DAVIS WATER & WASTE INDUSTRIES, Inc.
NOTICE OF
1995 ANNUAL MEETING
AND
PROXY STATEMENT
__________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
X Filed by the Registrant
__ Filed by a Party other than the Registrant
Check the appropriate box:
__ Preliminary Proxy Statement
X Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
DAVIS WATER & WASTE INDUSTRIES, INC.
(Name of Registrant as Specified in Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
__ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-111:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
1Set forth the amount on which the filing fee is calculated and state how
it was determined.
__ Fee paid previously with preliminary materials.
__ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
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Revocable Proxy
Common Stock
DAVIS WATER & WASTE INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1995
ANNUAL MEETING OF STOCKHOLDERS.
This undersigned hereby appoints Stan White and Larry J.
Friesen, and each of them, proxies, with full power of
substitution, to act for and in the name of the undersigned to
vote all shares of Common Stock of Davis Water & Waste
Industries, Inc. (the "Company") which the undersigned is
entitled to vote at the 1995 Annual Meeting of Stockholders of
the Company, to be held at the Garden Center, 1002 South Broad
Street, Thomasville, Georgia, on Friday, September 8, 1995 at
11:00 a.m., local time, and at any and all adjournments
thereof, as indicated below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSALS.
1. Elect R. R. Davis as a director to serve until the 1996
Annual Meeting of Stockholders and elect Robert P. Crozer
and Thomas R. Pledger as directors to serve until the
1998 Annual Meeting of Stockholders and until their
successors are elected and qualified:
__ FOR ALL NOMINEES listed __ WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below.
INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name in the list below.
R. R. Davis, Robert P. Crozer and Thomas R. Pledger
2. Authorize and approve the Davis Water & Waste, Inc. 1994
Employees Stock Option Plan.
__ FOR __ AGAINST __ ABSTAIN
3. Authorize and approve the Davis Water & Waste, Inc. 1994
Directors Stock Option Plan.
__ FOR __ AGAINST __ ABSTAIN
4. Ratify the appointment of Price Waterhouse LLP as
independent accountants for the fiscal year ending April
30, 1996.
__ FOR __ AGAINST __ ABSTAIN
In their discretion, the proxies are authorized to vote upon
such other business as properly may come before the Annual
Meeting and any adjournments thereof.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ENCLOSED PREPAID ENVELOPE.
(Continued, and to be signed and dated, on the reverse side)
(Continued from other side)
PROXY-SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY CARD WILL BE VOTED IN
THE DISCRETION OF THE PROXIES "FOR" THE ELECTION OF THE THREE
NOMINEES NAMED IN PROPOSAL 1 AND "FOR" PROPOSALS 2, 3 AND 4.
If any other business is presented to a vote of the
stockholders at the Annual Meeting, this proxy card will be
voted by the proxies in their best judgment. At the present
time, the Board of Directors knows of no other business to be
presented to a vote of the stockholders at the Annual Meeting.
If the undersigned elects to withdraw this proxy card on
or before the time of the Annual Meeting or any adjournments
thereof and notifies the secretary of the Company at or prior
to the Annual Meeting of the decision of the undersigned to
withdraw this proxy card, then the power of said proxies shall
be deemed terminated and of no further force and effect. If
the undersigned withdraws this proxy card in the manner
described above and prior to the Annual Meeting does not
submit a duly executed and subsequently dated proxy card to
the Company, the undersigned may vote in person at the Annual
Meeting all shares of Common Stock of the Company owned by the
undersigned as of the record date July 21, 1995.
Please mark, date and sign
exactly as your name appears on
this proxy card. When shares
are held jointly, both holders
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give your full
title. If the holder is a
corporation or a partnership,
the full corporate or
partnership name should be
signed by a duly authorized
officer.
Date:_________________________________, 1995
__________________________________________
Signature
__________________________________________
Signature, if shares held jointly
Do you plan to attend the Annual Meeting?
YES __ NO __
DAVIS WATER & WASTE INDUSTRIES, Inc.
P. O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 8, 1995
Notice hereby is given that the 1995 Annual Meeting of
Stockholders of Davis Water & Waste Industries, Inc. ("the
Company") will be held at the Garden Center, 1002 South Broad
Street, Thomasville, Georgia, on Friday, September 8, 1995 at
11:00 a.m., local time, for the purposes of considering and
voting upon:
1. A proposal to elect one director to serve until the
1996 Annual Meeting of Stockholders and two
directors to serve until the 1998 Annual Meeting of
Stockholders;
2. A proposal to authorize and approve the Davis Water
& Waste Industries, Inc. 1994 Employees Stock Option
Plan;
3. A proposal to authorize and approve the Davis Water
& Waste Industries, Inc. 1994 Directors Stock Option
Plan;
4. A proposal to ratify the appointment of Price
Waterhouse LLP as independent accountants of the Company
for the fiscal year ending April 30, 1996; and
5. Such other business as properly may come before the
Annual Meeting or any adjournments thereof. The
Board of Directors is not aware of any other
business to be presented to a vote of the
stockholders at the Annual Meeting.
Information relating to the above matters is set forth in
the attached Proxy Statement. Stockholders of record at the
close of business on July 21, 1995 are entitled to receive
notice of and to vote at the Annual Meeting and any
adjournments thereof.
By Order of the Board of Directors.
STAN WHITE
Secretary-Treasurer
Thomasville, Georgia
August 8, 1995
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY
COMPLETE, EXECUTE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY REVOKE THE PROXY CARD AND VOTE IN PERSON IF
YOU SO DESIRE.
DAVIS WATER & WASTE INDUSTRIES, Inc.
P. O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 8, 1995
This Proxy Statement is furnished to the stockholders of
Davis Water & Waste Industries, Inc. (the "Company") in
connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the 1995 Annual
Meeting of Stockholders and at any adjournments thereof (the
"Annual Meeting"). The Annual Meeting will be held on Friday,
September 8, 1995 at the Garden Center, 1002 South Broad
Street, Thomasville, Georgia, at 11:00 a.m., local time.
The approximate date on which this Proxy Statement and
form of proxy card are first being sent or given to
stockholders is August 8, 1995.
VOTING
General
The securities that can be voted at the Annual Meeting
consist of Common Stock of the Company, $.01 par value per
share, with each share entitling its owner to one vote on each
matter submitted to the stockholders. The record date for
determining the holders of Common Stock who are entitled to
receive notice of and to vote at the Annual Meeting is July
21, 1995. On the record date, 3,248,594 shares of Common
Stock were outstanding and eligible to be voted at the Annual
Meeting.
In voting for the election of directors, stockholders may
vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. In
voting for each of the remaining three proposals, stockholders
may vote in favor of the proposal or against the proposal or
may abstain from voting.
Quorum and Vote Required
The presence, in person or by proxy, of a majority of the
outstanding shares of Common Stock of the Company is necessary
to constitute a quorum at the Annual Meeting. In counting the
votes to determine whether a quorum exists at the Annual
Meeting, the proposal receiving the greatest number of all
votes cast "for" or "against" and abstentions (including
instructions to withhold authority to vote) will be used.
Pursuant to the Bylaws of the Company, the affirmative
vote of the holders of a majority of the shares of Common
Stock represented in person or by proxy at the Annual Meeting
is required to approve each of the four proposals, provided a
quorum is present. As a result, shares which are withheld or
abstained from voting on a proposal will have the same legal
effect as a vote against the proposal. The Company believes
that approximately 828,104 shares owned or controlled on the
record date by directors and executive officers of the
Company, constituting approximately 25.5% of the outstanding
Common Stock, will be voted in favor of each of the proposals.
1
Under the rules of the New York and American Stock
Exchanges (the "Exchanges") that govern most domestic stock
brokerage firms, member firms that hold shares in street name
for beneficial owners may, to the extent that such beneficial
owners do not furnish voting instructions with respect to any
or all proposals submitted for shareholder action, vote in
their discretion upon proposals which are considered
"discretionary" proposals under the rules of the Exchanges.
Member brokerage firms that have received no instructions from
their clients as to "non-discretionary" proposals do not have
discretion to vote on these proposals. Such "broker non-
votes" will not be considered in determining whether a quorum
exists at the Annual Meeting and will not be considered as
votes cast in determining the outcome of any proposal.
Proxies
Stockholders should specify their choices with regard to
each of the four proposals on the enclosed proxy card. All
properly executed proxy cards delivered by stockholders to the
Company in time to be voted at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with
the directions noted thereon. In the absence of such
instructions, the shares represented by a signed and dated
proxy card will be voted "FOR" the election of all director
nominees and "FOR" Proposals 2, 3 and 4. If any other matters
properly come before the Annual Meeting, the persons named as
proxies will vote upon such matters according to their
judgment.
Any stockholder delivering a proxy has the power to
revoke it at any time before it is voted by giving written
notice to Stan White, the Secretary of the Company, at 1820
Metcalf Avenue, Thomasville, Georgia 31792; by executing and
delivering to Mr. White a proxy card bearing a later date; or
by voting in person at the Annual Meeting; provided, however,
that under the rules of the Exchanges, any beneficial owner of
the Company's Common Stock whose shares are held in street
name by a member brokerage firm may revoke his proxy and vote
his shares in person at the Annual Meeting only in accordance
with applicable rules and procedures of the Exchanges.
In addition to soliciting proxies through the mail, the
Company may solicit proxies through its directors, officers
and employees in person and by telephone and facsimile.
Brokerage firms, nominees, custodians and fiduciaries also may
be requested to forward proxy materials to the beneficial
owners of shares held of record by them. All expenses
incurred in connection with the solicitation of proxies will
be borne by the Company.
Principal Stockholders
The following table sets forth information as of April
30, 1995 (except as otherwise noted) regarding the ownership
of the Company's Common Stock by each person known to the
Company to be the beneficial owner of more than 5% of the
Company's Common Stock, each executive officer of the Company
whose salary and bonus for the fiscal year ended April 30,
1995 exceeded $100,000, and all directors and executive
officers of the Company as a group. For information regarding
the ownership of the Company's Common Stock by the directors
of the Company, see "Proposal 1 -- Election of Directors --
Information Regarding Nominees for Director."
2
Name Shares Beneficially Owned(1) Percent of Class
Jasper C. Davis III (2) 582,744 (3) 18.0%
Dimensional Fund Advisors, Inc. 233,900 (4) 7.2%
R. Doyle White 36,547 1.1%
Robert H. Pless 10,762 *
Larry May 6,906 *
Robert D. Tatum 3,271 *
Stan White 3,218 *
All directors and
executive officers as a
group (12 persons) 828,104 (5) 25.5%
____________________
(*) Denotes less than 1% of the outstanding Common Stock.
(1) Beneficial ownership as reported in this Proxy Statement
has been determined in accordance with Securities and
Exchange Commission regulations and includes shares of
Common Stock of the Company that the named person has the
right to acquire within 60 days after April 30, 1995,
pursuant to the Company's employee stock purchase plan.
Except as otherwise stated in the footnotes below, the
named persons have sole voting and investment power with
regard to the shares shown as owned by such persons.
(2) Mr. Davis' mailing address is P. O. Box 1419,
Thomasville, Georgia 31799-1419.
(3) See Note (3) on page 7 hereof for stock ownership
information regarding Mr. Davis.
(4) The shares shown as beneficially owned by Dimensional
Fund Advisors Inc. are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, for all of
which Dimensional Fund Advisors Inc., a registered
investment advisor, serves as investment manager.
Dimensional Fund Advisors Inc. disclaims beneficial
ownership of all of such shares. The mailing address for
Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401. Such
information is as of December 31, 1994.
(5) Includes 128,181 shares with regard to the directors and
executive officers as a group as to which beneficial
ownership is shared or disclaimed. See Note (3) on page
7 hereof.
3
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees
Pursuant to the Company's Restated Articles of
Incorporation and Bylaws, the authorized number of directors
of the Company has been set at nine. The directors are
divided into three classes as nearly equal in number as
possible, with the term of office of one class expiring each
year. At each Annual Meeting of Stockholders, the directors
of one class are elected to hold office for a term expiring at
the third Annual Meeting following their election and until
their successors have been duly elected and qualified. The
directors whose terms will expire at the 1995 Annual Meeting
are Robert P. Crozer, R.R. Davis and Thomas R. Pledger, and
the Board of Directors has nominated these three individuals
for re-election as directors at the 1995 Annual Meeting.
In accordance with the Company's Restated Articles of
Incorporation and Bylaws, the Board of Directors has nominated
Robert P. Crozer and Thomas R. Pledger to serve for a three
year term expiring at the 1998 Annual Meeting of Stockholders
and until their successors have been duly elected and
qualified. With regard to R. R. Davis, the Company's Bylaws
provide that no person shall be eligible to continue to serve
on the Board of Directors after such person's 70th birthday.
R. R. Davis will attain the age of 70 in September 1996, which
is the same month in which it is anticipated that the
Company's 1996 Annual Meeting of Stockholders will be held.
Accordingly, the Board of Directors has nominated R. R. Davis
to serve for only one year of the three year term established
by the Company's Restated Articles of Incorporation and
Bylaws, with such one year of service to expire at the 1996
Annual Meeting of Stockholders. With regard to the resulting
vacancy following the 1996 Annual Meeting, the Company's
Bylaws and Georgia law (under which the Company is organized)
permit the Board of Directors to elect a person to serve for
any unexpired portion of a term as a director. The Board of
Directors has not yet considered possible candidates to fill
this vacancy.
In addition to the vacancy on the Board of Directors that
will result from the expiration of Mr. Davis' one year term of
service at the time of the 1996 Annual Meeting of
Stockholders, a vacancy currently exists on the Board of
Directors because the authorized number of directors is nine
but the Board of Directors currently consists of only eight
members. The remaining director position has been vacant
since April 30, 1993 and is for a term expiring at the 1996
Annual Meeting. The Board of Directors desires to fill this
currently vacant director position but has not yet identified
an appropriate person to fill this position. The Board of
Directors may fill the vacant position prior to the 1996
Annual Meeting. Shares may not be voted at the 1995 Annual
Meeting for more than three nominees.
Messrs. Davis, Crozer and Pledger each have consented to
serve another term as a director if re-elected. If any of the
nominees should be unavailable to serve for any reason (which
is not anticipated), the Board of Directors may designate a
substitute nominee or nominees (in which event the persons
named on the enclosed proxy card will vote the shares
represented by all valid proxy cards for the election of such
substitute nominee or nominees), allow the vacancy or
vacancies to remain open until a suitable candidate or
candidates are located, or by resolution provide for a lesser
number of directors.
The Board of Directors unanimously recommends that the
stockholders vote "FOR" the proposal to re-elect R. R. Davis
as a director to serve for a period of one year expiring at
the 1996 Annual Meeting of Stockholders and to re-elect Robert
P. Crozer and Thomas R. Pledger as directors for a three year
term expiring at the 1998 Annual Meeting of Stockholders and
until their successors have been duly elected and qualified.
4
Information Regarding Nominees and Incumbent Directors
Set forth below is certain information regarding the
three nominees for director as well as the five incumbent
directors whose terms as directors will continue following the
1995 Annual Meeting. Information regarding their ownership of
the Company's Common Stock is as of April 30, 1995.
Shares of
Common Stock
Beneficially
Owned
(% of Class)
Name Information About Nominees
Robert P. Crozer Mr. Crozer, age 48, has been Vice Chairman of the Board of 3,100
Directors of Flowers Industries, Inc., a diversified food products (*)
company, since 1989. From 1985 to 1989 he served as Corporate Vice
President-Marketing of Flowers Industries, Inc., and from 1979 to
1989 he served as President and Chief Operating Officer of its
Convenience Products Group. Mr. Crozer has served as a director of
the Company since 1981.
R. R. Davis (2) Mr. Davis, age 68, has served as Vice Chairman 70,000(3) of the 70,000(3)
Board since 1982 and has served as a (2.2%)consultant to the (2.2%)
Company since his retirement as an officer of the Company in 1991.
He previously served in various other capacities with the Company,
including President. He has served as a director of the Company
since 1956. He also serves as a director of Commercial Bank in
Thomasville, Georgia.
Thomas R. Pledger Mr. Pledger, age 57, has been Chairman of the Board and Chief 1,000
Executive Officer of Dycom Industries, Inc., a telecommunications (*)
and electrical services corporation, since 1991 and was President
and Chief Executive Officer of Dycom Industries, Inc. from 1984
until 1991. He also has been a director of Dycom Industries, Inc.
since 1981. Mr. Pledger has served as a director of the Company
since 1988.
5
Shares of
Common Stock
Beneficially
Information About Incumbent Directors - Owned
Name Term Expiring 1996 (% of Class)
Jasper C. Davis III (2) Mr. Davis, age 74, has served as a director of the Company since 582,744(3)
its founding in 1956 and served as Chairman of the Board of the (18.0%)
Company from 1956 until his retirement from such position in 1993.
Mr. Davis has served as a consultant to the Company since his
retirement as an officer of the Company in 1990. He served as
Chief Executive Officer of the Company from 1956 until 1986 and
also served at various times in the past as President and Chief
Operating Officer of the Company, most recently from 1980 until
1982.
R. Doyle White (3) Mr. White, age 64, has served as President of the Company since 36,547
1982, as Chief Executive Officer of the Company since 1986 and as (1.1%)
Chairman of the Board of the Company since 1993. He also served
from 1982 to June 1994 as Chief Operating Officer of the Company,
and from 1978 until 1982, he served as Senior Vice President and a
General Manager of the Company. Mr. White has served as a director
of the Company since 1981.
Stock
Beneficially
Information About Incumbent Owned
Name Directors - Term Expiring 1997 (% of Class)(1)
Joe E. Beverly Mr. Beverly, age 53, has served as Vice Chairman of the Board of 3,650
Synovus Financial Corp. of Columbus, Georgia and as Chairman of the (*)
Board of Commercial Bank in Thomasville, Georgia, a wholly-owned
subsidiary of Synovus Financial Corp., since 1990. He served as
President and a director of Commercial Bank from 1973 to 1989. Mr.
Beverly has served as a director of the Company since 1986.
O. Larry Comer Mr. Comer, age 62, has served as Senior Partner since 1986 of Comer 8,500
Associates, an investment partnership. He also has been Chairman (*)
of the Board since 1987 of Caravelle Boats, Inc., a boat
manufacturer. He has served as a director of the Company since
1983. Mr. Comer also is a director of Southern Bank Group, Inc. and
Sumter Bank and Trust Co., a wholly owned subsidiary of Synovus
Financial Corp.
6
H. Forbes Davis Mr. Davis, age 67, served as Vice President-Research and 98,406(3)
Development of the Company from 1989 until his retirement in 1993 (3.0%)
and has served as a consultant to the Company since that time. He
served as Vice President and General Manager of the Company's Davis
Process division from 1979 until 1989 and served previously in
various other management and sales positions with the Company since
1956. He has served as a director of the Company since 1956.
(*) Denotes less than 1% of the outstanding Common Stock.
(1) See Note (1) on page 3 hereof.
(2) Messrs. H. Forbes Davis, R. R. Davis and Jasper C. Davis
III are brothers.
(3) Includes 150 shares with regard to Joe E. Beverly which
are held by his wife and as to which beneficial ownership
is disclaimed, 19,939 shares with regard to H. Forbes
Davis which are held by his wife, 29,297 shares with
regard to R. R. Davis which are held by his wife and
78,795 shares with regard to Jasper C. Davis III which
are held by his wife.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through
meetings of the full Board and through committees of the
Board. In accordance with the Bylaws of the Company, the
Board of Directors has established an Executive Committee, an
Audit Committee, a Compensation Committee, a Finance, Pension
& Insurance Committee and a Nominating Committee.
The Executive Committee, during intervals between
meetings of the full Board, may exercise the powers of the
Board of Directors except with regard to a limited number of
matters which include amending the Restated Articles of
Incorporation or Bylaws of the Company; amending or repealing
any resolution of the Board of Directors that by its terms is
not subject to amendment or repeal by the Executive Committee;
filling vacancies on the Board of Directors or any of its
committees; adopting a plan of merger or consolidation;
selling, leasing, exchanging or otherwise disposing of all or
substantially all of the property and assets of the Company;
approving a voluntary dissolution of the Company or revoking
of any such voluntary dissolution; or approving or proposing
to the stockholders any other action that must be approved by
the stockholders. All actions of the Executive Committee are
submitted for review and ratification by the full Board. The
Executive Committee is composed of R. Doyle White, H. Forbes
Davis, Jasper C. Davis III and R. R. Davis. The Executive
Committee met one time during the fiscal year ended April 30,
1995.
7
The Audit Committee makes recommendations to the Board
concerning the appointment of the Company's independent
accountants; reviews with such accountants their audit plan,
the scope and results of their audit engagement and the
accompanying management letter, if any; reviews the scope and
results of the Company's internal auditing procedures;
consults with the independent accountants and management with
regard to the Company's accounting methods and the adequacy of
its internal accounting controls; approves professional
services provided by the independent accountants; reviews the
independence of the independent accountants; and reviews the
range of the independent accountants' audit and non-audit
fees. The Audit Committee is composed of O. Larry Comer, Joe
E. Beverly and Thomas R. Pledger. The Audit Committee met two
times during the fiscal year ended April 30, 1995.
The Compensation Committee is responsible for setting the
compensation of the Chairman of the Board and the President
and ratifying the compensation of all other officers and
general wage and salary limits of employees. The Compensation
Committee is composed of Robert P. Crozer, Joe E. Beverly, O.
Larry Comer and Thomas R. Pledger. The Compensation Committee
met three times during the fiscal year ended April 30, 1995.
The Finance, Pension & Insurance Committee acts or
advises the full Board with regard to financial matters such
as banking relationships, payment of dividends, issuance of
additional securities, selection of investment bankers and
treasury stock transactions. This committee also reviews the
strategies and performance of the Company's pension plan and
monitors the Company's insurance coverage and self-insurance
programs. The Finance, Pension & Insurance Committee is
composed of Joe E. Beverly, Robert P. Crozer and R. R. Davis.
The Finance, Pension & Insurance Committee met two times
during the fiscal year ended April 30, 1995.
The Nominating Committee is responsible for recommending
to the Board management's nominees for election as directors.
The Nominating Committee will consider nominees for director
recommended by stockholders if the nominations are submitted
in accordance with the procedures set forth in the Bylaws.
See "Stockholders' Proposals for 1996 Annual Meeting." The
Nominating Committee is composed of Jasper C. Davis III, H.
Forbes Davis and R. R. Davis. The Nominating Committee did
not meet during the fiscal year ended April 30, 1995.
During the fiscal year ended April 30, 1995, the full
Board of Directors held four meetings. All of the directors
attended at least 80% of the aggregate of all meetings of the
full Board and all meetings of all committees of the Board on
which they served during the fiscal year.
Director Compensation
Directors who are not employees or paid consultants of
the Company are paid $950 for each Board of Directors and
committee meeting attended and an additional fee of $950 per
month. Directors who are employees or paid consultants of the
Company are not compensated for attendance at Board or
committee meetings. All directors are reimbursed for expenses
incurred in attending meetings.
The Company entered into an Agreement for Consulting
Services with each of Jasper C. Davis III (effective September
1, 1990), R. R. Davis (effective October 1, 1991) and H.
Forbes Davis (effective July 1, 1993) (together, the
"Consulting Agreements"). Jasper C. Davis III, R. R. Davis
and H. Forbes Davis are directors of the Company, and R. R.
Davis is Vice Chairman of the Board of the Company. Pursuant
to the Consulting Agreements, Jasper C. Davis III, R. R. Davis
and H. Forbes Davis are to advise and assist the Company in
its business and serve on its Board of Directors. The
Consulting Agreements have initial one-year terms which are
automatically renewed for successive one-year terms unless
otherwise terminated. Under Jasper C. Davis III's Consulting
8
Agreement, as amended, Mr. Davis was compensated at the rate
of $60,000 per year through September 30, 1991, at the rate of
$36,000 per year from October 1, 1991 through December 31,
1994, and at the rate of $60,000 per year thereafter, payable
in each case in monthly installments. The Consulting
Agreement with R. R. Davis provides for compensation at the
rate of $18,000 per year, payable in monthly installments.
Under the Consulting Agreement with H. Forbes Davis, as
amended, Mr. Davis was paid at the rate of $18,000 per year
through December 31, 1994 and at the rate of $24,000 per year
thereafter, payable in each case in monthly installments.
Reasonable and necessary travel expenses and other
disbursements which are incurred in the performance of duties
under the Consulting Agreements are reimbursed by the Company.
In accordance with the Consulting Agreements, the three
consultants do not participate in any employee benefit plans
provided by the Company (except that they receive payments
under the Company's retirement plans in which they
participated prior to their retirement as officers of the
Company).
The Company maintains split dollar whole life insurance
policies for Jasper C. Davis III in the amount of $5,800,000
and for R. R. Davis in the amount of $2,000,000. Also
included as co-insureds on the policies are Marthalene M.
Davis and Ann R. Davis, the wives of Jasper C. Davis III and
R. R. Davis, respectively. The premiums under the policies
are, or have in the past been, paid by the Company, and the
beneficiaries under the policies are the respective estates of
the above-named persons. Upon the death of the primary
insureds or the termination of the policies, the Company will
be reimbursed by the respective estates for the aggregate
amount of premiums paid by the Company under the policies,
plus interest from the time of the first payment of premiums.
The interest rate to be charged will be 9% per year with
regard to premium payments made through April 30, 1993 and
will be at the prime rate of Sun Bank, N.A. with regard to
premium payments made thereafter. During the fiscal year
ended April 30, 1995, the Company paid $21,897 in premiums on
the policy for Jasper C. Davis III and made no payments on the
policy for R. R. Davis. If Jasper C. Davis III and R. R.
Davis had died on June 30, 1995, the amounts owed to the
Company would be $1,118,283 and $303,227, respectively.
9
EXECUTIVE COMPENSATION
Compensation Summary
The following table summarizes by various categories, for
the fiscal years ended April 30, 1995, 1994, and 1993, the
total compensation paid to or accrued by the Company for the
Chief Executive Officer of the Company and all other executive
officers of the Company whose salary and bonus for the fiscal
year ended April 30, 1995 exceeded $100,000. For information
regarding the various factors considered by the Compensation
Committee in determining the compensation of the Chief
Executive Officer and the executive officers of the Company as
a group, see "Compensation Committee Report" below.
Summary Compensation Table
Annual
Compensation Long Term
Fiscal Year Compensation
Name and Ended Other Annual LTIP All Other
Principal Position April 30 Salary Bonus(1) Compensation (2) Payouts(3) Compensation(4)
R. Doyle White 1995 $194,092 $210,000 $48,125 -0- $91,163
President and Chief 1994 178,100 -0- -0- -0- 82,691
Executive Officer 1993 178,100 31,168 -0- -0- 78,412
Larry May 1995 136,746 125,100 25,925 -0- 15,800
Executive Vice President 1994 113,023 67,644 -0- -0- 14,831
and Chief Operating 1993 113,023 -0- -0- -0- 15,162
Officer
Stan White 1995 100,215 83,200 13,413 -0- 7,069
Secretary-Treasurer 1994 93,763 -0- -0- -0- 5,786
1993 87,579 10,728 -0- -0- 5,805
Robert D. Tatum 1995 74,407 29,688 -0- -0- 1,338
Vice President (5) 1994 71,691 36,156 -0- -0- -0-
1993 65,651 39,391 -0- -0- -0-
Robert H. Pless 1995 102,897 -0- 5,308 $ 157 8,261
Vice President 1994 97,730 -0- -0- 5,933 6,239
1993 86,878 69,502 -0- 2,457 6,712
_________________
(1) Reflects amounts paid for the indicated fiscal years for
the achievement of performance criteria established for
such fiscal years pursuant to the Company's Incentive
Compensation Plan. See "Employee Benefit Plans -
Incentive Compensation Plan" below.
(2) Reflects cash payments made in satisfaction of earned but
unused vacation time.
(3) Reflects the value of awards paid during the indicated
fiscal years for the achievement of performance criteria
established for the preceding four fiscal year period
pursuant to the Company's Long-Term Incentive Plan. See
"Employee Benefit Plans - Long-Term Incentive Plan"
below.
(4) Reflects (a) amounts accrued by the Company for the
accounts of Messrs. R. Doyle White, May, Stan White,
Tatum and Pless under the Company's Supplemental
Retirement Plans for Certain Officers and (b) premiums
paid by the Company for term life insurance policies on
the lives of Messrs. R. Doyle White and May, any proceeds
of which are payable to the respective beneficiaries
designated by the named officers. The respective amounts
10
accrued or paid for these executive officers in the
indicated fiscal years were as follows: Mr. R. Doyle
White--(a) $89,318 and (b) $1,845 in fiscal 1995, (a)
$80,846 and (b) $1,845 in fiscal 1994, and (a) $76,567
and (b) $1,845 in fiscal 1993, respectively; Mr. May--(a)
$14,704 and (b) $1,096 in fiscal 1995, (a) $13,735 and
(b) $1,096 in fiscal 1994, and (a) $14,066 and (b) $1,096
in fiscal 1993, respectively; Mr. Stan White--(a) $7,069
in fiscal 1995, (a) $5,786 in fiscal 1994 and (a) $5,805
in fiscal 1993; Mr. Tatum--(a) $1,338 in fiscal 1995, (a)
$0 in fiscal 1994 and (a) $0 in fiscal 1993; and Mr.
Pless--(a) $8,261 in fiscal 1995, (a) $6,239 in fiscal
1994 and (a) $6,712 in fiscal 1993, respectively. See
"Employee Benefit Plans - Retirement Plans" below.
(5) Mr. Tatum is a nephew of H. Forbes Davis, Jasper C. Davis
III and R. R. Davis. R. Doyle White and Stan White are
not related.
Compensation Committee Report
Executive Officer Compensation. The philosophy of the
Company's compensation program is to offer competitive
compensation opportunities for all employees which are based
on the individual's personal performance and contribution to
the Company's success.
The Company's executive compensation program is reviewed
and approved annually by the Compensation Committee, which is
comprised entirely of non-employee directors, and is linked
directly to the Company's financial performance and
stockholder interest. In this regard, the essence of the
Company's executive compensation program is the fact that, in
general, significantly more than half of an executive
officer's maximum annual compensation is determined by the
profitability and other measures of financial performance of
the Company or the division for which the executive is
responsible, as described below. Under this program, an
appropriate compensation level for the achievement by each
executive of "expected" performance is determined. The
executive's compensation package is then structured such that
half or more of this amount is put "at risk" by tying it to
individual, division and/or Company performance. In this way,
an executive who has 55% of his expected compensation package
at risk may earn up to 155% of his "expected" compensation
through superior performance, but the executive also may earn
as little as 45% of his "expected" compensation as a result of
unacceptable performance. The details of the Company's
executive compensation program are set forth below.
There are three elements in the executive compensation
program of the Company, all of which are determined by
individual and corporate performance. These three elements
include base salary compensation, annual incentive
compensation and long-term incentive compensation. In
addition, the Compensation Committee reviews compensation
levels of executives of companies in the Company's industry to
assure competitive pay levels.
Base salary compensation is determined by the skills and
expertise required for a specific executive's job and by the
performance of the executive in that job. Base salary is
established in large measure by comparison to the compensation
paid to persons holding comparable positions in similar or
related industries and by general compensation levels in the
local markets.
Annual incentive compensation (bonus) is established in
accordance with the Company's Incentive Compensation Plan for
Certain Salaried Employees (the "Incentive Plan"). The
Incentive Plan is designed to provide an incentive for
management employees, including executive officers, to achieve
the Company's financial goals and strategic objectives as well
as to provide the Company a system for planning and measuring
the performance of executive officers. The President of the
Company develops performance standards and objectives for an
executive officer to attain in the coming fiscal year which
are reviewed and approved by the Compensation Committee. The
performance standards and objectives are based on (i) the
Company's current and projected financial results, which are
measured by a combination of sales, gross profit, profit
before tax, earnings per share, operating costs or efficiency
ratios and return on assets, and (ii) functional standards
11
that are tailored to the individual employee's position with
the Company (e.g., standards and objectives focusing on
department goals). Annual incentive opportunities range from
10% to 100% of annual base salary. Target incentive awards
based on a percentage of the executive's base salary are
established periodically by the President of the Company and
approved by the Compensation Committee. The Incentive Plan
does not fix a limit on the amount of the target incentive
award. Such target establishes the amount of a cash incentive
the executive may earn if he reaches his performance standards
and objectives. The executive may earn up to 200% of the
target incentive award depending upon the level of achievement
of the performance standards and objectives. The actual
amount of a cash incentive that the executive receives is
determined pursuant to a formula set forth in the Incentive
Plan that considers the importance of each performance
standard and objective as well as whether the executive has
met or exceeded the performance standards and objectives. See
"Employee Benefit Plans - Incentive Compensation Plan" below.
Long-term incentive compensation is established in
accordance with the Company's Long-Term Incentive Plan (the
"LTIP") which provides additional incentive for executive
officers of the Company for the achievement of long-term
Company goals. The LTIP is a stock award plan for executive
officers, and participants are elected by the Board of
Directors on the basis of recommendations of the Compensation
Committee. Participants are designated as having either a
"corporate" responsibility or a "division" responsibility, and
the LTIP generates stock awards on the basis of the
performance of the Company and/or the executive's division
over a specified period of time ("Performance Cycle").
Generally, a Performance Cycle consists of four fiscal years.
At the beginning of each Performance Cycle, each participating
executive receives a contingent, nontransferable grant of
shares of the Company's Common Stock having a value equal to a
predetermined percentage of the executive officer's base
salary. Awards are earned at the end of the Performance Cycle
based upon the achievement during the Performance Cycle of
predetermined goals relating to growth in the Company's
earnings per share, return on equity, division earnings, and
return on average invested capital in a division, with a
maximum value of any award earned at the end of the
Performance Cycle being equal generally to 200% of the value
of the shares of Common Stock contingently granted at the
beginning of the Performance Cycle. See "Employee Benefit
Plans - Long-Term Incentive Plan" below. Only one executive
officer of the Company earned an award under the LTIP during
the fiscal year ended April 30, 1995 (based on the Performance
Cycle that was initiated for the four year period that began
on May 1, 1991). No Performance Cycles were initiated for the
four year periods that began on May 1, 1993, 1994 or 1995.
The Board of Directors has determined that it would be in
the best interests of the Company and its stockholders to make
the opportunity for long-term incentive compensation available
to a greater number of employees of the Company and in a form
which directly links the performance incentives for these
employees, and their resulting compensation, to increases in
stockholder value. Accordingly, the Board of Directors has
adopted the 1994 Employees Stock Option Plan (the "ESOP") and
has recommended its approval by the stockholders at the Annual
Meeting. See "Proposal 2 - Approval of Davis Water & Waste
Industries, Inc. 1994 Employees Stock Option Plan." The
ESOP, which would replace the LTIP if the stockholders approve
the ESOP at the Annual Meeting, is intended to provide
incentive compensation opportunities to eligible employees in
the form of stock option grants, whereby any gain received
upon the exercise of stock options would be directly related
to the performance of the Company and the contribution of the
employee thereto, as reflected in the increased value of the
Company's Common Stock. The stock options generally would
have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant and, to encourage
a long-term perspective, would have an exercise period of ten
years. By tying the employee's incentive compensation
opportunity directly to increases in the market price of the
Company's Common Stock, the ESOP is intended to directly link
employee performance and compensation to increases in
stockholder value.
12
Chief Executive Officer Compensation. The base salary of
Mr. White is designed to be competitive with base salaries
paid to other chief executive officers in the Company's
industry. Specific factors used by the Compensation Committee
to set the base salary of Mr. White include Company
performance and his individual contribution. Based on
preliminary evidence of an improvement in the Company's
operating results for the fiscal year ending April 30, 1995,
the Compensation Committee elected to increase Mr. White's
base salary for fiscal 1995 by 9% from $178,100 to $210,000,
effective December 1, 1994.
In addition to his base salary, Mr. White is eligible to
receive annual incentive compensation under the Incentive Plan
and long-term incentive compensation pursuant to the LTIP.
Annual incentive compensation is established for Mr. White
under the terms of the Incentive Plan. The Compensation
Committee develops performance standards and objectives for
Mr. White for a fiscal year based on the same criteria set
forth above for other executive officers. Annual incentive
opportunities for Mr. White range from 0% to 100% of base
salary. Periodic target incentive awards based on a
percentage of Mr. White's base salary also may be established
by the Compensation Committee. Mr. White received $210,000
under the Incentive Plan for the fiscal year ended April 30,
1995 based on the Company's fiscal 1995 operating results, the
formula specified in the Incentive Plan and Mr. White's base
salary as of April 30, 1995.
As noted above, long-term compensation under the LTIP is
contingent on the overall performance of the Company over a
Performance Cycle and is earned in accordance with the terms
of the LTIP as set forth above. Mr. White received no payment
under the LTIP for the Performance Cycle ended April 30, 1995.
In connection with the adoption of the ESOP by the Board
of Directors, the Compensation Committee awarded to Mr. White,
contingent on the approval of the ESOP by the stockholders at
the Annual Meeting, options for the purchase of 54,194 shares
of Common Stock at an exercise price of $7.75 per share (equal
to the fair market value of the Company's Common Stock on the
date of grant). The number of options granted to Mr. White
under the ESOP had an aggregate exercise price equal to twice
Mr. White's base salary for fiscal 1995, which was the same
formula used by the Compensation Committee in granting options
to other employees under the ESOP. Options for the purchase
of 20% of the option shares granted to Mr. White would vest
annually over a period of five years.
The Compensation Committee believes the compensation
program for Mr. White is competitive with the compensation
program provided by other companies and is commensurate with
the Company's performance for the fiscal year ended April 30,
1995.
Compensation Committee: Robert P. Crozer, Joe E. Beverly,
O. Larry Comer and Thomas R. Pledger.
Employment Agreements
The Company entered into an Employment Agreement (the
"Employment Agreement") with R. Doyle White effective May 1,
1982 regarding the employment of Mr. White as President and
Chief Executive Officer of the Company. The Employment
Agreement provides that Mr. White's salary will be established
annually by the Board of Directors and that Mr. White may be
paid a bonus annually in accordance with the Company's
Incentive Compensation Plan for Certain Salaried Employees,
which is described below. Mr. White is entitled under the
Employment Agreement to defer receipt of any portion of his
salary or bonuses. Additionally, the Employment Agreement
obligates the Company to pay Mr. White upon retirement an
amount equal to benefits accrued but forfeitable under the
Company's Employees' Retirement Plan and benefits that would
have been payable if the retirement plan provided for accrual
of benefits on deferred compensation. See "Employee Benefit
Plans" below. Finally, the Employment Agreement provides for
the payment of annual premiums by the Company on a $146,000
term insurance policy on Mr. White's life, the proceeds of
which are payable to Mr. White's estate, and for the payment
to Mr. White's estate of salary and bonuses for a period of
six months following his death. All salary, bonuses and other
amounts received as compensation or deferred by Mr. White
during the fiscal years ended April 30, 1995, 1994 and 1993
are included in the summary compensation table. Amounts
deferred in prior years and reported as cash compensation
received by Mr. White in prior years, even if distributed to
him in fiscal 1995, 1994 and 1993, are excluded from the
summary compensation table because such amounts have been
reported in prior years.
13
The Company has entered into Compensation and Benefits
Agreements ("CBAs") with R. Doyle White, Larry May, Robert H.
Pless, Robert D. Tatum and Stan White, who are the executive
officers of the Company. Each CBA specifies the employee
benefits to which the covered officer is entitled. See
"Employee Benefit Plans" below. The respective CBAs permit
these officers to participate in the Company's Incentive
Compensation Plan, Long-Term Incentive Plan, Medical
Reimbursement Plan, Employees' Retirement Plan and
Supplemental Retirement Plan for Certain Officers (Plan No. 1
in the case of R. Doyle White and Plan No. 2 in the case of
Messrs. May, Pless, Tatum and Stan White). R. Doyle White's
CBA provides that if his employment is terminated by the
Company at any time or if he voluntarily resigns from
employment on or after his 64th birthday, or prior to his 64th
birthday with the approval of the Board of Directors, his
benefits payable under the Incentive Compensation Plan and the
Long-Term Incentive Plan shall be prorated through the date of
termination of employment. In addition, if he voluntarily
resigns after his 64th birthday, his vesting under the
Supplemental Retirement Plan shall be based on his age at his
birthday next following the effective date of his resignation.
If his employment is terminated for other than "good cause" (
as defined in the CBA) prior to May 1, 1996, he shall be
entitled to receive all compensation and benefits otherwise
payable as if the termination occurred on May 1, 1996.
Additionally, R. Doyle White's CBA provides that upon a
"change of control" (as defined in the CBA) prior to May 1,
1996, he shall be paid immediately all amounts due under the
Incentive Compensation Plan as if he had terminated his
employment on May 1, 1996. Furthermore, any bonus payments
due to him shall be paid within 10 days of completion of the
annual audit of the plan for the year in which the change of
control occurs. If he voluntarily resigns from employment
prior to his 64th birthday without the approval of the Board
of Directors, his benefits payable under the Incentive
Compensation Plan and the Long-Term Incentive Plan shall not
be prorated through the date of termination and only those
payments, if any, which have been earned for previous fiscal
years shall be made. The CBAs of Messrs. May, Pless, Tatum
and Stan White provide that if the officer voluntarily resigns
or is terminated from employment with the Company at any time,
he shall be entitled to receive only those payments, if any,
due under the Incentive Compensation Plan and the Long-Term
Incentive Plan which have been earned for previous fiscal
years. Each CBA provides procedures for notices in the event
the Company desires to terminate the employment of the
officer. R. Doyle White's CBA requires the Company to give
him six months' notice of termination of his employment, and
the CBAs of each of the other officers require 30 days' notice
by the Company for termination of their employment. If any of
these officers is disabled for purposes of the applicable
Supplemental Retirement Plan, his benefits payable under the
Incentive Compensation Plan and the Long-Term Incentive Plan
shall be earned through the end of the fiscal year ending
after the date of disability. Each of the CBAs provides for
up to three weeks of vacation annually.
Employee Benefit Plans
Incentive Compensation Plan. The Company maintains an
Incentive Compensation Plan for Certain Salaried Employees
(the "Incentive Plan") that is designed to provide an
incentive for management employees to achieve the Company's
financial goals and strategic objectives as well as to provide
the Company a system for planning and measuring the
performance of participating management employees.
Responsibility for administering the Incentive Plan is vested
in the President of the Company, subject to the overall
authority of the Board of Directors. Participation in the
Incentive Plan is limited to management employees who
contribute to corporate, group or division profits in a
significant way; have major responsibility for control or
allocation of corporate assets; provide (by virtue of
organizational, functional and position level criteria) the
perspective needed to balance short-term profit interests with
the long-term health and strategic interests of the Company;
are in compensation grades with salary ranges fixed at a
minimum of $32,500 per year and which are high enough to
permit participants to maintain a reasonable standard of
living, even though a meaningful and substantial portion of
their total cash package is at risk; and are approved by the
appropriate General Manager and by the President of the
Company.
Pursuant to the Incentive Plan, the participating
employee's supervisor, with the approval of his supervisor,
develops performance standards and objectives for the employee
to attain in the coming fiscal year. The supervisor bases the
performance standards and objectives on (i) the Company's
current and projected financial results, which are measured by
a combination of sales, gross profit, profit before tax,
earnings per share, operating costs or efficiency ratios, and
return on assets, and (ii) functional standards that are
14
tailored to the individual employee's position with the
Company (e.g., standards and objectives focusing on department
goals). Target incentive awards based on a percentage of the
employee's base salary are established periodically by the
executive officers of the Company for all positions held by
participating employees. The Incentive Plan does not fix a
limit on the amount of the target incentive award. Such
target establishes the amount of cash incentive the employee
may earn if he reaches his performance standards and
objectives. The employee may earn up to 200% of the target
incentive award depending upon the level of achievement of the
performance standards and objectives. The actual amount of
cash incentive that the employee receives is determined
pursuant to a formula set forth in the Incentive Compensation
Plan that considers the importance of each performance
standard and objective as well as whether the employee has met
or exceeded the performance standards and objectives. Payment
of the incentive awards is made annually on the earlier of the
July 15 subsequent to the fiscal year end or at such time as
the Company's independent accountants give their approval to
the Company's financial statements. Approximately 125
employees participated in the Incentive Plan during the fiscal
year ended April 30, 1995.
Long-Term Incentive Plan. The Company established a
Long-Term Incentive Plan (the "LTIP") effective as of May 1,
1986 to provide additional incentive for and to reward
officers of the Company for the achievement of long-term
Company goals. The Board of Directors elects the participants
from the four eligible officers of the Company, who are R.
Doyle White, Larry May, Robert H. Pless and Stan White, after
considering the recommendations of the Compensation Committee
of the Board of Directors. All four eligible officers
currently participate in the LTIP.
The LTIP generates stock awards on the basis of Company
performance achieved over specified periods of time
("Performance Cycles"). Generally, Performance Cycles consist
of four fiscal years, with a new Performance Cycle beginning
on May 1 of each year. At the beginning of each Performance
Cycle, each participant receives a contingent, nontransferable
grant of shares of the Company's Common Stock having a value
equal to a predetermined percentage of the participant's base
salary. Participants are designated as having either a
"corporate" responsibility or a "division" responsibility
depending on their scope of responsibility. Awards are earned
at the end of the Performance Cycle based upon the achievement
during the Performance Cycle of predetermined goals
established by the Board of Directors that relate, depending
on the participant's designation as having either a
"corporate" responsibility or a "division" responsibility, to
increases in the Company's earnings per share, return on
equity, division earnings and/or return on average invested
capital in a division, with the maximum value of any award
earned at the end of the Performance Cycle being equal
generally to 200% of the value of the shares of Common Stock
contingently granted at the beginning of the Performance
Cycle. Awards are paid in Common Stock or, at the election of
the participants, in a combination of cash (up to 50% of the
total dollar value of the award) and Common Stock.
No Performance Cycles were initiated for the four year
periods beginning May 1, 1993, 1994 or 1995.
Retirement' Plans. The Company maintains the Employees'
Retirement Plan (the "Retirement Plan"), the Supplemental
Retirement Plan for Certain Officers Plan No. 1 (the
"Supplemental Plan No. 1") and the Supplemental Retirement
Plan for Certain Officers Plan No. 2 (the "Supplemental Plan
No. 2"). The Retirement Plan is a non-contributory qualified
defined benefit plan for the benefit of substantially all
employees of the Company. The amounts of the Company's
contributions to the Retirement Plan are determined on an
actuarial basis to provide benefits based (i) on the highest
average compensation (excluding bonuses and overtime) earned
during any consecutive five-calendar-year period during the
last ten years of employment and (ii) the years of service to
normal retirement date. Effective May 1, 1989, the Retirement
Plan was amended to change the formula for calculation of
benefits. This amendment was required by law and was designed
to continue approximately the same level of benefits to
nonhighly compensated participants while providing a reduction
15
in the level of future benefits provided to highly compensated
participants under the Retirement Plan. The following table
describes estimated annual pension benefits payable under the
Retirement Plan to employees in the specified compensation and
period-of-service classifications, assuming (i) normal
retirement at age 65 as of January 1, 1995 and (ii) a benefit
payment in the form of a life annuity.
Pension Plan Table
Estimated Annual Retirement Benefits (2)
Average Annual for Years of Service Indicated (3)
Compensation(1) 15 20 25 30 35
$ 50,000 $ 7,552 $10,069 $12,586 $15,103 $17,620
75,000 12,239 16,319 20,399 24,473 28,558
100,000 16,927 22,569 28,211 33,853 39,495
125,000 21,614 28,819 36,024 43,228 50,433
150,000 26,302 35,069 43,836 52,603 61,370
175,000 26,302 35,069 43,836 52,603 61,370
________________
(1) This figure includes compensation in the form of base
salary but not compensation in the form of bonuses or
overtime.
(2) Does not include primary Social Security benefits.
(3) At January 1, 1995, R. Doyle White had 17 credited years
of service, Larry May had 30 credited years of service,
Stan White had 24 credited years of service, Robert D.
Tatum had 12 credited years of service and Robert H.
Pless had 17 credited years of service under the
Retirement Plan.
The Supplemental Plan No. 1 was adopted on May 1, 1990 to
provide to certain officers retirement benefits that
supplement other benefits provided by the Company. The Board
of Directors determines the officers eligible to participate
in the Supplemental Plan No. 1 as well as the participation
date for each eligible officer. Currently, R. Doyle White is
the only officer participating in the Supplemental Plan No. 1.
Benefits under the Supplemental Plan No. 1 vest according to a
schedule based on the participant's age at the date of
termination of employment as determined under the terms of the
participant's CBA. A participant who retires after attaining
age 65 will receive a vested benefit equal to two-thirds of
his highest five-year average annual compensation, reduced by
his anticipated Social Security benefit and the amount of
benefits paid under the Retirement Plan, for a fixed number of
years equal to the participant's life expectancy. The
Supplemental Plan No. 1 also provides an early retirement
benefit that is determined under the same formula but is then
reduced by a certain percentage determined under an additional
age based vesting schedule if a participant retires
voluntarily prior to age 65. Retirement benefits are paid
monthly. Disability benefits under the Supplemental Plan No.
1 provide a participant who the Board of Directors determines
to be disabled with a benefit equal to 66 2/3 % of his
annualized base pay (excluding incentive compensation) reduced
by any benefits from a long-term disability plan provided by
the Company or Social Security. The beneficiary of a
participant who dies while employed by the Company will
receive a death benefit for one year equal to the monthly
payment of the participant's base pay at the time of death,
reduced by the preretirement death benefit. The preretirement
death benefit equals the vested retirement benefit of a
participant who dies while employed and after attaining age 59
and will be paid to the deceased participant's beneficiary.
If a participant dies after his retirement benefits have
commenced under the Supplemental Plan No. 1, his beneficiary
will receive any remaining installment payments. The
Supplemental Plan No. 1 was amended on December 10, 1993 to
provide that in the event of a "change of control" (as defined
therein), the present value of all benefits which would be
accrued to Mr. White thereunder as of May 1, 1996 shall become
immediately due and payable. No payments have been made
pursuant to the Supplemental Plan No. 1, but the Company
accrued $89,318 under the Supplemental Plan No. 1 for the
account of Mr. White during the fiscal year ended April 30,
1995. Such accrued amount is included in the compensation
reported for Mr. White under the heading "All Other
Compensation" in the summary compensation table. See Note (3)
thereto.
16
The Board of Directors also adopted the Supplemental Plan
No. 2 on May 1, 1990. The Supplemental Plan No. 2 provides to
certain officers designated by the Board, including Larry May,
Robert H. Pless, Robert D. Tatum and Stan White, retirement
benefits that are supplemental to other benefits received from
the Company. Under the Supplemental Plan No. 2, a participant
who retires after attaining age 65 will receive a benefit
equal to two-thirds of his highest five-year average annual
compensation multiplied by years of service with the Company,
multiplied by .01875, and then reduced by his anticipated
Social Security benefit and the amount of benefits paid under
the Retirement Plan. Benefits from the Supplemental Plan No.
2 will be paid monthly for the life of the participant unless
the participant elects another form of payment at the time of
admission to the Supplemental Plan No. 2. If a participant
retires from the Company prior to age 65 without the approval
of the Board of Directors, he will receive 90% of the
retirement benefit described above. Disability provisions of
the Supplemental Plan No. 2 will allow a participant
determined to be disabled by the Board of Directors to receive
a benefit equal to 66 2/3% of his annualized base pay
(excluding incentive compensation) reduced by any benefits
from any Company-provided long-term disability plan or Social
Security. The Supplemental Plan No. 2 provides that a death
benefit equal to a participant's base pay at the time of death
will be paid monthly for one year to the beneficiary if a
participant dies while employed by the Company. The death
benefit will be reduced by any preretirement death benefit.
The preretirement death benefit will be paid upon the death of
a participant who elected a form of distribution other than
the life only option. Under the preretirement death benefit,
the participant's beneficiary will receive the benefit
determined as if the participant retired the day before his
death.
Amounts accrued under the Supplemental Plan No. 2 for the
account of Larry May, Robert H. Pless, Robert D. Tatum and
Stan White are included in the compensation reported for them
under the heading "All Other Compensation" in the summary
compensation table. See Note (3) thereto.
17
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total
stockholder return on Common Stock of the Company with the
cumulative total return of companies on the Standard & Poor's
500 Stock Index and on a peer group index.
Comparison of 5-Year Cumulative Total Return
on Company Common Stock
vs. S&P 500 and Peer Group Indices
[Insert graph.]
Year Ended April 30, 1990 1991 1992 1993 1994 1995
Davis Water & Waste Industries, Inc. $100 $ 82 $ 62 $ 64 $ 73 $101
Peer Group $100 $122 $137 $132 $137 $149
S & P 500 $100 $118 $134 $147 $154 $181
The calculations in the above graph and table assume the
investment of $100 on May 1, 1990 in the Company's Common
Stock, S&P 500 Index and peer group index and also assume
dividend reinvestment. The peer group index is composed of
the following companies: Badger Meter, Inc., Eastern
Enterprises, Hughes Supply, Inc., Ionics, Inc., Lawson
Products, Met-Pro Corp., Nalco Chemical, Osmonics, Inc., U.S.
Filter Corp., Watts Industries, Waxman Industries and Willcox
18
& Gibbs. The peer group index reflects the cumulative total
stockholder return of each company included in the peer group,
weighted by the market capitalization of the respective
companies.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, and regulations of the Securities and Exchange
Commission thereunder require the Company's directors and
executive officers and persons who own more than 10% of the
Company's Common Stock, as well as certain affiliates of such
persons, to file initial reports of their ownership of the
Company's Common Stock and subsequent reports of changes in
such ownership with the Securities and Exchange Commission and
the New York Stock Exchange. Directors, executive officers
and persons owning more than 10% of the Company's Common Stock
are required by Securities and Exchange Commission regulations
to furnish the Company with copies of all Section 16(a)
reports they file. Based solely on its review of the copies
of such reports received by it and written representations
that no other reports were required for those persons, the
Company believes that during the fiscal year ended April 30,
1995, all filing requirements applicable to its directors,
executive officers and owners of more than 10% of its Common
Stock were complied with in a timely manner.
PROPOSAL 2 - APPROVAL OF DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
General
On December 9, 1994, the Board of Directors of the
Company adopted the Davis Water & Waste Industries, Inc. 1994
Employees Stock Option Plan (the "ESOP"), subject to the
approval of the ESOP by the stockholders.
The ESOP is intended to further the growth and
development of the Company by allowing certain employees of
the Company (or any parent or subsidiary companies) to obtain
a proprietary interest in the Company through the purchase of
shares of Common Stock of the Company. The Company believes
that the ESOP will aid in attracting and retaining such
individuals and in stimulating the efforts of such individuals
for the success of the Company. If the ESOP is approved by
the stockholders, the ESOP will become effective as of its
adoption by the Board, and it is anticipated that stock
options will be granted to certain employees of the Company
pursuant to the ESOP effective as of such time. See
"Anticipated ESOP Stock Rights Which Will Be Granted" below.
The following summary of the principal features and
effects of the ESOP does not purport to be complete and is
subject to, and qualified in it entirety by reference to, the
text of the ESOP, a copy of which may be obtained by any
stockholder upon request to Stan White, Secretary-Treasurer of
the Company.
Types of Awards
Incentive stock options ("ISOs") and nonqualified stock
options ("NQSOs") awards may be granted under the ESOP
(collectively, "ESOP Stock Options").
Administration
The ESOP will be administered by a committee consisting
of two or more directors initially made
up of the members of the Compensation Committee of the Board
of Directors (the "ESOP Committee"). The members of the ESOP
Committee cannot participate in the ESOP and must be
"disinterested persons" within the meaning of Rule 16b-3 of
the Securities Exchange Act of 1934, as amended (the "1934
Act"). The Board from time to time may remove members from,
or add members to, the ESOP Committee, and vacancies will be
filled by the Board.
19
The ESOP Committee will have authority (i) to determine
the individuals to whom ESOP Stock Options will be granted
from among those individuals who are eligible, (ii) to
determine whether an option will constitute an ISO intended to
qualify under Section 422 of the Code or an NQSO not intended
to qualify under Section 422, (iii) to determine the terms and
provisions of the Option Agreements by which options shall be
evidenced, (iv) to interpret the provisions of, and prescribe,
amend and rescind any rules and regulations relating to, the
ESOP and (v) to make all determinations necessary or advisable
for the administration of the ESOP.
Eligibility for and Grants of ESOP Stock Options
Under the terms of the ESOP, all employees of the Company
(and any parent or subsidiary corporations), including such
employees who are also members of the Board (or of the board
of directors of a parent or subsidiary corporation), are
eligible for consideration for the granting of ESOP Stock
Options by the ESOP Committee. As of July 21, 1995, there
were approximately 670 employees of the Company, and it is
anticipated that five employees would receive a grant of ESOP
Stock Options initially. See "Anticipated ESOP Stock Options
Which Will Be Granted" below.
Shares Available
The stock underlying the ESOP Stock Options is the Common
Stock of the Company. Up to 250,000 shares of Common Stock,
in the aggregate, may be purchased upon the exercise of ESOP
Stock Options. Shares of Common Stock allocable to the
unexercised portion of expired or terminated ESOP Stock
Options returned to the Company by forfeiture may again become
subject to ESOP Stock Options.
Terms of Options
Option Price. The purchase price of the Common Stock
underlying each ESOP Stock Option will be the fair market
value of the Company's Common Stock on the date the ESOP Stock
Option is granted, unless otherwise determined by the ESOP
Committee. However, the option price for ISOs may not be less
than 100% (110% for shares subject to an optionee who owns
more than 10% of the total combined voting power of all
classes of stock of either the Company or any parent or
subsidiary corporation of the Company) of the fair market
value of the Common Stock on the date the ISO is granted.
Vesting. Commencing on the first anniversary of the date
an ESOP Stock Option is granted, the optionee will have the
right to exercise 20% of the shares subject to such option.
On each succeeding anniversary date, the optionee will have
the right to exercise an additional 20% of the shares subject
to the option, and the option will be fully exercisable as to
all of the shares subject to the ESOP Stock Option on the
fifth anniversary of the grant date. If an optionee ceases to
be an employee of the Company, his rights with regard to all
non-vested options shall cease immediately except upon a
"change of control" of the Company (as defined below),
whereupon all options previously granted to an optionee shall
become immediately vested and exercisable for 100% of the
number of shares subject to the options.
Term and Exercise of Options. Each ESOP Stock Option may
be exercised on such dates, during such periods and for such
number of shares as determined by the ESOP Committee and as
specified in each option agreement. The term of any ESOP
Stock Option will be determined by the ESOP Committee, but the
term may not exceed 10 years from the date of grant (or five
years in the case of ISOs granted to optionees who own more
than 10% of the total combined voting power of all classes of
outstanding stock of the Company or one of its subsidiaries).
No ESOP Stock Option may be granted after ten years from the
earlier of the date the ESOP is approved by the stockholders
or is adopted by the Board. An ESOP Stock Option may be
exercised for less than the full number of shares of Common
Stock subject to such option, provided that no option may be
exercised for less than (i) 100 shares or (ii) the total
remaining shares subject to the option, if less than 100
shares. Upon exercise of an ESOP Stock Option, an option
holder must pay for the Common Stock subject to the exercise.
Payment may be made in cash, in Common Stock (including the
retention by the Company of optioned shares of Common Stock
with a fair market value equal to the exercise price), in
property or by performance of services (if acceptable to the
ESOP Committee and allowed under applicable law), or by a
combination of the foregoing.
20
Transfers. The ESOP does not permit an optionee to sell,
assign or otherwise transfer options except by bequest or
inheritance at the death of the optionee, and any purported
transfer is null and void; provided, however, that this
restriction applies to NQSOs only to the extent required for
grants of options under the ESOP to be exempt from the
provisions of Section 16 of the 1934 Act. ESOP Stock Options
are exercisable during the optionee's life only by the
optionee unless the optionee is incapacitated and unable to
exercise options. To the extent that an option has not been
distributed to the person acquiring the option after the death
of the optionee by bequest or inheritance, the option may be
exercised by the executor or administrator of the optionee's
estate.
Termination of Employment. Vested ESOP Stock Options
must be exercised within the earlier of (i) twelve months
(three months in the case of an ISO) after an employee
optionee ceases to be in the employ of the Company or any
parent or subsidiary for any reason other than death or
disability; (ii) the expiration date of the option; (iii)
immediately upon termination of employment with the Company or
a parent of subsidiary for cause; (iv) one year after
termination of employment with the Company or a parent or
subsidiary because of disability unless the optionee dies
within this one year period; or (v) one year after the death
of an optionee who dies (a) while in the employ of the Company
or a parent or subsidiary, (b) within twelve months (three
months in the case of an ISO) after termination of employment
with the Company or a parent or subsidiary (for a reason other
than cause); or (c) within one year after employment with the
Company or a parent or subsidiary terminated due to
disability. However, the ESOP Committee may provide different
exercise expiration periods with respect to NQSOs granted
under the ESOP.
Amendment and Termination
The Board may amend or terminate the ESOP at any time,
provided that (i) no amendment may be effected without the
approval of the option holders if such amendment would affect
in any way the rights of such option holders under the ESOP,
and (ii) no amendment may be effected without the approval of
the stockholders of the Company if (a) the amendment would
cause the applicable portions of the ESOP to fail to qualify
as an "incentive stock option plan" pursuant to Section 422 of
the Code, (b) the amendment would materially increase the
benefits accruing to participants under the ESOP, (c) the
amendment would materially increase the number of shares which
may be issued under the ESOP, or (d) the amendment would
materially modify the requirements as to eligibility for
participation in the ESOP.
The ESOP will terminate on the later of (i) the complete
exercise or lapse of the last outstanding ESOP Stock Option
granted under the ESOP, or (ii) the last date upon which
options may be granted under the ESOP (which may not be later
than ten years after the date on which the ESOP is adopted),
subject to its earlier termination by the Board at any time.
Change of Control
For purposes of the ESOP, the term "change of control" is
defined to mean 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
21
(c) Substantial Change of Board Members. During any
fiscal year of the Company, individuals who at the beginning
of such year constitute the Board cease for any reason to
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.
Adjustments
In the event of changes in the number of outstanding
shares of Common Stock by reason of stock dividends, splits or
recapitalizations, an appropriate and equitable adjustment
will be made by the ESOP Committee to the number and kind of
shares remaining available for issuance pursuant to ESOP Stock
Options. Additionally, in the event that the Company is
involved in a reorganization involving a merger,
consolidation, transfer of Common Stock or transfer of the
assets of the Company, the ESOP Committee may, in its
discretion, declare that (i) outstanding options are
nonforfeitable and exercisable; (ii) outstanding options apply
to the securities of the resulting corporation; and/or (iii)
outstanding options are nonforfeitable and are to be
terminated after giving at least 30 days notice to the option
holders. If the Company is dissolved, all of the rights of
all optionees will become immediately nonforfeitable and
exercisable through the date of dissolution.
Federal Income Tax Consequences
The Company intends that part of the ESOP qualify as an
incentive stock option plan and that any option granted in
accordance with such portion of the ESOP qualify as an ISO,
all within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). The tax effects of any
other ESOP Stock Option should be determined under Section 83
of the Code. The following is a brief description of the
consequences under the Code of the receipt or exercise of ESOP
Stock Options.
ISOs. An option holder has no tax consequences upon
issuance or, generally, upon exercise of an ISO. An option
holder will recognize income when he sells or exchanges the
shares acquired upon exercise of an ISO. This income will be
taxed at the applicable capital gains rate if the sale or
exchange occurs after the expiration of the requisite holding
periods. Generally, the requisite holding periods expire two
years after the date of grant of the ISO and one year after
the date of acquisition of the Company Stock pursuant to the
exercise of the ISO.
If an option holder disposes of the Common Stock acquired
pursuant to exercise of an ISO before the expiration of the
requisite holding periods, the option holder will recognize
compensation income in an amount equal to the difference
between the option price and the lesser of (i) the fair market
value of the shares on the date of exercise and (ii) the price
at which the shares are sold. This amount will be taxed at
ordinary income rates. If the sale price of the shares is
greater than the fair market value on the date of exercise,
the difference will be recognized as gain by the option holder
and taxed at the applicable capital gains rate. If the sale
price of the shares is less than the option price, the option
holder will recognize a capital loss equal to the excess of
the option price over the sale price.
For these purposes, the use of shares acquired upon
exercise of an ISO to pay the option price of another option
(whether or not it is an ISO) will be considered a disposition
of the shares. If this disposition occurs before the
expiration of the requisite holding periods, the option holder
will have the same tax consequences as are described in the
immediately preceding paragraph. If the option holder
transfers any such shares after holding them for the requisite
holding periods or transfers shares acquired pursuant to
exercise of an NQSO or on the open market, he generally will
not recognize any income upon the exercise. Whether or not
the transferred shares were acquired pursuant to an ISO and
regardless of how long the option holder has held such shares,
the basis of the new shares received pursuant to the exercise
will be computed in two steps. In the first step, a number of
new shares equal to the number of older shares tendered (in
payment of the option's exercise) is considered exchanged
under Section 1036 of the Code and the rulings thereunder;
these new shares receive the same holding period and the same
basis that the option holder had in the old tendered shares,
if any, plus the amount included in income from the deemed
sale of the old shares and the amount of cash or other
nonstock consideration paid for the new shares, if any. In
the second step, the number of new shares received by the
option holder in excess of the old tendered shares receives a
basis of zero, and the option holder's holding period with
respect to such shares commences upon exercise.
22
An option holder may have tax consequences upon exercise
of an ISO if the aggregate fair market value of the shares of
Common Stock subject to ISOs which first become exercisable by
an option holder in any one calendar year exceeds $100,000.
If this occurs, the excess shares will be treated as though
they are subject to an NQSO instead of an ISO. Upon exercise
of an option with respect to these shares, the option holder
will have the tax consequences described below with respect to
the exercise of NQSOs.
Finally, except to the extent that an option holder has
recognized income with respect to the exercise of an ISO (as
described in the preceding paragraphs), the amount by which
the fair market value of a share of Common Stock at the time
of exercise of the ISO exceeds the option price will be
included in determining an option holder's alternative minimum
taxable income and may cause the option holder to incur an
alternative minimum tax liability in the year of exercise.
There will be no tax consequences to the Company upon the
issuance or, generally, upon the exercise of an ISO. However,
to the extent that an option holder recognizes ordinary income
upon exercise, as described above, the Company will have a
deduction in the same amount.
NQSOs. Neither the Company nor the option holder has
income tax consequences from the issuance of NQSOs.
Generally, in the tax year when an option holder exercises
NQSOs, the option holder recognizes ordinary income in the
amount by which the fair market value of the shares at the
time of exercise exceeds the option price for such shares.
The Company will have a deduction in the same amount as the
ordinary income recognized by the option holder in the
Company's tax year in which or with which the option holder's
tax year (of exercise) ends.
If an option holder exercises an NQSO by paying the
option price with previously acquired Common Stock, the option
holder will recognize income (relative to the new shares he is
receiving) in two steps. In the first step, a number of new
shares equivalent to the number of older shares tendered (in
payment of the NQSO exercised) is considered to have been
exchanged in accordance with Section 1036 of the Code and the
rulings thereunder, and no gain or loss is recognized. In the
second step, with respect to the number of new shares acquired
in excess of the number of old shares tendered, the option
holder will recognize income on those new shares equal to
their fair market value less any nonstock consideration
tendered.
The new shares equal to the number of the older shares
tendered will receive the same basis the option holder had in
the older shares, and the option holder's holding period with
respect to the tendered older shares will apply to those new
shares. The excess new shares received will have a basis
equal to the amount of income recognized by the option holder
by exercise, increased by any nonstock consideration tendered.
Their holding period will commence upon the exercise of the
option.
Limitation on Company Deductions. No federal income tax
deduction is allowed for compensation paid to a "covered
employee" in any taxable year of the Company beginning on or
after January 1, 1994 to the extent that such compensation
exceeds $1,000,000. For this purpose, "covered employees" are
generally the chief executive officer of the Company and the
four highest compensated officers of the Company whose annual
salary and bonus exceeds $100,000, and the term "compensation"
generally includes amounts includable in gross income as a
result of the exercise of stock options. This deduction
limitation does not apply to compensation that is (1)
commission based compensation, (2) performance based
compensation, (3) compensation which would not be includable
in an employee's gross income, and (4) compensation payable
under a written binding contract in existence on February 17,
1993 and not materially modified thereafter.
Proposed regulations indicate that compensation
attributable to a stock option will generally satisfy the
limitation exception for the performance based compensation if
the grant or award is made by a "compensation committee" (a
committee composed of "outside" directors), the plan under
which the option is granted states the maximum number of
shares with respect to which options may be granted during a
specified period to any employee, and, under the terms of the
option, the amount of compensation the employee could receive
is based solely on an increase in the value of the stock after
the date of the grant. ESOP Stock Options may possibly
satisfy these requirements, depending upon the specific terms,
provisions, restrictions and limitations of such options.
23
ERISA. The ESOP is not, and is not intended to be, an
employee benefit plan or qualified retirement plan. The ESOP
is not, therefore, subject to the Employee Retirement Income
Security Act of 1974, as amended, or Section 401(a) of the
Code.
Effective Date of ESOP
The ESOP will become effective as of the date it is
approved by the stockholders of the Company at the Annual
Meeting.
Anticipated ESOP Stock Options Which Will Be Granted
The table set forth below shows the grants of ESOP Stock
Options that are expected to be made by the ESOP Committee as
of the date the ESOP is approved by the stockholders:
Anticipated ESOP Stock
Name of Individual Position Options Which Will be Granted
R. Doyle White Chairman of the Board, 54,194
President and Chief
Executive Officer
Larry May Executive Vice President 35,871
and Chief Operating Officer
Stan White Secretary-Treasurer 26,839
Robert D. Tatum Vice President 19,202
Robert H. Pless Vice President 26,554
All current executive _____ 162,660
officers as a group
(5 persons)
All current directors
who are not executive _____ -0-
officers as a group
(7 persons)
All non-executive officer _____ -0-
employees as a group
(approximately 665 persons)
Other than the above listing, it is not currently anticipated
that any other individuals would be granted ESOP Stock Options
by the ESOP Committee.
The Board of Directors unanimously recommends that the
stockholders vote "FOR" the proposal to authorize and approve
the Davis Water & Waste Industries, Inc. Employees Stock
Option Plan.
24
PROPOSAL 3 - DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
General
On December 9, 1994, the Board of Directors of the
Company adopted the Davis Water & Waste Industries, Inc. 1994
Directors Stock Option Plan (the "DSOP"), subject to the
approval of the DSOP by the stockholders.
The DSOP is intended to further the growth and
development of the Company by encouraging directors of the
Company who are not otherwise compensated employees of the
Company (or any parent or subsidiary of the Company) to obtain
a proprietary interest in the Company through the purchase of
shares of Common Stock of the Company. The Company believes
that the DSOP will aid in attracting and retaining such
individuals and in stimulating the efforts of such individuals
for the success of the Company. If the DSOP is approved by
the stockholders, the DSOP will become effective as of its
adoption by the Board, and stock options will be granted to
eligible directors of the Company pursuant to the DSOP
effective as of such time. See "Anticipated DSOP Stock
Options Which Will Be Granted" below.
The following summary of the principal features and
effects of the DSOP does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the
text of the DSOP, a copy of which may be obtained by any
stockholder upon request to Stan White, Secretary-Treasurer of
the Company.
Types of Awards
Only nonqualified stock options ("NQSOs") may be granted
under the DSOP ("DSOP Stock Options").
Administration
The DSOP will be administered by a committee consisting
of two or more directors appointed by the Board of Directors
of the Company from among its members and shall initially be
made up of the members of the Compensation Committee of the
Board of Directors (the "DSOP Committee"). The Board from
time to time may remove members from, or add members to, the
DSOP Committee, and vacancies will be filled by the Board.
The DSOP Committee will have authority (to the extent
that such authority does not disqualify the DSOP from being a
"formula plan" within the meaning of Rule 16b-3 of the 1934
Act) (i) to determine the terms and provisions of the Option
Agreements by which options shall be evidenced, (ii) to
interpret the provisions of, and prescribe, amend and rescind
any rules and regulations relating to, the DSOP, and (iii) to
make all determinations necessary or advisable for the
administration of the DSOP.
Eligibility for and Grants of DSOP Stock Options
Under the terms of the DSOP, directors of the Company who
are not otherwise compensated employees and who are not and
never have been officers of the Company or any parent or
subsidiary shall be eligible to receive DSOP Stock Options.
As of the effective date of the DSOP, each eligible director
as of such date shall be granted a one-time option to purchase
8,000 shares of Common Stock. After the effective date of the
DSOP, as of the date that another individual initially becomes
a director, if such individual is not employed by the Company
or any parent or subsidiary corporation of the Company as of
such date, such individual shall be granted a one-time option
to purchase 8,000 shares of Common Stock if such person has
not previously served as a director of the Company. If the
DSOP is approved by the stockholders at the Annual Meeting,
four directors of the Company would receive one time grants of
DSOP Stock Options for the purchase of an aggregate of 32,000
shares of Common Stock. See "Anticipated DSOP Stock Options
Which Will Be Granted" below.
25
Shares Available
The stock underlying the DSOP Stock Options is the Common
Stock of the Company. Up to 75,000 shares of Common Stock, in
the aggregate, may be purchased upon the exercise of DSOP
Stock Options. Shares of Common Stock allocable to the
unexercised portion of expired or terminated DSOP Stock
Options returned to the Company by forfeiture may again become
subject to DSOP Stock Options.
Terms of Options
Option Price. The purchase price of the Common Stock
underlying each DSOP Stock Option will be the fair market
value of the Common Stock on the date the option is granted.
Vesting. Commencing on the first anniversary of the date
a DSOP Stock Option is granted, the optionee will have the
right to exercise 20% of the shares subject to such option.
On each succeeding anniversary date, the optionee will have
the right to exercise an additional 20% of the shares subject
to the option, and the option will be fully exercisable as to
all of the shares subject to the DSOP Stock Option on the
fifth anniversary of the grant date. If an optionee ceases to
be a Director of the Company, his rights with regard to all
non-vested options shall cease immediately except upon a
"change of control" of the Company (as defined below),
whereupon all options previously granted to an optionee shall
become immediately vested and exercisable for 100% of the
number of shares subject to the options.
Term and Exercise of Options. Each DSOP Stock Option may
be exercised on such dates, during such periods and for such
number of shares as determined by the DSOP Committee and as
specified in each option agreement. The term of any DSOP
Stock Option will be determined by the DSOP Committee, but the
term may not exceed ten years from the date of grant. No DSOP
Stock Option may be granted after five years from the earlier
of the date the DSOP is approved by the stockholders or is
adopted by the Board. A DSOP Stock Option may be exercised
for less than the full number of shares of Common Stock
subject to such option, provided that no option may be
exercised for less than (i) 100 shares or (ii) the total
remaining shares subject to the option, if less than 100
shares. Upon exercise of a DSOP Stock Option, an option
holder must pay for the Common Stock subject to the exercise.
Payment may be made in cash, in Common Stock (including the
retention by the Company of optioned shares of Common Stock
with a fair market value equal to the exercise price), in
property or by performance of services (if acceptable to the
DSOP Committee and allowed under applicable law), or by a
combination of the foregoing.
Transfers. The DSOP does not permit an optionee to sell,
assign or otherwise transfer options except by bequest or
inheritance at the death of the optionee, and any purported
transfer is null and void; provided, however, that this
restriction applies only to the extent required for grants of
options under the DSOP to be exempt from the provisions of
Section 16 of the 1934 Act. DSOP Stock Options are
exercisable during the optionee's life only by the optionee
unless optionee is incapacitated and unable to exercise
options. To the extent that an option has not been
distributed to the person acquiring the option after the death
of the optionee by bequest or inheritance, the option may be
exercised by the executor or administrator of the optionee's
estate.
Termination of Service as Director. Vested DSOP Stock
Options generally must be exercised within the earlier of (i)
12 months after the optionee ceases to be in the service of
the Company or any parent or subsidiary as a director for any
reason other than death or disability; (ii) the expiration
date of the option; (iii) immediately upon the removal of the
optionee as a director of the Company or a parent or
subsidiary for cause; (iv) one year after termination of
service with the Company or a parent or subsidiary as a
director because of disability unless the optionee dies within
this one year period; or (v) one year after the death of an
optionee who dies (a) while in the service of the Company or a
parent or subsidiary as a director, (b) within 12 months after
termination of service with the Company or any parent or
subsidiary as a director (for a reason other than cause); or
(c) within one year after service as a director with the
Company or any parent or subsidiary terminated due to
disability. However, the DSOP Committee may provide different
exercise expiration periods with respect to options granted
under the DSOP.
26
Amendment and Termination
The Board may amend or terminate the DSOP at any time,
provided that (i) no amendment may be effected without the
approval of the option holders if such amendment would affect,
in any way, the rights of such option holders under the DSOP,
and (ii) no amendment may be effected without the approval of
the stockholders of the Company if (1) the amendment would
materially increase the benefits accruing to participants
under the DSOP, (2) the amendment would materially increase
the number of shares which may be issued under the DSOP, or
(3) the amendment would materially modify the requirements as
to eligibility for participation in the DSOP. Additionally,
no amendment may be made to the DSOP 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 DSOP will terminate on the later of (a) the complete
exercise or lapse of the last outstanding DSOP Stock Option
granted under the DSOP, or (b) the last date upon which
options may be granted under the DSOP (which may not be later
than five years after the date on which the DSOP is adopted),
subject to its earlier termination by the Board at any time.
Change of Control
For purposes of the DSOP, the term "change of control" is
defined to mean 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 to 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.
Adjustments
In the event of changes in the number of outstanding
shares of Common Stock by reason of stock dividends, splits or
recapitalizations, an appropriate and equitable adjustment
will be made by the DSOP Committee to the number and kind of
shares remaining available for issuance pursuant to DSOP Stock
Options. Additionally, in the event that the Company is
involved in a reorganization involving a merger,
consolidation, transfer of Common Stock or transfer of the
assets of the Company, the DSOP Committee, may, in its
discretion, declare that (i) outstanding options are
nonforfeitable and exercisable; (ii) outstanding options apply
to the securities of the resulting corporation; and/or (iii)
outstanding options are nonforfeitable and are to be
terminated after giving at least 30 days notice to the option
holders. If the Company is dissolved, all of the rights of
all optionees will become immediately nonforfeitable and
exercisable through the date of dissolution.
27
Federal Income Tax Consequences
The Company intends that the tax effects of any stock
option granted under the DSOP should be determined under
Section 83 of the Code. The following is a brief description
of the consequences under the Code of the receipt or exercise
of DSOP Stock Options.
Because DSOP Stock Options are NQSOs, neither the Company
nor the option holder has income tax consequences from the
issuance of DSOP Stock Options. Generally, in the tax year
when an option holder exercises DSOP Stock Options, the option
holder recognizes ordinary income in the amount by which the
fair market value of the shares at the time of exercise
exceeds the option price of such shares. The Company will
have a deduction in the same amount as the ordinary income
recognized by the option holder in the Company's tax year in
which or with which the option holder's tax year (of exercise)
ends.
If an option holder exercises a DSOP Stock Option by
paying the option price with previously acquired Common Stock,
the option holder will recognize income (relative to the new
shares he is receiving) in two steps. In the first step, a
number of new shares equivalent to the number of older shares
tendered (in payment of the DSOP Stock Option exercised) is
considered to have been exchanged in accordance with Section
1036 of the Code and the rulings thereunder, and no gain or
loss is recognized. In the second step, with respect to the
number of new shares acquired in excess of the number of old
shares tendered, the option holder will recognize income on
those new shares equal to their fair market value less any
nonstock consideration tendered.
The new shares equal to the number of the older shares
tendered will receive the same basis the option holder had in
the older shares, and the option holder's holding period with
respect to the tendered older shares will apply to those new
shares. The excess new shares received will have a basis
equal to the amount of income recognized by the option holder
by exercise, increased by any nonstock consideration tendered.
Their holding period will commence upon the exercise of the
option.
Golden Parachute Payments. Under Section 280G of the
Code, no federal income tax deduction is allowed to a
corporation for "excess parachute payments" made to
"disqualified individuals," and receipt of such payments
subject the recipient to a 20% excise tax under Section 4999
of the Code. For this purpose, "disqualified individuals" are
generally officers, stockholders or highly compensated
individuals performing services for a corporation, and the
term "excess parachute payments" includes payments in the
nature of compensation which are contingent on a change in the
ownership or effective control of a corporation, to the extent
that such payments (in present value) exceed three times the
payee's average annual taxable compensation from the
corporation for the previous five years. Certain payments
with respect to nonpublicly traded corporations, payments for
reasonable compensation for services rendered after a change
of control and payments from qualified plans are generally not
included in determining "excess parachute payments."
ERISA. The DSOP is not, and is not intended to be, an
employee benefit plan or qualified retirement plan. The DSOP
is not, therefore, subject to the Employee Retirement Income
Security Act of 1974, as amended, or Section 401(a) of the
Code.
Effective Date of DSOP
The DSOP will become effective as of the date it is
approved by the stockholders of the Company at the Annual
Meeting.
28
Anticipated DSOP Stock Options Which Will Be Granted
The table set forth below shows the grants of DSOP Stock
Options that will be made as of the date the DSOP is approved
by the stockholders:
Anticipated ESOP Stock
Name of Individual Position Options Which Will be Granted
R. Doyle White Chairman of the Board, -0-
President and Chief
Executive Officer
Larry May Executive Vice President -0-
and Chief Operating Officer
Stan White Secretary-Treasurer -0-
Robert D. Tatum Vice President -0-
Robert H. Pless Vice President -0-
All current executive ___________ -0-
officers as a group (5
persons)
All current directors ___________ 32,000
who are not executive
officers as a group
(7 persons)
All non-executive officer ___________ -0-
employees as a group
(approximately 665
persons)
Persons elected as non-employee directors in the future will
receive DSOP Stock Options in accordance with the DSOP
automatic grant provisions discussed above. See "Eligibility
and Grants of DSOP Stock Options" above.
The Board of Directors unanimously recommends that the
stockholders vote "FOR" the proposal to authorize and approve
the Davis Water & Waste Industries, Inc. Directors Stock
Option Plan.
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon the
recommendation of the Audit Committee, has appointed the firm
of Price Waterhouse LLP to serve as independent accountants of the
Company for the fiscal year ending April 30, 1996 and has
directed that such appointment be submitted to the
stockholders of the Company for ratification at the Annual
Meeting. Price Waterhouse LLP has served as independent
accountants of the Company since 1970 and is considered by
management of the Company to be well qualified. If the
stockholders do not ratify the appointment of Price
Waterhouse LLP, the Board of Directors will reconsider the
appointment.
Representatives of Price Waterhouse LLP will be present at
the Annual Meeting and will have an opportunity to make a
statement if they desire to do so. They also will be
available to respond to appropriate questions from
stockholders.
The Board of Directors unanimously recommends that the
stockholders vote "FOR" the proposal to ratify the appointment
of Price Waterhouse LLP as independent accountants of the Company.
29
STOCKHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of stockholders, including nominations for the
Board of Directors, intended to be presented at the 1996
Annual Meeting of Stockholders should be submitted by
certified mail, return receipt requested, and must be received
by the Company at its executive offices in Thomasville,
Georgia on or before April 10, 1996 to be eligible for
inclusion in the Company's proxy statement and form of proxy
relating to that meeting and to be introduced for action at
the meeting. Any stockholder proposal must be in writing and
must set forth (i) a description of the business desired to be
brought before the meeting and the reasons for conducting the
business at the meeting, (ii) the name and address, as they
appear on the Company's books, of the stockholder submitting
the proposal, (iii) the class and number of shares that are
beneficially owned by such stockholder, (iv) the dates on
which the stockholder acquired the shares, (v) documentary
support for any claim of beneficial ownership, (vi) any
material interest of the stockholder in the proposal, (vii) a
statement in support of the proposal and (viii) any other
information required by the rules and regulations of the
Securities and Exchange Commission.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters
other than those referred to in the accompanying Notice of
Annual Meeting of Stockholders which may properly come before
the Annual Meeting. However, if any other matter should be
properly presented for consideration and voting at the Annual
Meeting or any adjournments thereof, it is the intention of
the persons named as proxies on the enclosed form of proxy
card to vote the shares represented by all valid proxy cards
in accordance with their judgment of what is in the best
interest of the Company.
By Order of the Board of Directors.
STAN WHITE
Secretary-Treasurer
Thomasville, Georgia
August 8, 1995
____________________
The Company's 1995 Annual Report, which includes audited
financial statements, has been mailed to stockholders of the
Company with these proxy materials. The Annual Report does
not form any part of the material for the solicitation of
proxies.
30
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
31
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES 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 employees 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 in the employ of the Company 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 to its service
persons of outstanding quality.
1.2 Intended Tax Effects of Options. It is intended that
part of the Plan qualify as an ISO plan and that any option
granted in accordance with such portion of the Plan qualify as
an ISO, all within the meaning of Code 422. 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.
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
32
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) Substantial Change of Board Members. During any
fiscal year of the Company, individuals who at the beginning
of such year constitute the Board cease for any reason to
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,
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-
33
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 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 ISO shall mean an incentive stock option within the
meaning of Code 422(b).
2.16 NQSO shall mean an option to which Code 421 (relating
generally to certain ISO and other options) does not apply.
2.17 Option shall mean ISO's or NQSO's, as applicable,
granted to individuals pursuant to the terms and provisions of
this Plan.
2.18 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.
2.19 Option Price shall mean the purchase price of the
shares of Common Stock underlying an Option.
2.20 Optionee shall mean an individual who is granted an
Option pursuant to the terms and provisions of this Plan.
2.21 Person shall mean any individual, organization,
corporation, partnership or other entity.
2.22 Plan shall mean this Davis Water & Waste Industries,
Inc. 1994 Employees Stock Option Plan.
34
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
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
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. During the period any
director is serving on the Committee and during the 1-year
period immediately preceding the commencement of such service,
he shall not be or have been granted or awarded any Option or
other equity securities of the Company under the Plan (or any
other discretionary stock plan of the Company or any Company
affiliate as defined by Rule 144(a)(1) of the 1933 Act).
Notwithstanding the preceding sentence, a member of the
Committee may participate during such period in (A) a formula
plan, (B) an ongoing securities acquisition program with
broad-based employee participation, and/or (C) a program to
elect to receive all or part of his annual retainer in equity
securities of the Company, all as defined and limited by Rule
16b-3 promulgated under Section 16 of the 1934 Act. The
requirements of this subsection are intended to comply with
the "disinterested administration rule" of Rule 16b-3 under
Section 16 of the 1934 Act or any successor rule or
regulation, and shall be interpreted and construed in a manner
which assures compliance with said Rule. To the extent said
Rule 16b-3 is modified to reduce or increase the restrictions
on who may serve on the Committee, the Plan shall be deemed
modified in a similar manner.
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 250,000 shares
of Common Stock. Notwithstanding the foregoing, shares of
Common Stock allocable to the unexercised portion of any
35
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
employees of the Company or of any parent or subsidiary
corporation of the Company, including such employees who are
also members of the Board or of the board of directors of any
parent or subsidiary corporation of the Company; provided, no
non-employee director shall be eligible to receive any Options
pursuant to this Plan, and provided further, that only
employees of the Company and its "parent" or "subsidiary"
corporations within the meaning of subsections (e) and (f) of
Code 424 shall be eligible to receive ISO's.
5.2 Grants of Options. Subject to the provisions of the
Plan, the Committee shall have the authority and sole
discretion to determine and designate, from time to time,
those individuals (from among the individuals eligible for a
grant of Options under the Plan pursuant to Section 5.1 above)
to whom Options will actually be granted, the Option Price of
the shares covered by any Options granted, the manner in and
conditions under which Options are exercisable (including,
without limitation, any limitations or restrictions thereon),
and the time or times at which Options shall be granted. In
making such determinations, the Committee may take into
account the nature of the services rendered by the respective
employees to whom Options may be granted, their present and
potential contributions to the Company's success and such
other factors as the Committee, in its sole discretion, shall
deem relevant. In its authorization of the granting of an
Option hereunder, the Committee shall specify the name of the
Optionee, the number of shares of stock subject to such Option
and whether such Option is an ISO or a NQSO. The Committee
may grant, at any time, new Options to an Optionee who
previously has received Options, whether such Options include
prior Options that still are outstanding, previously have been
exercised in whole or in part, have expired or are canceled in
connection with the issuance of new Options. No individual
shall have any claim or right to be granted Options under the
Plan.
5.3 Limitation on Exercisability of ISO's. Notwithstanding
anything herein to the contrary, the aggregate Fair Market
Value of ISO's which are granted to any employee under the
Plan or any other stock option plan adopted by the Company
that are first exercisable in any one calendar year shall not
exceed $100,000. The Committee shall interpret and administer
the limitations set forth in this Section in accordance with
Code 422(d).
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.
36
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 an
employee of the Company, 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
Stock underlying each Option shall be the Fair Market Value of
the Common Stock on the date the Option is granted, unless
otherwise determined by the Committee; provided, in no event
shall the Option Price of any ISO be less than 100% (110% in
the case of ISO's of Optionees who own more than ten percent
of the voting power of all classes of stock of either the
Company or any "parent" or "subsidiary" corporation of the
Company (within the meaning of subsections (e) and (f) of Code
424)) of 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 Committee granted the Option as specified 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 (five years in the case of ISO's granted to
Optionees who own more than ten percent of the voting power of
all classes of stock of either the Company or any parent or
37
subsidiary) from the date the Option is granted. No Option
shall be granted hereunder after ten 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 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 Contribution 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 Employment, 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 an employee of the Company from the
38
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 with respect to any NQSO's granted
hereunder and, instead, may provide a different expiration
date or dates in a NQSO Option Agreement.
(a) Termination of Employment. In the event an Optionee
ceases to be an employee of the Company 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 (three
months in the case of an ISO Option) after termination of
employment or (iii) the date on which the Company gives
notice to such Optionee of termination of employment if
employment is terminated by the Company for Cause (an
Optionee's resignation in anticipation of termination of
employment by the Company for Cause 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 employment 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 (three months in the
case of an ISO Option) period immediately following the date
of such termination; provided, this extension shall apply to
ISO's only to the extent it does not cause the term of such
ISO's to exceed the maximum term permitted under Code 422
or does not cause such ISO's to lose their status as ISO's.
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 employment. 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
employment 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
employment 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 an employee of the Company 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 employment ceases
due to Disability.
(c) Death. In the event of the death of the Optionee
(i) while he is an employee of the Company, (ii) within
twelve months (three months in the case of an ISO Option)
after the date on which such Optionee's employment
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 employment terminated due to
his Disability as provided in subsection (b), any Option or
unexercised portion thereof granted to him which is
otherwise exercisable may be exercised by his 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 sooner, 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.
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 to NQSO's only to
39
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.
6.15 Designation of Option as ISO or NQSO. Subject to the
provisions of this Article, each Option granted under the Plan
shall be designated either as an ISO or a NQSO. An Option
Agreement evidencing both an ISO and a NQSO shall identify
clearly the status and terms of each Option.
6.16 ISO's Converted to NQSO's. In the event any part or
all of an Option granted under the Plan which is intended to
be an ISO at any time fails to satisfy all of the requirements
of an ISO, then such ISO shall be split into an ISO and NQSO
so that the portion of the Option, if any, that still
qualifies as an ISO shall remain an ISO and the portion that
does not qualify as an ISO shall become a NQSO. Such split of
an Option into an ISO portion and a NQSO portion shall be
evidenced by one or more Option Agreements, as long as each
Option is identified clearly as to its status as an ISO or
NQSO.
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 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
40
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) Any adjustment to or assumption of ISO's under this
Section shall be made in accordance with Code 424(a) and
the regulations promulgated thereunder so as to preserve the
status of such Options as ISO's under Code 422.
(d) 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.
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.
41
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 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 is not an
"affiliate," as that term is defined in Rule 144 of the 1933
Act, or who ceases to be an "affiliate," 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, but in no
event earlier than 12 months prior to 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
42
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 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
cause the applicable portions of the Plan to fail to qualify
as an ISO plan pursuant to Code 422, (ii) such modification
or amendment would materially increase the benefits accruing
to participants under the Plan, (iii) such modification or
amendment would materially increase the number of securities
which may be issued under the Plan, or (iv) such
modification or amendment would materially modify the
requirements as to eligibility for participation in the
Plan. Clauses (ii), (iii) and (iv) of 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 clauses (ii), (iii) and (iv)
above, 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 required by
paragraph (b)(2) 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
43
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.
11.7 Plan Document Controls. In the event of any conflict
between the provisions of an Option 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.
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 Employment. Nothing contained in the
Plan, or any modification thereof, shall be construed to give
any individual any rights to employment with 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
44
INCENTIVE STOCK OPTION NO. ________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Incentive 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 (which term as used herein shall
include any parent or subsidiary of the Company) has adopted
the Davis Water & Waste Industries, Inc. 1994 Employees 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 an incentive 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 _________________,
________, the Committee granted Optionee an incentive stock
option. Under that option and subject to the terms and
conditions set forth herein, Optionee shall have the right to
purchase ________ shares of the $0.01 par value common stock
of the Company (the "Common Stock"); such _________ 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 an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Option Price. The price per share for each of the
Optioned Shares shall be $________________ (the "Option
Price"), which is not less than 100% (110% if the Optionee
owns more than 10% of the voting power of all classes of stock
of either the Company or any "parent" or "subsidiary"
corporation of the Company) of the per share Fair Market Value
of the Optioned Shares on the date of grant specified above.
45
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 an
employee 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 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, 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
employed by the Company, (ii) within the three-month period
that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or
Disability or (iii) within the one-year period that begins on
the date on which Optionee ceases to be an employee of the
Company due to Disability;
46
(c) The date of expiration of the one-year period that
begins on the date on which Optionee ceases to be an employee
of the Company due to Disability; provided, if Optionee dies
during such one-year period, the terms of subsection (b) shall
control;
(d) The date of expiration of the three-month period
that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or
Disability; provided, if Optionee dies during such three-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
employment for Cause, all as described in Section 6.9(a) of
the Plan; or
(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 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
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 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. In the event
of the death of Optionee while in the employ of the Company,
within a period of one year after the termination of his
employment with the Company due to Disability, or within a
three-month period after the employee ceases to be an employee
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;
47
(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
(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.
In addition to the payment of the Option Price, 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
and FICA withholding provisions of the Code and of the income
tax laws of the state of Optionee's residence, and of any
other applicable law.
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.
48
11. Other Terms and Conditions. In addition to the terms
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 employ of
the Company or to interfere in any way with the right of the
Company to terminate Optionee's employment at any time.
(b) Unless and except as otherwise specifically provided
in this Agreement, Optionee shall have no rights of a
shareholder 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 and 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.
49
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
50
EXHIBIT A
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
NOTICE OF EXERCISE FOR INCENTIVE STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of
the Incentive Stock Option Agreement, dated _________________,
_______, between Davis Water & Waste Industries, Inc. (the
"Company") and the undersigned Optionee (the "Agreement"),
which Agreement represents 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
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: ________________________________
51
NONQUALIFIED STOCK OPTION NO. ________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES 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 (which term as used herein shall
include any parent or subsidiary of the Company) has adopted
the Davis Water & Waste Industries, Inc. 1994 Employees 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 non-incentive 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 _________________,
________, the Committee granted Optionee a non-incentive stock
option. Under that option and subject to the terms and
conditions set forth herein, Optionee shall have the right to
purchase ________ shares of the $0.01 par value common stock
of the Company (the "Common Stock"); such ________ 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 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 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 an
employee of the Company, his rights with regard to all non-
vested Options:
52
(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
immediately 100% vested 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 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
employed by the Company, (ii) within the twelve-month period
that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or
Disability or (iii) within the twelve-month period that begins
on the date on which Optionee ceases to be an employee of the
Company due to Disability;
(c) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be an
employee of the Company due to Disability; 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 an
employee of the Company for any reason other than death or
Disability; 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
employment for Cause, all as described in Section 6.9(a) of
the Plan; or
(f) Such other earlier date as may be required under the
terms of the Plan.
53
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 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 in the employ of the
Company, within a period of twelve-months after the
termination of his employment with the Company due to
Disability, or within a twelve-month period after the employee
ceases to be an employee 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
or shares of the Common Stock, 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
(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.
In addition to the payment of the Option Price, 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
and FICA withholding provisions of the Internal Revenue Code
of 1986, as amended, and of the income tax laws of the state
of Optionee's residence, and of any other applicable law.
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).
54
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
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 employ of
the Company or to interfere in any way with the right of the
Company to terminate Optionee's employment at any time.
(b) Unless and except as otherwise specifically provided
in this Agreement, Optionee shall have no rights of a
shareholder 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
55
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 and 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.
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
56
NONQUALIFIED STOCK OPTION NO. ________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ATTACHMENT I
ADDITIONAL TERMS AND PROVISIONS REGARDING OPTION
57
EXHIBIT A
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES 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
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: ________________________________
58
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
59
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.
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
60
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,
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.
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(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 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
62
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
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 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
63
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.
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.
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(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
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
65
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 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
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.
66
(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.
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.
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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 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.
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).
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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 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.
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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 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
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
70
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.
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.
71
ADOPTED BY BOARD OF DIRECTORS ON DECEMBER 9, 1994
APPROVED BY SHAREHOLDERS AS OF ____________ ___, 1995
72
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 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.
73
(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 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
74
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 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
75
(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
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.
76
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.
77
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
78
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
79
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
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: ___________________________________________
80