and
Borrower dated as of March 28, 2008, that certain Fifth Amendment to Loan
and Security Agreement by and between Bank and Borrower dated as of May 27,
2008 and that certain Sixth Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of August 6, 2008 (as the same may from
time to time be further amended, modified, supplemented or restated, the “Loan
Agreement”).

 

B.                                    Bank has extended credit to
Borrower for the purposes permitted in the Loan Agreement.

 

C.                                    Borrower has requested that Bank
amend the Loan Agreement to (i) reset the financial covenants, (ii) waive
certain covenant violations, and (iii) make certain other revisions to the
Loan Agreement as more fully set forth herein.

 

D.                                    Bank has agreed to so amend
certain provisions of the Loan Agreement, but only to the extent, in accordance
with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:

 

1.                                      Definitions.  Capitalized terms used but not defined in
this Amendment shall have the meanings given to them in the Loan Agreement.

 

 

2.                                      Amendments
to Loan Agreement.

 

2.1                               Schedule
Section 5 (FINANCIAL COVENANTS (Section 5.1)).  The paragraphs regarding Minimum Tangible Net
Worth and Subordinated Debt prior to the “Definitions” portion of Section 5
of the Schedule to the Loan Agreement are hereby amended and restated to read
as follows:

 

                                                “Minimum Tangible Net Worth. 
Borrower shall maintain a minimum Tangible Net Worth of not less than
Seven Hundred Fifty Thousand Dollars ($750,000) for the measuring periods
ending August 31, 2008 and September 30, 2008.  Thereafter, Borrower and Bank agree to reset
the minimum Tangible Net Worth covenant, effective beginning with the measuring
period ending October 31, 2008, based on a final revised forecast to be
delivered by Borrower to Bank no later than October 5, 2008.

 

                                                Subordinated Debt. 
Borrower shall have received (a) at least One Million Dollars
($1,000,000) in proceeds from the issuance of Subordinated Debt no later than September 5,
2008, and (b) at least Two Million Dollars ($2,000,000) (exclusive of the
One Million Dollars ($1,000,000) required in clause (a) above) in proceeds
from the issuance of Subordinated Debt no later than September 30,
2008.  If Borrower fails to receive a
total of at least Three Million Dollars ($3,000,000) in proceeds from the
issuance of Subordinated Debt by September 30, 2008, in addition to all
other rights and remedies available to Bank hereunder, Borrower shall pay to
Bank a fee equal to Ten Thousand Dollars ($10,000).”

 

3.                                      Waiver.  Bank hereby waives Borrower’s default
under Section 5 of the Schedule to the Loan Agreement with respect to the
Tangible Net Worth requirement solely for the measuring period ending July 31,
2008.

 

4.                                      Limitation
of Amendments.

 

4.1                               The
amendments set forth in Section 2
and the waiver set forth in Section 3,
above, are effective for the purposes set forth herein and shall be limited
precisely as written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of any Loan
Document, or (b) otherwise prejudice any right or remedy which Bank may
now have or may have in the future under or in connection with any Loan Document.

 

4.2                               This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are
hereby ratified and confirmed and shall remain in full force and effect.

 

2

 

5.                                      Representations
and Warranties.  To induce Bank to
enter into this Amendment, Borrower hereby represents and warrants to Bank as
follows:

 

5.1                               Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they
are true and correct as of such date), and (b) no Event of Default has
occurred and is continuing;

 

5.2                               Borrower
has the power and authority to execute and deliver this Amendment and to
perform its obligations under the Loan Agreement, as amended by this Amendment;

 

5.3                               The
organizational documents of Borrower delivered to Bank with the Sixth Amendment
to Loan and Security Agreement remain true, accurate and complete and have not
been amended, supplemented or restated and are and continue to be in full force
and effect;

 

5.4                               The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

 

5.5                               The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a
Person binding on Borrower, (c) any order, judgment or decree of any court
or other governmental or public body or authority, or subdivision thereof,
binding on Borrower, or (d) the organizational documents of Borrower;

 

5.6                               The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by
any governmental or public body or authority, or subdivision thereof, binding
on either Borrower, except as already has been obtained or made; and

 

5.7                               This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.

 

6.                                      Counterparts.  This Amendment may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

 

3

 

7.                                      Effectiveness.  This Amendment shall be deemed effective upon
(a) the due execution and delivery to Bank of this Amendment by each party
hereto, and (b) Borrower’s payment of an amendment fee in an amount equal
to Two Thousand Five Hundred Dollars ($2,500).

 

[Signature page follows.]

 

4

 

IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be duly executed and delivered
as of the date first written above.

 

	
  BANK

  	
  BORROWER  

  
	
   

  	
   

  
	
  Silicon Valley Bank 

  	
  XPLORE TECHNOLOGIES 

  CORPORATION OF AMERICA 

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Regina Perkins

  	
   

  	
  By: 

  	
  /s/ Michael J. Rapisand

  
	
  Name: 

  	
  Regina Perkins

  	
   

  	
  Name: 

  	
  Michael J. Rapisand

  
	
  Title:

  	
  Relationship Manager

  	
   

  	
  Title:

  	
  Chief Financial Officer

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