Document:

Exhibit 10.1

 

December 2, 2008

 

Personal and Confidential

 

Mr. Andrew Moller

9942 Dell Road

Eden Prairie, Minnesota 55347

 

RE:                              Resignation, Separation Agreement and Release

 

Dear Mr. Moller:

 

The purpose of this Separation Agreement and
Release Letter (the “Agreement”) is to set forth the specific separation pay
and benefits that Christopher & Banks Corporation (“Christopher &
Banks”) will provide you in exchange for your agreement to the terms and
conditions of this Agreement.

 

By your signature below, you agree to the
following terms and conditions:

 

1.                                       End of Employment.

 

a.                                       By your signature below effective as of December 2,
2008 you resign as both an employee of Christopher & Banks and as an
officer and/or director of Christopher & Banks and all of its related
entities (the “Separation Date”).

 

b.                                      As you have been on an unpaid leave recently,
you have already received all wages owed to you by virtue of your employment
through the Separation Date.

 

c.                                       Upon receipt of payment from Christopher and
Banks for twelve (12) hours of earned and accrued Paid-Time-Off (“PTO”), you will
have received all benefits owed to you by virtue of your employment with
Christopher & Banks or the termination of your employment with respect
to PTO benefits.

 

d.                                      The COBRA period for continuation of your
insurance coverage under Christopher & Banks’ group plans will begin
on December 1, 2008.  Information regarding your right to elect
COBRA coverage will be sent to you via separate letter.

 

 

e.                                       During your employment, Christopher &
Banks granted you various stock options and restricted stock.  You may, as per the terms of the Christopher &
Banks Corporation 1997 Stock Incentive Plan and the Christopher &
Banks Corporation 2005 Stock Incentive Plan, exercise any and all stock options
granted to you and which are vested on or prior to your Separation Date.  These stock options may be exercised as per
the applicable Plan’s provisions which, in the case of the 1997 Plan, your
ability to exercise expires on your Separation Date and, in the case of the
2005 Plan, expires ninety (90) days following your Separation Date.  Pursuant to the terms of the applicable plan
documents, all unvested stock options and all restricted stock granted by
Christopher & Banks that have not vested as of the Separation Date are
forfeited effective upon your Separation Date; provided, however, Christopher &
Banks’ Board of Directors waives the remaining vesting period for the 2,800
shares of Restricted Stock awarded to you on February 7, 2006, such that
such shares shall vest upon your execution of this Agreement.  You may obtain further information regarding
any grants of stock options or restricted stock that were made to you by
contacting Mike Lyftogt at 763-551-5118.  Please also note you remain subject to the
terms of the Company’s Insider Trading Policy and applicable securities laws,
which imposes limits on when employees or recently separated employees are
permitted to trade.

 

This Section 1.e. of the Agreement will be construed in accordance
with the terms of the applicable plan documents; to the extent that such
documents conflict with any terms in this Section, the plan documents are
controlling, except with respect to the accelerated vesting of the 2,800 shares
described above.

 

f.                                         You are not eligible for any other payments
or benefits by virtue of your employment with Christopher & Banks or
termination thereof except for those expressly described in this
Agreement.  You will not receive the pay
and benefits described in Section 2 and subsequent Sections of this
Agreement if you (i) do not sign and return this Agreement, (ii) rescind
this Agreement after signing it during the applicable rescission period, or (iii) violate
any of the terms and conditions set forth in this Agreement.

 

2.                                       Separation Pay and Benefits. 
Specifically in consideration of your signing this Agreement and subject
to the limitations, obligations and other provisions contained in this
Agreement, Christopher & Banks agrees as follows:

 

a.                                       To pay you in the aggregate $275,000, less
applicable deductions and withholding. 
You will receive a lump sum payment in the amount of $165,000 (less
applicable deductions and withholding) on the first regular payroll date that
occurs after the six-month anniversary of the Separation Date, and the balance
will be payable at the Company’s normal payroll periods following thereafter at
the weekly rate of $6,346.15 until you have been paid the gross amount of
$275,000, inclusive of taxes and other withholding obligations or deductions.  Such payments shall not commence until the
rescission period described in Section 5 has expired and so long as you
have not exercised such right of rescission and shall terminate upon the
payment of such gross amount in the aggregate. 
Notwithstanding the above, if you secure other employment,
self-employment or a consulting position during the severance payment period,
the severance payable to or on behalf of you by Christopher & Banks
shall be offset and reduced by such other cash compensation you earn through
such other employment or consulting arrangements during the severance period
hereunder.  You further agree to promptly
notify Christopher & Banks if you secure other employment,
self-employment or a consulting position during the severance period.  Severance pay to you hereunder will be made
over time in accordance with Christopher & Bank’s regular payroll
schedule.  The amounts payable pursuant
to this Section 2 shall be subject to your compliance with all of the
terms and conditions of this Agreement.

 

b.                                      Provided you timely elect COBRA, to continue
to pay or reimburse from December 1, 2008 through November 30, 2009 the
employer portion of the premiums for health, dental, life and vision insurance
coverage under Christopher & Banks’ group health, dental, life and
vision insurance plans.  You

 

2

 

will
continue to be responsible to pay your portion of the premiums, if any, for
such insurance coverage during this period. 
It is understood and agreed that you will pay the entire cost of all
such coverages that you elect for the months of December 2008 through June 2009.  As of July 1, 2009, Christopher &
Banks will reimburse you in an amount equal to the employer portion of the
premiums for the coverages that you have elected for those months of December 2008
through June 2009.  Christopher &
Banks will thereafter pay the employer portion of such premiums through November 30,
2009.  Christopher & Banks will
discontinue payments under this Section 2.b. before November 30, 2009
(and will be relieved of its obligation to reimburse you for such payments)  if, and as of such time as, you (i) are
covered or eligible to be covered under a comparable insurance policy of a new
employer, or (ii) cease to participate, for whatever reason, in
Christopher & Banks’ group insurance plans.  By your signature below, you acknowledge and
agree that Christopher & Banks may modify or terminate its group
insurance plans at any time and that you shall have the same right to
participate in Christopher & Banks’ group insurance plans only as is
provided on an equivalent basis to the Company’s employees.  You further agree to promptly provide
Christopher & Banks notice if you become covered or eligible to be
covered under the health and/or dental insurance policy of a new employer.

 

c.                                       To provide you up to six (6) consecutive
months of career transition and outplacement services through Drake Beam Morin, Inc.  You may begin the use of such services at any
time after you have returned a fully executed Agreement to Christopher &
Banks and have not rescinded such Agreement and so long as you commence use of
such services on or before June 1, 2010.

 

3.                                       Release of Claims. 
Specifically in consideration of the separation pay and benefits
described in Section 2, and to which you would not otherwise be entitled,
by signing this Agreement you, for yourself and anyone who has or obtains legal
rights or claims through you, agree to the following:

 

a.                                       You hereby do release and forever discharge
Christopher & Banks as defined below in Section 3.e. of and from
any and all manner of claims, demands, actions, causes of action,
administrative claims, liability, damages, claims for punitive or liquidated
damages, claims for attorney’s fees, costs and disbursements, individual or
class action claims, or demands of any kind whatsoever, you have or might have
against them or any of them, whether known or unknown, in law or equity,
contract or tort, arising out of or in connection with your employment with
Christopher & Banks, or the termination of that employment, or
otherwise, and however originating or existing, from the beginning of time
through the date of your signing this Agreement.

 

b.                                      This release includes, without limiting the
generality of the foregoing, any claims you may have for wages, bonuses,
commissions, penalties, deferred compensation, vacation pay, separation
benefits, defamation, invasion of privacy, negligence, emotional distress,
breach of contract, estoppel, improper discharge (based on contract, common law,
or statute, including any federal, state or local statute or ordinance
prohibiting discrimination, harassment or retaliation in employment), violation
of the United States Constitution, the Minnesota Constitution, the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et  seq., the
Minnesota Human Rights Act, Minn. Stat. § 363A.01 et  seq., Title
VII of the Civil Rights Act, 42 U.S.C. § 2000e et  seq., the
Americans with Disabilities Act, 42 U.S.C. § 12101 et  seq., the
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et  seq.,
the Family and Medical Leave Act, 29 U.S.C. § 2601 et  seq., the
National Labor Relations Act, 29 U.S.C. § 151 et  seq., the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq., the Sarbanes-Oxley Act, 15 U.S.C. §
7201 et  seq., any claim arising under Minn. Stat. Chapters 177
and 181, Minn. Stat. § 176.82, any claim based on a “whistleblower” theory, and
any claim for retaliation, harassment or discrimination based on sex, race,
color, creed, religion, age, national origin, marital status, sexual
orientation, disability, status with regard to public assistance, military
status, or any other protected class, or sexual or other harassment.  You hereby waive any and all relief not
provided for in this Agreement.  You
understand and agree that, by signing this Agreement, you waive and release any
past, present, or future claim to employment with Christopher & Banks.

 

3

 

Without limiting the generality of the foregoing, this release also
includes, but is not limited to, any claims you currently have, or may have based
on events occurring before the date of this release, with respect to (i) the
exercise of stock options in the Company and any subsequent sales of such
stock; or (ii) the inability to exercise, or the prohibition on the
exercise of, options to purchase Company stock, and the subsequent
inability to sell, or prohibition on the sale of, the related stock; or (iii) the
inability to purchase or sell, or the prohibition on the sale of or
purchase and sale of, Company stock; provided, however, that nothing in this
release prevents the future exercise of vested options to purchase Company
stock and to sell said stock in a manner consistent with the terms of the
Company stock option plans, the options themselves, and governing legal
standards.

 

c.                                       If you file, or have filed on your behalf, a
charge, complaint, or action, you agree that the payments described above in Section 2
are in complete satisfaction of any and all claims in connection with such
charge, complaint, or action and you waive, and agree not to take, any award of
money or other damages from such charge, complaint, or action.

 

d.                                      You are not, by signing this Agreement,
releasing or waiving (i) any vested interest you may have in any 401(k) plan
by virtue of your employment with Christopher & Banks, (ii) any
rights or claims that may arise after the Agreement is signed by all parties, (iii) the
post-employment payments specifically promised to you under this Agreement
(subject to the terms of this Agreement), (iv) the right to institute
legal action for the purpose of enforcing the provisions of this Agreement, (v) your
rights, if any, to indemnification and/or insurance for your acts or omissions
that occurred within the scope of your employment under the terms of the Indemnification
Agreement with the Company dated October 27, 2008 or otherwise, (vi) any
rights you may have under state unemployment compensation benefits law, (vii) any
rights you may have under workers compensation benefits laws, or (viii) the
right to file a charge of discrimination with a governmental agency, although,
as noted above, you agree that you will not be able to recover any award of
money or damages if you file such a charge or have a charge filed on your
behalf.

 

e.                                       Christopher & Banks, as used in this
Section 3, shall mean Christopher & Banks Corporation and its
subsidiaries, divisions, affiliated or related entities, insurers, and its and
their present and former officers, directors, shareholders, trustees,
employees, agents, attorneys, representatives and consultants, and the
successors and assigns of each, whether in their individual or official
capacities, and the current and former trustees or administrators of any
pension or other benefit plan applicable to the employees or former employees
of Christopher & Banks, in their official and individual capacities.

 

4.                                       Notice of Right to Consult Attorney and
Twenty-One (21) Calendar Day Consideration Period.  By
signing this Agreement, you acknowledge and agree that Christopher &
Banks has informed you by this Agreement that (i) you have the right to
consult with an attorney of your choice prior to signing this Agreement, and (ii) you
are entitled to twenty-one (21) calendar days from the receipt of this
Agreement to consider whether the terms are acceptable to you.  Christopher & Banks encourages you
to use the full twenty-one (21) day period to consider this Agreement but you
have the right, if you choose, to sign this Agreement prior to the expiration
of the twenty-one (21) day period; provided, however you are not to sign the
agreement until on or after your Separation Date.  The twenty-one (21) day consideration period
commenced when the initial form of this Agreement was presented to you and is
not extended and does not start anew if you and Christopher & Banks
agree to any modifications or revisions to the form of Agreement.

 

5.                                       Notification of Rights under the Minnesota
Human Rights Act (Minn. Stat. Chapter 363A) and the Federal Age Discrimination
in Employment Act (29 U.S.C. § 621 et seq.).  You are hereby notified of
your right to rescind the release of claims contained in Section 3 within
fifteen (15) calendar days of your signing this Agreement.  In order to be effective, the rescission must
(i) be in writing; (ii) be delivered to Luke Komarek, SVP and General
Counsel, 2400 Xenium Lane North, Plymouth, MN 55441 by hand or mail

 

4

 

within
the required period; and (iii) if delivered by mail, the rescission must
be postmarked within the required period, properly addressed to Luke Komarek,
SVP and General Counsel  as set
forth above, and sent by certified mail, return receipt requested.  This Agreement will be effective upon the
expiration of the fifteen (15) day period without rescission.  You understand that if you rescind any part
of this Agreement in accordance with this Section 5, you will not receive
the separation pay and benefits described in Section 2 and you will be
obligated to return any such payments and benefits if already received.

 

6.                                       Cooperation.

 

a.                                       Period of December 2, 2008
to September 30, 2009.  During the period commencing December 2,
2008 through September 30, 2009, and without any additional compensation,
you shall be available for up to twelve (12) hours per week and not exceeding one-hundred
twenty (120) hours in the aggregate during such period to:  (i) assist with transition or consulting services
as requested; (ii) to cooperate with Christopher & Banks,
including its attorneys or accountants, in connection with any potential or
actual litigation, on other disputes, internal investigations or government
investigations, which directly or indirectly involves Christopher &
Banks or its related entities; (iii) to appear as a witness voluntarily
upon Christopher & Banks’ request regardless of whether served with a
subpoena and be available to attend depositions, court proceedings,
consultations or meetings regarding investigations, litigation or potential
litigation as requested by Christopher & Banks.  Christopher & Banks also agrees to
reimburse you for the out-of-pocket expenditures actually and reasonably
incurred by you in connection with any out-of-town travel required in
connection with any services requested pursuant to this Section 6.a.,
including hotel accommodations, airfare, transportation and meals consistent
with Christopher & Banks’ generally applicable expense reimbursement
policies.

 

b.                                      Cooperation after September 30,
2009.  On and after September 30, 2009, you
agree to cooperate fully with Christopher & Banks, including its
attorneys or accountants, in connection with any potential or actual
litigation, other real or potential disputes, internal investigations or
government investigations, which directly or indirectly involves Christopher &
Banks or its related entities.  You agree
to appear as a witness voluntarily upon Christopher & Banks’ request
regardless of whether served with a subpoena and be available to attend
depositions, court proceedings, consultations or meetings regarding
investigations, litigation or potential litigation as requested by Christopher &
Banks.  Christopher & Banks
acknowledges these efforts, if necessary, will impose on your time and will
likely interfere with other commitments you may have in the future.  Consequently Christopher & Banks
shall attempt to schedule such depositions, court proceedings, consultations or
meetings in coordination with your schedule but you recognize that scheduling
of certain court proceedings, including depositions and trials, may be beyond
Christopher & Banks’ control. 
Likewise Christopher & Banks agrees to compensate you for your
time hereunder at the hourly rate of $160 for actual time traveling to and from
and attending such depositions, consultations or meetings, not to include
ancillary time spent in hotels or related locations during non-business hours
between proceedings.  Any such payments
shall be in addition to the payments to be made to you pursuant to Section 2.a.
of this Agreement.  Christopher &
Banks also agrees to reimburse you for the out-of-pocket expenditures actually
and reasonably incurred by you in connection with the performance of services
contemplated by this Section 6.b.,
including hotel accommodations, airfare, transportation and meals consistent
with Christopher & Banks’ generally applicable expense reimbursement
policies.  It is expressly understood by
the parties that any compensation paid by Christopher & Banks to you
under this Section 6.b.
shall be an exchange for your time and is not intended or understood to be
dependent upon the character or content of any information you disclose in good
faith in any such proceedings, meetings or consultations.

 

7.                                       Return of Property.  By
signing this Agreement, you acknowledge and agree that all documents and
materials relating to the business of, or the services provided by, Christopher &
Banks and its

 

5

 

affiliated
companies are the sole property of Christopher & Banks.  By signing this Agreement you further agree
and represent that you have returned to Christopher & Banks all of its
and its affiliated companies property including, but not limited to, all
customer records and other documents and materials, whether on computer disc,
hard drive or other form, and all copies thereof, within your possession or
control, which in any manner relate to the business of, or the duties and
services you performed on behalf of Christopher & Banks or its related
companies.

 

8.                                       Executive Employment Agreement.  Your
Executive Employment Agreement (the “EE Agreement”) made effective May 24,
2007 is hereby terminated effective immediately; however, you acknowledge that
per the provisions of Section 19 of the EE Agreement, Articles 7, 8 and 9
of the EE Agreement and the other provisions of the EE Agreement necessary for
the enforcement of Articles 7, 8 and 9 of the EE Agreement shall survive
termination of the EE Agreement and your resignation of employment.

 

9.                                       Non-Disparagement.  You
promise and agree not to disparage Christopher & Banks (as defined in Section 3.e.
above) or their employees, officers, directors, agents or vendors.

 

10.                                 Remedies.  If you breach any term of this
Agreement or Articles 7, 8 or 9 of the EE Agreement, Christopher &
Banks shall be entitled to its available legal and equitable remedies including,
but not limited to, terminating and recovering any and all payments and
benefits made or to be made under Section 2 of this Agreement.  You agree that, if you breach or threaten to
breach any term of Section(s) 7, 8, and/or 9 of this Agreement or Articles
7, 8 or 9 of the EE Agreement, Christopher & Banks shall be entitled
as a matter of right to injunctive relief in addition to any other remedies
available at law or equity under this Agreement.  You further agree that Christopher &
Banks shall be entitled to its reasonable attorneys’ fees, costs and expenses
if it prevails in any such litigation or proceeding.  If Christopher & Banks obtains
relief for a material breach of Section(s) 7, 8, and/or 9 of this
Agreement or Articles 7, 8 or 9 of the EE Agreement, Christopher &
Banks, among other available recourse, shall be entitled to suspend any
payments otherwise due to Employee under this Agreement.

 

11.                                 Non-Admission.  It
is expressly understood that this Agreement does not constitute, nor shall it
be construed as, an admission by Christopher & Banks or you of any
liability or unlawful conduct whatsoever. 
Christopher & Banks and you specifically deny any liability or
unlawful conduct.

 

12.                                 Successors and Assigns.  This
Agreement is personal to you and may not be assigned by you without the written
agreement of Christopher & Banks. 
The rights and obligations of this Agreement shall inure to the
successors and assigns of Christopher & Banks.

 

13.                                 Enforceability.  If a
court finds any term of this Agreement to be invalid, unenforceable, or void,
the parties agree that the court shall modify such term to make it enforceable
to the maximum extent possible.  If the
term cannot be modified, the parties agree that the term shall be severed and
all other terms of this Agreement shall remain in effect.

 

14.                                 Governing Law and Forum Selection.  The
laws of the State of Minnesota (without regard to conflicts of laws of any
jurisdiction) will govern the validity, construction, performance and remedies
of this Agreement, including, without limitation, the creation and termination
of the legal relationship between the parties. 
Any legal proceeding related to this Agreement will be brought in Hennepin
County District Court, State of Minnesota, and both Christopher &
Banks and you consent to and submit to the exclusive jurisdiction of that court
for this purpose, and waive any argument that venue in such court is not
convenient.

 

15.                                 Attorneys’ Fees. 
Should any litigation be commenced to enforce the provisions of this
Agreement, the successful party (as it relates solely to the issue of
enforcement) in such litigation shall be

 

6

 

entitled
to recover, in addition to such other relief as the court may award, its
reasonable attorneys’ fees incurred in such litigation or proceeding.

 

16.                                 Full Agreement.  This
Agreement, which includes the Acknowledgment and Signature section attached, contains
the full agreement between you and Christopher & Banks and may not be
modified, altered, or changed in any way except by written agreement signed by
both Christopher & Banks and you. 
The parties agree that this Agreement supersedes and terminates any and
all other written and oral agreements and understandings between the parties,
except for any applicable stock option agreements and related plan documents or
benefit plan documents, which shall remain in full force and effect.

 

The offer contained in this Agreement will expire at 5:00 p.m. on December 17,
2008.  After you have reviewed this
Agreement and obtained whatever advice and counsel you consider appropriate
regarding it, please evidence your agreement to the provisions set forth in
this Agreement by dating and signing below. 
Please then return a signed original of this Agreement to Luke  Komarek, SVP and General Counsel no
later than 5:00 p.m. on December 17, 2008.  You should keep a copy of the fully executed
Agreement for your records.

 

Sincerely,

 

 

	
  CHRISTOPHER &
  BANKS COMPANY

  
	
   

  
	
  By:

  	
  /s/
  Lorna E. Nagler

  	
   

  
	
   

  	
  Lorna
  E. Nagler

  
	
   

  	
  Its:
  President and Chief Executive Officer

  

 

7

 

ACKNOWLEDGMENT AND
SIGNATURE

 

By signing below, I, Andrew Moller,
acknowledge and agree to the following:

 

·                  I have had adequate time to consider whether
to sign this Separation Agreement and Release Letter.

 

·                  I have read this Separation Agreement and
Release Letter carefully.

 

·                  I understand and agree to all of the terms of
the Separation Agreement and Release Letter.

 

·                  I am knowingly and voluntarily releasing my
claims against Christopher & Banks (as defined in Section 3.e.
above) and the other entities and individuals identified herein to the extent
expressly set forth in this Separation Agreement and Release Letter.

 

·                  I have not, in signing this Agreement, relied
upon any statements or explanations made by Christopher & Banks except
as for those specifically set forth in this Separation Agreement and Release
Letter.

 

·                  I intend this Separation Agreement and
Release Letter to be legally binding.

 

·                  I represent and warrant that I have agreed to
the terms of this Separation Agreement and Release Letter in entire
reliance upon my own judgment and the advice and opinions of my
own attorneys and advisors, and have not in any part relied upon the
opinions of, or facts represented by Christopher & Banks or
its employees or attorneys.

 

·                  I understand that this Separation Agreement
and Release Letter specifically waives claims arising under the Age Discrimination
in Employment Act of 1967 (29 U.S.C. § 621 et seq.), and in connection with
this waiver I acknowledge and agree to the following:

 

(1)          I am not waiving any rights or claims under the Age Discrimination in
Employment Act of 1967, as amended, that may arise after this Separation
Agreement and Release Letter is executed by me, or any rights or claims to test
the knowing and voluntary nature of this Agreement under the Older Workers’
Benefit Protection Act, as amended;

 

(2)          In exchange for my waiver of rights or claims under the Age
Discrimination in Employment Act, I am receiving consideration that is in
addition to anything of value to which I am already entitled;

 

(3)          I have had ample opportunity to consult with an attorney prior to my
execution of this Separation Agreement and Release Letter and was encouraged
and advised to do so by Christopher & Banks;

 

(4)          I further understand that I may consider the decision of whether to
sign the Separation Agreement and Release Letter for twenty-one (21) days.  I acknowledge that, as discussed in the
Separation Agreement, any changes to the terms or conditions of this Agreement
(whether material or immaterial) will not restart the running of the twenty-one
(21) day period;

 

(5)          If I sign this Separation Agreement and Release Letter prior to the end
of the twenty-one (21) day time period, I certify that, in accordance with 29
CFR § 1625.22(e)(6), I knowingly and voluntarily decided to sign the Separation
Agreement and Release Letter after considering it less than twenty-one (21)
days and that my decision to do so was not induced by Christopher &
Banks through fraud, misrepresentation or a threat to withdraw or alter the
offer prior to the expiration of the twenty-one (21) day time period;

 

(6)          I further understand that I may rescind this Separation Agreement and
Release Letter at any time within fifteen (15) days after I sign it;

 

(7)          I further understand and agree that if I wish to rescind this
Separation Agreement and Release Letter after signing it, I or my authorized
legal representative will do so in accordance with the time limitations and
procedures contained in Section 5 above;

 

(8)          I have carefully read and fully understand all of the provisions and
effects of this Separation Agreement and Release Letter and I knowingly and
voluntarily enter into, and choose to be legally bound by, all of the terms set
forth in this Separation Agreement and Release Letter.

 

·                  I am signing this Separation Agreement and
Release Letter on or after my last day of employment with Christopher &
Banks, i.e., on or after December 2, 2008.

 

Accepted this  2nd day of December, 2008.

 

	
  /s/ Andrew Moller

  	
   

  
	
  Andrew
  Moller

  

 

8Exhibit 10.1

 

CASELLA WASTE SYSTEMS, INC.

 

2006 STOCK INCENTIVE PLAN, AS AMENDED

 

1.                                      Purpose

 

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

 

2.                                      Eligibility

 

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

 

3.                                      Administration
and Delegation

 

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

 

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

 

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

 

1

 

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

 

4.                                      Stock
Available for Awards

 

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

 

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

 

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

 

5.                                      Stock
Options

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

6.                                      Director
Options.

 

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

 

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

 

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

 

4

 

7.                                      Stock
Appreciation Rights.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.                                      Restricted
Stock; Restricted Stock Units.

 

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

 

(b)                                Limitations
on Vesting.

 

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

 

5

 

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

 

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

 

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

 

(d)                                Additional
Provisions Relating to Restricted Stock.

 

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

 

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

 

(e)                                 Additional
Provisions Relating to Restricted Stock Units.

 

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

 

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

 

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

 

6

 

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

 

9.                                      Other
Stock Unit Awards.

 

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

 

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

 

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

 

(b)                                Reorganization
Events.

 

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

 

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

 

7

 

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

 

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

 

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

 

8

 

11.                                General
Provisions Applicable to Awards

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

(i)                                    Performance
Awards.

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

12.                                Miscellaneous

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

12

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