Document:

Exhibit
10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT, dated as of July 6,
2010 (the “Agreement”), is made by and between Casella Waste Systems, Inc.,
a Delaware corporation with an address of 25 Greens Hill Lane, Rutland, Vermont
05701 (“Company”), and Edwin D. Johnson, an individual with an address of 1161
Quarterline Road, Rutland, Vermont 05701 (“Employee”).

 

WHEREAS, Company is in the business of providing solid
waste management, disposal, resource recovery and recycling services and
related businesses; and

 

WHEREAS, Company and Employee are mutually desirous
that Company employ Employee, and Employee accepts employment, upon the terms
and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and
of the respective covenants and agreements of the parties herein contained,
Company and Employee, intending to be legally bound, do hereby agree as
follows:

 

1.     Duties.

 

1.1 During the Agreement Term (as defined below),
Employee shall be a Senior Vice President and Chief Financial Officer of
Company (or such other and comparable titles and positions as shall be given
Employee by the Board of Directors (the “Board”) of Company), and shall
faithfully perform for Company the duties of said office. Employee shall have
such corporate power and authority as are necessary to perform the duties of
such office and any other office(s) that are so assigned to him. Employee
shall report to the Chairman and Chief Executive Officer of Company. Employee
shall devote substantially all of his business time and effort to the
performance of his duties hereunder, shall use all reasonable efforts to
advance the best interests of Company and shall not engage in outside business
activities which materially interfere with the performance of his duties
hereunder; provided, however, that, subject to Sections 5 and 6
below, nothing in this Agreement shall preclude Employee from devoting
reasonable periods required for participating in his family business ventures
or in other professional, educational, philanthropic, public interest,
charitable, social or community activities.

 

The duties to be performed by Employee hereunder shall
be performed primarily in Rutland, Vermont, subject to reasonable travel
requirements on behalf of Company.

 

2.             Agreement
Term. Company hereby employs Employee, and Employee hereby
accepts such employment, for an initial term (“Initial Term”) commencing July 6,
2010 and ending on the third anniversary of such date, unless sooner terminated
in accordance with the provisions of Section 4. The term of this Agreement
shall be automatically extended for an additional year at the expiration of the
Initial Term or any succeeding term (such Initial Term and any succeeding terms
being hereinafter referred to as “Agreement Term”), unless terminated by
Company or Employee pursuant to the terms of Section 4 of this Agreement.

 

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3.             Compensation
and Expenses.

 

3.1.1        Base Salary.
Subject to the next sentence of this Section 3.1.1, Employee shall be
compensated at the annual rate of three hundred thousand dollars ($300,000) (“Base
Salary”), payable on a bi-weekly basis in accordance with Company’s standard
payroll procedures. The Base Salary will be subject to annual reviews in
accordance with Company policy.  Such
reviews shall form the basis for any increase in Base Salary.

 

3.1.2        Initial Stock
Options. 
Company shall grant to Employee, conditioned upon Employee’s
commencement of employment with Company, two hundred fifty thousand (250,000)
options to purchase Class A Common Stock of Company at the Fair Market
Value per share on the first date of Employee’s employment with Company.  All such shares shall be subject to all
conditions of the current Company stock option incentive plan provisions (a copy
of which has been or will be provided to Employee), and will vest one-third
(1/3) on the first anniversary of Employee’s employment with Company; one-third
(1/3) on the second anniversary of such date; and one-third (1/3) on the third
anniversary of such date.  A Stock Option
Agreement reflecting the foregoing grant and the terms of the grant and Company
Plan, shall be executed by Company and Employee within fifteen (15) days of
Employee’s commencement of employment with Company as set forth in Section 2.

 

3.2           Incentive
Compensation. In addition to the Base Salary, on
an annual basis, subject to annual reviews in accordance with Company policy,
and also subject to the overall performance of Company, Employee shall be
eligible but not guaranteed to receive a bonus (“Bonus”) consisting of (i) a
cash bonus of up to eighty five percent (85%) of Employee’s Base Salary, (ii) issuance
of additional stock options or restricted stock units (“RSU’s”)of Company or (iii) a
combination of both cash and stock options in an amount to be determined prior
to the conclusion of each fiscal year of Company during the Agreement Term in
the sole discretion of the Compensation Committee of the Board (the “Compensation
Committee”).  Should a cash Bonus be
payable to Employee, it is expected that it will be based on an initial review
during June 2011, and payable shortly thereafter, and at similar time
frames during the Agreement Term (and in any event no later than 2 1⁄2 months
after the end of the later of the Employer’s fiscal year or Employee’s taxable
year during which the Bonus was earned.

 

3.3.1        Business
Expenses. 
Upon submission of appropriate invoices or vouchers, Company shall pay
or reimburse Employee for all reasonable and necessary expenses actually
incurred or paid by him during the Agreement Term in the performance of his
duties hereunder.

 

3.3.2        Relocation and
Temporary Living and Commuting Expenses.  Employee will relocate to the greater
Rutland, Vermont area in order to be employed in the Rutland, Vermont
headquarters of Company.  Employee shall
conclude such relocation within eight (8) months of the date of this
Agreement.  During this period, Company
shall reimburse Employee for all temporary living and commuting expenses for
Employee and his family.  To assist Employee
with his relocation expenses, Company shall pay Employee one hundred five
thousand dollars ($105,000.00) upon the conclusion of Employee’s relocation.

 

3.4           Participation
in Benefit Plans. Subject to each plan’s Employee
contribution requirement, Employee shall be entitled to immediately participate
in any health benefit or other employee benefit plans available to Company’s
senior executives as in effect from time to time, including, without
limitation, any qualified or non-qualified pension, profit sharing and savings
plans, any death and disability benefit plans, any medical, dental, health and
welfare plans and any stock purchase programs, on terms and conditions at least
as favorable as provided to other senior executives of Company, and to continue
to participate in them during the Severance 

 

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Benefit Term (as defined in Section 4.4.1(g), if
applicable), in each case to the extent that he may be eligible to do so under
the applicable provisions of any such plan and applicable law. Following the
termination of Employee hereunder or the expiration of the Severance Benefit
Term (if applicable), Employee and his eligible dependents shall be eligible
for health care continuation under the Consolidated Omnibus Reconciliation Act
of 1985 (“COBRA”) to the extent authorized by law and at Employee’s own cost.

 

3.5           Vacation.
Employee shall be entitled to four (4) weeks of annual vacation and shall
be subject to Company’s standard holiday schedule.  Unused vacation shall not be carried over
into any subsequent year during the Agreement Term. Company shall have no
obligation to pay Employee for any unused vacation.

 

3.6           Fringe
Benefits and Perquisites. Employee
shall be entitled to a monthly auto allowance of six hundred fifty dollars
($650.00) per month; a Company paid gas card related to the use of said
automobile; as well as any fringe benefits and perquisites that are generally
made available to senior executives of Company from time to time and that are
approved by the Compensation Committee.

 

3.7           Life
Insurance. 
In addition to all basic and/or supplemental life insurance coverages
available to Employee pursuant to Section 3.4 hereof, some of which
require Employee contribution, Company shall also provide a supplemental term
life insurance policy to Employee at Company’s expense in the face amount of
four hundred thousand dollars ($400,000).

 

4.             Termination.  Employee’s employment hereunder may be
terminated only under the following circumstances:

 

4.1           Death.  Employee’s employment hereunder shall
terminate automatically upon his death, in which event Company shall pay to
Employee’s written designee or, if he has no written designee, to his spouse
or, if he leaves no spouse and has no written designee, to his estate, (i) Severance
and Acceleration Payment  immediately
upon death,  and (ii) all reasonable
expenses actually incurred or paid by Employee in the performance of his duties
hereunder prior to the date of death.

 

4.2           Disability.
Company may terminate Employee’s employment hereunder if (i) as a result
of Employee’s incapacity due to physical or mental illness, Employee shall have
been absent from his duties hereunder on a full-time basis for an aggregate of
one hundred eighty (180) consecutive or non-consecutive business days in any
twelve (12) consecutive-month period and (ii) within ten (10) days
after written notice of termination hereunder is given by Company, Employee
shall not have returned to the performance of his duties hereunder on a
full-time basis. The determination of incapacity or disability under the
preceding sentence shall be made in good faith by Company based upon
information supplied by a physician selected by Company or its insurers and
reasonably acceptable to Employee or his legal representative. During any
period that Employee fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness (the “Disability Period”),
Employee shall continue to receive his full Base Salary hereunder until his
employment is terminated pursuant to this Section 4.2, provided that
amounts payable to Employee shall be reduced by the sum of the amounts, if any,
paid to Employee during the Disability Period under any disability benefit
plans of Company. If Employee is terminated pursuant to this Section 4.2,
Company shall pay to Employee (or his legal representative):  (i) Severance, payable as described in Section 4.4.1(e),
(ii) the Acceleration Payment, payable as described in Section 4.4.1(b),
(iii) Severance Benefits for the Severance Benefit Term, and (iv) all
reasonable expenses actually incurred or paid by Employee in the performance of
his duties hereunder prior to the date of termination due to disability.

 

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4.3           Termination
by Company.

 

4.3.1        Termination by
Company for Cause. 
Company (i) shall have “Cause” to terminate Employee’s employment
hereunder upon Employee (A) being convicted of a crime involving Company
(other than pursuant to actions taken at the direction or with the approval of
the Board), (B) having engaged in (1) willful misconduct which has a
material adverse effect on Company, (2) willful or gross neglect which has
a material adverse effect on 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 this
Agreement and failed to cure such breach within fifteen (15) days following
written notice from Company specifying such breach and (ii) may terminate
Employee’s employment on written notice given to Employee at any time following
the occurrence of any of the events described in clauses (i)(A) and (i)(B) above
and on written notice given to Employee at any time not less than 60 days following
the occurrence of any of the events described in clause (i)(C) above.  In the event Employee’s employment is
terminated by Company for “Cause”, Employee shall be entitled to continue to
receive Base Salary accrued but unpaid and expenses incurred but not repaid to
Employee, in each case only until the effective date of such termination.

 

4.3.2        Termination by
Company other than for Cause.  In the event Employee’s employment is
terminated by Company other than for Cause, Employee shall be entitled to (i) Severance,
payable as described in Section 4.4.1(e), (ii) the Acceleration
Payment payable as described in Section 4.4.1(b), (iii) Severance
Benefits for the Severance Benefit Term, and (iv)  the accelerated vesting
at the time of termination of any stock options or equity grants (such as RSU’s,
with respect to which payment also shall be made upon such vesting) issued by
Company to Employee.

 

4.4           Termination
by Employee.

 

4.4.1        Definitions.    For
purposes of this Agreement, the following terms shall have the respective
meanings set forth below:

 

(a)           “Affiliate”
means, with respect to Company, any entity directly or indirectly controlled,
controlling or under common control with Company.

 

(b)           “Acceleration
Payment” means an amount in cash equal to the value of (i) any
Base Salary accrued but unpaid prior to the date of termination, (ii) Bonus
accrued but unpaid prior to the date of termination and (iii) any vacation
accrued but unused prior to the date of termination.  The Acceleration Payment shall be payable in
a lump sum immediately upon termination, subject to Section 11.  The Acceleration Payment is not “deferred
compensation” within the meaning of Section 409A (as defined below).

 

(c)           “Good
Reason” means the occurrence of one or more of the following conditions:
the assignment to Employee of any duties inconsistent with his status as Senior
Vice President and Chief Financial Officer, at a publicly traded company, a
material adverse alteration in the nature or status of his responsibilities
from those provided herein or the transfer of a significant portion of such
responsibilities to one or more third persons, a material diminution in
Employee’s compensation, provided that Employee has given Company notice within
90 days of the initial existence of the condition, Company has not remedied the
condition within 30 days after 

 

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receiving such notice and Employee actually terminates
within 180 days of the initial existence of such condition.

 

(e)           “Severance”
means the sum of:  (i) two (2) times
the highest Base Salary that was paid to Employee at any time prior to
termination by Employee for Good Reason or prior to when Employee’s employment
is terminated by Company other than for “Cause”; and (ii) two (2) times
85% of the highest Base Salary used in clause (i).  Severance due under (i) shall be paid
bi-weekly in accordance with Company payroll procedures, commencing immediately
upon termination, and Severance due under (ii) shall be paid in a lump sum
within sixty (60) days of the date of Employee’s termination, in all cases
subject to Section 11 and, to the extent applicable, Section 20, and
less applicable Employee payroll deductions. 
Severance
payable under clause (i) is intended to, and shall be construed to, fit
within the short-term deferral and separation pay exceptions to Section 409A
to the maximum permissible extent and each installment payment thereof shall be
treated as a separate payment.  Severance
payable under clause (ii) is intended to, and shall be construed to, fit
within the short-term deferral exception to Section 409A.

 

(f)            “Severance
Benefits” means the group medical, dental, disability and life insurance
benefits contemplated by Section 3.4 and 3.7 of this Agreement.  The Severance Benefits are intended to, and shall be
construed to, fit within the short-term deferral and separation pay exceptions
to Section 409A to the maximum permissible extent and each installment
thereof shall be treated as a separate payment for purposes of Section 409A.

 

(g)           “Severance
Benefit Term” means two (2) years from the date Employee terminates
his employment for Good Reason, or Employee’s employment is terminated by
Company other than for Cause.

 

(h)           “Section 409A”
means Section 409A of the Internal Revenue Code of 1986, and the
regulations issued thereunder, as each may be amended from time to time.

 

4.4.2        Termination by
Employee for Good Reason.  At the election of Employee, Employee may
terminate his employment for Good Reason immediately upon written notice to
Company; provided, however, that Employee must make such election
to terminate his employment for Good Reason within 90 days of his becoming
aware of the occurrence of such event that qualifies as Good Reason under Section 4.4.1(d) of
this Agreement. If during the Agreement Term Employee’s employment is
terminated by Employee for Good Reason, Employee shall be entitled to receive
from Company (i) Severance, payable as described in Section 4.4.1(e),
(ii)  the Acceleration Payment payable as described in Section 4.4.1(b),
, (iii) Severance Benefits for the Severance Benefit Term, (iv) the
accelerated vesting at the time of termination of any stock options or equity
grants (such as Restricted Stock Units, with respect to which payment also
shall be made upon such vesting) issued by Company to Employee, and (v) a
cash payment in an amount equal to the amount of any excise tax imposed on
Employee under Section 4999 of the Internal Revenue Code of 1986, as
amended (“Section 4999”), increased by the additional federal and
state income taxes on such amount, such that, after payment of this additional
cash payment, Employee’s Severance, Acceleration Payment and Severance Benefits
after federal and state income taxes are equal to the amount that Employee
would have received but for the imposition of the excise tax under Section 4999.  Any payment pursuant to clause (v) shall
be made no later than December 31 of the year following the year in which
Employee remits the related taxes.

 

4.4.3        Termination by
Employee for other than Good Reason.  Upon forty five (45) days’ prior written
notice, Employee may terminate his employment with Company other than for Good
Reason. If Employee voluntarily 

 

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terminates his employment with Company other than for
Good Reason, no further payment shall be due Employee pursuant to Sections 3 or
4 above (other than payments for accrued and unpaid Base Salary and expenses
incurred but not previously paid to Employee, in each case prior to such
termination), however the indemnification provisions pursuant to Section 10
hereof shall survive any termination of employment of Employee hereunder.

 

4.5           Effect
of Termination on Certain Obligations. No
termination of the employment of Employee by either Company or Employee,
whether for Good Reason or without Cause or for Cause ,shall terminate, affect
or impair any of the obligations or rights of the parties set forth in Sections
4, 5, 6, 7, 8 and 10 of this Agreement, all of which obligations and rights
shall survive any termination of employment of Employee hereunder.

 

5.             Covenant
Not to Disclose Confidential Information.  During the Agreement Term, and for a period
of two (2) years thereafter, Employee acknowledges that during the course
of his affiliation with Company he has or will have access to and knowledge of
certain information and data which Company considers confidential and/or
proprietary and the release of such information or data to unauthorized persons
would be extremely detrimental to Company. As a consequence, Employee hereby
agrees and acknowledges that he owes a duty to Company not to disclose, and
agrees that without the prior written consent of Company, at any time, either
during or after his employment with Company, he will not communicate, publish
or disclose, to any person anywhere, or use, any Confidential Information (as
hereinafter defined), except as may be necessary or appropriate to conduct his
duties hereunder, provided Employee is acting in good faith and in the best interest
of Company. Employee will use all reasonable efforts at all times to hold in
confidence and to safeguard any Confidential Information from falling into the
hands of any unauthorized person and, in particular, will not permit any
Confidential Information to be read, duplicated or copied. Employee will return
to Company all Confidential Information in Employee’s possession or under
Employee’s control when the duties of Employee no longer require Employee’s
possession thereof, or whenever Company shall so request, and in any event will
promptly return all such Confidential Information if Employee’s employment with
Company is terminated for any or no reason and will not retain any copies
thereof. For purposes hereof, the term “Confidential Information” shall mean
any information or data used by or belonging or relating to Company whether
communication is verbal or in writing that is not known generally to the
industry in which Company is or may be engaged, including without limitation,
any and all trade secrets, proprietary data and information relating to Company’s
business and products, intellectual property, patents, or copyrightable works,
price list, customer lists, processes, procedures or standards, know-how,
manuals, business strategies, records, drawings, specifications, designs,
financial information, whether or not reduced to writing, or information or
data which Company advises Employee should be treated as Confidential
Information.

 

6.             Covenant
Not to Compete and Non-Solicitation and Non-Disparagement.
Employee acknowledges that he, at the expense of Company, has been and will be
specially trained in the business of Company, has established and will continue
to establish favorable relations with the customers, clients and accounts of
Company and will have access to trade secrets of Company. Therefore, in
consideration of the compensation paid Employee hereunder, and of such training
and relations and to further protect trade secrets, directly or indirectly, of
Company, Employee agrees that during the term of his employment by Company, and
for a period of one (1) year from and after the voluntary or involuntary
termination of such employment for any or no reason, he will not, directly or
indirectly, without the express written consent of Company:

 

(a)           own
or have any interest in or act as an officer, director, partner, principal,
employee, agent, representative, consultant or independent contractor of, or in
any way assist in, any 

 

6

 

business located in or doing business in the United
States of America or Canada in any area within one hundred (100) miles of any
facility of Company during the term of Employee’s employment,  by Company, which is engaged, directly or
indirectly, in (i) the solid waste processing, disposal and management
business, (ii) the utilization of recyclable materials business or (iii) any
other business Company is engaged in or proposes to engage in on the date this
Agreement, or subsequently, at the date of termination of this Agreement,
including, without limitation, businesses in the nature of, or relating to,
waste reduction, the creation of power or fuels out of waste, landfill gas to
energy or gasification businesses (the businesses described in clauses (a)(i), (ii) and
(iii) are collectively referred to as the “Competitive  Businesses”);
provided, however, that notwithstanding the above, Employee may
own, directly or indirectly, solely as an investment, securities of any such
person which are traded on any national securities exchange or NASDAQ if
Employee (A) is not a controlling person of, or a member of a group which
controls, such person and (B) does not, directly or indirectly, own 5% or
more of any class of securities of such person;

 

(b)           solicit
clients, customers (who are or were customers of Company, or were prospects to
be customers of Company, within the twelve (12) months prior to termination) or
accounts of Company for, on behalf of or otherwise related to any such
Competitive Businesses or any products related thereto; or

 

(c)           solicit,
employ or in any manner influence or encourage any person who is or shall be in
the employ or service of Company to leave such employ or service.

 

Furthermore, the
terms of this covenant not to compete shall be enforceable against Employee
only to the extent that during Employee’s employment, Company continues to pay
Employee compensation equal to the salary level set forth in Section 3.1
of this Agreement and after termination of Employee’s employment, Company
continues to pay Employee any and all Severance Benefits, Severance  and the Acceleration Payment as required
under Section 4 of this Agreement. Furthermore, if any court determines
that the covenant not to compete, or any part thereof, is unenforceable because
of the duration of such provision or the geographic area or scope covered
thereby, such court shall have the power to reduce the duration, area or scope
of such provisions and, in its reduced form, such provision shall then be
enforceable and shall be enforced

 

7.             Assignment of Inventions and Work.  Employee hereby agrees to disclose in writing
to Company any  Inventions or
copyrightable Works, which are conceived, made, discovered, written or created
by Employee, alone and/or in combination with others, during Employee’s employment
with Company, and that Employee will, voluntarily and without additional
consideration, assign Employee’s  rights
and title to such Inventions or Works to Company.  This assignment of Inventions or Works
relates only to Inventions or Works which are directly related to the
businesses of Company.

 

8.             Specific
Performance. 
Recognizing that irreparable damage will result to Company in the event
of the breach or threatened breach of any of the foregoing covenants and
assurances by Employee contained in Sections 5, 6 or 7 hereof, and that Company’s
remedies at law for any such breach or threatened breach will be inadequate,
Company and its successors and assigns, in addition to such other remedies
which may be available to them, shall be entitled to an injunction, including a
mandatory injunction, to be issued by any court of competent jurisdiction
ordering compliance with this Agreement or enjoining and restraining Employee,
and 

 

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each and every person, firm or company acting in
concert or participation with him, from the continuation of such breach.

 

9.             Potential
Unenforceability of Any Provision. Employee
acknowledges and agrees that he has had an opportunity to seek advice of
counsel in connection with this Agreement. If a final judicial determination is
made that any provision of this Agreement is an unenforceable restriction
against Employee or Company, the provisions hereof shall be rendered void only
to the extent that such judicial determination finds such provisions
unenforceable, and such unenforceable provisions shall automatically be
reconstituted and became a part of this Agreement, effective as of the date
first written above, to the maximum extent in favor of Company (in the case of
an Employee breach) or Employee (in the case of a Company breach) that is
lawfully enforceable. A judicial determination that any provision of this
Agreement is unenforceable shall in no instance render the entire Agreement
unenforceable, but rather the Agreement will continue in full force and effect
absent any unenforceable provision to the maximum extent permitted by law.

 

10.           Indemnification.  Company agrees that, except as limited by
Company’s Certificate of Incorporation or By-Laws (as either or both may be amended
from time to time), or applicable law, Company shall indemnify Employee (and
promptly advance expenses as may be required) to the fullest extent permitted
by applicable law in effect on the date hereof and to such greater extent as
applicable law may thereafter from time to time permit.  Employee shall be entitled to this
indemnification if by reason of his employment or by any reason of anything
done or not done by Employee in any such capacity he is or is threatened to be
made, a party to any threatened, pending, or completed Proceeding (as defined
herein).  Employee will be indemnified to
the full extent permitted by applicable law against expenses, judgments,
penalties, fines and amounts paid in settlement (including all interest
assessments and other charges paid or payable in connection with or in respect
of such expenses, judgments, fines, penalties or amounts paid in settlement)
actually and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of Company, and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.  “Proceeding” includes any threatened,
pending, or completed claim, action, suit, arbitration, alternate dispute
resolution mechanism, administrative hearing, appeal, inquiry or investigation,
whether civil, criminal, administrative, arbitrative, investigative, or other
(whether instituted by Company or any other party), or any inquiry or
investigation that Employee in good faith believes might lead to the
institution of any such action, suit or proceeding whether civil, criminal,
administrative, investigative, or other, including any action, suit
arbitration, alternate dispute resolution mechanism, administrative  hearing, appeal, or any inquiry or
investigation pending on or prior to the date hereof or initiated by Employee
to enforce his rights under this indemnification section of this Agreement.
This indemnification and the advancement of expenses shall include attorney’s
fees and other reasonable expenses incurred by Employee pursuant to this
clause. In the event that there is a potential conflict of interest between
Employee and Company, Employee may select his own counsel (and still be
entitled to the benefit of this indemnification).   This indemnification clause shall survive
the termination of this Agreement.

 

11.           General
Release. 
Employee recognizes, understands and agrees that the provision of this
Agreement by Company, and its terms of employment, as well as its terms of
Severance, Severance Benefits and the Acceleration Payment are generous and
extraordinary, and that in consideration thereof, Employee agrees in this
Agreement that in advance of and as a condition to the receipt of such
Severance Benefits, Severance and the Acceleration Payment, if any, Employee
will execute a General Release in a form mutually satisfactory to Company and
Employee, but in any case, including appropriate releases for all claims or
demands Employee may have against Company for violation of any laws, rules,
regulations, orders or decrees established to protect 

 

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the rights of employees pursuant to
anti-discrimination laws and including all protections afforded to Employee
relative to the execution and revocation of such a General Release.  Employee understands and agrees that no
Severance Benefits or Severance and the Acceleration Payment will be made to
Employee unless, and until Employee and Company execute such a General Release,
and Employee’s rights to revoke such General Release have expired or have been
extinguished as a matter of law.  Such
General Release must be executed and submitted to Company within 60 days
following termination of employment. 
Payment of amounts exempt from Section 409A shall be made (or shall
begin, as the case may be) immediately upon the expiration of the revocation
period, but payment of any amounts that constitute “deferred compensation”
within the meaning of Section 409A shall be made (or begin) immediately
upon the expiration of the 60-day period, subject to any further delay under Section 20.

 

12.           Corporate
Authority.  Company represents and warrants to Employee
that (a) Company has all necessary power and authority to enter into, and
be bound by the terms of, this Agreement, (b) the execution, delivery, and
performance of the undertakings contemplated by the Agreement have been duly
authorized by Company, and (c) this Agreement shall be a legal, valid and
binding obligation of Company, enforceable against Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the enforcement of creditors rights generally.

 

13.           Notice.
Any notice or other communication hereunder shall be in writing and shall be
mailed or delivered to the respective parties hereto as follows:

 

(a) If to Company:

 

Casella Waste Systems, Inc.

25 Greens Hill Lane

Rutland, VT 05702

Attention: Vice President and General Counsel

 

(b) If to Employee:

 

Edwin D. Johnson

Senior Vice President and Chief Financial Officer

25 Greens Hill Lane

Rutland, VT 05702

 

 

With a copy to:

 

Edwin D. Johnson

1161 Quarterline Road

Center Rutland, VT 
05736

The addresses of either party hereto above may be
changed by written notice to the other party.

 

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14.           Amendment;
Waiver. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended and the terms of covenants hereof may be waived,
only by written instrument executed by the party against whom such modification
or waiver is sought to be enforced. The failure of either party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in anyone or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant in this Agreement.

 

15.           Benefit
and Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of Company, but shall
be personal to and not assignable by Employee. The obligations of Company
hereunder are personal to Employee or where applicable to his spouse or estate,
and shall be continued only so long as Employee shall be personally discharging
his duties hereunder. Company may assign its rights, together with its
obligations, to any corporation which is a direct or indirect wholly-owned
subsidiary of Company; provided, however, that Company shall not
be released from its obligations hereunder without the prior written consent of
Employee, which consent shall not be unreasonably withheld.

 

16.           GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF VERMONT REGARDLESS OF THE LAWS THAT MIGHT BE APPLICABLE UNDER
PRINCIPLES OF CONFLICTS OF LAW.

 

17.           Counterparts.
This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original but all such
counterparts together shall constitute one and the same instrument. Each
counterpart may consist of two copies hereof each signed by one of the parties
hereto.

 

18.           Headings.  The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.

 

19.           Entire
Agreement. This Agreement constitutes the
entire understanding between the parties with respect to the subject matter
hereof, superseding all negotiations, prior discussions and preliminary
agreements. No subsequent modifications may be made to this Agreement except by
signed writing of the parties.

 

20.           Compliance
with Section 409A.

 

Payments and benefits under this Agreement are
intended to be exempt from Section 409A to the maximum possible extent and,
to the extent not exempt, are intended to comply with the requirements of Section 409A.  The provisions of this Agreement shall be
construed in a manner consistent with such intent.

 

With respect to any “deferred compensation” within the
meaning of Section 409A that is payable or commences to be payable under
this Agreement solely by reason of Employee’s termination of employment, such
amount shall be payable or commence to be payable as soon as, and no later
than,  Employee experiences a “separation
from service” as defined in Section 409A, subject to Section 11 of
the Agreement and subject to the six-month delay described below, if
applicable.  In addition, nothing in 

 

10

 

the Agreement shall require Company to, and Company
shall not, accelerate the payment of any amount that constitutes “deferred
compensation” except to the extent permitted under Section 409A.

 

If Employee is a “Specified Employee” within the
meaning of Section 409A at the time his employment terminates and any
amount payable to Employee by virtue of his separation from service constitutes
“deferred compensation” within the meaning of Section 409A, any such
amounts that otherwise would be payable during the first six months following
separation from service shall be delayed and accumulated for a period of six
months and paid in a lump sum on the first day of the seventh month.  Amounts exempt from Section 409A shall
not be so delayed.  The Severance and
Severance Benefits described in Section 4.4.1 of the Agreement are
intended to, and shall be construed to, fit within the short-term deferral and
separation pay exceptions to Section 409A to the maximum permissible
extent and each installment thereof shall be treated as a separate payment for
such purposes.

 

Any reimbursements or in-kind benefits provided to
Employee shall be administered in accordance with Section 409A, such
that:  (a) the amount of expenses
eligible for reimbursement, or in-kind benefits provided, during one year shall
not affect the expenses eligible for reimbursement or the in-kind benefits
provided in any other year; (b) reimbursement of eligible expenses shall
be made on or before December 31 of the year following the year in which
the expense was incurred; and (c) the right to reimbursement or in-kind
benefits shall not be subject to liquidation or to exchange for another
benefit.

 

21.           AGREEMENT TO ARBITRATE

 

The undersigned parties agree that any disputes that
may arise between them (including but not limited to any controversies or
claims arising out of or relating to this Agreement or any alleged breach
thereof, and any dispute over the interpretation or scope of this arbitration
clause) shall be settled by arbitration by a single arbitrator agreed to by the
parties, or if one cannot be agreed to by the parties, then by a three (3) person
arbitration panel which is selected by the party of the first party, the second
member chosen by the party of the second party, and the third member being
selected by the first two arbitrators as previously selected by the
parties.  The arbitrator(s) shall
administer the arbitration in accordance with the American Arbitration
Association, Commercial Arbitration Rules, and judgment on the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction
thereof. No party shall be entitled to punitive, consequential or treble
damages.  The arbitrator(s) selection
process shall be concluded by the parties within sixty (60) days of a party’s
Notice of Arbitration.

 

ACKNOWLEDGMENT OF ARBITRATION PURSUANT TO 12 V.S.A. §
5651 et seq. THE PARTIES HERETO ACKNOWLEDGE THAT THIS DOCUMENT CONTAINS AN
AGREEMENT TO ARBITRATE. AFTER SIGNING THIS DOCUMENT EACH PARTY UNDERSTANDS THAT
HE WILL NOT BE ABLE TO BRING A LAWSUIT CONCERNING ANY DISPUTE THAT MAY ARISE
WHICH IS COVERED BY THIS ARBITRATION AGREEMENT EXCEPT AS PROVIDED IN THIS
PARAGRAPH OR UNLESS IT INVOLVES A QUESTION OF CONSTITUTIONAL LAW OR CIVIL
RIGHTS. INSTEAD EACH PARTY HAS AGREED TO SUBMIT ANY SUCH DISPUTE TO AN
IMPARTIAL ARBITRATOR.

 

IN WITNESS WHEREOF, all parties have set their hand
and seal to this Agreement and Acknowledgement of Arbitration pursuant to 12 V
..S.A. § 5651 et seq. as of the dates written below:

 

11

 

	
   

  	
   

  	
  EDWIN D. JOHNSON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness:

  	
  /s/ Shelley S. Rogers

  	
   

  	
  /s/ Edwin D. Johnson

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  8/4/2010

  	
   

  	
  Date:

  	
  8/4/10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CASELLA WASTE SYSTEMS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness:

  	
  /s/ Shelley S. Rogers

  	
   

  	
  By:

  	
  /s/ John W. Casella

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  8/4/2010

  	
   

  	
  Name:

  	
  John W. Casella

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date: 

  	
  8/4/10

  

 

12Exhibit 10.19

 

MGP INGREDIENTS, INC.

STOCK INCENTIVE PLAN OF 2004, as amended

 

Table of Contents

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  PURPOSES

  	
  A - 2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
  A - 2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  GRANTS OF STOCK INCENTIVES

  	
  A - 4

  
	
   

  	
   

  	
   

  
	
  4.

  	
  STOCK SUBJECT TO THE PLAN

  	
  A - 5

  
	
   

  	
   

  	
   

  
	
  5.

  	
  STOCK AWARDS

  	
  A - 6

  
	
   

  	
   

  	
   

  
	
  6.

  	
  STOCK OPTIONS

  	
  A - 6

  
	
   

  	
   

  	
   

  
	
  7.

  	
  STOCK APPRECIATION RIGHTS

  	
  A - 7

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PERFORMANCE AWARDS

  	
  A - 8

  
	
   

  	
   

  	
   

  
	
  9.

  	
  TERMINATION OR SUSPENSION OF EMPLOYMENT

  	
  A - 9

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ADJUSTMENT PROVISIONS

  	
  A - 11

  
	
   

  	
   

  	
   

  
	
  11.

  	
  CHANGE IN CONTROL; SALE OF SUBSIDIARY

  	
  A - 11

  
	
   

  	
   

  	
   

  
	
  12.

  	
  TERM

  	
  A - 12

  
	
   

  	
   

  	
   

  
	
  13.

  	
  ADMINISTRATION

  	
  A - 13

  
	
   

  	
   

  	
   

  
	
  14.

  	
  GENERAL PROVISIONS

  	
  A - 14

  
	
   

  	
   

  	
   

  
	
  15.

  	
  AMENDMENT OR DISCONTINUANCE OF PLAN

  	
  A - 17

  

 

 A - 1  

 

MGP INGREDIENTS, INC.

STOCK INCENTIVE PLAN OF 2004

 

1.                                      PURPOSES.

 

The purpose of this Stock Incentive Plan of 2004 (the “Plan”) is to aid
MGP Ingredients, Inc., a Kansas corporation (the “Company”), in
attracting, retaining, motivating and rewarding employees who provide
substantial services to the Company or its Subsidiaries, to provide for
equitable and competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and to promote the
creation of long-term value for stockholders by closely aligning the interests
of Participants with those of stockholders.

 

2.                                      DEFINITIONS.

 

Unless otherwise required by the context, the following terms, when
used in the Plan, shall have the meanings set forth in this Section 2:

 

Award Agreement:  Any
written agreement, contract, or other instrument or document evidencing any
Stock Incentive, which may, but need not, be executed or acknowledged by a
Participant.

 

Board of Directors or Board:  The Board of Directors of the Company.

 

Change in Control:  A Change in Control shall mean:

 

(i)  The acquisition
(other than from the Company) by any person, entity or “group,” within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act,
(excluding, for this purpose, the Company or its subsidiaries, any employee
benefit plan of the Company or its subsidiaries, trustees of the Cray Family
Trust, or any person who acquires Common or Preferred Stock from Cloud L. Cray, Jr.
or from any trust controlled by or for the benefit of Cloud L. Cray, Jr.
prior to or as a result of his death) of beneficial ownership, (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of at least 30%
of the then outstanding shares of Common Stock and 50% of the then outstanding
shares of Preferred Stock or 30% of the combined voting power of the Company’s
then outstanding voting securities entitled to vote generally in the election
of directors; or

 

(ii)  Individuals who,
as of the date hereof, constitute the Board (as of the date hereof the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company)
shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or

 

(iii)  Approval by the
stockholders of the Company of a reorganization, merger, consolidation, in each
case, with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own collectively as a group more than 50% of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company’s then outstanding voting
securities, or a liquidation or dissolution of the Company or of the sale of
all or substantially all of the assets of the Company.

 

If any of the events enumerated in clauses (i) through (iii) occur,
the Board shall determine the effective date of the Change in Control resulting
therefrom, for purposes of the Plan.

 

Code:  The Internal
Revenue Code of 1986 as now or hereafter amended.  References to any provision of the Code or
regulation (including a proposed regulation) thereunder shall include any
successor provisions and regulations.

 

Committee:  The Human
Resources and Compensation Committee of the Board of Directors of the Company
or any other committee the Board may subsequently appoint to administer the
Plan pursuant to Section 13 

 

 A - 2  

 

hereof, each member of which shall be a Qualified Member.  No action of the Committee shall be void or
deemed to be without authority due to the failure of any member, at the time
the action was taken, to be a Qualified Member.

 

Common Stock:  The
Common Stock of the Company, no par value, or such other class of shares or
other securities as may be subject to the Plan as the result of an adjustment made
pursuant to the provisions of Section 10.

 

Company:  MGP
Ingredients, Inc., a Kansas corporation.

 

Covered Employee:  An
Eligible Person who is a Covered Employee as specified in Section 14(o).

 

Disability: The inability of a Participant to perform substantially
such Participant’s duties and responsibilities due to a physical or mental
condition that would entitle such Participant to benefits under the Company’s
Long-Term Disability Plan in effect at the time or, if no such plan is in
effect, such condition as would enable the Participant to receive an award for
permanent and total disability from the Social Security Administration.

 

Eligible Person: A salaried, full-time employee of the Company
or any Subsidiary, including any executive officer (whether or not also a
director of the Company), and any such person who has been offered employment
by the Company or a Subsidiary, provided that such prospective employee may not
receive any payment or exercise any right relating to a Stock Incentive until
such person has commenced employment with the Company or a Subsidiary. An
employee on leave of absence may be considered as still in the employ of the
Company or Subsidiary for purposes of eligibility for participation in the
Plan. For purposes of the Plan, a joint venture in which the Company or a
Subsidiary has a substantial direct or indirect equity investment shall be
deemed a Subsidiary, if so determined by the Committee.  Stock Incentives may be made to Eligible Persons
whether or not they have received prior awards under the Plan or under any
previously adopted plan, and whether or not they are participants in other
benefit plans of the Company or any other Subsidiary.

 

Exchange Act:  The
Securities Exchange Act of 1934, as amended.

 

Executive Officer:  At any time, an individual who is an
executive officer of the Company within the meaning of Exchange Act Rule 3b-7
as promulgated and interpreted by the SEC under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time, or
who is an officer of the Company within the meaning of Exchange Act rule 16a-1(f) as
promulgated and interpreted by the SEC under the Exchange Act, or any successor
rule or regulation thereto as in effect from time to time.

 

Fair Market Value:  The fair market value of a share of Common
Stock on the date as of which fair market value is to be determined shall be: (a) if
the Common Stock is reported on the NASDAQ National Market System of the
National Association of Securities Dealers, Inc., the last reported sales
price of a share of Common Stock as reported by NASDAQ; or (b) if the
Common Stock is listed on an established securities exchange or exchanges, the
highest reported closing price of a share of Common Stock on such exchange or
exchanges.  The fair market value of the
Common Stock if not so reported or listed and the fair market value of any
other property on the date as of which fair market value is to be determined
shall mean the fair market value as determined by the Committee in its sole discretion.

 

Incentive Compensation:  Bonuses, extra and other compensation payable
in addition to a salary or other base amount, whether contingent or not,
whether discretionary or required to be paid pursuant to an agreement,
resolution, arrangement, plan or practice, and whether payable currently or on
a deferred basis, in cash, Common Stock or other property.

 

Incentive Stock Option:  A stock option which satisfies the
requirements of Section 422 of the Code. 
None of the Options granted under the Plan is intended to be an
Incentive Stock Option.

 

Mature Stock: 
Previously-acquired shares of Common Stock for which the holder thereof
has good title, free and clear of all liens and encumbrances and which such
holder either (i) has held for at least six months or (ii) has
purchased on the open market.

 

Non-Qualified Stock Option:  A right to purchase Common Stock from the
Company that is granted under Section 6 of the Plan.

 

 A - 3  

 

Option:  An option to
purchase shares of Common Stock or, where the context so requires, the
instrument which evidences such an option.

 

Participant:  Any Eligible
Person selected by the Committee to receive a Stock Incentive under the Plan.

 

Performance Award: A conditional right, granted to a
Participant under Section 8, to a Stock Award or other Stock Incentive, as
determined by the Committee, based upon performance criteria specified by the
Committee.

 

Plan:  The Stock
Incentive Plan of 2004 herein set forth as the same may from time to time be
amended.

 

Qualified Member:  A member of the
Committee who is a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) and
an “outside director” within the meaning of Regulation 1.162-27 under Code Section 162(m).

 

Retirement: Retirement at or after the attainment of age 62.

 

Stock Appreciation Right:  A right to receive a number of shares of
Common Stock, cash, or a combination of the two based on the increase in the
Fair Market Value of shares of Common Stock subject to an Option, as set forth
in Section 7 of the Plan.

 

Stock Award:  An issuance
or transfer of shares of Common Stock at the time a Stock Incentive is granted
or as soon thereafter as practicable, or an undertaking to issue or transfer
such shares in the future, including, without limitation, such an issuance,
transfer or undertaking with respect to a Stock Incentive that is contingent,
in whole or in part, upon the attainment of a specified objective or
objectives.

 

Stock Incentive:  A
stock incentive granted under the Plan in one of the forms authorized in Section 3.

 

Subsidiary:  A
corporation or other form of business association of which shares (or other
ownership interests) having 50% or more of the voting power are owned or
controlled, directly or indirectly, by the Company.

 

3.                                      GRANTS
OF STOCK INCENTIVES.

 

(a)  Persons Eligible to Participate.  Subject to the provisions of the Plan, the
Committee may at any time grant Stock Incentives under the Plan to, and only
to, Eligible Persons.

 

(b)  Forms of Stock Incentives.  Stock Incentives may be granted in the
following forms:

 

(i)  a Stock Award, in
accordance with Section 5, or

 

(ii)  a Stock Option,
in accordance with Section 6, or

 

(iii)  a Stock
Appreciation Right, in accordance with Section 7, or

 

(iv)  a Performance Award
in accordance with Section 8, or

 

(v)  a combination of
any of the foregoing.

 

(c)  Award Agreements.  Each Stock Incentive shall be evidenced by a
written Award Agreement in a form prescribed by the Committee that is
consistent with this Plan, that shall be delivered to the Participant and that
shall specify the terms and conditions of the Stock Incentive and any rules applicable
thereto.  The Committee may impose on any
Stock Incentive or the exercise thereof, at the date of grant or thereafter
(subject to Section 15(a) ), such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Committee shall
determine.  The Committee shall retain
full power and discretion with respect to any term or condition of a Stock
Incentive that is not mandatory under the Plan. 
The Committee shall require the payment of lawful consideration for a
Stock Incentive to the extent necessary to satisfy the requirements of the
Kansas General Corporations Act, and may otherwise require payment of consideration
for a Stock Incentive except as limited by the Plan.  Award 

 

 A - 4  

 

Agreements
may be executed on behalf of the Company and the Plan by any Executive Officer
of the Company or such other officer of the Company as the Committee shall
designate.

 

(d)  Amendments  of Award Agreements.  Subject to the terms of the Plan, the
Committee may from time to time authorize the amendment of outstanding Award
Agreements so long as such amendments are consistent with the Plan; provided,
that any such amendment that would adversely affect the rights of any
Participant or any holder or beneficiary of any Stock Incentive theretofore
granted shall not to that extent be effective without the consent of the affected
Participant, holder or beneficiary.  The
Committee may not reprice (as defined in Section 15(a)) any Stock Option
which has been awarded to a Participant without stockholder approval.

 

(e)  Timing  of Payment under Stock
Incentives; Deferrals.  Subject to the
terms of the Plan and any applicable Award Agreement, payments to be made by
the Company or Subsidiary upon the exercise of an Option or other Stock
Incentive or settlement of a Stock Incentive may be made in a single payment or
transfer, in installments, or on a deferred basis.  Installment or deferred payments may be
required by the Committee (subject to Section 15(a)) or permitted at the
election of the Participant on terms and conditions established by the
Committee.

 

4.                                      STOCK
SUBJECT TO THE PLAN.

 

(a)  Number of Shares Available.                    Subject to the provisions of
clause (b) of this Section 4 and Section 10, the number of
shares of Common Stock that may be issued under the Plan for Stock Incentives
during the term of the Plan is Two Million Six Hundred Eighty Thousand
(2,680,000).

 

(b)  Share Counting Rules.  If any shares of Common Stock subject to a
Stock Incentive shall not be issued or transferred or shall cease to be
issuable or transferable under such Stock Incentive, or if, after issuance or
transfer, any such shares shall be reacquired by the Company or Subsidiary
because of a Participant’s failure to comply with or meet the terms and
conditions of a Stock Incentive, such shares may again be made subject to Stock
Incentives; and only the net additional shares issued upon the exercise or
vesting of a Stock Incentive through the delivery or withholding of shares of
Common Stock in payment of the exercise price or withholding taxes shall be
counted against the number of shares which are authorized for issuance under
this paragraph.  The limitation provided
for in this paragraph shall also be increased by the number of shares subject
to any substitute Stock Incentives granted under Section 14(k).  Notwithstanding the foregoing, shares shall
be deemed to have been issued pursuant to a Stock Option or Stock Award and
shall be charged against the limitation provided for in this paragraph, whether
actually delivered, to the extent of the number of shares covered by that
portion of the related Stock Option or Stock Award granted under the Plan which
is settled by the exercise of a Stock Appreciation Right or by a cash payment
under a Stock Award.  The foregoing
notwithstanding, shares shall not become available under this Section 4(b) in
an event that would constitute a “material amendment” of the Plan subject to
stockholder approval under then applicable NASDAQ Marketplace Rules.  Because shares will count against the number
reserved in Section 4(a) upon delivery, and subject to the share
counting rules under this Section 4(b), the Committee may determine
that Stock Incentives may be outstanding that relate to a greater number of
shares than the aggregate remaining available under the Plan, so long as Stock
Incentives will not result in delivery and vesting of shares in excess of the
number then available under the Plan.

 

(c)  Use of Treasury and Other Shares.  Subject to the requirements of applicable
Kansas law, authorized but unissued shares of Common Stock and shares of Common
Stock held in the treasury, whether acquired by the Company specifically for
use under the Plan or otherwise, may be used, as the Board of Directors may
from time to time determine, for purposes of the Plan; provided, however, that
any shares acquired or held by the Company for the purposes of the Plan shall,
unless and until transferred to a Participant in accordance with the terms and
conditions of a Stock Incentive, be and at all times remain treasury shares of
the Company, available for any corporate purpose, irrespective of whether such
shares are entered in a special account for purposes of the Plan.

 

(d)  Certain Limitations on Grants.  Notwithstanding any provision herein to the
contrary, and subject to adjustment as provided in Section 10, to the
extent necessary for an award to be qualified performance based compensation
under Section 162(m) of the Code, the maximum aggregate number of
shares of Common Stock issuable under any Stock Incentives awarded to any
individual with respect to any fiscal year of the Company shall be 100,000
shares or equivalents thereof.  In
addition, subject to other provisions of the Plan permitting the expiration of
restrictions under certain circumstances, unless otherwise determined by the
Committee the Stock Awards or Performance Awards granted under Section 5
or 8 will be subject to a vesting period of one year from the date of grant in
the case of such Stock Incentives that are performance based and three years
from the date of grant 

 

 A - 5  

 

in
the case of such Stock Incentives under Section 5 that are not performance
based; provided, however, that such Stock Incentives may vest, in whole or in
part, on an accelerated basis in the event of a Participant’s death,
Disability, Retirement, or in the event of a Change in Control or other special
circumstances, including involuntary termination without cause, in the sole
discretion of the Committee.  In its
discretion, the Committee may provide for vesting periods of longer or shorter
duration that the one or three year periods referred to above. For purposes of
this Section 4(d), (i) a period that precedes the grant of the Stock
Incentive will be treated as part of the vesting or performance period if the
participant has been notified a reasonable time after the commencement of the
period that he or she has the opportunity to earn the Stock Incentive based on
performance and/or continued service, and (ii) vesting over a vesting
period may include periodic vesting over such period if the rate of such
vesting is proportional (or less rapid) throughout such period.

 

5.                                      STOCK
AWARDS.

 

Stock Incentives in the form of Stock Awards shall be subject to the
following provisions:

 

(a)  General.  A Stock Award shall be granted only (i) in
payment of Incentive Compensation that has been earned, (ii) as Incentive
Compensation to be earned, or (iii) a combination of (i) and (ii).

 

(b)  Valuation.  For the purposes of the Plan, in determining
the value of a Stock Award, all shares of Common Stock subject to such Stock
Award shall be valued at not less than 100% of the Fair Market Value of such
shares on the date such Stock Award is granted, regardless of whether or when
such shares are issued or transferred to the Participant and whether or not
such shares are subject to restrictions which affect their value.

 

(c)  Grant.  Shares of Common Stock subject to a Stock
Award may be issued or transferred to a Participant at the time the Stock Award
is granted, or at any time subsequent thereto, or in installments from time to
time, as the Committee shall determine. 
With respect to a Stock Award providing for issuance or transfer of
shares subsequent to the time it is granted, the Committee may provide for
payment to the grantee of amounts equal to the cash dividends which would have
been payable in respect of such shares (as adjusted under Section 10 of
the Plan) if they had been issued or transferred at the time the Stock Award
was granted.  Such payments may be made
in cash, shares of Common Stock or a combination of cash and shares.  Such payments may be made at the time the
shares are issued or transferred, or at the time or times the cash dividends
would have been payable if the shares had been issued or transferred at the
time the Stock Award was granted. A Stock Award may provide that if such
payments are made at the time shares are issued or transferred, there also will
be paid interest on any deferred dividend amounts, with respect to the number
of shares of Common Stock subject to such award, if any.  Any amount payable in shares of Common Stock
under the terms of the Stock Award may be paid in cash on each date on which
delivery of shares would otherwise have been made, in an amount equal to the
Fair Market Value on such date of the shares which would otherwise have been
delivered.

 

(d)  Terms Relating to Transfer, Payment or
Forfeiture.  A Stock Award may
contain such other terms and conditions as the Committee may determine with
respect to transfer, payment or forfeiture of all or any part of the Stock
Award.

 

(e)  Other Terms.  A Stock Award may be subject to such other
terms and conditions, including, without limitation, restrictions on sale or
other disposition of the shares issued or transferred pursuant to the Stock
Award, as the Committee may determine; provided, however, that upon the
issuance or transfer of shares pursuant to a Stock Award, the recipient shall,
with respect to such shares, be and become a stockholder of the Company fully
entitled to receive dividends, to vote and to exercise all other rights of a
stockholder except to the extent otherwise provided in the Stock Award.

 

6.                                      STOCK
OPTIONS.

 

Stock Incentives granted under the Plan in the form of Stock Options
shall be Non-Qualified Stock Options and shall be subject to the following
provisions:

 

(a)  Grant.  Subject to the provisions of the Plan,
including those contained in this Section 6, the Committee shall have the
sole and complete authority to determine the Eligible Persons to whom Options
shall be granted, the number of shares of Common Stock to be covered by each
Option, the option price therefor and the conditions and limitations applicable
to the exercise of the Option.

 

 A - 6  

 

(b)  Date of Grant.  The “Date of Grant” of an Option shall be the
date the action of the Committee providing for the grant of the Option is
taken, or such later date as the Committee may provide.  An amendment to the terms of an existing
Option shall not constitute the grant of a new Option except to the extent that
the amendment increases the number of shares subject to the Option other than
as the result of an amendment effected pursuant to the adjustment provisions of
the Plan.

 

(c)  Price.  The price at which shares of Common Stock may
be purchased under an Option (the “Option Price”) shall be specified in the
Option and shall be not less than 100% of the Fair Market Value of such stock
on the Date of Grant of the Option.

 

(d)  Term.  An Option shall be exercisable only during a
term (the “Term of the Option” or “Term”) commencing not sooner than six months
and one day after the Date of Grant of the Option and ending (unless the Option
shall have terminated earlier under other provisions of the Plan) on a date
fixed by the Committee and stated in the Option, which date shall not be later
than the tenth anniversary of the Date of Grant.  If an Option is granted for an original Term
of less than ten years, the Committee may, at any time prior to the expiration
of the Option, extend its Term for a period ending not later than the tenth
anniversary of the Date of Grant of the Option.

 

(e)  Installments.  An Option may provide that it shall be
exercisable in full or in part at any time during the Term of the Option, or
that it shall be exercisable in a specified series of installments.  Unless otherwise provided in the Option,
installments or portions thereof not exercised in earlier periods shall be
cumulative and shall be available for exercise in later periods.  The Committee may, by so providing in an
Option, require any partial exercise thereof to be with respect to a specified
minimum number of shares.

 

(f)  Exercise.  To the extent that the right to purchase
shares has accrued under an Option, the Option may be exercised from time to
time by the optionee or by a person or persons entitled to exercise the Option,
by delivery to the Company of a written notice, in the manner and in such form
as may be prescribed by the Committee, stating the number of shares with
respect to which the Option is being exercised, and by making provision
satisfactory to the Company for the payment in full of the Option price of the
shares prior to or in connection with the delivery of certificates evidencing
the shares. In this regard, no certificate representing Common Stock shall be
delivered until (x) the full purchase price therefor has been paid (or
arrangement made for such payment to the Company’s satisfaction), either in (A) cash
(which includes certified bank or cashier’s checks or money orders), (B) Mature
Stock having an aggregate Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason of such
exercise, or (C) by a combination of (A) and (B); and (y) full
payment of any withholding taxes thereon required by the Company to be paid (or
arrangements made for such payment to the Company’s satisfaction). Upon receipt
of such notice and payment, the Company shall deliver to or upon the order of
the optionee, or such other person entitled to exercise the Option, at the
corporate headquarters of the Company, or at such place as shall be mutually
acceptable, a certificate or certificates evidencing such shares.  An Option may not be exercised for fractional
shares of Common Stock. The Committee may, in its discretion and at the request
of the optionee, upon receipt in cash (as described above) of the exercise
price and upon the provision of the amount of any taxes required to be
withheld, issue shares directly to a brokerage firm selected by the optionee to
whom the optionee has submitted an irrevocable notice of exercise in accordance
with Regulation T of the Board of Directors of the Federal Revenue Board.

 

(g)  No Stockholder Rights Prior to Exercise.  No person shall have any rights of a
stockholder by virtue of an Option except with respect to shares actually
issued to him, and issuance of shares shall not confer retroactive rights to
dividends.

 

7.                                      STOCK
APPRECIATION RIGHTS.

 

(a)  Grant.  Stock Appreciation Rights may be granted in
connection with any Option granted under the Plan, either at the time of the
grant of such Option or at any time thereafter during the term of the
Option.  A grant of Stock Appreciation
Rights shall either be included in the instrument evidencing the Option to
which they relate or evidenced by a separate instrument meeting the
requirements of Section 3 of the Plan.

 

(b)  Settlement.  A person entitled to exercise an Option in
connection with which Stock Appreciation Rights shall have been granted shall
be entitled, at such time or times and subject to such terms and conditions as
may be stated in the granting instrument, to settle all or part of the Option
by requesting the Company to pay, in cancellation of the part of the Option to
be settled, consideration in an amount equal to the number of shares of 

 

 A - 7  

 

Common
Stock subject to the canceled part of the Option times the amount by which the
fair market value of one share on the exercise date exceeds the Option Price
(the “Appreciation”).  The election shall
be made in a written instrument, in form satisfactory to the Committee,
delivered in the manner prescribed in Section 6 for the exercise of
options.

 

(c)  Form of Consideration.  The form of the consideration to be paid for
the Appreciation shall either be cash, shares of Common Stock having an
aggregate market value on the exercise date equal to the Appreciation, or a
combination of cash and shares.  Such
form of consideration shall be specified either by the Committee or, subject to
the approval of the Committee, by the person exercising the Stock Appreciation
Right, provided that such form of consideration shall in no event include
fractional shares of Common Stock.

 

(d)  Other Terms.  An Option in connection with which Stock
Appreciation Rights are granted may prescribe or limit the period or periods of
time during which the Stock Appreciation Rights may be exercised as provided in
paragraph (b) of this Section 7, and may prescribe such additional
terms and conditions applicable to the exercise of the Stock Appreciation
Rights as may be determined by the Committee and as are consistent with the
Plan.  In no event may Stock Appreciation
Rights be exercised at a time when the Option in connection with which they
were granted is not exercisable.

 

8.                                      PERFORMANCE
AWARDS.

 

(a)  Performance Awards Generally.  The Committee is authorized to grant
Performance Awards on the terms and conditions specified in this
Section 8.  Performance Awards may
be denominated as a Stock Award or other Stock Incentive (or a combination)
which may be earned or vest upon achievement or satisfaction of performance
conditions specified by the Committee. 
The Committee may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance conditions.

 

(b)  Performance Awards Granted to Covered
Employees.  If the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify
as “performance-based compensation” for purposes of Code Section 162(m),
the Committee shall designate the Performance Award as an “Award to Covered
Employee” and the grant, exercise, vesting and/or settlement of such
Performance Award shall be contingent upon achievement of a pre-established
performance goal and other terms set forth in this Section 8(b).

 

(i)  Performance
Goal Generally.  The performance goal
for such Performance Awards shall consist of one or more business criteria and
a targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section 8(b).
The performance goal shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder
(including Regulation 1.162-27 and successor regulations thereto), including
the requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being “substantially
uncertain.”  The Committee may determine
that such Performance Awards shall be granted, exercised, vest and/or settled
upon achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise, vesting
and/or settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different Participants.

 

(ii)  Business
Criteria.  One or more of the
following business criteria for the Company, on a consolidated basis, and/or
for specified Subsidiaries or other business units of the Company, shall he
used by the Committee in establishing performance goals for such Performance
Awards: (1) net sales; (2) income from operations; (3) income
before taxes; (4) income before interest, taxes, depreciation,
amortization, incentives, service fees and/or extraordinary or special items;
(5) net income or net income per common share (basic or diluted);
(6) return on assets, return on investment, return on capital, or return
on equity; (7) cash flow from operations, free cash flow (cash flow from
operations less capital expenditures) or cash flow return on invested capital; (8)  modified
economic profit (a financial performance measure that calculates the profits
that remain after considering an assumed cost of capital);  (9)   stock price or total
stockholder return; and (10) strategic business criteria, consisting of
one or more objectives based on meeting specified market penetration, geographic
business expansion goals, cost targets, customer satisfaction, employee
satisfaction, management of employment practices and employee benefits, and
goals relating to acquisitions or divestitures of subsidiaries, affiliates or
joint ventures. The 

 

 A - 8  

 

targeted level or levels of performance with respect
to such business criteria may be established at such levels and in such terms
as the Committee may determine, in its discretion, including in absolute terms,
as a goal relative to performance in prior periods, or as a goal compared to
the performance of one or more comparable companies or an index covering
multiple companies.

 

(iii)  Performance
Period; Timing for Establishing Performance Goals.  Achievement of performance goals in respect
of such Performance Awards shall be measured over a performance period
specified by the Committee. A performance goal shall be established not later
than the earlier of (A) 90 days after the beginning of any performance
period applicable to such Performance Award or (B) the time 25% of such
performance period has elapsed.

 

(c)  Settlement of Performance Awards; Other
Terms.  Settlement of Performance
Awards shall be in Stock Awards or other Stock Incentives, in the discretion of
the Committee. The Committee may, in its discretion, increase or reduce the
amount of a settlement otherwise to be made in connection with such Performance
Awards, but may not exercise discretion to increase any such amount payable to
a Covered Employee in respect of an Award to Covered Employee subject to
Section 8(b).

 

(d)  Written Determinations.  Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect
of Performance Awards, the level of actual achievement of the specified
performance goals relating to Performance Awards, and the amount of any final
Performance Award shall be recorded in writing in the case of any Award to
Covered Employee intended to qualify under Section 162(m). Specifically,
the Committee shall certify in writing, in a manner conforming to applicable
regulations under Section 162(m), prior to settlement of each such
Performance Award granted to a Covered Employee, that the performance objective
relating to the Performance Award and other material terms of such Award upon
which settlement of the Award was conditioned have been satisfied.

 

9.                                      TERMINATION
OR SUSPENSION OF EMPLOYMENT.

 

The following provisions shall apply in the event of the Participant’s
termination of employment unless the Committee shall have provided otherwise,
either at the time of the grant of the Stock Incentive or thereafter:

 

(a)  Stock Options and Stock Appreciation
Rights.

 

(i)  Termination of
Employment Other than Due to Death, Disability, Cause or Retirement.  If the Participant’s employment with the
Company or its Subsidiaries is terminated for any reason other than death,
Disability, cause due to misconduct or Retirement, the Participant’s right to
exercise any Stock Option and related Stock Appreciation Right will terminate
one year after the cessation of employment, unless the Option or Right
terminates earlier by its terms or under other provisions of the Plan.  Until the Option or Right terminates, it may
be exercised by the optionee, his estate or legal representatives for all or a
portion of the shares as to which the right of purchase had accrued under the
Plan at the time of cessation of employment, subject to all applicable
conditions and restrictions provided in the Plan and the Option.  In no event shall an Option or Right be
exercisable later than the date of expiration of the term of the Option or
Right, and in no event shall an Option or Right be exercisable for any shares
as to which the right of purchase had not accrued at the time of cessation of
employment.  Employment for the purposes
of this paragraph shall mean continuous full-time salaried employment.  Vacations, sick leaves and any approved
absence on leave shall not constitute a termination of employment or an
interruption of continuous full-time salaried employment.

 

(ii)  Disability or
Retirement.  If the Participant’s
employment with the Company or its Subsidiaries is terminated by Disability or
Retirement, any Stock Option or Stock Appreciation Right held by such
Participant shall terminate on the earlier of (i) the third anniversary of
such termination of employment, or (ii) the date the Option or Right would
have otherwise expired by its terms had it not been for such termination of
employment.  Until the Option terminates,
it may be exercised by the optionee, his estate or legal representatives, for
all or a portion of the shares as to which the right of purchase had accrued as
of the date of such exercise, subject to all applicable conditions and
restrictions provided in the Plan and the Option or Right.  In no event shall such Option or Right be
exercisable later than the date of 

 

 A - 9  

 

expiration of the term of the Option or Right, and
in no event shall such Option or Right be exercisable for any shares as to
which the right of purchase had not accrued at the time of exercise.

 

(iii)  Death.  If the Participant’s employment with the
Company or its Subsidiaries is terminated by death, and if any Stock Option or
Stock Appreciation Right was in effect at the time of his death (whether or not
its terms had then commenced), the Option or Right may, until the expiration of
one year from the date of death of the Participant or until the earlier
expiration of the term of the Option or Right, be exercised as and to the
extent it could have been exercised by the Participant had he been living at
the time of exercise, by the legal representatives of the Participant or by any
person, persons or entity to whom his rights under the Option or Right shall
have been transferred pursuant to the provisions of paragraph (h) of Section 14
of the Plan.  Such exercise shall not be
limited to the shares as to which the right of purchase had accrued at the date
of death of the Participant, but shall be subject to all applicable conditions
and restrictions prescribed in the Plan and the Option or Right, including any
installment provision.

 

(iv)  Acceleration
and Extension of Exercisability.  The
Committee may, in its discretion, provide (A) that a Stock Option or Stock
Appreciation Right granted to a Participant may terminate at a date earlier
than that set forth above; (B) that a Stock Option or Stock Appreciation
Right granted to a participant not subject to Section 16 of the Exchange
Act may terminate at a date later than that set forth above, provided such date
shall not be beyond the date the option or right would have expired had it not
been for the termination of the Participant’s employment.

 

(b)  Stock Awards and Performance Awards
that are not designated as an Award to Covered Employee.  Unless otherwise determined by the Committee,
if the employment of the Participant with the Company or a Subsidiary
terminates by reason of Disability, death, Retirement or, in the sole
discretion of the Committee, involuntary termination of employment without
cause, any restrictions and provisions for forfeiture on such Participant’s
outstanding Stock Awards shall automatically expire, any performance goals with
respect to Performance Awards will be deemed to have been satisfied at the
target level on the date the Committee determines that the performance goal has
been met and the Participant will be entitled to a prorated award.  Such prorated award will be equal to the
number of Stock Awards or other Stock Incentives that would have been awarded
(in the case of Performance Awards, at the target level) multiplied by a
fraction, the numerator of which shall equal the number of months such
Participant was employed by the Company during the vesting or performance
period, as applicable (fractional months shall be counted as full months) and
the denominator of which shall equal the number of months in the vesting or
performance period, as applicable. Unless the Committee determines otherwise,
if the employment of the Participant with the Company or a Subsidiary terminates
for any other reason, the portion of such award which is subject to performance
goals or other vesting requirement on the effective date of such Participant’s
termination of employment shall be immediately forfeited and canceled by the
Company.

 

(c)  Performance Awards that are an Award to
Covered Employee. Unless otherwise determined by the Committee, if the
employment of the Participant with the Company or a Subsidiary terminates by
reason of Disability or death, any performance goals with respect to
Performance Awards will be deemed to have been satisfied at the target level on
the date the Committee determines that the performance goal has been met and
the Participant will be entitled to a prorated award.  Such prorated award will be equal to the
number of Stock Awards or other Stock Incentives that would have been awarded
at the target level multiplied by a fraction, the numerator of which shall
equal the number of months such Participant was employed by the Company during
the performance period (fractional months shall be counted as full months), and
the denominator of which shall equal the number of months in the performance
period. Unless the Committee determines otherwise, if the employment of the
Participant with the Company or a Subsidiary terminates for any other reason,
the portion of such award which is subject to performance goals on the
effective date of such Participant’s termination of employment shall be
immediately forfeited and canceled by the Company.

 

(d)  Termination for Cause.  Notwithstanding the other provisions hereof,
a Stock Incentive granted to a Participant shall expire and the Participant
shall thereupon forfeit all rights thereunder if the Participant is terminated
for cause due to the misconduct of the Participant.  The Committee shall, in its sole discretion,
determine whether a termination was for cause due to misconduct.

 

 A - 10  

 

10.                               ADJUSTMENT
PROVISIONS

 

(a)  Adjustments to Shares and Price.  In the event that any large, special and
non-recurring dividend or other distribution (whether in the form of cash or
property other than Common Stock), recapitalization, stock split or reverse
stock split, stock dividend, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation. dissolution or other
similar corporate transaction or event affects the Common Stock such that an
adjustment is determined by the Committee to be appropriate under the Plan,
then the Committee may, in such manner as it may deem equitable, adjust any or
all of (i) the number and kind of shares of stock which may be delivered
in connection with Stock Incentives granted thereafter; (ii) the number
and kind of shares of stock by which annual per-person Stock Incentive
limitations are measured under Section 4(d); (iii) the number and
kind of shares of stock subject to or deliverable in respect of outstanding Stock
Incentives; and (iv) the exercise price, grant price, purchase price or
other terms (including performance goals) relating to any Stock Incentive or,
if deemed appropriate, the Committee may make provision for a payment of cash
or property to the holder of an outstanding Option (subject to
Section 14(n)).The Committee may also determine that new Stock Incentives
be substituted for any unexpired corresponding Stock Incentives then
outstanding, such adjustments to be made in the case of outstanding Stock
Options without an increase in the aggregate purchase price.  The decision of the Committee regarding any
such adjustment or substitution shall be final, binding and conclusive.  If any such adjustment would result in a
fractional security being (i) available under this Plan, such fractional
security shall be disregarded, or (ii) subject to an award under this
Plan, the Company shall pay the holder of such award, in connection with the
first vesting, exercise or settlement of such award in whole or in part
occurring after such adjustment, an amount in cash determined by multiplying
(x) the fraction of such security (rounded to the nearest hundredth) by
(y) the excess, if any, of (A) the Fair Market Value on the vesting,
exercise or settlement date over (B) the exercise or base price, if any,
of such award.  The Company shall be
obligated to, and therefore the Committee shall, provide for such equitable
adjustments of outstanding Stock Incentives in order to preserve the positive
intrinsic value of such Stock Incentives, unless in the circumstances the
Participant would be able to realize such intrinsic value in the absence of an
adjustment.

 

(b)  Other Adjustments.  In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Stock Incentives (including Performance Awards and performance goals and any
hypothetical funding pool relating thereto) in recognition of unusual or
nonrecurring items or events (including, without limitation, events described
in the preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting the Company or any subsidiary or other
business unit, or the financial statements of the Company or any subsidiary, or
in response to changes in applicable laws, regulations, accounting principles,
tax rates and regulations or business conditions, or in view of the Committee’s
assessment of the business strategy of the Company, any subsidiary or business
unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant and any other circumstances
deemed relevant; provided that no such adjustment shall be authorized or made
if and to the extent that the existence of such authority (i) would cause
Options, Stock Appreciation Rights, or Performance Awards granted under
Section 8 to Participants designated by the Committee as Covered Employees
and intended to qualify as “performance-based compensation” under Code
Section 162(m) and regulations thereunder to otherwise fail to
qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder; or (ii) would cause the Committee to be deemed to
have authority to change the targets, within the meaning of Treasury Regulation
1.162-27(e)(4)(vi), under the performance goals relating to Options, Stock
Appreciation Rights or Performance Awards granted to Covered Employees and
intended to qualify as “performance-based compensation” under Code
Section 162(m) and regulations thereunder.

 

The Committee may also unilaterally amend outstanding Stock Incentives
to remove restrictions or otherwise change the terms of outstanding Stock
Incentives to permit such incentives to be substituted for comparable
incentives to be provided by any entity which assumes the obligations with
respect to such outstanding Stock Incentives upon terms and conditions approved
by the Board of Directors or Stockholders.

 

(c)  Committee Action Binding on all Persons.  The action of the Committee in approving any
adjustment or change contemplated by this Section 10 shall be conclusively
deemed to be equitable, appropriate, fair and/or comparable and shall be
binding on all persons holding rights under the Plan.

 

11.                               CHANGE
IN CONTROL; SALE OF SUBSIDIARY.

 

(a)  Change in Control.  Unless the Committee shall otherwise provide
in the Award Agreement relating to a Stock Incentive granted under the Plan,
upon the occurrence of a Change in Control:

 

 A - 11  

 

(i)  Vesting of
Stock Incentive.  Any Stock Incentive
carrying a right to exercise that was not previously exercisable and vested
shall become fully exercisable and vested as of the time of the Change in
Control; and

 

(ii)  Committee
Power to Permit Cash Election.  The
Committee may, in its discretion, determine to extend to any Participant who
holds an Option the right to elect, during the 60-day period immediately
following the Change in Control, in lieu of acquiring the shares of Common
Stock covered by such Option, to receive in cash the excess of the Change in
Control Price over the exercise price of such Option, multiplied by the number
of shares of Stock covered by such Option, and to extend to any Participant who
holds other types of Stock Incentives denominated in shares the right to elect,
during the 60-day period immediately following the Change in Control, in lieu
of receiving the shares of Stock covered by such Stock Incentive, to receive in
cash the Change in Control Price multiplied by the number of shares of Stock
covered by such Stock Incentive.  In
addition, the Committee may provide that Options and Stock Appreciation Rights
shall be subject to a mandatory cash-out in lieu of accelerated vesting.

 

(iii)  Stock Awards.  Any restrictions and provisions for
forfeiture on all outstanding Stock Awards shall automatically expire and
immediately lapse and all such awards shall be immediately and fully vested.

 

(iv)  Performance
Awards.  Each Grantee of a
Performance Award for a performance period that has not been completed at the time
of the Change in Control shall be deemed to have earned a Performance Award as
of the time of such Change in Control equal to such Participant’s target award
opportunity for such Performance Award.

 

(b)  Definition of “Change in Control Price.”  The “Change in Control Price” means an amount
in cash equal to the higher of (i) the amount of cash and fair market
value of property that is the highest price per share of Common Stock paid
(including extraordinary dividends) in any transaction triggering the Change in
Control or any liquidation of shares following a sale of substantially all
assets of the Company, or (ii) the highest Fair Market Value per share at
any time during the 60-day period preceding and 60-day period following the
Change in Control.

 

(c)  Sale of Subsidiary. Unless the
Committee shall otherwise provide in the Award Agreement relating to a Stock
Incentive granted under the Plan, in the event that the Company sells or
otherwise disposes of substantially all the assets of, or a majority interest
in, a Subsidiary, then any and all Options and Stock Appreciation Rights
granted under the Plan to employees of the affected Subsidiary shall be
immediately exercisable in full, any restrictions and provisions for forfeiture
on all outstanding Stock Awards held by employees of the affected Subsidiary
shall automatically expire and immediately lapse and all such awards shall be
immediately and fully vested, and each employee of the affected subsidiary who
holds a Performance Award for a performance period that has not been completed
at the time of the sale or other disposition shall be deemed to have earned a
Performance Award as of the time of such sale or disposition equal to such
Participant’s target award opportunity for such Performance Award.

 

(d)  Other Powers.  The Committee in its discretion and at any
time may take such additional action as it deems appropriate to address the
effect of a Change in Control or the sale or disposition of a Subsidiary on
awards issued under this Plan. Without limitation, the Committee may determine
that any Stock Options or Stock Appreciation Rights not exercised prior to a
Change in Control or the sale or other disposition of a Subsidiary, or within
such period of time thereafter (not to exceed 120 days) as the Committee shall
determine, shall terminate.

 

12.                               TERM.

 

(a)  Effective Date.  The Plan shall become effective when approved
by the holders of a majority of the shares of the Company’s Common Stock and by
the holders of a majority of the shares of the Company’s Preferred Stock,
present or represented and entitled to vote at a meeting duly held in
accordance with applicable law.

 

(b)  Expiration Date.  No Stock Incentive shall be granted under the
Plan after October 14, 2014.  Unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Stock Incentive granted hereunder may, and the authority of the Board or
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Stock Incentive or to waive any conditions or rights under any such Stock
Incentive shall, continue after the authority for grant of new Stock Incentive
hereunder has been exhausted.

 

 A - 12  

 

13.                               ADMINISTRATION.

 

(a)  Committee.  The Plan shall be administered by the
Committee which shall consist of not less than three directors of the Company
designated by the Board of Directors; provided, however, that no director shall
be designated as a member of the Committee unless such director shall at the time
of designation be a Qualified Member.  At
anytime that a member of the Committee is not a Qualified Member, any action of
the Committee relating to a Stock Incentive intended by the Committee to
qualify as “performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder or intended to be covered
by an exemption under Rule 16b-3 under the Exchange Act may be taken by a
subcommittee, designated by the Committee or the Board, composed solely of two
or more Qualified Members or may be taken by the Committee but with each such
member who is not a Qualified Member abstaining or recusing himself or herself
from such action, provided that, upon such abstention or recusal, the Committee
remains composed of two or more Qualified Members.  Such action, authorized by such a
subcommittee or by the Committee upon the abstention or recusal of such
non-Qualified Member(s), shall be the action of the Committee for purposes of
the Plan.  The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.

 

(b)  Delegation by the Board.  The Board of Directors, by adoption of the
Plan, delegates to the Committee all of its authority under the Plan, including
the authority to award Stock Incentives, but excluding the authority to amend
or discontinue the Plan.

 

(c)  Authority of the Committee.

 

(i)  Subject to the
terms of the Plan and applicable law, and in addition to other express powers
and authorizations conferred on the Committee by the Plan, the Committee shall
have full power and authority to: (A) designate Participants; (B) determine
the type or types of Stock Incentive to be granted to an eligible employee; (C) determine
the number of shares of Common Stock to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Stock Incentives; (D) determine the terms and conditions of any Stock
Incentive; (E) determine whether, to what extent, and under what
circumstances Stock Incentives may be settled or exercised in cash, shares of
Common Stock, other securities, other Stock Incentives or other property, or
canceled, forfeited, or suspended; (F) determine whether, to what extent,
and under what circumstances cash, shares of Common Stock, other securities,
other Stock Incentives, other property, and other amounts payable with respect
to a Stock Incentive shall be deferred either automatically or at the election
of the holder thereof or of the Committee; (G) interpret and administer
the Plan and any instrument or agreement relating to, or Stock Incentive
granted under, the Plan; (H) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (I) make any other determination and take
any other action that the Committee deems necessary or desirable for the
administration of the Plan.

 

(ii)  Unless prohibited
by the Plan, the Committee may, in its sole discretion and for any reason at
any time, take action such that (i) any or all outstanding Stock Options
or Stock Appreciation Right shall become exercisable in part or in full,
(ii) all or a portion of the vesting period applicable to any outstanding
Stock Award shall lapse, (iii) all or a portion of the performance period
applicable to any outstanding Performance Award shall lapse, and (iv) the
performance goals applicable to any outstanding award (if any) shall be deemed
to be satisfied at the maximum or any other level.  Notwithstanding the foregoing, except as to
Committee action in the event of the Participant’s death or Disability or a
Change in Control or as provided in Section 10, no award designated as an
Award to a Covered Employee may be amended, nor may the Committee exercise any
discretionary authority it may otherwise have under this Plan with respect to
an award designated as an Award to a Covered Employee under this Plan, in any
manner to waive the achievement of the applicable performance goal, or to
increase the amount payable pursuant thereto or the value thereof, or otherwise
in a manner that would cause an award designated as an Award to a Covered
Employee to cease to qualify for the exemption from the limitation on deductibility
under Section 162(m) of the Code. 
Notwithstanding that performance goals may be achieved, the Committee
may determine, in its discretion, whether and the extent to which an award
designated as an Award to a Covered Employee, as defined under Code Section 162(m),
will be paid.

 

 A - 13  

 

(d)  Committee Discretion Binding.  Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Stock Incentive shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all persons, including the Company, any
Subsidiary, any Participant, any holder or beneficiary of any Stock Incentive,
any stockholder and any employee. The Committee’s determination under the Plan
including, without limitation, determination of the persons to receive awards,
the form, amount and type of awards, the terms and provisions of awards and the
written material evidencing such awards, any amendments to the terms and
provisions of any awards, and the granting or rejecting of applications for
delivery of shares of Common Stock need not be uniform and may be made
selectively among otherwise eligible persons whether or not such persons are
similarly situated.

 

(e)  Limitation of Liability.  The Committee and
each member thereof, and any person acting pursuant to authority delegated by
the Committee, shall be entitled, in good faith, to rely or act upon any report
or other information furnished by any executive officer, other officer or
employee of the Company or a subsidiary or affiliate, the Company’s independent
auditors, consultants or any other agents assisting in the administration of
the Plan. Members of the Committee, any person acting pursuant to authority
delegated by the Committee, and any officer or employee of the Company or a
subsidiary or affiliate acting at the direction or on behalf of the Committee
or a delegee shall not be personally liable for any action or determination
taken or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified, held harmless and protected by the
Company with respect to any such action or determination.

 

(f)  Delegation.  Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers or managers
of the Company or any Subsidiary, or to a committee of such officers or
managers, the authority, subject to such terms and limitations as the Committee
shall determine, to grant Stock Incentives to, or to cancel, modify or waive
rights with respect to, or to alter, discontinue, suspend, or terminate Stock
Incentives held by, Participants who are not officers or directors of the
Company for purposes of Section 16 of the Exchange Act, or any successor
section thereto, or who are otherwise not subject to such Section.

 

14.                               GENERAL
PROVISIONS.

 

(a)  No Rights to Participation or
Employment.  No person shall have any
right to participation in this Plan. Nothing in the Plan or in any instrument
executed pursuant thereto shall confer upon any Participant any right to
continue in the employ of the Company or a Subsidiary or shall affect the right
of the Company or of a Subsidiary to terminate the employment of any
Participant with or without cause.

 

(b)  Restrictions on Shares.  Each Stock Incentive made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock subject to
such Stock Incentive upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the
vesting, exercise or settlement of such Stock Incentive or the delivery of
shares thereunder, such Stock Incentive shall not vest, be exercised or settled
and such shares shall not be issued or delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the
Company.  In addition, the Committee may
condition the grant of a Stock Incentive on compliance with certain listing,
registration or other qualifications applicable to the Stock Incentive under
any law or any obligation to obtain the consent or approval of a governmental
body.  The Company may require that
certificates evidencing shares of Common Stock delivered pursuant to any Stock
Incentive made hereunder bear a legend indicating that the sale, transfer or
other disposition thereof by the holder is prohibited except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations thereunder.  The Company shall not be obligated by virtue
of any terms and conditions of any Stock Incentive or any provisions of the
Plan to recognize the exercise of a Stock Option or to sell or issue shares in
violation of the Securities Act or the law of any government having
jurisdiction thereof.  Any postponement
or delay by the Company in recognizing the exercise of any Stock Option or in
issuing any shares under a Stock Award or otherwise hereunder shall not extend
the term of a Stock Option nor shorten the term of any restriction period or
vesting period attached to any Stock Award or other award and neither the
Company nor its directors or officers shall have any obligation or liability to
the holder of a Stock Incentive or to any other person with respect to any
shares as to which a Stock Option or other award shall lapse because of such
postponement or as to which issuance under a Stock Award or other Stock
Incentive was delayed.

 

 A - 14  

 

(c)  No Rights as Stockholder.  Subject to the provisions of the applicable
Stock Incentive, no Participant (individually or as a member of a group), and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any shares of Common Stock allocated or
reserved for the purposes of the Plan or subject to any Stock Incentive, except
as to such shares of Common Stock, if any, as shall have been issued or
transferred to him.

 

(d)  Grants of Awards to Future Employees.  The Company or a Subsidiary may, with the
approval of the Committee, enter into an agreement or other commitment to grant
a Stock Incentive in the future to a person who is or will be at the time of
grant an Eligible Person, and, notwithstanding any other provision of the Plan,
any such agreement or commitment shall not be deemed the grant of a Stock
Incentive until the date on which the Committee takes action to implement such
agreement or commitment, which date shall for the purpose of the Plan be the
date of grant.

 

(e)  Implementation of Stock Incentives by
Subsidiaries.  In the case of a grant
of a Stock Incentive to any employee of a Subsidiary, such grant may, if the
Committee so directs, be implemented by the Company issuing or transferring the
shares, if any, covered by the Stock Incentive to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares to the employee in
accordance with the terms of the Stock Incentive.  Notwithstanding any other provision hereof,
such Stock Incentive may be issued by and in the name of the Subsidiary and
shall be deemed granted on the date it is approved by the Committee or on such
later date as the Committee shall specify.

 

(f)  Withholding and Payment of Taxes.  The Company or a Subsidiary may make such
provisions as it may deem appropriate for the withholding of any taxes which
the Company or Subsidiary determines it is permitted or required to withhold in
connection with any Stock Incentive. 
Such provisions may include a requirement that all or part of the amount
of such taxes be paid to the Company or Subsidiary, in cash, at the time of
settlement and may permit the Company to withhold an amount of cash, if any,
which would otherwise be payable to a Participant, including withholding from
wages or other cash compensation or awards otherwise due to the Participant,
under this Plan or otherwise, in the amount necessary to satisfy any such
obligation.  In the discretion of the
Committee such provisions may also permit the payment of such taxes by the
Company through the withholding of shares of Common Stock to be issued under a
Stock Incentive, either on a mandatory or elective basis, or the delivery of
shares of Mature Stock owned by the Participant (either actual delivery or by
attestation procedures established by the Company), in any such case having an
aggregate Fair Market Value, determined as of the date the obligation to
withhold or pay taxes arises in connection with a Stock Incentive, not
exceeding the Company’s minimum statutory withholding amount, based on the
Company’s minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes, that are applicable to the taxable income
resulting from the Stock Incentive.  Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the holder.

 

(g)  Required Consent to and Notification of
Code Section 83(b) Election. 
No election under Section 83(b) of the Code (to include in
gross income in the year of transfer the amounts specified in Code
Section 83(b)) or under a similar provision of the laws of a jurisdiction
outside the United States may be made unless expressly permitted by the terms
of the Award Agreement or by action of the Committee in writing prior to the
making of such election. In any case in which a Participant is permitted to
make such an election in connection with a Stock Incentive, the Participant
shall notify the Company of such election within ten days of filing notice of
the election with the Internal Revenue Service or other governmental authority,
in addition to any filing and notification required pursuant to regulations
issued under Code Section 83(b) or other applicable provision.

 

(h)  Non-transferability.  Except with the Committee’s prior approval, (i) no
Stock Incentive and no rights under a Stock Incentive or under the Plan,
contingent or otherwise, shall, by operation of law or otherwise, be
transferable or assignable or subject to any encumbrance, pledge, hypothecation
or charge of any nature, or to execution, attachment or other legal process,
except that, in the event of the death of the Participant, the Participant’s
rights under the Stock Incentive may pass, as provided by law, to the legal
representatives of the Participant, and such legal representatives may transfer
any rights in respect of such Stock Incentive to the person or persons or
entity (including a trust) entitled thereto under the will of Participant, or
in the case of intestacy, under the applicable laws relating to intestacy, and (ii) during
the life of a Participant, the Stock Incentive shall be exercisable only by
such Participant.

 

 A - 15  

 

(i)  Other Compensation.  Nothing in the Plan is intended to be a
substitute for, or shall preclude or limit the establishment or continuation
of, any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
which the Company or any Subsidiary now has or may hereafter lawfully put into
effect, including, without limitation, any retirement, pension, profit-sharing,
insurance, stock purchase, incentive compensation or bonus plan.

 

(j)  Place of Administration.  The place of administration of the Plan shall
conclusively be deemed to be within the State of Kansas and the validity,
construction, interpretation and administration of the Plan and of any rules and
regulations or determinations or decisions made thereunder, and the rights of
any and all persons having or claiming to have any interest therein or
thereunder, shall be governed by and be determined exclusively and solely in
accordance with, the laws of the State of Kansas.  Without limiting the generality of the
foregoing, the period within which any action arising under or in connection
with the Plan, or any payment or award made or purportedly made under or in
connection therewith, must be commenced, shall be governed by the laws of the
State of Kansas, irrespective of the place where the act or omission complained
of took place and of the residence of any party to such action and irrespective
of the place where the action may be brought.

 

(k)  Substitute Options.  Stock Incentives may be granted under the
Plan from time to time in substitution for stock incentives held by employees
of other corporations who are about to become employees of the Company or a
Subsidiary as the result of a merger or consolidation of the employing
corporation with the Company or a Subsidiary, or the acquisition by the Company
or a Subsidiary of the assets of the employing corporation, or the acquisition
by the Company or a Subsidiary of stock of the employing corporation as the
result of which it becomes a Subsidiary. 
The terms and conditions of the substitute options so granted may vary
from the terms and conditions set forth in this Plan to such extent as the
Committee at the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock incentives in substitution for which they
are granted.

 

(l)  Unfunded Status of Awards; Creation of
Trusts.  The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Common Stock pursuant to a Stock Incentive, nothing contained in the Plan or
any Award Agreement shall give any such Participant any rights that are greater
than those of a general creditor of the Company; provided that the Committee
may authorize the creation of trusts and deposit therein cash, Common Stock,
other Stock Incentives or other property, or make other arrangements to meet
the Company’s obligations under the Plan. Such trusts or other arrangements
shall be consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.

 

(m)  Payments in the Event of Forfeitures;
Fractional Shares.  If so determined
by the Committee, in the event of a forfeiture of a Stock Incentive with
respect to which a Participant paid cash consideration, the Participant shall
be repaid the amount of such cash consideration. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Stock Incentive.
Except as provided in the Plan, the Committee shall determine whether cash,
other Stock Incentives or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

 

(n)  Certain Limitations Relating to
Accounting Treatment of Awards.  At
any time that the Company is accounting for Stock Incentives under Accounting
Principles Board Opinion 25 (“APB 25”), the Company intends that, with respect
to such Stock Incentives, the compensation measurement date for accounting
purposes shall occur at the date of grant or the date performance conditions
are met if a Stock Incentive is fully contingent on achievement of performance
goals, unless the Committee specifically determines otherwise.  Therefore, other provisions of the Plan
notwithstanding, in order to preserve this fundamental objective of the Plan,
if any authority granted to the Committee hereunder or any provision of the
Plan or a Stock Incentive agreement would result, under APB 25, in “variable”
accounting or a measurement date other than the date of grant or the date such
performance conditions are met with respect to such Stock Incentives, if the
Committee was not specifically aware of such accounting consequence at the time
such Stock Incentive was granted or provision otherwise became effective, such
authority shall be limited and such provision shall be automatically modified
and reformed to the extent necessary to preserve the accounting treatment of
the award intended by the Committee. 
This provision shall cease to be effective if and at such time as the
Company no longer accounts for equity compensation under APB 25.

 

(o)  Compliance with Code
Section 162(m).  It is the
intent of the Company that Options and Stock Appreciation Rights granted to
Covered Employees and other Stock Incentives designated as “Awards to Covered
Employees” subject to Section 8(b) shall constitute qualified “performance-based
compensation” within the meaning 

 

 A - 16  

 

of
Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Sections 8(b), (c) and (d), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder.
Because the Committee cannot determine with certainty whether a given
Participant will be a Covered Employee with respect to a fiscal year that has
not yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee as likely to be a Covered Employee
with respect to a specified fiscal year. If any provision of the Plan or any
Award Agreement relating to a Performance Award that is designated as intended
to comply with Code Section 162(m) does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall be deemed to
confer upon the Committee or any other person discretion to increase the amount
of compensation otherwise payable in connection with any such award upon
attainment of the applicable performance objectives.

 

(p)  Agreement.  The Committee may condition a Participant’s
right (i) to exercise, vest or settle the award, and (ii) to receive
delivery of shares, on the execution and delivery to the Company of the Award
Agreement and the completion of other requirements, including, but not limited
to, the execution of a non-compete and/or non-solicitation agreement by the
recipient and delivery thereof to the Company. 
Acceptance of, or receipt of the benefit of, a Stock Incentive shall be
conclusively presumed to be assent by the holder to all of the terms and
conditions of the Plan and of the Award Agreement, whether or not signed by the
holder.

 

(q)  Termination of Employment or Service.  Unless otherwise determined by the Committee,
a Participant employed by an entity that is a Subsidiary under this Plan shall
be deemed to have terminated employment with or service to the Company for
purposes of this Plan on the date that such entity ceases to be a Subsidiary
hereunder.

 

(r)  Designation of Beneficiary.

 

(i)  If permitted by
the Committee, a Participant may file with the Committee a written designation
of one or more persons as such Participant’s beneficiary or beneficiaries (both
primary and contingent) in the event of the Participant’s death.  To the extent an outstanding Stock Option
granted hereunder is exercisable, such beneficiary or beneficiaries shall be
entitled to exercise such Stock Option to the extent permitted under local law.

 

(ii)  Each beneficiary
designation shall become effective only when filed in writing with the
Committee during the Participant’s lifetime on a form prescribed by the
Committee.  The filing with the Committee
of a new beneficiary designation shall cancel all previously filed beneficiary
designations.

 

(iii)  If a Participant
fails to designate a beneficiary, or if all designated beneficiaries of a
Participant predecease the Participant, then each outstanding Stock Option
hereunder held by such Participant, to the extent exercisable, may be exercised
by, and any Stock Award not yet delivered shall be delivered, exchanged, or
paid to, such Participant’s legal representative.

 

15.                               AMENDMENT
OR DISCONTINUANCE OF PLAN.

 

(a)  Amendment.  The Plan may be amended by the Board of
Directors at any time, provided that without the affirmative vote of the
holders of a majority of the shares of the Company’s Common Stock and the
affirmative vote of the holders of a majority of the Company’s Preferred Stock
present or represented, and entitled to vote at a meeting duly held in
accordance with applicable law, no amendment shall be made which (i) increases
the aggregate number of shares of Common Stock that may be issued or
transferred pursuant to Stock Incentives as provided in Section 4, (ii) amends
the provisions of paragraph (a) of Section 13 with respect to
eligibility of members of the Committee, (iii) permits any person who does
not meet the eligibility requirements of the Plan to be granted a Stock
Incentive, (iv) amends the provisions of Sections 5, 6, 7 or 8 to permit
shares to be valued or to be optioned at less than 100% of Fair Market Value or
to change the business criteria in Section 8 upon which Performance Awards
are based, (v) amends Section 12 to extend the term of the Plan, or (vi) amends
this Section 15.  Any amendment to
the Plan shall be submitted to the Company’s stockholders for approval not
later than the earliest annual meeting for which the record date is after the
date of such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other amendments to the Plan to stockholders for approval. Without the approval
of stockholders, the Committee will not 

 

 A - 17  

 

amend
or replace previously granted Options or Stock Appreciation Rights in a
transaction that constitutes it “repricing.” 
For purposes of this plan, a “repricing” means: (1) amending the
terms of an Option or Stock Appreciation Right after it is granted to lower its
exercise price; (2) any other action that is treated as a repricing under
generally accepted accounting principles; and (3) canceling an Option or
Stock Appreciation Right at a time when its strike price is equal to or greater
than the fair market value of the underlying Stock, in exchange for another
Option, Stock Appreciation Right, Stock Award, or other equity, unless the
cancellation and exchange occurs in connection with a merger, acquisition,
spin-off or other similar corporate transaction. A cancellation and exchange
described in clause (3) of the preceding sentence will be considered a
repricing regardless of whether the Option, Stock Award or other equity is
delivered simultaneously with the cancellation, regardless of whether it is
treated as a repricing under generally accepted accounting principles, and
regardless of whether it is voluntary on the part of the Option holder.  Adjustments to awards under Section 10
will not be deemed “repricings,” however.

 

(b)  Discontinuance.  The Board of Directors may by resolution
adopted by a majority of the entire Board of Directors discontinue the Plan at
any time.

 

(c)  Consents.  No amendment or discontinuance of the Plan by
the Board of Directors or the stockholders of the Company shall adversely
affect, without the consent of the holder thereof, any Stock Incentive
theretofore granted.

 

 A - 18

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