DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
57
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
ARTICLE 1
Purpose
1.1 General Purpose. The purpose of this Plan is to
further the growth and development of the Company by encouraging
Directors who are not employees of the Company to obtain a
proprietary interest in the Company by owning its stock. The
Company intends that the Plan will provide such persons with an
added incentive to continue to serve as Directors and will
stimulate their efforts in promoting the growth, efficiency and
profitability of the Company. The Company also intends that the
Plan will afford the Company a means of attracting persons of
outstanding quality to service on the Board.
1.2 Intended Tax Effects of Options. It is intended that
the tax effects of any NQSO granted hereunder should be
determined under Code 83.
ARTICLE 2
Definitions
The following words and phrases as used in this Plan shall
have the meanings set forth in this Article unless a different
meaning is clearly required by the context:
2.1 1933 Act shall mean the Securities Act of 1933, as
amended.
2.2 1934 Act shall mean the Securities Exchange Act of
1934, as amended.
2.3 Beneficiary shall mean, with respect to an Optionee,
the Person or Persons who acquire the Options of such Optionee by
bequest or inheritance. To the extent that an Option has not yet
been distributed to such Person or Persons from a deceased
Optionee's estate, an Option may be exercised by the executor or
administrator (as applicable) of the deceased Optionee's estate.
2.4 Board shall mean the Board of Directors of the Company.
2.5 Cause shall mean an act or acts by an individual
involving a felony conviction or the failure to contest
prosecution for a felony, willful misconduct, dishonesty,
embezzlement, fraud, deceit or civil rights violations, any of
which acts causing the Company or any subsidiary liability or
loss, as determined by the Committee in its sole discretion.
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2.6 Change of Control shall mean the occurrence of any one
of the following events:
(a) Acquisition By Person of Substantial Percentage.
The future acquisition by a Person (including "affiliates"
and "associates" of such Person, but excluding the Company,
any "parent" or "subsidiary" of the Company, or any employee
benefit plan of the Company or of any "parent" or
"subsidiary" of the Company) of a sufficient number of
shares of the Common Stock, or securities convertible into
the Common Stock, and whether through direct acquisition of
shares or by merger, consolidation, share exchange,
reclassification of securities or recapitalization of or
involving the Company or any "parent" or "subsidiary" of the
Company, to constitute the Person the beneficial owner of
20% or more of the Common Stock, but only if such
acquisition occurs without approval or ratification by a
majority of the members of the Board of Directors of the
Company;
(b) Transactions Involving Substantial Assets. Any
sale, lease, transfer, exchange, mortgage, pledge or other
disposition, in one transaction or a series of transactions,
of all or substantially all of the assets of the Company or
of any "subsidiary" of the Company to a Person described in
subsection (a) above, but only if such transaction occurs
without approval or ratification by a majority of the
members of the Board of Directors of the Company; or
(c) Transactions Requiring Regulatory Approval.
During any fiscal year of the Company, individuals who at
the beginning of such year constitute the Board of Directors
of the Company cease for any reason ton constitute at least
a majority thereof, unless the election of each director who
was not a director at the beginning of such period has been
approved in advance by a majority of the directors in office
at the beginning of the fiscal year.
For purposes of this Section 2.6, the terms "affiliate,"
"associate," "parent" and "subsidiary" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the 1934 Act.
2.7 Code shall mean the Internal Revenue Code of 1986, as
amended.
2.8 Committee shall mean the committee appointed by the
Board to administer and interpret the Plan in accordance with
Article 3 below. Initially, the Committee shall consist of the
members of the Company's Compensation Committee.
2.9 Common Stock shall mean the common stock, par value
$0.01 per share, of the Company.
2.10 Company shall mean Davis Water & Waste Industries,
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Inc., and shall also mean any parent or subsidiary corporation of
Davis Water & Waste Industries, Inc., unless the context clearly
indicates otherwise.
2.11 Director shall mean an individual who is serving as a
member of the Board (i.e., a director of the Company).
2.12 Disability shall mean, with respect to an individual,
the total and permanent disability of such individual as
determined by the Committee in its sole discretion.
2.13 Effective Date shall mean the date on which this Plan
is adopted by the Board, subject to shareholder approval. See
Article 9 herein.
2.14 Fair Market Value of the Common Stock as of a date of
determination shall mean the following:
(a) Stock Listed and Shares Traded. If the Common
Stock is listed and traded on a national securities exchange
(as such term is defined by the 1934 Act) or on the NASDAQ
National Market System on the date of determination, the
Fair Market Value per share shall be the closing price of a
share of the Common Stock on said national securities
exchange or National Market System on the date of
determination. If the Common Stock is traded in the over-
the-counter market, the Fair Market Value per share shall be
the average of the closing bid and asked prices on the date
of determination.
(b) Stock Listed But No Shares Traded. If the Common
Stock is listed on a national securities exchange or on the
National Market System but no shares of the Common Stock are
traded on the date of determination but there were shares
traded on dates within a reasonable period before the date
of determination, the Fair Market Value shall be the closing
price of the Common Stock on the most recent date before the
date of determination. If the Common Stock is regularly
traded in the over-the-counter market but no shares of the
Common Stock are traded on the date of determination (or if
records of such trades are unavailable or burdensome to
obtain) but there were shares traded on dates within a
reasonable period before the date of determination, the Fair
Market Value shall be the average of the closing bid and
asked prices of the Common Stock on the most recent date
before the date of determination.
(c) Stock Not Listed. If the Common Stock is not
listed on a national securities exchange or on the National
Market System and is not regularly traded in the
over-the-counter market, then the Committee shall determine
the Fair Market Value of the Common Stock from all relevant
available facts, which may include the average of the
closing bid and ask prices reflected in the over-the-counter
market on a date within a reasonable period either before or
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after the date of determination or opinions of independent
experts as to value and may take into account any recent
sales and purchases of such Common Stock to the extent they
are representative.
The Committee's determination of Fair Market Value, which shall
be made pursuant to the foregoing provisions, shall be final and
binding for all purposes of this Plan.
2.15 NQSO shall mean an option to which Code 421 (relating
generally to certain ISO and other options) does not apply.
2.16 Option shall mean NQSO's granted to individuals
pursuant to the terms and provisions of this Plan.
2.17 Option Agreement shall mean a written agreement,
executed and dated by the Company and an Optionee, evidencing an
Option granted under the terms and provisions of this Plan,
setting forth the terms and conditions of such Option, and
specifying the name of the Optionee and the number of shares of
stock subject to such Option.
2.18 Option Price shall mean the purchase price of the
shares of Common Stock underlying an Option.
2.19 Optionee shall mean an individual who is granted an
Option pursuant to the terms and provisions of this Plan.
2.20 Person shall mean any individual, organization,
corporation, partnership or other entity.
2.21 Plan shall mean this Davis Water & Waste Industries,
Inc. 1994 Directors Stock Option Plan.
ARTICLE 3
Administration
3.1 General Administration. The Plan shall be administered
and interpreted by the Committee. Subject to the express
provisions of the Plan, the Committee shall have authority (to
the extent that such authority does not disqualify the Plan from
being a "formula plan" within the meaning of paragraph (c)(2)(ii)
of Rule 16b-3 of the 1934 Act) to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the terms and provisions of the Option
Agreements by which Options shall be evidenced (which shall not
be inconsistent with the terms of the Plan), and to make all
other determinations necessary or advisable for the
administration of the Plan, all of which determinations shall be
final, binding and conclusive.
3.2 Appointment. Initially, the members of the
Compensation Committee of the Company shall constitute the
Committee hereunder. The Board from time to time may remove
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members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed
of two or more directors.
3.3 Organization. The Committee may select one of its
members as its chairman and shall hold its meetings at such times
and at such places as it shall deem advisable. A majority of the
Committee shall constitute a quorum, and such majority shall
determine its actions. The Committee shall keep minutes of its
proceedings and shall report the same to the Board at the meeting
next succeeding.
3.4 Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the
Committee, the members of the Committee, to the extent permitted
by applicable law, shall be indemnified by the Company against
reasonable expenses (including, without limitation, attorneys'
fees) actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with
any appeal, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with
the Plan or any Options granted hereunder, and against all
amounts paid by them in settlement thereof (provided such
settlement is approved to the extent required by and in the
manner provided by the articles of incorporation or the bylaws of
the Company relating to indemnification of directors) or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee
member or members did not act in good faith and in a manner he or
they reasonably believed to be in or not opposed to the best
interest of the Company.
ARTICLE 4
Stock
The stock subject to the Options and other provisions of the
Plan shall be authorized but unissued or reacquired shares of
Common Stock. Subject to readjustment in accordance with the
provisions of Article 7, the total number of shares of Common
Stock for which Options may be granted persons participating in
the Plan shall not exceed in the aggregate 75,000 shares of
Common Stock. Notwithstanding the foregoing, shares of Common
Stock allocable to the unexercised portion of any expired or
terminated Option returned to the Company by forfeiture again may
become subject to Options under the Plan.
ARTICLE 5
Eligibility to Receive and Grant of Options
5.1 Individuals Eligible for Grants of Options. The
individuals eligible to receive Options hereunder shall be solely
those individuals who are "outside" Directors. For purposes of
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the preceding sentence, an "outside" Director shall be a Director
(1) who is not a current employee of the Company (or any
corporation affiliated with the Company under Code 1504), (2)
who is not a former employee of the Company (or any corporation
affiliated with the Company under Code 1504) receiving
compensation for prior services (other than benefits under a tax-
qualified retirement plan), (3) who is not and has never been an
officer of the Company (or any corporation affiliated with the
Company under Code 1504), and (4) who is not receiving
remuneration (directly or indirectly) from the Company (or any
corporation affiliated with the Company under Code 1504) in any
capacity other than as a Director. Such Directors shall receive
Options hereunder in accordance with the provisions of Section
5.2 below.
5.2 Grant of Options. Options shall be granted to those
Directors who are eligible under Section 5.1 above (an "eligible
Director") in accordance with the following formulas:
(a) Option Upon Initially Becoming a Director. Upon
initially becoming an eligible Director, an individual shall
be granted an Option to purchase 8,000 shares of Common
Stock, with such Option subject to the provisions of Article
6 below. The Options granted under this subsection (a)
shall not be granted to a Director who has previously served
as a Director and who is again becoming a Director, but
shall only be granted upon an individual's initially
becoming an eligible Director.
(b) Transitional Rules. Each eligible Director as of
the Effective Date shall be granted Options under the terms
and provisions of subsection (a) above as of the Effective
Date as if such Director had initially become an eligible
Director on the Effective Date. Except as provided in this
subsection (b), no individual who is serving as a Director
as of the Effective Date of this Plan shall be entitled to
any Options under this Plan.
ARTICLE 6
Terms and Conditions of Options
Options granted hereunder and Option Agreements shall comply
with and be subject to the following terms and conditions:
6.1 Requirement of Option Agreement. Upon the grant of an
Option hereunder, the Committee shall prepare (or cause to be
prepared) an Option Agreement. The Committee shall present such
Option Agreement to the Optionee. Upon execution of such Option
Agreement by the Optionee, such Option shall be deemed to have
been granted effective as of the date of grant. The failure of
the Optionee to execute the Option Agreement within 30 days after
the date of the receipt of same shall render the Option Agreement
and the underlying Option null and void ab initio.
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6.2 Optionee and Number of Shares. Each Option Agreement
shall state the name of the Optionee and the total number of
shares of the Common Stock to which it pertains, the Option
Price, and the date as of which the Option was granted under this
Plan.
6.3 Vesting.
(a) Each Option shall first become exercisable (i.e.,
vested) with respect to such portions of the shares subject
to such Option as are specified in the schedule set forth
hereinbelow; provided, if an Optionee ceases to be a
Director, his rights with regard to all non-vested Options
shall cease immediately except as provided in subsection (b)
below.
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, 20% of the shares subject to such
Option. Prior to said date, the Option shall be
unexercisable in its entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(iii) Commencing as of the third anniversary
of the date the Option is granted, the Optionee shall
have the right to exercise the Option with respect to,
and to thereby purchase, an additional 20% of the
shares subject to the Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, the remainder of the shares subject
to such Option.
(b) Notwithstanding the above, all Options previously
granted to an Optionee shall become immediately vested and
exercisable for 100% of the number of shares subject to the
Options upon a Change of Control.
See also Section 6.13 herein.
6.4 Option Price. The Option Price of the shares of Common
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Stock underlying each Option shall be the Fair Market Value of
the Common Stock on the date the Option is granted. Upon
execution of an Option Agreement by both the Company and
Optionee, the date as of which the Option was granted under this
Plan as noted in the Option Agreement shall be considered the
date on which such Option is granted.
6.5 Terms of Options. Terms of Options granted under the
Plan shall commence on the date of grant and shall expire on such
date as the Committee may determine for each Option; provided, in
no event shall any Option be exercisable after ten years from the
date the Option is granted. No Option shall be granted hereunder
after five years from the earlier of (a) the date the Plan is
approved by the shareholders, or (b) the date the Plan is adopted
by the Board.
6.6 Terms of Exercise. The exercise of an Option may be
for less than the full number of shares of Common Stock subject
to such Option, but such exercise shall not be made for less than
(i) 100 shares or (ii) the total remaining shares subject to the
Option, if such total is less than 100 shares. Subject to the
other restrictions on exercise set forth herein, the unexercised
portion of an Option may be exercised at a later date by the
Optionee.
6.7 Method of Exercise. All Options granted hereunder
shall be exercised by written notice directed to the Secretary of
the Company at its principal place of business or to such other
person as the Committee may direct. Each notice of exercise
shall identify the Option which the Optionee is exercising (in
whole or in part) and shall be accompanied by payment of the
Option Price for the number of shares specified in such notice
and by any documents required by Section 8.1. The Company shall
make delivery of such shares within a reasonable period of time;
provided, if any law or regulation requires the Company to take
any action (including, but not limited to, the filing of a
registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to the
shares specified in such notice before the issuance thereof, then
the date of delivery of such shares shall be extended for the
period necessary to take such action.
6.8 Medium and Time of Payment.
(a) The Option Price shall be payable upon the
exercise of the Option in an amount equal to the number of
shares then being purchased times the per share Option
Price. Payment, at the election of the Optionee (or his
successors as provided in subsection (c) of Section 6.9),
shall be (A) in cash; (B) by delivery to the Company of a
certificate or certificates for shares of the Common Stock
duly endorsed for transfer to the Company with signature
guaranteed by a member firm of a national stock exchange or
by a national or state bank or a federally chartered thrift
institution (or guaranteed or notarized in such other manner
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as the Committee may require) or by instructing the Company
to retain shares of Common Stock upon the exercise of the
Option with a Fair Market Value equal to the exercise price
as payment; (C) by delivery to the Company of such other
property or by the performance for the Company of such
services as may be acceptable to the Committee and allowed
under applicable law; or (D) by a combination of (A), (B)
and (C).
(b) If all or part of the Option Price is paid by
delivery of shares of the Common Stock, on the date of such
payment, the Optionee must have held such shares for at
least six months from (i) the date of acquisition, in the
case of shares acquired other than through a stock option or
other stock award plan, or (ii) the date of grant or award
in the case of shares acquired through such a plan; and the
value of such Common Stock (which shall be the Fair Market
Value of such Common Stock on the date of exercise) shall be
less than or equal to the total Option Price payment. If
the Optionee delivers Common Stock with a value that is less
than the total Option Price, then such Optionee shall pay
the balance of the total Option Price in cash, other
property or services, as provided in subsection (a) above.
(c) In addition to the payment of the purchase price
of the shares then being purchased, an Optionee also shall
pay in cash (or have withheld from his normal pay) an amount
equal to the amount, if any, which the Company at the time
of exercise is required to withhold under the income tax
or Federal Insurance Contributions Act tax withholding
provisions of the Code, of the income tax laws of the state
of the Optionee's residence, and of any other applicable
law.
6.9 Effect of Termination of Service, Disability or Death.
Except as provided in subsections (a), (b) and (c) below, no
Option shall be exercisable unless the Optionee thereof shall
have been a Director from the date of the granting of the Option
until the date of exercise; provided, the Committee, in its sole
discretion, may waive the application of this Section and,
instead, may provide a different expiration date or dates in an
Option Agreement.
(a) Termination of Service. In the event an Optionee
ceases to be a Director for any reason other than death or
Disability, any Option or unexercised portion thereof
granted to him shall terminate on and shall not be
exercisable after the earliest to occur of (i) the
expiration date of the Option, (ii) twelve months after the
date the Optionee ceases to be a Director or (iii) the date
on which the Company gives notice to such Optionee of
termination of his service as a Director if service is
terminated by the Company or by its shareholders for Cause
(an Optionee's resignation in anticipation of termination of
service by the Company or by its shareholders for Cause
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shall constitute a notice of termination by the Company);
provided, the Committee may provide in the Option Agreement
that such Option or any unexercised portion thereof shall
terminate sooner or later, subject to the provisions of
Section 6.5 above. Notwithstanding the foregoing, in the
event that an Optionee's service as a Director terminates
for a reason other than death or Disability at any time
after a Change of Control, the term of all Options of that
Optionee shall be extended through the end of the twelve-
month period immediately following the date of such
termination of service. Prior to the earlier of the dates
specified in the preceding sentences of this subsection (a),
the Option shall be exercisable only in accordance with its
terms and only for the number of shares exercisable on the
date of termination of service as a Director. The question
of whether an authorized leave of absence or absence for
military or government service or for any other reason shall
constitute a termination of service as a Director for
purposes of the Plan shall be determined by the Committee,
which determination shall be final and conclusive.
(b) Disability. Upon the termination of an Optionee's
service as a Director due to Disability, any Option or
unexercised portion thereof granted to him which is
otherwise exercisable shall terminate on and shall not be
exercisable after the earlier to occur of (i) the expiration
date of such Option, or (ii) one year after the date on
which such Optionee ceases to be a Director due to
Disability; provided, the Committee may provide in the
Option Agreement that such Option or any unexercised portion
thereof shall terminate sooner or later subject to the
provisions of Section 6.5 above. Prior to the earlier of
such date, such Option shall be exercisable only in
accordance with its terms and only for the number of shares
exercisable on the date such Optionee's service as a
Director ceases due to Disability.
(c) Death. In the event of the death of the Optionee
(i) while he is a Director, (ii) within twelve months after
the date on which such Optionee's service as a Director is
terminated (for a reason other than Cause) as provided in
subsection (a) above, or (iii) within one year after the
date on which such Optionee's service as a Director
terminated due to his Disability, any Option or unexercised
portion thereof granted to him which is otherwise
exercisable may be exercised by the Optionee's Beneficiary
at any time prior to the expiration of one year from the
date of death of such Optionee, but in no event later than
the date of expiration of the option period; provided, the
Committee may provide in the Option Agreement that such
Option or any unexercised portion thereof shall terminate
sooner or later subject to the provisions of Section 6.5
above. Such exercise shall be effected pursuant to the
terms of this Section as if such Beneficiary is the named
Optionee.
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6.10 Restrictions on Transfer and Exercise of Options. No
Option shall be assignable or transferable by the Optionee except
by will or by the laws of descent and distribution, and any
purported transfer shall be null and void; provided, however,
this sentence shall be applicable only to the extent required for
grants of securities under this Plan to be exempt from the
provisions of Section 16 of the 1934 Act (in accordance with Rule
16b-3(a)(2) or the corresponding provisions, if any, of
subsequent regulations under Section 16 of the 1934 Act). During
the lifetime of an Optionee, the Option shall be exercisable only
by him; provided, however, that in the event the Optionee is
incapacitated and unable to exercise Options, such Options may be
exercised by such Optionee's legal guardian, legal
representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and
circumstances.
6.11 Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to shares covered by his
Option until date of the issuance of the shares to him and only
after the Option Price of such shares is fully paid. Unless
specified in Article 7, no adjustment will be made for dividends
or other
rights for which the record date is prior to the date of such
issuance.
6.12 No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon the Optionee to exercise
such Option.
6.13 Acceleration. The Committee shall at all times have
the power to accelerate the vesting date of Options previously
granted under this Plan.
6.14 Holding Period. Shares underlying any Option granted
hereunder to an Optionee who is an "affiliate" of the Company
subject to the "short-swing profit provisions" of Section 16(b)
of the 1934 Act are subject to a six-month holding period. Such
holding period will be satisfied if, with regard to any vested
(i.e., exercisable) Option that is exercised within six months of
the date of grant, the shares acquired upon exercise are not
disposed of until a minimum of six months have elapsed from the
date of grant of the Option. Notwithstanding the foregoing, the
Committee may, in its sole discretion, waive the preceding
required holding period with respect to any Optionee.
ARTICLE 7
Adjustments Upon Changes in Capitalization
7.1 Recapitalization. In the event that the outstanding
shares of the Common Stock of the Company are hereafter increased
or decreased or changed into or exchanged for a different number
or kind of shares or other securities of the Company by reason of
a recapitalization, reclassification, stock split, combination of
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shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(a) The Committee shall make an appropriate adjustment
in the number and kind of shares available for the granting
of Options under the Plan.
(b) The Committee also shall make an appropriate
adjustment in the number and kind of shares as to which
outstanding Options, or portions thereof then unexercised,
shall be exercisable; any such adjustment in any outstanding
Options shall be made without change in the total price
applicable to the unexercised portion of such Option and
with a corresponding adjustment in the Option Price per
share. No fractional shares shall be issued or optioned in
making the foregoing adjustments, and the number of shares
available under the Plan or the number of shares subject to
any outstanding Options shall be the next lower number of
shares, rounding all fractions downward.
(c) If any rights or warrants to subscribe for
additional shares are given pro rata to holders of
outstanding shares of the class or classes of stock then set
aside for the Plan, each Optionee shall be entitled to the
same rights or warrants on the same basis as holders of the
outstanding shares with respect to such portion of his
Option as is exercised on or prior to the record date for
determining shareholders entitled to receive or exercise
such rights or warrants.
7.2 Reorganization. Subject to any required action by the
shareholders, if the Company shall be a party to any
reorganization involving merger, consolidation, acquisition of
the stock or acquisition of the assets of the Company which does
not constitute a Change of Control, the Committee, in its
discretion, may declare that:
(a) any Option granted but not yet exercised shall
pertain to and apply, with appropriate adjustment as
determined by the Committee, to the securities of the
resulting corporation to which a holder of the number of
shares of the Common Stock subject to such Option would have
been entitled;
(b) any or all outstanding Options granted hereunder
shall become immediately nonforfeitable and fully
exercisable or vested (to the extent permitted under federal
or state securities laws); and/or
(c) any or all Options granted hereunder shall become
immediately nonforfeitable and fully exercisable or vested
(to the extent permitted under federal or state securities
laws) and are to be terminated after giving at least 30
days' notice to the Optionees to whom such Options have been
granted.
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7.3 Dissolution and Liquidation. If the Board adopts a
plan of dissolution and liquidation that is approved by the
shareholders of the Company, the Committee shall give each
Optionee written notice of such event at least ten days prior to
its effective date, and the rights of all Optionees shall become
immediately nonforfeitable and fully exercisable or vested (to
the extent permitted under federal or state securities laws).
7.4 Limits on Adjustments. Any issuance by the Company of
stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Article. The grant of
Options pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or
assets. All adjustments the Committee makes under this Article
shall be conclusive.
ARTICLE 8
Agreement by Optionee and Securities Registration
8.1 Agreement. If, in the opinion of counsel to the Company,
such action is necessary or desirable, no Options shall be
granted to any Optionee, and no Stock Option shall be
exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee (i) represents and warrants that he
will acquire the Common Stock for investment only and not for
purposes of resale or distribution, and (ii) makes such further
representations and warranties as are deemed necessary or
desirable by counsel to the Company with regard to holding and
resale of the Common Stock. The Optionee shall, upon the request
of the Committee, execute and deliver to the Company an agreement
or affidavit to such effect. Should the Committee have
reasonable cause to believe that such Optionee did not execute
such agreement or affidavit in good faith, the Company shall not
be bound by the grant of the Option or by the exercise of the
Option. All certificates representing shares of Common Stock
issued pursuant to the Plan shall be marked with the following
restrictive legend or similar legend, if such marking, in the
opinion of counsel to the Company, is necessary or desirable:
The shares represented by this certificate [have not
been registered under the Securities Act of 1933, as
amended, or the securities laws of any state and] are
held by an "affiliate" (as such term is defined in Rule
144 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as
amended) of the Corporation. Accordingly, these shares
may not be sold, hypothecated, pledged or otherwise
transferred except (i) pursuant to an effective
registration statement under the Securities Act of
70
1933, as amended, and any applicable securities laws or
regulations of any state with respect to such shares,
(ii) in accordance with Securities and Exchange
Commission Rule 144, or (iii) upon the issuance to the
Corporation of a favorable opinion of counsel or the
submission to the Corporation of such other evidence as
may be satisfactory to the Corporation that such
proposed sale, assignment, encumbrance or other
transfer will not be in violation of the Securities Act
of 1933, as amended, or any applicable securities laws
of any state or any rules or regulations thereunder.
Any attempted transfer of this certificate or the
shares represented hereby which is in violation of the
preceding restrictions will not be recognized by the
Corporation, nor will any transferee be recognized as
the owner thereof by the Corporation.
If the Common Stock is (A) held by an Optionee who ceases to be
an "affiliate," as that term is defined in Rule 144 of the 1933
Act, or (B) registered under the 1933 Act and all applicable
state securities laws and regulations as provided in Section 8.2,
the Committee, in its discretion and with the advice of counsel,
may dispense with or authorize the removal of the restrictive
legend set forth above or the portion thereof which is
inapplicable.
8.2 Registration. In the event that the Company in its
sole discretion shall deem it necessary or advisable to register,
under the 1933 Act or any state securities laws or regulations,
any shares with respect to which Options have been granted
hereunder, then the Company shall take such action at its own
expense before delivery of the certificates representing such
shares to an Optionee. In such event, and if the shares of
Common Stock of the Company shall be listed on any national
securities exchange or on NASDAQ at the time of the exercise of
any Option, the Company shall make prompt application at its own
expense for the listing on such stock exchange or NASDAQ of the
shares of Common Stock to be issued.
ARTICLE 9
Effective Date
The Plan shall be effective as of the Effective Date, and no
Options shall be granted hereunder prior to said date. Adoption
of the Plan shall be approved by the shareholders of the Company
at the earlier of (i) the annual meeting of the shareholders of
the Company which immediately follows the date of the first grant
or award of Options hereunder, or (ii) 12 months after the
adoption of the Plan by the Board. Shareholder approval shall be
made by a majority of the votes cast at a duly held meeting at
which a quorum representing a majority of all outstanding voting
stock is, either in person or by proxy, present and voting on the
Plan, or by the written consent in lieu of a meeting of the
holders of all of the outstanding voting stock; provided,
however, such shareholder approval, whether by vote or by written
71
consent in lieu of a meeting, must be solicited substantially in
accordance with the rules and regulations in effect under Section
14(a) of the 1934 Act. Failure to obtain such approval shall
render the Plan and any Options granted hereunder null and void
ab initio.
ARTICLE 10
Amendment and Termination
10.1 Amendment and Termination By the Board. Subject to
Section 10.2 below, the Board shall have the power at any time to
add to, amend, modify or repeal any of the provisions of the
Plan, to suspend the operation of the entire Plan or any of its
provisions for any period or periods or to terminate the Plan in
whole or in part. In the event of any such action, the Committee
shall prepare written procedures which, when approved by the
Board, shall govern the administration of the Plan resulting from
such addition, amendment, modification, repeal, suspension or
termination.
10.2 Restrictions on Amendment and Termination.
Notwithstanding the provisions of Section 10.1 above, the
following restrictions shall apply to the Board's authority under
Section 10.1 above:
(a) Prohibition Against Adverse Affects on Outstanding
Options. No addition, amendment, modification, repeal,
suspension or termination shall adversely affect, in any
way, the rights of the Optionees who have outstanding
Options without the consent of such Optionees;
(b) Shareholder Approval Required for Certain
Modifications. No modification or amendment of the Plan may
be made without the prior approval of the shareholders of
the Company if (i) such modification or amendment would
materially increase the benefits accruing to participants
under the Plan, (ii) such modification or amendment would
materially increase the number of securities which may be
issued under the Plan, or (iii) such modification or
amendment would materially modify the requirements as to
eligibility for participation in the Plan. The preceding
sentence shall be interpreted in accordance with the
provisions of paragraph (b)(2) of Rule 16b-3 of the 1934
Act. Shareholder approval shall be made by a majority of
the votes cast at a duly held meeting at which a quorum
representing a majority of all outstanding voting stock is,
either in person or by proxy, present and voting, or by the
written consent in lieu of a meeting of the holders of all
of the outstanding voting stock; provided, however, that for
modifications described in the first sentence of this
subsection (b), such shareholder approval, whether by vote
or by written consent in lieu of a meeting, must be
solicited substantially in accordance with the rules and
regulations in effect under Section 14(a) of the 1934 Act as
72
required by paragraph (b)(2) of Rule 16b-3 of the 1934 Act;
and
(c) Six Month Restriction on Amendments. No provision
of this Plan may be modified or amended more than once every
six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations promulgated
thereunder. The preceding sentence shall be interpreted in
accordance with the provisions of paragraph (c)(ii)(B) of
Rule 16b-3 of the 1934 Act.
ARTICLE 11
Miscellaneous Provisions
11.1 Application of Funds. The proceeds received by the
Company from the sale of the Common Stock subject to the Options
granted hereunder will be used for general corporate purposes.
11.2 Notices. All notices or other communications by an
Optionee to the Committee pursuant to or in connection with the
Plan shall be deemed to have been duly given when received in the
form specified by the Committee at the location, or by the
person, designated by the Committee for the receipt thereof.
11.3 Term of Plan. Subject to the terms of Article 10, the
Plan shall terminate upon the later of (i) the complete exercise
or lapse of the last outstanding Option, or (ii) the last date
upon which Options may be granted hereunder.
11.4 Compliance with Rule 16b-3. This Plan is intended to
be in compliance with the requirements of Rule 16b-3 as
promulgated under Section 16 of the 1934 Act.
11.5 Governing Law. The Plan shall be governed by and
construed in accordance with the laws of the State of Georgia.
11.6 Additional Provisions By Committee. The Option
Agreements authorized under the Plan may contain such other
provisions, including, without limitation, restrictions upon the
exercise of an Option, as the Committee shall deem advisable.
The Restriction Agreements authorized under the Plan may contain
such other provisions, including, without limitation, as the
Committee shall deem advisable.
11.7 Plan Document Controls. In the event of any conflict
between the provisions of an Option Agreement and the Plan, or
between a Restriction Agreement and the Plan, the Plan shall
control.
11.8 Gender and Number. Wherever applicable, the masculine
pronoun shall include the feminine pronoun, and the singular
shall include the plural.
73
11.9 Headings. The titles in this Plan are inserted for
convenience of reference; they constitute no part of the Plan and
are not to be considered in the construction hereof.
11.10 Legal References. Any references in this Plan to
a provision of law which is, subsequent to the Effective Date of
this Plan, revised, modified, finalized or redesignated, shall
automatically be deemed a reference to such revised, modified,
finalized or redesignated provision of law.
11.11 No Rights to Perform Services. Nothing contained
in the Plan, or any modification thereof, shall be construed to
give any individual any rights to perform services for the
Company or any parent or subsidiary corporation of the Company.
11.12 Unfunded Arrangement. The Plan shall not be
funded, and except for reserving a sufficient number of
authorized shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any grant under
the Plan.
ADOPTED BY BOARD OF DIRECTORS ON DECEMBER 9, 1994
APPROVED BY SHAREHOLDERS AS OF ____________ ___, 1995
74
NONQUALIFIED STOCK OPTION NO. __________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement")
is entered into as of the ____ day of ___________________,
________, by and between Davis Water & Waste Industries, Inc.
(the "Company") and __________________________________________
("Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Davis Water & Waste
Industries, Inc. 1994 Directors Stock Option Plan (the "Plan")
which is administered by a committee appointed by the Company's
Board of Directors (the "Committee"); and
WHEREAS, effective as of _________________, _______, the
Committee granted to Optionee a nonqualified stock option under,
and in accordance with, the terms of the Plan to reward Optionee
for his efforts on behalf of the Company and to encourage his
continued loyalty and diligence; and
WHEREAS, to comply with the terms of the Plan and to further
the interests of the Company and Optionee, the parties hereto
have set forth the terms of such option in writing in this
Agreement;
NOW, THEREFORE, for and in consideration of the premises and
mutual promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Grant of Option. Effective as of _________________,
________, Optionee was granted a nonqualified stock option under
the Plan. Under that option and subject to the terms and
conditions set forth herein, Optionee shall have the right to
purchase 8,000 shares of the $0.01 par value common stock of the
Company (the "Common Stock"); such 8,000 shares hereinafter are
referred to as the "Optioned Shares", and this option hereinafter
is referred to as the "Option". The Option is intended to be a
nonqualified stock option.
2. Option Price. The price per share for each of the
Optioned Shares shall be $________________ (the "Option
Price"), which is the per share Fair Market Value of the Optioned
75
Shares on the date of grant specified above.
3. Exercise of Option.
(a) General. The Option may be exercised by
Optionee's delivery to the Secretary of the Company of a written
notice of exercise executed by Optionee (the "Notice of
Exercise"). The Notice of Exercise shall be substantially in the
form set forth as Exhibit A, attached hereto and made a part
hereof, and shall identify the Option and the number of Optioned
Shares that are being exercised.
(b) Beginning of Exercise Period. The Option first
shall become exercisable (i.e., vested) according to the
following schedule; provided, if Optionee ceases to be a director
of the Company, his rights with regard to all non-vested Options
shall cease immediately:
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, 20% of the shares subject to such
Option. Prior to said date, the Option shall be
unexercisable in its entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(iii) Commencing as of the third anniversary
of the date the Option is granted, the Optionee shall
have the right to exercise the Option with respect to,
and to thereby purchase, an additional 20% of the
shares subject to the Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, the remainder of the shares subject
to such Option.
Notwithstanding the foregoing, the Option shall become 100%
vested immediately upon a Change in Control, and may become 100%
vested immediately in the sole discretion of the Committee.
(c) Partial Exercise. Optionee may exercise the
Option for less than the full number of exercisable Optioned
76
Shares, but such exercise may not be made for less than 100
shares or the total remaining shares subject to the Option, if
less than 100 shares.
4. Termination of Option. Notwithstanding any provisions
to the contrary herein, and except as otherwise specified in
Attachment I (if any) hereto, the Option shall not be exercisable
either in whole or in part after the earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first
anniversary of the date on which Optionee dies (i) while a
director of the Company, (ii) within the twelve-month period that
begins on the date
on which Optionee ceases to be a director of the Company for any
reason other than death or disability (as determined by the
Committee in its sole discretion) or (iii) within the twelve-
month period that begins on the date on which Optionee ceases to
be a director of the Company due to disability (as determined by
the Committee in its sole discretion);
(c) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be a director
of the Company due to disability (as determined by the Committee
in its sole discretion); provided, if Optionee dies during such
twelve-month period, the terms of subsection (b) shall control;
(d) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be a director
of the Company for any reason other than death or disability (as
determined by the Committee in its sole discretion); provided, if
Optionee dies during such twelve-month period, the terms of
subsection (b) shall control;
(e) The date on which the Company gives notice (or is
deemed to have given notice) to Optionee of his termination of
service as a director for Cause, all as described in Section
6.9(a) of the Plan.
(f) Such other earlier date as may be required under
the terms of the Plan.
5. Option Non-Transferable. The Option shall not be
transferable by Optionee other than by will or by the laws of
descent and distribution, and any purported transfer shall be
null and void; provided, however, this sentence shall only be
applicable to the extent required for grants of securities under
the Plan to be exempt from the provisions of Section 16 of the
1934 Act (in accordance with Rule 16b-3(a)(2) or the
corresponding provisions, if any, of subsequent regulations under
Section 16 of the 1934 Act). During the lifetime of Optionee,
the Option shall be exercisable only by Optionee (or, if he
becomes disabled or otherwise incapacitated, by the guardian of
his property or his duly appointed attorney-in-fact), and shall
77
not be assignable or transferable by Optionee and, subject to
Section 6 hereof, no other person shall acquire any rights in the
Option.
6. Death of Optionee and Transfer of Option. Except as
otherwise specified in Attachment I (if any) hereto, in the event
of the death of Optionee while a director of the Company, within
a period of twelve-months after the termination of his service as
a director of the Company due to disability (as determined by the
Committee in its sole discretion), or within a twelve-month
period after the director ceases to be a director of the Company
for any reason other than for cause, all or any of the
unexercised portion of the Option owned by the deceased Optionee
may be exercised by Optionee's Beneficiary (as defined in Section
2.3 of the Plan) at any time prior to the first anniversary of
the date of the death of Optionee, but in no event later than the
date as of which such Option expires pursuant to Section 4
hereof. Such exercise shall be effected in accordance with the
terms hereof as if such Beneficiary was Optionee herein.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by
Optionee (or his successors in accordance with Section 6 hereof)
upon exercise of the Option and shall be paid in cash, in shares
of the Common Stock (or by instructing the Company to retain
shares as payment), in other property or services acceptable to
the Committee and allowed under the terms of the Plan and
applicable law, or any combination thereof.
(b) Payment in Shares of the Common Stock. If
Optionee pays all or part of the Option Price with shares of the
Common Stock, the following conditions shall apply:
(i) Optionee shall deliver to the Secretary of
the Company a certificate or certificates for shares of the
Common Stock duly endorsed for transfer to the Company with
signature guaranteed by a member firm of a national stock
exchange or by a national or state bank (or guaranteed or
notarized in such other manner as the Committee may
require);
(ii) Optionee must have held any shares of the
Common Stock used to pay the Option Price for at least six
months prior to the date such payment is made;
(iii) Such shares shall be valued on the basis
of the fair market value of the Common Stock on the date of
exercise pursuant to the terms of the Plan; and
78
(iv) The value of such Common Stock shall be less
than or equal to the Option Price. If Optionee delivers
Common Stock with a value that is less than the Option
Price, then Optionee shall pay the balance of the Option
Price in a form allowed under subsection (a) above.
8. Agreement of Optionee. Optionee acknowledges that he
has read Article 8 of the Plan and understands that certain
restrictions may apply with respect to shares of the Common Stock
acquired by him pursuant to his exercise of the Option (including
restrictions on resale applicable to "affiliates" under Rule 144
of the Securities Act of 1933, as amended, and restrictions on
resale applicable to shares of the Common Stock that have not
been registered under the Securities Act of 1933, as amended, and
applicable state securities laws). Optionee hereby agrees to
execute such documents and take such actions as the Company may
require with respect to state and federal securities laws and any
restrictions on the resale of such shares which may pertain.
9. Delivery of Stock Certificates. As promptly as
practical after the date of exercise of the Option and the
receipt by the Company of full payment therefor, the Company
shall deliver to Optionee a stock certificate representing the
shares of the Common Stock acquired by Optionee pursuant to his
exercise of the Option.
10. Notices. All notices or other communications hereunder
shall be in writing and shall be effective (i) when personally
delivered by courier (including overnight carriers) or otherwise
to the party to be given such notice or other communication or
(ii) on the third business day following the date deposited in
the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt
requested and postage thereon fully prepaid. The addresses for
such notices shall be as follows:
If to the Company:
Davis Water & Waste Industries, Inc.
Attention: Corporate Secretary
P.O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may
change its address for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms
79
and conditions set forth herein, the Option is subject to and
governed by the other terms and conditions set forth in the Plan
which is hereby incorporated by reference. In the event of any
conflict between the provisions of this Agreement and the Plan,
the Plan shall control.
12. Miscellaneous.
(a) The granting of the Option and the execution of
this Agreement shall not give Optionee any rights to similar
grants in future years or any right to be retained in the service
of the Company or to interfere in any way with the right of the
Company to terminate Optionee's services at any time.
(b) Unless and except as otherwise specifically
provided in this Agreement, Optionee shall have no rights of a
stockholder with respect to any shares covered by the Option
until the date of issuance of a stock certificate to him for such
shares.
(c) If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal
regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that this Agreement will not permit
Optionee to acquire the full number of Optioned Shares as
provided in Section 1 hereof, it is the express intention of the
Company to allow Optionee to acquire such lesser number of shares
as may be permissible without any amendment or modification
hereof.
(d) This Agreement shall be construed and enforced in
accordance with the laws of Georgia.
(e) This Agreement, together with the Plan, contains
the entire understanding among the parties and supersedes any
prior understanding and agreements between them representing the
subject matter hereof. There are no representations, agreements,
arrangements or understandings, oral or written, between and
among the parties hereto relating to the subject matter hereof
which are not fully expressed herein, or in the Plan.
(f) Section and other headings contained in this
Agreement are for reference purposes only and are in no way
intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
(g) This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which shall constitute one agreement, and the signatures of
any party or any counterpart shall be deemed to be a signature
to, and may be appended to, any other counterpart.
80
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the first date written above.
DAVIS WATER & WASTE INDUSTRIES, INC.
By:_______________________________________________
Title: ____________________________________________
OPTIONEE:
__________________________________________________
Signature
__________________________________________________
Print or type name
81
NONQUALIFIED STOCK OPTION NO. __________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ATTACHMENT I
ADDITIONAL TERMS AND PROVISIONS REGARDING OPTION
82
EXHIBIT A
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
NOTICE OF EXERCISE FOR NONQUALIFIED STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of
the Nonqualified Stock Option Agreement, dated
__________________, ________, between Davis Water & Waste
Industries, Inc. (the "Company") and the undersigned Optionee
(the "Agreement"), which Agreement represents Nonqualified Stock
Option No. ________ and which is made a part hereof and
incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to
purchase _______ of his Optioned Shares. Optionee hereby
delivers, together with this written statement of exercise, the
full Option Price with respect to the exercised Optioned Shares,
which consists of: [COMPLETE ONLY ONE]
cash in the total amount of $________________.
________ shares of the Company's Common Stock.
cash in the total amount of $_________________ and
_________ shares of the Company's Common Stock.
other (specify): _____________________________________
ACKNOWLEDGEMENT. Optionee hereby acknowledges that, to the
extent he is an "affiliate" of the Company (as that term is
defined in Rule 144 promulgated under the Securities Act of 1933,
as amended) or to the extent that the Optioned Shares have not
been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's
Common Stock acquired by him as a result of his exercise of the
Option pursuant to this Notice are subject to, and the
certificates representing such shares shall be legended to
reflect, certain trading restrictions under applicable securities
laws (including particularly the Securities and Exchange
Commission's Rule 144), all as described in Article 8 of the
Plan, and Optionee hereby agrees to comply with all such
restrictions and to execute such documents or take such other
actions as the Company may require in connection with such
restrictions.
Executed this ______ day of _________________, ________.
OPTIONEE:
___________________________________________________
Signature
___________________________________________________
Print or Type Name
83
Davis Water & Waste Industries, Inc. hereby acknowledges
receipt of this Notice of Exercise and receipt of payment in the
form and amount indicated above, all on this ______ day of
____________________, ________.
DAVIS WATER & WASTE INDUSTRIES, INC.
By: _______________________________________________
Title: ____________________________________________
84