EXHIBIT 10.28
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WASTE CONNECTIONS, INC.
2004 EQUITY INCENTIVE PLAN
AS AMENDED AND RESTATED JULY 20, 2004
1. PURPOSE.
The purpose of the Plan is to provide a means for the Company and
any Subsidiary, through the grant of Nonqualified Stock Options and/or
Restricted Stock or Restricted Stock Units to selected Employees (including
officers), Directors and Consultants, to attract and retain persons of ability
as Employees, Directors and Consultants, and to motivate such persons to exert
their best efforts on behalf of the Company and any Subsidiary.
2. DEFINITIONS.
(A) "BOARD" means the Company's Board of Directors.
(B) "CHANGE IN CONTROL" means:
(I) any reorganization, liquidation or consolidation of the
Company, or any merger or other business combination of the Company with any
other corporation, other than any such merger or other combination that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such transaction;
(II) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or
(III) a transaction or series of related transactions in which
any "person" (as defined in Section 13(d) and 14(d) of the Exchange Act) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the Company's
outstanding voting securities (except that for purposes of this definition,
"person" shall not include any person (or any person that controls, is
controlled by or is under common control with such person) who as of the date of
an Option Agreement or a Restricted Stock or Restricted Stock Unit Agreement
owns ten percent (10%) or more of the total voting power represented by the
outstanding voting securities of the Company, or a trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or a
corporation that is owned directly or indirectly by the stockholders of the
Company in substantially the same percentage as their ownership of the Company).
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(C) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
(D) "COMMITTEE" means a committee appointed by the Board in
accordance with Section 4(b) of the Plan.
(E) "COMPANY" means Waste Connections, Inc., a Delaware corporation.
(F) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Subsidiary to render consulting services and who is compensated
for such services; provided that the term "Consultant" shall not include
Directors.
(G) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the individual's employment as an Employee or relationship as a Consultant is
not interrupted or terminated, or, in the case of a Director who is not an
Employee, the term means the Director remains a Director of the Company. The
Board, in its sole discretion, may determine whether Continuous Status as an
Employee, Director or Consultant shall be considered interrupted in the case of
(i) any leave of absence approved by the Board, including sick leave, military
leave or any other personal leave, or (ii) transfers between locations of the
Company or between the Company and a Subsidiary or their successors.
(H) "DIRECTOR" means a member of the Company's Board.
(I) "DISABILITY" means permanent and total disability within the
meaning of Section 422(c)(6) of the Code.
(J) "EMPLOYEE" means any person employed by the Company or any
Subsidiary of the Company. Any officer of the Company or a Subsidiary is an
Employee. A Director is not an Employee unless he or she has an employment
relationship with the Company or a Subsidiary in addition to being a Director.
Service as a Consultant shall not be sufficient to constitute "employment" by
the Company.
(K) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(L) "FAIR MARKET VALUE" means, as of any date, the value of Stock
determined as follows:
(I) If the Stock is listed on any established stock exchange
or a national market system, including without limitation the New York Stock
Exchange, its Fair Market Value shall be the closing sales price for the Stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system on the market trading day of the date of determination, or, if the date
of determination is not a market trading day, the last market trading day prior
to the date of determination, in each case as reported in The Wall Street
Journal or such other sources as the Board deems reliable;
(II) If the Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Stock on the
market trading day of the date of determination, or, if the date of
determination is not a market trading day, the last market trading day prior to
the date of determination; or
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(III) In absence of an established market for the Stock, the
Fair Market Value thereof shall be determined in good faith by the Board."
(M) "NONQUALIFIED STOCK OPTIONS" means Options that are not intended
to qualify as incentive stock options within the meaning of Section 422 of the
Code.
(N) "OPTION AGREEMENT" means a written certificate or agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan that apply to Options.
(O) "OPTIONEE" means an Employee, Director or Consultant who holds
an outstanding Option.
(P) "OPTIONS" means Nonqualified Stock Options.
(Q) "PLAN" means this Waste Connections, Inc. 2004 Equity Incentive
Plan.
(R) "RESTRICTED STOCK" means Stock awarded under the Plan in
accordance with the terms and conditions set forth in Section 6.
(S) "RESTRICTED STOCK AGREEMENT" means a written certificate or
award agreement between the Company and a Restricted Stock Participant
evidencing a Restricted Stock Award. Each Restricted Stock Agreement shall be
subject to the terms and conditions of the Plan that apply to Restricted Stock.
(T) "RESTRICTED STOCK AWARD" means shares of Restricted Stock
awarded pursuant to the terms and conditions of the Plan.
(U) "RESTRICTED STOCK PARTICIPANT" means an Employee, Director or
Consultant who holds an outstanding Restricted Stock Award.
(V) "RESTRICTED STOCK UNIT" means a contractual right to receive
Stock under the Plan upon the attainment of designated performance milestones or
the completion of a specified period of employment or service with the
Corporation or any Subsidiary or upon a specified date or dates following the
attainment of such milestones or the completion of such service period.
(W) "RESTRICTED STOCK UNIT AGREEMENT" means a written agreement
between the Company and a Restricted Stock Unit Participant evidencing a
Restricted Stock Unit Award. Each Restricted Stock Unit Agreement shall be
subject to the terms and conditions of the Plan that apply to Restricted Stock
Units.
(X) "RESTRICTED STOCK UNIT AWARD" means an award of Restricted Stock
Units made pursuant to the terms and conditions of the Plan.
(Y) "RESTRICTED STOCK UNIT PARTICIPANT" means an Employee, Director
or Consultant who holds an outstanding Restricted Stock Unit Award.
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(Z) "RESTRICTION PERIOD" means a time period, which may or may not
be based on performance goals and/or the satisfaction of vesting provisions
(which may depend on the Continuous Status as an Employee, Director or
Consultant of the applicable Restricted Stock Participant), that applies to, and
is established or specified by the Board at the time of, each Restricted Stock
Award.
(AA) "RULE 16B-3" means Rule 16b-3 under the Exchange Act or any
successor to Rule 16b-3, as amended from time to time.
(BB) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(CC) "STOCK" means the Common Stock of the Company.
(DD) "SUBSIDIARY" means any corporation that at the time an Option
or a Restricted Stock or Restricted Stock Unit Award is granted under the Plan
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code, or any similar provision
hereafter enacted.
3. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 9 for changes in Stock,
the Stock that may be sold pursuant to Options shall not exceed 2,250,000
shares, minus the number of shares delivered pursuant to Restricted Stock or
Restricted Stock Unit Awards. The Stock that may be delivered pursuant to
Restricted Stock or Restricted Stock Unit Awards shall not exceed 450,000
shares. The Company shall reserve for Options 2,250,000 shares, of which up to
450,000 may be delivered pursuant to Restricted Stock or Restricted Stock Unit
Awards, each number of shares subject to adjustment as provided in Section 9. If
any Option for any reason terminates, expires or is cancelled without having
been exercised in full, the Stock not purchased under such Option shall revert
to and again become available for issuance under the Plan. Shares of Stock that
are issued pursuant to Restricted Stock or Restricted Stock Unit Awards may be
either authorized and unissued shares (which will not be subject to preemptive
rights) or previously issued shares acquired by the Company or any Subsidiary.
Any shares of Stock subject to a Restricted Stock Award that are forfeited shall
revert to and again become available for issuance under the Plan. If any
Restricted Stock Unit Award terminates or is cancelled for any reason before all
the shares of Stock subject to such award vest and become issuable, the shares
of Stock which do not vest and become issuable under that Restricted Stock Unit
Award shall revert to and again become available for issuance under the Plan.
4. ADMINISTRATION.
(A) Board's Power and Responsibilities. The Plan shall be
administered by the Board or, at the election of the Board, by a Committee, as
provided in subsection (b), or, as to certain functions, by an officer of the
Company, as provided in subsection (c). Subject to the Plan, the Board shall:
(I) determine and designate from time to time those Employees,
Directors and Consultants to whom Options, Restricted Stock Awards and/or
Restricted Stock Unit Awards are to be granted;
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(II) authorize the granting of Options, Restricted Stock
Awards and Restricted Stock Unit Awards;
(III) determine the number of shares subject to each Option,
the exercise price of each Option, the time or times when and the manner in
which each Option shall be exercisable, and the duration of the exercise period;
(IV) determine the number of shares of Stock to be included in
any Restricted Stock Award, the Restriction Period for such Award, and the
vesting schedule of such Award over the Restriction Period;
(V) determine the number of shares of Stock to be subject to
any Restricted Stock Unit Award, the vesting schedule for those shares of Stock
and the date or dates on which the shares of Stock which vest under the Award
are actually to be issued;
(VI) construe and interpret the Plan and each Option,
Restricted Stock and Restricted Stock Unit Agreement, and establish, amend and
revoke rules and regulations for the Plan's administration, and correct any
defect, omission or inconsistency in the Plan or any Option, Restricted Stock or
Restricted Stock Unit Agreement in a manner and to the extent it deems necessary
or expedient to make the Plan fully effective;
(VII) adopt such procedures and subplans and grant Options and
Restricted Stock and Restricted Stock Unit Awards on such terms and conditions
as the Board determines necessary or appropriate to permit participation in the
Plan by individuals otherwise eligible to so participate who are foreign
nationals or employed outside of the United States, or otherwise to conform to
applicable requirements or practices of jurisdictions outside of the United
States;
(VIII) prescribe and approve the form and content of
certificates and agreements for use under the Plan;
(IX) establish and administer any terms, conditions,
performance criteria, restrictions, limitations, forfeiture, vesting schedule,
and other provisions of or relating to any Option or any Restricted Stock or
Restricted Stock Unit Award;
(X) grant waivers of terms, conditions, restrictions and
limitations under the Plan or applicable to any Option or Restricted Stock or
Restricted Stock Unit Award, or accelerate the vesting of any Option or any
Restricted Stock or Restricted Stock Unit Award or the issuance of vested Stock
under any Restricted Stock Unit Award;
(XI) amend or adjust the terms and conditions of any
outstanding Option or any Restricted Stock or Restricted Stock Unit Award and/or
adjust the number and/or class of shares of Stock subject to any outstanding
Option or any outstanding Restricted Stock or Restricted Stock Unit Award,
provided that no such amendment or adjustment shall reduce the exercise price of
any Option to a price lower than the Fair Market Value of the Stock covered by
such Option on the date the Option was granted;
(XII) at any time and from time to time after the granting of
an Option or a Restricted Stock or Restricted Stock Unit Award, specify such
additional terms, conditions and
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restrictions with respect to any such Option or any such Restricted Stock or
Restricted Stock Unit Award as may be deemed necessary or appropriate to ensure
compliance with any and all applicable laws or rules, including, but not limited
to, terms, restrictions and conditions for compliance with applicable securities
laws and methods of withholding or providing for the payment of required taxes;
(XIII) offer to buy out a Restricted Stock or Restricted Stock
Unit Award previously granted, based on such terms and conditions as the Board
shall establish with and communicate to the Restricted Stock or Restricted Stock
Unit Participant at the time such offer is made;
(XIV) to the extent permitted under the applicable Restricted
Stock Agreement, permit the transfer of a Restricted Stock Award by one other
than the Restricted Stock Participant who received the grant of such Restricted
Stock Award; and
(XV) take any and all other actions it deems necessary for the
purposes of the Plan.
The Board shall have full discretionary authority in all matters
related to the discharge of its responsibilities and the exercise of its
authority under the Plan. Decisions and actions by the Board with respect to the
Plan and any Option Agreement or any Restricted Stock or Restricted Stock Unit
Agreement shall be final, conclusive and binding on all persons having or
claiming to have any right or interest in or under the Plan and/or any Option
Agreement or Restricted Stock or Restricted Stock Unit Agreement.
(B) Authority to Delegate to Committee. The Board may delegate
administration of the Plan to a Committee of the Board. The Committee shall
consist of not less than two members appointed by the Board. Subject to the
foregoing, the Board may from time to time increase the size of the Committee
and appoint additional members, remove members (with or without cause) and
appoint new members in substitution therefor, or fill vacancies, however caused.
If the Board delegates administration of the Plan to a Committee, the Committee
shall have the same powers theretofore possessed by the Board with respect to
the administration of the Plan (and references in this Plan to the Board shall
apply to the Committee), subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.
(C) Authority to Delegate to Officers. The Board may delegate
administration of Sections 4(a)(i) through 4(a)(v) above to the Chief Executive
Officer of the Company; provided, however, that such officer may not grant
Options, Restricted Stock Awards and Restricted Stock Unit Awards covering more
than 1,000,000 shares of Stock in the aggregate.
(D) Ten Year Grant Period. Notwithstanding the foregoing, no Option
or any Restricted Stock or Restricted Stock Unit Award shall be granted after
the expiration of ten years from the effective date of the Plan specified in
Section 15 below.
(E) Modification of Terms and Conditions through Employment or
Consulting Agreements. Notwithstanding the provisions of any Option Agreement or
any Restricted Stock
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or Restricted Stock Unit Agreement, any modifications to the terms and
conditions of any Option or any Restricted Stock or Restricted Stock Unit Award
permitted by Section 4(a) with respect to any Employee or Consultant may be
effected by including the modification in an employment or consulting agreement
between the Company or a Subsidiary and the Optionee or the Restricted Stock or
Restricted Stock Unit Participant.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted shall be evidenced by an Option Agreement in
substantially the form attached hereto as Annex A or such other form as may be
approved by the Board. Each Option Agreement shall include the following terms
and conditions and such other terms and conditions as the Board may deem
appropriate:
(A) Option Term. Each Option Agreement shall specify the term for
which the Option thereunder is granted and shall provide that such Option shall
expire at the end of such term. The Board may extend such term; provided that
the term of any Option, including any such extensions, shall not exceed five
years from the date of grant.
(B) Exercise Price. Each Option Agreement shall specify the exercise
price per share, as determined by the Board at the time the Option is granted,
which exercise price shall in no event be less than the Fair Market Value when
the Option is granted.
(C) Vesting. Each Option Agreement shall specify when it is
exercisable. The total number of shares of Stock subject to an Option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). An Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period or
any prior period as to which the Option shall have become vested but shall not
have been fully exercised. An Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board deems appropriate.
(D) Payment of Purchase Price on Exercise. Each Option Agreement
shall provide that the purchase price of the shares as to which such Option may
be exercised shall be paid to the Company at the time of exercise either (i) in
cash, or (ii) in the absolute discretion of the Board (which discretion may be
exercised in a particular case without regard to any other case or cases), at
the time of the grant or thereafter, (A) by the withholding of shares of Stock
issuable on exercise of the Option or the delivery to the Company of other Stock
owned by the Optionee, provided in either case that the Optionee has owned
shares of Stock equal in number to the shares so withheld for a period
sufficient to avoid a charge to the Company's reported earnings, (B) subject to
compliance with applicable law, according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of Stock) with the person to whom the Option is granted or to
whom the Option is transferred pursuant to Section 5(e), (C) by delivery of a
properly executed notice together with irrevocable instructions to a broker
providing for the assignment to the Company of the proceeds of a sale or loan
with respect to some or all of the Stock being acquired upon the exercise of the
Option, including, without limitation, through an exercise complying with the
provisions of Regulation T
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as promulgated from time to time by the Board of Governors of the Federal
Reserve System (a "cashless exercise"), or (D) in any other form or combination
of forms of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement, or if less, the maximum rate permitted by law.
(E) Transferability. An Option shall not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of by the Optionee
during his or her lifetime, whether by operation of law or otherwise, other than
by will or the laws of descent and distribution applicable to the Optionee, and
shall not be made subject to execution, attachment or similar process; provided
that the Board may in its discretion at the time of approval of the grant of an
Option or thereafter permit an Optionee to transfer an Option to a trust or
other entity established by the Optionee for estate planning purposes, and may
permit further transferability or impose conditions or limitations on any
permitted transferability. Otherwise, during the lifetime of an Optionee, an
Option shall be exercisable only by such Optionee. In the event any Option is to
be exercised by the executors, administrators, heirs or distributees of the
estate of a deceased Optionee, or such an Optionee's beneficiary, in any such
case pursuant to the terms and conditions of the Plan and the applicable Option
Agreement and in accordance with such terms and conditions as may be specified
from time to time by the Board, the Company shall be under no obligation to
issue Stock thereunder unless and until the Board is satisfied that the person
to receive such Stock is the duly appointed legal representative of the deceased
Optionee's estate or the proper legatee or distributee thereof or the named
beneficiary of such Optionee.
(F) Exercise of Option After Death of Optionee. If an Optionee dies
(i) while an Employee, Director or Consultant, or (ii) within three months after
termination of the Optionee's Continuous Status as an Employee, Director or
Consultant because of his or her Disability or retirement, his or her Options
may be exercised (to the extent that the Optionee was entitled to do so on the
date of death or termination) by the Optionee's estate or by a person who shall
have acquired the right to exercise the Options by bequest or inheritance, but
only within the period ending on the earlier of (A) one year after the
Optionee's death (or such shorter or longer period specified in the Option
Agreement, which period shall not be less than six months), or (B) the
expiration date specified in the Option Agreement. If, after the Optionee's
death, the Optionee's estate or the person who acquired the right to exercise
the Optionee's Options does not exercise the Options within the time specified
herein, the Options shall terminate and the shares covered by such Options shall
revert to and again become available for issuance under the Plan.
(G) Exercise of Option After Termination of Optionee's Continuous
Status as an Employee, Director or Consultant as a Result of Disability or
Retirement. If an Optionee's Continuous Status as an Employee, Director or
Consultant terminates as a result of the Optionee's Disability or retirement,
and the Optionee does not die within the following three months, the Optionee
may exercise his or her Options (to the extent that the Optionee was entitled to
exercise them on the date of termination), but only within the period ending on
the earlier of (i) six months after Disability or retirement (or such longer
period specified in the Option Agreement), and (ii) the expiration of the term
set forth in the Option Agreement. If,
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after termination, the Optionee does not exercise his or her Options within the
time specified herein, the Options shall terminate, and the shares covered by
such Options shall revert to and again become available for issuance under the
Plan.
(H) No Exercise of Option After Termination of Optionee's Continuous
Status as an Employee, Director or Consultant Other Than as a Result of Death,
Disability or Retirement. If an Optionee's Continuous Status as an Employee,
Director or Consultant terminates other than as a result of the Optionee's
death, Disability or retirement, all right of the Optionee to exercise his or
her Options shall terminate on the date of termination of such Continuous Status
as an Employee, Director or Consultant. The Options shall terminate on such
termination date, and the shares covered by such Options shall revert to and
again become available for issuance under the Plan.
(I) Exceptions. Notwithstanding subsections (f), (g) and (h), the
Board shall have the authority to extend the expiration date of any outstanding
Option in circumstances in which it deems such action to be appropriate,
provided that no such extension shall extend the term of an Option beyond the
expiration date of the term of such Option as set forth in the Option Agreement.
(J) Company's Repurchase Right or Option Shares. Each Option
Agreement may, but is not required to, include provisions whereby the Company
shall have the right to repurchase any and all shares acquired by an Optionee on
exercise of any Option granted under the Plan, at such price and on such other
terms and conditions as the Board may approve and as may be set forth in the
Option Agreement. Such right shall be exercisable by the Company after
termination of an Optionee's Continuous Status as an Employee, Director or
Consultant, whenever such termination may occur and whether such termination is
voluntary or involuntary, with cause or without cause, without regard to the
reason therefor, if any.
6. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
(A) Restricted Stock Award Agreement. Each Restricted Stock Award
shall be evidenced by a Restricted Stock Agreement in substantially the form
attached hereto as Annex B or such other form as may be approved by the Board.
Each Restricted Stock Agreement shall be executed by the Company and the
Restricted Stock Participant to whom such Restricted Stock Award has been
granted, unless the Restricted Stock Agreement provides otherwise; two or more
Restricted Stock Awards granted to a single Restricted Stock Participant may,
however, be combined in a single Restricted Stock Agreement. A Restricted Stock
Agreement shall not be a precondition to the granting of a Restricted Stock
Award; no person shall have any rights under any Restricted Stock Award,
however, unless and until the Restricted Stock Participant to whom the
Restricted Stock Award shall have been granted (i) shall have executed and
delivered to the Company a Restricted Stock Agreement or other instrument
evidencing the Restricted Stock Award, unless such Restricted Stock Agreement
provides otherwise, (ii) has satisfied the applicable federal, state, local
and/or foreign income and employment withholding tax liability with respect to
the shares of Stock which vest or become issuable under the Restricted Stock
Award, and (iii) has otherwise complied with the applicable terms and conditions
of the Restricted Stock Award.
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(B) Restricted Stock Awards Subject to Plan. All Restricted Stock
Awards under the Plan shall be subject to all the applicable provisions of the
Plan, including the following terms and conditions, and to such other terms and
conditions not inconsistent therewith, as the Board shall determine and which
are set forth in the applicable Restricted Stock Agreement.
(I) The Restricted Stock subject to a Restricted Stock Award
shall entitle the Restricted Stock Participant to receive shares of Restricted
Stock, which vest over the Restriction Period. The Board shall have the
discretionary authority to authorize Restricted Stock Awards and determine the
Restriction Period for each such award.
(II) Subject to the terms and restrictions of this Section 6
or the applicable Restricted Stock Agreement or as otherwise determined by the
Board, upon delivery of Restricted Stock to a Restricted Stock Participant, or
upon creation of a book entry evidencing a Restricted Stock Participant's
ownership of shares of Restricted Stock, pursuant to Section 6(f), the
Restricted Stock Participant shall have all of the rights of a stockholder with
respect to such shares.
(C) Cash Payment. The Board may make any such Restricted Stock Award
without the requirement of any cash payment from the Restricted Stock
Participant to whom such Restricted Stock Award is made, or may require a cash
payment from such a Restricted Stock Participant in an amount no greater than
the aggregate Fair Market Value of the Restricted Stock as of the date of grant
in exchange for, or as a condition precedent to, the completion of such
Restricted Stock Award and the issuance of such shares of Restricted Stock.
(D) Transferability. During the Restriction Period stated in the
Restricted Stock Agreement, the Restricted Stock Participant who receives a
Restricted Stock Award shall not be permitted to sell, transfer, pledge, assign,
encumber or otherwise dispose of such Restricted Stock whether by operation of
law or otherwise and shall not be made subject to execution, attachment or
similar process. Any attempt by such Restricted Stock Participant to do so shall
constitute the immediate and automatic forfeiture of such Restricted Stock
Award. Notwithstanding the foregoing, the Restricted Stock Agreement may permit
the payment or distribution of a Restricted Stock Participant's Award (or any
portion thereof) after his or her death to the beneficiary most recently named
by such Restricted Stock Participant in a written designation thereof filed with
the Company, or, in lieu of any such surviving beneficiary, as designated by the
Restricted Stock Participant by will or by the laws of descent and distribution.
In the event any Restricted Stock Award is to be paid or distributed to the
executors, administrators, heirs or distributees of the estate of a deceased
Restricted Stock Participant, or such a Restricted Stock Participant's
beneficiary, in any such case pursuant to the terms and conditions of the Plan
and the applicable Restricted Stock Agreement and in accordance with such terms
and conditions as may be specified from time to time by the Board, the Company
shall be under no obligation to issue Stock thereunder unless and until the
Board is satisfied that each person to receive such Stock is the duly appointed
legal representative of the deceased Restricted Stock Participant's estate or
the proper legatee or distributee thereof or the named beneficiary of such
Restricted Stock Participant.
(E) Forfeiture of Restricted Stock. If, during the Restriction
Period, the Restricted Stock Participant's Continuous Status as an Employee,
Director or Consultant terminates for any
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reason, all of such Restricted Stock Participant's shares of Restricted Stock as
to which the Restriction Period has not yet expired shall be forfeited and
revert to the Plan, unless the Board has provided otherwise in the Restricted
Stock Agreement or in an employment or consulting agreement with the Restricted
Stock Participant, or the Board, in its discretion, otherwise determines to
waive such forfeiture.
(F) Receipt of Stock Certificates. Each Restricted Stock Participant
who receives a Restricted Stock Award shall be issued one or more stock
certificates in respect of such shares of Restricted Stock. Any such stock
certificates for shares of Restricted Stock shall be registered in the name of
the Restricted Stock Participant but shall be appropriately legended and
returned to the Company or its agent by the recipient, together with a stock
power or other appropriate instrument of transfer, endorsed in blank by the
recipient. Notwithstanding anything in the foregoing to the contrary, in lieu of
the issuance of certificates for any shares of Restricted Stock during the
applicable Restriction Period, a "book entry" (i.e., a computerized or manual
entry) may be made in the records of the Company, or its designated agent, as
the Board, in its discretion, may deem appropriate, to evidence the ownership of
such shares of Restricted Stock in the name of the applicable Restricted Stock
Participant. Such records of the Company or such agent shall, absent manifest
error, be binding on all Restricted Stock Participants hereunder. The holding of
shares of Restricted Stock by the Company or its agent, or the use of book
entries to evidence the ownership of shares of Restricted Stock, in accordance
with this Section 6(f), shall not affect the rights of Restricted Stock
Participants as owners of their shares of Restricted Stock, nor affect the
Restriction Period applicable to such shares under the Plan or the Restricted
Stock Agreement.
(G) Dividends. A Restricted Stock Participant who holds outstanding
shares of Restricted Stock shall not be entitled to any dividends paid thereon,
other than dividends in the form of the Company's stock.
(H) Expiration of Restriction Period. A Restricted Stock
Participant's shares of Restricted Stock shall become free of the foregoing
restrictions on the earlier of a Change in Control or the expiration of the
applicable Restriction Period, and the Company shall, subject to Sections 8(a)
and 8(b), then deliver stock certificates evidencing such Stock to such
Restricted Stock Participant. Such certificates shall be freely transferable,
subject to any market black-out periods which may be imposed by the Company from
time to time or insider trading policies to which the Restricted Stock
Participant may at the time be subject.
(I) Substitution of Restricted Stock Awards. The Board may accept
the surrender of outstanding shares of Restricted Stock (to the extent that the
Restriction Period or other restrictions applicable to such shares have not yet
lapsed) and grant new Restricted Stock Awards in substitution for such
Restricted Stock.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARDS.
(A) Restricted Stock Unit Award Agreement. Each Restricted Stock
Unit Award shall be evidenced by a Restricted Stock Unit Agreement in
substantially the form attached hereto as Annex C or such other form as may be
approved by the Board. Each Restricted Stock Unit Agreement shall be executed by
the Company and the Restricted Stock Unit Participant to whom
11
such Restricted Stock Unit Award has been granted, unless the Restricted Stock
Unit Agreement provides otherwise; two or more Restricted Stock Unit Awards
granted to a single Restricted Stock Unit Participant may, however, be combined
in a single Restricted Stock Unit Agreement. A Restricted Stock Unit Agreement
shall not be a precondition to the granting of a Restricted Stock Unit Award;
however, no person shall be entitled to receive any shares of Stock pursuant to
a Restricted Stock Unit Award unless and until the Restricted Stock Unit
Participant to whom the Restricted Stock Unit Award shall have been granted (i)
shall have executed and delivered to the Company a Restricted Stock Unit
Agreement or other instrument evidencing the Restricted Stock Unit Award, unless
such Restricted Stock Unit Agreement provides otherwise, (ii) has satisfied the
applicable federal, state, local and/or foreign income and employment
withholding tax liability with respect to the shares of Stock which vest or
become issuable under the Restricted Stock Unit Award and (iii) has otherwise
complied with all the other applicable terms and conditions of the Restricted
Stock Unit Award.
(B) Restricted Stock Unit Awards Subject to Plan. All Restricted
Stock Unit Awards under the Plan shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith, as the Board shall
determine and which are set forth in the applicable Restricted Stock Unit
Agreement.
(I) The Restricted Stock Units subject to a Restricted Stock
Unit Award shall entitle the Restricted Stock Unit Participant to receive the
shares of Stock underlying those Units upon the attainment of designated
performance goals or the satisfaction of specified employment or service
requirements or upon the expiration of a designated time period following the
attainment of such goals or the satisfaction of the applicable service period.
The Board shall have the discretionary authority to determine the performance
milestones or service period required for the vesting of the Restricted Stock
Units and the date or dates when the shares of Stock which vest under those
Restricted Stock Units are actually to be issued. The Board may alternatively
provide the Restricted Stock Unit Participant with the right to elect the issue
date or dates for the shares of Stock which vest under his or her Restricted
Stock Unit Award. The issuance of vested shares under the Restricted Stock Unit
Award may be deferred to a date following the termination of the Restricted
Stock Unit Participant's employment or service with the Company and its
Subsidiaries.
(II) The Restricted Stock Unit Participant shall not have any
stockholder rights with respect to the shares of Stock subject to his or her
Restricted Stock Unit Award until that Award vests and the shares of Stock are
actually issued thereunder. However, dividend-equivalent units may, in the sole
discretion of the Board, be paid or credited, either in cash or in actual or
phantom shares of Stock, on one or more outstanding Restricted Stock Units,
subject to such terms and conditions as the Board may deem appropriate.
(III) An outstanding Restricted Stock Unit Award shall
automatically terminate, and no shares of Stock shall actually be issued in
satisfaction of that Award, if the performance goals or service requirements
established for such Award are not attained or satisfied. The Board, however,
shall have the discretionary authority to issue vested shares of Stock under one
or more outstanding Restricted Stock Unit Awards as to which the designated
performance goals or service requirements have not been attained or satisfied.
12
(IV) Service requirements for the vesting of Restricted Stock
Unit Awards may include service as an Employee, Consultant or non-employee
Director.
(C) No Cash Payment. Restricted Stock Unit Awards shall not require
any cash payment from the Restricted Stock Unit Participant to whom such
Restricted Stock Unit Award is made, either at the time such Award is made or at
the time any shares of Stock become issuable under that Award. However, the
issuance of such shares shall be subject to the Restricted Stock Unit
Participant's satisfaction of all applicable federal, state, local and/or
foreign income and employment withholding taxes.
(D) Transferability. The Restricted Stock Unit Participant who
receives a Restricted Stock Unit Award shall not be permitted to sell, transfer,
pledge, assign, encumber or otherwise dispose of his or her interest in such
Award or the underlying shares of Stock, whether by operation of law or
otherwise, and such Award shall not be made subject to execution, attachment or
similar process. Any attempt by such Restricted Stock Unit Participant to do so
shall constitute the immediate and automatic forfeiture of such Restricted Stock
Unit Award. Notwithstanding the foregoing, any shares of Stock which vest under
the Restricted Stock Unit Agreement but which remain unissued at the time of the
Restricted Stock Unit Participant's death shall be issued to the beneficiary
most recently named by such Restricted Stock Unit Participant in a written
designation thereof filed with the Company, or, in lieu of any such surviving
beneficiary, as designated by the Restricted Stock Unit Participant by will or
by the laws of descent and distribution. In the event such vested shares of
Stock are to be issued to the executors, administrators, heirs or distributees
of the estate of a deceased Restricted Stock Unit Participant, or his or her
designated beneficiary, in any such case pursuant to the terms and conditions of
the Plan and the applicable Restricted Stock Unit Agreement and in accordance
with such terms and conditions as may be specified from time to time by the
Board, the Company shall be under no obligation to effect such issuance unless
and until the Board is satisfied that each person to receive such Stock is the
duly appointed legal representative of the deceased Restricted Stock Unit
Participant's estate or the proper legatee or distributee thereof or the named
beneficiary of such Restricted Stock Unit Participant.
(E) Forfeiture of Restricted Stock Units. If the Restricted Stock
Unit Participant's Continuous Status as an Employee, Director or Consultant
terminates for any reason, all of the Restricted Stock Units subject to his or
her outstanding Restricted Stock Unit Awards shall, to the extent not vested at
that time, be forfeited, and no shares of Stock shall be issued pursuant to
those forfeited Restricted Stock Units, unless the Board has provided in the
Restricted Stock Unit Agreement or in an employment or consulting agreement with
the Restricted Stock Unit Participant that no such forfeiture shall occur, or
the Board, in its sole discretion, otherwise determines to waive such
forfeiture.
(F) Issuance of Stock Certificates. Each Restricted Stock Unit
Participant who becomes entitled to an issuance of shares of Stock following the
vesting of his or her Restricted Stock Unit Award shall, subject to Sections
8(a) and 8(b), be issued one or more stock certificates for those shares.
Subject to such Sections 8(a) and 8(b), each such stock certificate shall be
registered in the name of the Restricted Stock Unit Participant and shall be
freely transferable, subject to any market black-out periods which may be
imposed by the Company from time to time
13
or insider trading policies to which the Restricted Stock Unit Participant may
at the time be subject.
8. CONDITIONS ON EXERCISE OF OPTIONS AND ISSUANCE OF SHARES.
(A) Securities Law Compliance. The Plan, the grant of Options and
Restricted Stock or Restricted Stock Unit Awards thereunder, the exercise of
Options thereunder and the obligation of the Company to issue shares of Stock on
the exercise of Options, at the expiration of the applicable Restriction Period
for Restricted Stock or upon the occurrence of the designated issuance date for
shares of Stock subject to vested Restricted Stock Units, shall be subject to
all applicable Federal and state laws, rules and regulations and to such
approvals by any government or regulatory agency as may be required, in the
opinion of the Board. Options may not be exercised, Restricted Stock and
Restricted Stock Unit Awards may not be granted, and shares of Stock may not be
issued if any such action would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed. No Option may be exercised unless (i) a registration statement
under the Securities Act shall at the time of exercise of the Option be in
effect with respect to the shares issuable upon exercise of the Option or (ii)
in the opinion of legal counsel to the Company, the shares issuable upon
exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
No Stock may be issued in connection with a Restricted Stock or Restricted Stock
Unit Award unless (i) a registration statement under the Securities Act shall at
the time of issuance of the Stock be in effect with respect to the shares of
Stock to be issued or (ii) in the opinion of legal counsel to the Company, the
shares of Stock to be issued on expiration of the applicable Restriction Period
or upon the designated issuance date for vested Restricted Stock Units may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of any
Option and the issuance of any Stock in connection with a Restricted Stock or
Restricted Stock Unit Award, the Company may require the Optionee or the
Restricted Stock or Restricted Stock Unit Participant to satisfy any
qualifications that may be necessary or appropriate to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.
(B) Investment Representations. The Company may require any Optionee
or a Restricted Stock or Restricted Stock Unit Participant, or any person to
whom an Option or Restricted Stock or Restricted Stock Unit Award is
transferred, as a condition of exercising such Option or receiving shares of
Stock pursuant to such Restricted Stock or Restricted Stock Unit Award, to (A)
give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option or receiving such
Stock, and (B) to give written assurances satisfactory to the Company stating
that such person is acquiring the
14
Stock for such person's own account and not with any present intention of
selling or otherwise distributing the Stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall not apply if (1) the
issuance of the Stock has been registered under a then currently effective
registration statement under the Securities Act, or (2) counsel for the Company
determines as to any particular requirement that such requirement need not be
met in the circumstances under the then applicable securities laws. The Company
may, with the advice of its counsel, place such legends on stock certificates
issued under the Plan as the Company deems necessary or appropriate to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Stock.
9. ADJUSTMENTS ON CERTAIN EVENTS.
(A) No Effect on Powers of Board or Shareholders. The existence of
the Plan and any Options or any Restricted Stock or Restricted Stock Unit Awards
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the capital structure or
business of the Company or any of its subsidiaries, any merger or consolidation
of the Company or a subsidiary of the Company, any issue of debt, preferred or
prior preference stock ahead of or affecting Stock, the authorization or
issuance of additional shares of Stock, the dissolution or liquidation of the
Company or its subsidiaries, any sale or transfer of all or part of its assets
or business or any other corporate act or proceeding.
(B) Changes in Control.
(I) Options. Each Option Agreement shall provide that in the
event that the Company is subject to a Change in Control:
(A) immediately prior thereto all outstanding Options
shall be automatically accelerated and become immediately exercisable as to all
of the shares of Stock covered thereby, notwithstanding anything to the contrary
in the Plan or the Option Agreement; and
(B) the Board may, in its discretion, and on such terms
and conditions as it deems appropriate, by resolution adopted by the Board or by
the terms of any agreement of sale, merger or consolidation giving rise to the
Change in Control, provide that, without Optionee's consent, the shares subject
to an Option may (1) continue as an immediately exercisable Option of the
Company (if the Company is the surviving corporation), (2) be assumed as
immediately exercisable Options by the surviving corporation or its parent, (3)
be substituted by immediately exercisable options granted by the surviving
corporation or its parent with substantially the same terms for the Option, or
(4) be cancelled after payment to the Optionee of an amount in cash or other
consideration delivered to stockholders of the Company in the transaction
resulting in a Change in Control of the Company equal to the total number of
shares subject to the Option multiplied by the remainder of (i) the amount per
share to be received by holders of the Company's Stock in the sale, merger or
consolidation, minus (ii) the exercise price per share of the shares subject to
the Option.
15
(II) Restricted Stock Awards. Each Restricted Stock Agreement
shall provide that, immediately prior to a Change in Control, all restrictions
imposed by the Board on any outstanding Restricted Stock Award shall be
automatically canceled, the Restriction Period applicable to all outstanding
Restricted Stock Awards shall immediately terminate, and such Restricted Stock
Awards shall be fully vested, subject to the Restricted Stock Participant's
satisfaction of all applicable federal, state, local and/or foreign income and
employment withholding taxes. Any applicable performance goals shall be deemed
achieved at not less than the target level, notwithstanding anything to the
contrary in the Plan or the Restricted Stock Agreement.
(III) Restricted Stock Unit Awards. Each Restricted Stock Unit
Agreement shall provide that, immediately upon a Change in Control, the
Restricted Stock Units subject to such Agreement shall automatically vest in
full, and the shares subject to those vested Restricted Stock Units shall be
issued, notwithstanding any deferred issuance date otherwise in effect at the
time for such shares, subject to the Restricted Stock Unit Participant's
satisfaction of all applicable federal, state, local and/or foreign income and
employment withholding taxes. Accordingly, all performance milestones or service
requirements in effect for those Restricted Stock Units shall be deemed to have
been fully achieved or completed, notwithstanding anything to the contrary in
the Plan or the Restricted Stock Unit Agreement.
(C) Adjustment Of Shares. The aggregate number, class and kind of
shares of stock available for issuance under the Plan, the aggregate number,
class and kind of shares of stock as to which Restricted Stock or Restricted
Stock Unit Awards may be granted, the limitation set forth in Section 4(c) on
the number of shares of Stock that may be issued by a single officer under the
Plan, the number, class and kind of shares under each outstanding Restricted
Stock or Restricted Stock Unit Award, the exercise price of each Option and the
number of shares purchasable on exercise of such Option shall be appropriately
adjusted by the Board in its discretion to preserve the benefits or potential
benefits intended to be made available under the Plan or with respect to any
outstanding Options or any outstanding Restricted Stock or Restricted Stock Unit
Awards or otherwise necessary to reflect any such change, if the Company shall
(i) pay a dividend in, or make a distribution of, shares of Stock (or securities
convertible into, exchangeable for or otherwise entitling a holder thereof to
receive Stock), or evidences of indebtedness or other property or assets, on
outstanding Stock, (ii) subdivide the outstanding shares of Stock into a greater
number of shares, (iii) combine the outstanding shares of Stock into a smaller
number of shares or (iv) issue any shares of its capital stock in a
reclassification of the Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the resulting
corporation). An adjustment made pursuant to this Section 9(c) shall, in the
case of a dividend or distribution, be made as of the record date therefor and,
in the case of a subdivision, combination or reclassification, be made as of the
effective date thereof. In case of any adjustment pursuant to this Section 9(c)
with respect to an Option, the total number of shares and the number of shares
or other units of such other securities purchasable on exercise of the Option
immediately prior thereto shall be adjusted so that the Optionee shall be
entitled to receive at the same aggregate purchase price the number of shares of
Stock and the number of shares or other units of such other securities that the
Optionee would have owned or would have been entitled to receive immediately
following the occurrence of any of the events described above had the Option
been exercised in full immediately prior to the occurrence (or applicable record
date) of such event. If, as a result of any adjustment pursuant to
16
this Section 9(c), the Optionee shall become entitled to receive shares of two
or more classes or series of securities of the Company, the Board shall
equitably determine the allocation of the adjusted exercise price between or
among shares or other units of such classes or series and shall notify the
Optionee of such allocation. Any new or additional shares or securities received
by a Restricted Stock Participant shall be subject to the same terms and
conditions, including the Restriction Period, as related to the original
Restricted Stock Award.
(D) Receipt of Assets Other Than Stock. If at any time, as a result
of an adjustment made pursuant to this Section 9, an Optionee or a Restricted
Stock or Restricted Stock Unit Participant shall become entitled to receive any
shares of capital stock or shares or other units of other securities or property
or assets other than Stock, the number of such other shares or units so
receivable on any exercise of the Option or expiration of the Restriction Period
or the designated issuance date for the securities subject to vested Restricted
Stock Units shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
shares of Stock in this Section 9, and the provisions of this Plan with respect
to the shares of Stock shall apply, with necessary changes in points of detail,
on like terms to any such other shares or units.
(E) Fractional Shares. All calculations under this Section 9 shall
be made to the nearest cent or to the nearest one-hundredth of a share, as the
case may be, but in no event shall the Company be obligated to issue any
fractional share.
(F) Inability to Prevent Acts Described in Section 9; Uniformity of
Actions Not Required. No Optionee and no Restricted Stock or Restricted Stock
Unit Participant shall have or be deemed to have any right to prevent the
consummation of the acts described in this Section 9 affecting the number of
shares of Stock subject to any Option or any Restricted Stock or Restricted
Stock Unit Award held by the Optionee or the Restricted Stock or Restricted
Stock Unit Participant. Any actions or determinations by the Board under this
Section 9 need not be uniform as to all outstanding Options or outstanding
Restricted Stock or Restricted Stock Unit Awards, and need not treat all
Optionees or all Restricted Stock or Restricted Stock Unit Participants
identically.
10. TAX WITHHOLDING OBLIGATIONS.
(A) General Authorization. The Company is authorized to take
whatever actions are necessary and proper to satisfy all obligations of
Optionees and Restricted Stock and Restricted Stock Unit Participants
(including, for purposes of this Section 10, any other person entitled to
exercise an Option or receive shares of Stock pursuant to a Restricted Stock or
Restricted Stock Unit Award under the Plan) for the payment of all federal,
state, local and/or foreign taxes in connection with any Option grant or
exercise, any Restricted Stock Award or any Stock issuance pursuant to a vested
Restricted Stock Unit Award (including, but not limited to, actions pursuant to
the following Section 10(b)).
(B) Withholding Requirement and Procedure.
(I) Options. Whenever the Company proposes or is required to
issue or transfer shares of Stock with respect to an Option, the Company shall
have the right to require
17
the grantee to remit to the Company an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares, including, for each Optionee who is
an Employee, the employee portion of the FICA (Social Security and Medicare)
taxes. Alternatively, the Company may issue or transfer such shares net of the
number of shares sufficient to satisfy the withholding tax requirements. For
withholding tax purposes, the shares of Stock shall be valued on the date the
withholding obligation is incurred.
(II) Restricted Stock. Each Restricted Stock Participant
shall, no later than the date as of which the value of the Restricted Stock
Award first becomes includible in the gross income of the Restricted Stock
Participant for income tax purposes, pay to the Company in cash, or make
arrangements satisfactory to the Company regarding payment to the Company of,
any taxes of any kind required by law to be withheld with respect to the Stock
or other property subject to such Restricted Stock Award, including, for each
Restricted Stock Participant who is an Employee, the employee portion of the
FICA (Social Security and Medicare) taxes applicable to the shares of Stock or
other property. No Stock shall be delivered to a Restricted Stock Participant
with respect to a Restricted Stock Award until such payment or arrangement has
been made. The Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to such
Restricted Stock Participant. Notwithstanding the above, the Board may, in its
discretion and pursuant to procedures approved by the Board, permit the
Restricted Stock Participant to elect withholding by the Company of Stock or
other property otherwise deliverable to such Restricted Stock Participant
pursuant to his or her Restricted Stock Award, provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
the Company's required tax withholding obligations using the minimum statutory
withholding rates for federal, state and/or local tax purposes, including
payroll taxes, that are applicable to supplemental taxable income in full or
partial satisfaction of such tax obligations, based on the Fair Market Value of
the Stock on the payment date.
(C) Section 83(b) Election. If a Restricted Stock Participant makes
an election under Code Section 83(b), or any successor section thereto, to be
taxed with respect to a Restricted Stock Award as of the date of transfer of the
Restricted Stock rather than as of the date or dates on which the Restricted
Stock Participant would otherwise be taxable under Code Section 83(a), such
Restricted Stock Participant shall deliver a copy of such election to the
Company immediately after filing such election with the Internal Revenue
Service. Neither the Company nor any of its affiliates shall have any liability
or responsibility relating to or arising out of the filing or not filing of any
such election or any defects in its construction.
(D) Restricted Stock Units. Each Restricted Stock Unit Participant
shall comply with the following tax withholding requirements:
(I) INCOME TAXES. The Restricted Stock Unit Participant shall
no later than the date as of which the shares of Stock which vest under his or
her vested Restricted Stock Unit Award first becomes includible in his or her
gross income for income tax purposes, pay to the Company in cash, or make
arrangements satisfactory to the Company regarding payment to the Company of,
any income taxes required by law to be withheld with respect to the Stock or
other property issuable pursuant to such vested Restricted Stock Unit Award.
18
(II) EMPLOYMENT TAXES. Any Restricted Stock Unit Participant
who is an Employee shall be liable for the payment of the employee portion of
the FICA (Social Security and Medicare) taxes applicable to the shares of Stock
subject to his or her Restricted Stock Unit Award at the time those shares vest.
The FICA taxes shall be based upon the Fair Market Value of the shares of Stock
on the date those shares vest under the Restricted Stock Unit Award.
No Stock shall be delivered to a Restricted Stock Unit
Participant with respect to a Restricted Stock Unit Award until such income and
employment withholding taxes have been collected. The Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to such Restricted Stock Unit Participant.
Notwithstanding the above, the Board may, in its discretion and pursuant to
procedures approved by the Board, permit the Restricted Stock Unit Participant
to satisfy the federal and state income withholding taxes applicable to the
issued shares of Stock, together with any FICA withholding taxes due at the time
of such Stock issuance, by having the Company withhold shares of Stock (based on
the Fair Market Value of the Stock on the issuance date) or other property
otherwise deliverable to such Restricted Stock Unit Participant in settlement of
his or her vested Restricted Stock Unit Award, provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
the Company's required income tax withholding obligations using the minimum
statutory withholding rates for federal, state and/or local tax purposes, that
are applicable to supplemental taxable income
11. AMENDMENT, TERMINATION OR SUSPENSION OF THE PLAN.
(A) Amendment, Termination or Suspension of Plan. The Board may, at
any time and with or without prior notice, amend, alter, suspend, or terminate
the Plan, retroactively or otherwise, for any reason; provided, however, that
unless otherwise required by law or specifically provided herein, no such
amendment, alteration, suspension, or termination shall be made that would
materially impair the previously accrued rights of any Optionee or any
Restricted Stock or Restricted Stock Unit Participant with respect to his or her
Option or his or her Restricted Stock or Restricted Stock Unit Award without his
or her written consent.
(B) Amendment of Options and Restricted Stock and Restricted Stock
Unit Awards. The Board may amend the terms of any Option or any Restricted Stock
or Restricted Stock Unit Award previously granted, including any Option
Agreement or any Restricted Stock or Restricted Stock Unit Agreement,
retroactively or prospectively, but no such amendment shall materially impair
the previously accrued rights of any Optionee or any Restricted Stock or
Restricted Stock Unit Participant with respect to any such Option or any
Restricted Stock or Restricted Stock Unit Award without his or her written
consent.
(C) Automatic Termination of Plan. Unless sooner terminated, the
Plan shall terminate on the date that the aggregate the total number of shares
of Stock subject to the Plan have been issued pursuant to the Plan's provisions,
and no shares covered by a Restricted Stock Award are any longer subject to any
Restriction Period.
19
12. RIGHTS OF EMPLOYEES, DIRECTORS, CONSULTANTS AND OTHER PERSONS.
Neither this Plan nor any Options or Restricted Stock or Restricted
Stock Unit Awards shall confer on any Optionee, Restricted Stock or Restricted
Stock Unit Participant or other person:
(A) Any rights or claims under the Plan except in accordance with
the provisions of the Plan and the applicable agreement;
(B) Any right with respect to continuation of employment by the
Company or any Subsidiary or engagement as a Consultant or Director, nor shall
they interfere in any way with the right of the Company or any Subsidiary that
employs or engages an Optionee or a Restricted Stock or Restricted Stock Unit
Participant to terminate that person's employment or engagement at any time with
or without cause.
(C) Any right to be selected to participate in the Plan or to be
granted an Option or a Restricted Stock or Restricted Stock Unit Award; or
(D) Any right to receive any bonus, whether payable in cash or in
Stock, or in any combination thereof, from the Company or its subsidiaries, nor
be construed as limiting in any way the right of the Company or its subsidiaries
to determine, in its sole discretion, whether or not it shall pay any employee
or consultant bonus, and, if so paid, the amount thereof and the manner of such
payment.
13. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT.
So long as a class of the Company's equity securities is registered
under Section 12 of the Exchange Act, the Company intends that the Plan shall
comply in all respects with Rule 16b-3. If during such time any provision of
this Plan is found not to be in compliance with Rule 16b-3, that provision shall
be deemed to have been amended or deleted as and to the extent necessary to
comply with Rule 16b-3, and the remaining provisions of the Plan shall continue
in full force and effect without change. All transactions under the Plan during
such time shall be executed in accordance with the requirements of Section 16 of
the Exchange Act and the applicable regulations promulgated thereunder.
14. LIMITATION OF LIABILITY AND INDEMNIFICATION.
(A) Contractual Liability Limitation. Any liability of the Company
or its subsidiaries to any Optionee or any Restricted Stock or Restricted Stock
Unit Participant with respect to any Option or any Restricted Stock or
Restricted Stock Unit Award shall be based solely on contractual obligations
created by the Plan and the Option Agreements and the Restricted Stock or
Restricted Stock Unit Agreements outstanding thereunder.
(B) Indemnification. In addition to such other rights of
indemnification as they may have as Directors or officers, Directors and
officers to whom authority to act for the Board or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any
20
action, suit or proceeding, or in connection with any appeal therein, 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 right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) 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 person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
15. MISCELLANEOUS
(A) Effective Date. The effective date of the Plan shall be the date
the Plan is approved by the stockholders of the Company or such later date as
shall be determined by the Board.
(B) Acceptance of Terms and Conditions of Plan. By accepting any
benefit under the Plan, each Optionee and each Restricted Stock or Restricted
Stock Unit Participant and each person claiming under or through such Optionee
or such Restricted Stock or Restricted Stock Unit Participant shall be
conclusively deemed to have indicated their acceptance and ratification of, and
consent to, all of the terms and conditions of the Plan and any action taken
under the Plan by the Company, the Board or the Committee, in any case in
accordance with the terms and conditions of the Plan.
(C) No Effect on Other Arrangements. Neither the adoption of the
Plan nor anything contained herein shall affect any other compensation or
incentive plans or arrangements of the Company or its subsidiaries, or prevent
or limit the right of the Company or any subsidiary to establish any other forms
of incentives or compensation for their Employees, Directors or Consultants or
grant or assume restricted stock or other rights otherwise than under the Plan.
(D) Choice of Law. The Plan shall be governed by and construed in
accordance with the laws of the State of California, without regard to such
state's conflict of law provisions, and, in any event, except as superseded by
applicable Federal law.
21
ANNEX A
-------
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
Dear ____________:
Waste Connections, Inc. (the "Company"), pursuant to its 2004 Equity
Incentive Plan (the "Plan"), has granted to you an option to purchase shares of
the common stock of the Company ("Stock"). This option is not intended to
qualify and will not be treated as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
The grant under this Nonqualified Stock Option Agreement (the
"Agreement") is in connection with and in furtherance of the Company's
compensatory benefit plan for participation of the Company's Employees,
Directors and Consultants. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Plan.
The option granted hereunder is subject to and governed by the
following terms and conditions:
1. AWARD DATE: .
2. NUMBER OF SHARES SUBJECT TO OPTION: .
3. VESTING SCHEDULE. Subject to the limitations herein and in the
Plan, this option shall become exercisable (vest) as follows:
Number of Shares Date of Earliest Exercise
(Installment) (Vesting)
The installments provided for are cumulative. Each such installment that becomes
exercisable shall remain exercisable until expiration or earlier termination of
the option.
4. EXERCISE PRICE.
(a) The exercise price of this option is $______________
per share.
(b) Payment of the exercise price per share is due in
full in cash (including check) on exercise of all or any part of each
installment that has become exercisable by you; provided that, if at the time of
exercise the Stock is publicly traded and quoted regularly in the WALL STREET
JOURNAL, payment of the exercise price, to the extent permitted by the Company
and applicable statutes and regulations, may be made by having the Company
withhold shares of Stock issuable on such exercise, by delivering shares of
Stock already owned by you, by cashless exercise described in Section 5(d) of
the Plan and complying with its provisions, or by delivering a combination of
such forms of payment. Such Stock (i) shall be valued at its Fair Market Value
at the close of business on the date of exercise, (ii) if originally acquired
from the Company,
1
must have been held for the period required to avoid a charge to the Company's
reported earnings, and (iii) must be owned free and clear of any liens, claims,
encumbrances or security interests.
5. PARTIAL OR EARLY EXERCISE.
(a) Subject to the provisions of this Agreement, you may
elect at any time during your Continuous Status as an Employee, Director or
Consultant to exercise this option as to any part or all of the shares subject
to this option at any time during the term hereof, including, without
limitation, a time prior to the date of earliest exercise (vesting) stated in
paragraph 3 hereof; provided that:
(i) a partial exercise of this option shall
be deemed to cover first vested shares and then unvested shares next vesting;
(ii) any shares so purchased that shall not
have vested as of the date of exercise shall be subject to the purchase option
in favor of the Company as described in the Early Exercise Stock Purchase
Agreement available from the Company; and
(iii) you shall enter into an Early Exercise
Stock Purchase Agreement in the form available from the Company with a vesting
schedule that will result in the same vesting as if no early exercise had
occurred.
(b) The election provided in this paragraph 5 to
purchase shares on the exercise of this option prior to the vesting dates shall
cease on termination of your Continuous Status as an Employee, Director or
Consultant and may not be exercised from or after the date thereof.
6. FRACTIONAL SHARES. This option may not be exercised for any
number of shares that would require the issuance of anything other than whole
shares.
7. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary herein, this option may not be exercised if the issuance of shares of
Stock upon exercise would constitute a violation of any applicable federal,
state or foreign securities laws or other law or regulations or the requirements
of any stock exchange or market system upon which the Stock may then be listed.
In addition, this option may not be exercised unless (a) a registration
statement under the Securities Act shall at the time of exercise of the option
be in effect with respect to the shares issuable upon exercise of the option or
(b) in the opinion of legal counsel to the Company, the shares issuable upon
exercise of the option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to the exercise of any option, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.
2
8. TERM. The term of this option commences on the date hereof and,
unless sooner terminated as set forth below or in the Plan, terminates on
________________ (which date shall be no more than five years from the award
date in Section 1 of this Agreement). In no event may this option be exercised
on or after the date on which it terminates. This option shall terminate prior
to the expiration of its term on the date of termination of your Continuous
Status as an Employee, Director or Consultant for any reason or for no reason,
unless:
(a) such termination is due to your retirement or
Disability and you do not die within the three months after such termination, in
which event the option shall terminate on the earlier of the termination date
set forth above or six months after such termination of your Continuous Status
as an Employee, Director or Consultant; or
(b) such termination is due to your death, or such
termination is due to your retirement or Disability and you die within three
months after such termination, in which event the option shall terminate on the
earlier of the termination date set forth above or the first anniversary of your
death.
Notwithstanding any of the foregoing provisions to the contrary
however, this option may be exercised following termination of your Continuous
Status as an Employee, Director or Consultant only as to that number of shares
as to which it shall have been exercisable under Section 2 of this Agreement on
the date of such termination.
9. CONDITIONS ON EXERCISE.
(a) This option may be exercised, to the extent
specified above, by delivering a notice of exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to Section 7 of the Plan.
(b) By exercising this option you agree that the Company
(or a representative of the underwriters) may, in connection with an
underwritten registration of the offering of any securities of the Company under
the Exchange Act, require that you not sell or otherwise transfer or dispose of
any shares of Stock or other securities of the Company during such period (not
to exceed 180 days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Exchange Act as may be
requested by the Company or the representative of the underwriters. For purposes
of this restriction, you will be deemed to own securities which (A) are owned
directly or indirectly by you, including securities held for your benefit by
nominees, custodians, brokers or pledgees, (B) may be acquired by you within
sixty days of the Effective Date, (C) are owned directly or indirectly, by or
for your brothers or sisters (whether by whole or half blood), spouse, ancestors
and lineal descendants, or (D) are owned, directly or indirectly, by or for a
corporation, partnership, estate or trust of which you are a shareholder,
partner or beneficiary, but only to the extent of your proportionate interest
therein as a shareholder, partner or beneficiary thereof. You further agree that
the Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such period.
10. ADJUSTMENTS ON CERTAIN EVENTS.
(a) In the event that the Company is subject to a Change
in Control:
3
(i) immediately prior thereto this option
shall be automatically accelerated and become immediately exercisable as to all
of the shares of Stock covered hereby, notwithstanding anything to the contrary
in the Plan or this Agreement; and
(ii) the Board may, in its discretion, and
on such terms and conditions as it deems appropriate, by resolution adopted by
the Board or by the terms of any agreement of sale, merger or consolidation
giving rise to the Change in Control, provide that, without Optionee's consent,
the shares subject to this option may (A) continue as an immediately exercisable
option of the Company (if the Company is the surviving corporation), (B) be
assumed as immediately exercisable options by the surviving corporation or its
parent, (C) be substituted by immediately exercisable options granted by the
surviving corporation or its parent with substantially the same terms for this
option, or (D) be cancelled after payment to Optionee of an amount in cash or
other consideration delivered to stockholders of the Company in the transaction
resulting in a Change in Control of the Company equal to the total number of
shares subject to this option multiplied by the remainder of (1) the amount per
share to be received by holders of the Company's Stock in the sale, merger or
consolidation, minus (2) the exercise price per share of the shares subject to
this option.
(b) The exercise price shall be subject to adjustment
from time to time in the event that the Company shall (i) pay a dividend in, or
make a distribution of, shares of Stock (or securities convertible into,
exchangeable for or otherwise entitling a holder thereof to receive Stock), or
evidences of indebtedness or other property or assets, on outstanding Stock,
(ii) subdivide the outstanding shares of Stock into a greater number of shares,
(iii) combine the outstanding shares of Stock into a smaller number of shares or
(iv) issue any shares of its capital stock in a reclassification of the Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the resulting corporation). An adjustment made
pursuant to this Section 10(b) shall, in the case of a dividend or distribution,
be made as of the record date therefor and, in the case of a subdivision,
combination or reclassification, be made as of the effective date thereof. In
any such case, the total number of shares and the number of shares or other
units of such other securities purchasable on exercise of the option immediately
prior thereto shall be adjusted so that the Optionee shall be entitled to
receive at the same aggregate purchase price the number of shares of Stock and
the number of shares or other units of such other securities that the Optionee
would have owned or would have been entitled to receive immediately following
the occurrence of any of the events described above had the option been
exercised in full immediately prior to the occurrence (or applicable record
date) of such event. If, as a result of any adjustment pursuant to this Section
10(b), the Optionee shall become entitled to receive shares of two or more
classes or series of securities of the Company, the Board shall equitably
determine the allocation of the adjusted exercise price between or among shares
or other units of such classes or series and shall notify the Optionee of such
allocation.
(c) If at any time, as a result of an adjustment made
pursuant to this Section 10, the Optionee shall become entitled to receive any
shares of capital stock or shares or other units of other securities or property
or assets other than Stock, the number of such other shares or units so
receivable on any exercise of the option shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Stock in this Section 10, and the
provisions of this Agreement with respect to the shares of Stock shall apply,
with necessary changes in points of detail, on like terms to any such other
shares or units.
4
(d) All calculations under this Section 10 shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be, but in no event shall the Company be obligated to issue any fractional share
on any exercise of the option.
11. NON-TRANSFERABILITY. This option is generally not transferable,
except by will or by the laws of descent and distribution, unless the Company
expressly permits a transfer, such as to a trust or other entity for estate
planning purposes. Unless the Company approves such a transfer, this option is
exercisable during your life only by you.
12. RIGHTS OF OPTIONEE. This Agreement is not an employment contract
and nothing in this Agreement shall be deemed to create in any way whatsoever
any obligation on your part to continue in the employ of the Company, or of the
Company to continue your employment with the Company. If this option is granted
to you in connection with your performance of services as a Consultant,
references to employment, Employee and similar terms shall be deemed to include
the performance of services as a Consultant; provided that no rights as an
Employee shall arise by reason of the use of such terms.
13. TAX WITHHOLDING OBLIGATIONS. Whenever the Company proposes or is
required to issue or transfer shares of Stock to you with respect to an Option,
the Company shall have the right to require you to remit to the Company an
amount sufficient to satisfy any Federal, state or local withholding tax
requirements, including your applicable share of any employment taxes, prior to
the delivery of any certificate or certificates for such shares. Alternatively,
the Company may issue or transfer such shares net of the number of shares
sufficient to satisfy the withholding tax requirements. For withholding tax
purposes, the shares of Stock shall be valued on the date the withholding
obligation is incurred.
14. NOTICE. Any notice or other communication to be given under or
in connection with this Agreement or the Plan shall be given in writing and
shall be deemed effectively given on receipt or, in the case of notices from the
Company to you, five days after deposit in the United States mail, postage
prepaid, addressed to you at the address specified below or at such other
address as you may hereafter designate by notice to the Company.
15. AGREEMENT SUBJECT TO PLAN. This Agreement is subject to all
provisions of the Plan, a copy of which is attached hereto and made a part of
this Agreement, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of this
Agreement and those of the Plan, the provisions of the Plan shall control.
WASTE CONNECTIONS, INC.
By ____________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Waste Connections, Inc. 2004 Equity Incentive Plan
Notice of Exercise
5
The undersigned:
(a) Acknowledges receipt of the foregoing Nonqualified Stock Option
Agreement and the attachments referenced therein and understands that all rights
and liabilities with respect to the option granted under the Agreement are set
forth in such Agreement and the Plan; and
(b) Acknowledges that as of the date of grant set forth in such
Agreement, the Agreement sets forth the entire understanding between the
undersigned optionee and the Company and its Subsidiaries regarding the
acquisition of Stock pursuant to the option and supersedes all prior oral and
written agreements on that subject with the exception of (i) the options, if
any, previously granted and delivered to the undersigned under stock option
plans of the Company, and (ii) the following agreements only:
NONE: _____________
(Initial)
OTHER: ________________________
________________________
________________________
OPTIONEE
Address:________________________
________________________
6
NOTICE OF EXERCISE
------------------
Waste Connections, Inc.
35 Iron Circle, Suite 200
Folsom, CA 95630-8589 Date of Exercise: __________
Ladies and Gentlemen:
This constitutes notice under my Nonqualified Stock Option Agreement
that I elect to purchase the number of shares of Common Stock ("Stock") of Waste
Connections, Inc. (the "Company") for the price set forth below.
Option Agreement dated: _______________________
Number of shares as
to which option is
exercised: _______________________
Certificates to be
issued in name of: _______________________
Total exercise price: $______________________
Cash payment delivered
herewith: $______________________
Value of __________ shares
of _________________ common
stock delivered herewith:1 $______________________
By this exercise, I agree (i) to provide such additional documents
as you may require pursuant to the terms of the Waste Connections, Inc. 2004
Equity Incentive Plan or the Option Agreement, and (ii) to provide for the
payment by me to you (in the manner designated by you) of your withholding
obligation, if any, relating to the exercise of this option.
I hereby represent, warrant and agree with respect to the shares of
Stock of the Company that I am acquiring by this exercise of the option (the
"Shares") that, if required by the Company (or a representative of the
underwriters) in connection with an underwritten registration of the offering of
any securities of the Company under the Securities Act, I will not sell or
otherwise transfer or dispose of any shares of Stock or other securities of the
Company during such period (not to exceed 180 days) following the effective date
of the registration statement of the Company filed under the Securities Act (the
"Effective Date") as may be requested by the Company or the representative of
the underwriters. For purposes of this restriction, I will be deemed to own
securities that (i) are owned, directly or indirectly by me, including
securities
- ------------------
1 Shares must meet the public trading requirements set forth in the Option
Agreement. Shares must be valued in accordance with the terms of the option
being exercised, must have been owned for the minimum period required in the
Option Agreement, and must be owned free and clear of any liens, claims,
encumbrances or security interests. Certificates must be endorsed or accompanied
by an executed assignment separate from certificate.
7
held for my benefit by nominees, custodians, brokers or pledgees; (ii) may be
acquired by me within sixty days of the Effective Date; (iii) are owned directly
or indirectly, by or for my brothers or sisters (whether by whole or half
blood), spouse, ancestors and lineal descendants; or (iv) are owned, directly or
indirectly, by or for a corporation, partnership, estate or trust of which I am
a shareholder, partner or beneficiary, but only to the extent of my
proportionate interest therein as a shareholder, partner or beneficiary thereof.
I further agree that the Company may impose stop-transfer instructions with
respect to securities subject to this restriction until the end of such period.
Very truly yours,
8
ANNEX B
-------
RESTRICTED STOCK AGREEMENT
--------------------------
Dear ______________________:
Waste Connections, Inc. (the "Company"), pursuant to its 2004 Equity
Incentive Plan (the "Plan") has granted to you an award of Restricted Stock
("Award") in shares of common stock of the Company ("Stock"). The Restricted
Stock will be issued to you subject to restrictions on transfer and otherwise,
which will lapse over the Restricted Period, provided that you maintain
Continuous Status as an Employee, Director or Consultant.
The grant under this Restricted Stock Agreement (the "Agreement") is
in connection with and in furtherance of the Company's compensatory benefit plan
for participation of the Company's Employees, Directors and Consultants.
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Plan.
The Award granted hereunder is subject to and governed by the
following terms and conditions:
1. AWARD DATE: ________________.
2. NUMBER OF SHARES SUBJECT TO AWARD: ______________.
3. PURCHASE PRICE. The purchase price for each share of Stock
awarded by this Agreement is $ _______________.
4. VESTING SCHEDULE. The Award of Restricted Stock shall be deemed
non-forfeitable and such Stock shall no longer be considered Restricted Stock on
the earlier of a Change in Control or the expiration of the Restriction Period
on the following dates with respect to the following percentages of the total
shares of Restricted Stock awarded, and the Company shall, within a reasonable
time and subject to Section 5, deliver stock certificates evidencing such Stock
to you:
(A) SCHEDULE OF EXPIRATION OF RESTRICTION PERIOD. The
overall restriction period, which begins on the date of the grant of the Award
and ends on the ________ anniversary of the grant of the Award (the "Restriction
Period"), expires in _____ equal phases:
Restriction Period Expires with Respect to
the Following Percentage of Total Shares of
Date Restricted Stock Awarded
- -------------------------------------------------------- -------------------------------------------
On grant 0%
As of ____________, 20__ (first anniversary of grant) __%
[As of ____________, 20__ (second anniversary of grant)] [__%]
[As of ____________, 20__ (third anniversary of grant)] [__%]
[As of ____________, 20__ (fourth anniversary of grant)] [__%]
1
(B) FORFEITURE OF RESTRICTED STOCK. If, during the
Restriction Period, your Continuous Status as an Employee, Director or
Consultant terminates for any reason, you will forfeit any shares of Restricted
Stock as to which the Restriction Period has not yet expired.
5. CONDITIONS ON AWARDS. Notwithstanding anything to the contrary
herein:
(A) SECURITIES LAW COMPLIANCE. Awards may not be granted
and shares of stock may not be issued if either such action would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system on
which the Stock may then be listed. In addition, no Stock may be issued unless
(a) a registration statement under the Securities Act shall at the time of
issuance of the Stock be in effect with respect to the shares of Stock to be
issued or (b) in the opinion of legal counsel to the Company, the shares of
Stock to be issued on expiration of the applicable Restriction Period may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the issuance of any
Stock, the Company may require you to satisfy any qualifications that may be
necessary or appropriate to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
(B) INVESTMENT REPRESENTATION. The Company may require
you, or any person to whom an Award is transferred, as a condition of receiving
shares of Stock pursuant to such Award, to (A) give written assurances
satisfactory to the Company as to your knowledge and experience in financial and
business matters or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business
matters, and that you are capable of evaluating, alone or together with the
purchaser representative, the merits and risks of receiving such Stock, and (B)
to give written assurances satisfactory to the Company stating that you are
acquiring the Stock for your own account and not with any present intention of
selling or otherwise distributing the Stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall not apply if (1) the
issuance of the Stock has been registered under a then currently effective
registration statement under the Securities Act, or (2) counsel for the Company
determines as to any particular requirement that such requirement need not be
met in the circumstances under the then applicable securities laws.
6. NON-TRANSFERABILITY OF AWARD. During the Restriction Period
stated herein, you shall not sell, transfer, pledge, assign, encumber or
otherwise dispose of the Restricted Stock whether by operation of law or
otherwise and shall not make such Restricted Stock subject to execution,
attachment or similar process. Any attempt by you to do so shall constitute the
immediate and automatic forfeiture of such Award. Notwithstanding the foregoing,
you may designate the payment or distribution of the Award (or any portion
thereof) after your death to the beneficiary most recently named by you in a
written designation thereof filed with the Company, or, in lieu of any such
surviving beneficiary, as designated by you by will or by the laws of descent
and distribution. In the event any Award is to be paid or distributed to the
executors, administrators, heirs or distributees of your estate, or to your
beneficiary, in any such case pursuant to the terms and conditions of the Plan
and in accordance with such terms and
2
conditions as may be specified from time to time by the Committee, the Company
shall be under no obligation to issue Stock thereunder unless and until the
Committee is satisfied that the person or persons to receive such Stock is the
duly appointed legal representative of your estate or the proper legatee or
distributee thereof or your named beneficiary.
7. ADJUSTMENTS ON CERTAIN EVENTS.
(A) CHANGES IN CONTROL. Immediately prior to a Change in
Control, all restrictions imposed by the Committee on any outstanding Award
shall be immediately automatically canceled, the Restriction Period shall
immediately terminate and the Award shall be fully vested, notwithstanding
anything to the contrary in the Plan or the Agreement.
(B) ADJUSTMENT OF SHARES. The number, class and kind of
shares under the Award shall be appropriately adjusted by the Committee in its
discretion to preserve the benefits or potential benefits intended to be made
available under the Plan or with respect to the Award or otherwise necessary to
reflect any such change, if the Company shall (i) pay a dividend in, or make a
distribution of, shares of Stock (or securities convertible into, exchangeable
for or otherwise entitling a holder thereof to receive Stock), or evidences of
indebtedness or other property or assets, on outstanding Stock, (ii) subdivide
the outstanding shares of Stock into a greater number of shares, (iii) combine
the outstanding shares of Stock into a smaller number of shares or (iv) issue
any shares of its capital stock in a reclassification of the Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the resulting corporation). An adjustment made pursuant to this
Section 7(b) shall, in the case of a dividend or distribution, be made as of the
record date therefor and, in the case of a subdivision, combination or
reclassification, be made as of the effective date thereof. Any new or
additional shares or securities that you receive are subject to the same terms
and conditions, including the Restriction Period, as related to the original
Award.
(C) RECEIPT OF ASSETS OTHER THAN STOCK. If at any time,
as a result of an adjustment made pursuant to this Section 7, you shall become
entitled to receive any shares of capital stock or shares or other units of
other securities or property or assets other than Stock, the number of such
other shares or units so receivable on expiration of the Restriction Period
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Stock in this Section 7, and the provisions of this Agreement with respect to
the shares of Stock shall apply, with necessary changes in points of detail, on
like terms to any such other shares or units.
(D) FRACTIONAL SHARES. All calculations under this
Section 7 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be, but in no event shall the Company be obligated to
issue any fractional share.
(E) INABILITY TO PREVENT ACTS DESCRIBED IN SECTION 7;
UNIFORMITY OF ACTIONS NOT REQUIRED. No Restricted Stock Participant shall have
or be deemed to have any right to prevent the consummation of the acts described
in this Section 7 affecting the number of shares of Stock subject to any Award
held by the Restricted Stock Participant. Any actions or determinations by the
Committee under this Section 7 need not be uniform as to all outstanding Awards,
and need not treat all Restricted Stock Participants identically.
3
8. RIGHTS OF RESTRICTED STOCK PARTICIPANT. This Plan and the Awards
shall not confer on you or any other person:
(A) Any rights or claims under the Plan except in
accordance with the provisions of the Plan and the applicable agreement;
(B) Any right with respect to continuation of employment
or a consulting or directorship arrangement with the Company or
any Subsidiary, nor shall they interfere in any way with the right of the
Company or any Subsidiary that employs you or engages you as a consultant or
director to terminate your employment or consulting or directorship arrangement
at any time with or without cause;
(C) Any right to be selected to participate in the Plan
or to be granted an Award; or
(D) Any right to receive any bonus, whether payable in
cash or in Stock, or in any combination thereof, from the Company or
its subsidiaries, nor be construed as limiting in any way the right of the
Company or its subsidiaries to determine, in its sole discretion, whether or not
it shall pay any employee, consultant or director bonuses, and, if so paid, the
amount thereof and the manner of such payment.
9. TAX WITHHOLDING OBLIGATIONS.
(A) WITHHOLDING REQUIREMENT AND PROCEDURE. You shall
(and in no event shall Stock be delivered to you with respect to an
Award until), no later than the date as of which the value of the Award first
becomes includible in your gross income for income tax purposes, pay to the
Company in cash, or make arrangements satisfactory to the Company, as determined
in the Committee's discretion, regarding payment to the Company of, any taxes of
any kind required by law to be withheld with respect to the Stock or other
property subject to such Award, including your applicable share of any
employment taxes, and the Company shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment of any kind otherwise due to
you. Notwithstanding the above, the Committee may, in its discretion and
pursuant to procedures approved by the Committee, permit you to elect
withholding by the Company of Stock or other property otherwise deliverable to
you pursuant to your Award, provided, however, that the amount of any Stock so
withheld shall not exceed the amount necessary to satisfy the Company's required
tax withholding obligations using the minimum statutory withholding rates for
Federal, state and/or local tax purposes, including payroll taxes, that are
applicable to supplemental taxable income in full or partial satisfaction of
such tax obligations, based on the Fair Market Value of the Stock on the payment
date.
(B) SECTION 83(B) ELECTION. If you make an election
under Code Section 83(b), or any successor section thereto, to be taxed with
respect to an Award as of the date of transfer of the Restricted Stock rather
than as of the date or dates on which you would otherwise be taxable under Code
Section 83(a), you shall deliver a copy of such election to the Company
immediately after filing such election with the Internal Revenue Service.
Neither the Company nor any of its affiliates shall have any liability or
responsibility relating to or arising out of the filing or not filing of any
such election or any defects in its construction.
10. NOTICE. Any notice or other communication to be given under or
in connection with this Agreement or the Plan shall be given in writing and
shall be deemed effectively given
4
on receipt or, in the case of notices from the Company to you, five days after
deposit in the United States mail, postage prepaid, addressed to you at the
address specified below or at such other address as you may hereafter designate
by notice to the Company.
11. AGREEMENT SUBJECT TO PLAN. This Agreement is subject to all
provisions of the Plan, a copy of which is attached hereto and made a part of
this Agreement, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of this
Agreement and those of the Plan, the provisions of the Plan shall control.
WASTE CONNECTIONS, INC.
By __________________________________
Ronald J. Mittelstaedt
President and Chief Executive Officer
ATTACHMENT:
Waste Connections, Inc. 2004 Equity Incentive Plan
5
The undersigned:
(a) Acknowledges receipt of the foregoing Restricted Stock Award
Agreement and the attachments referenced therein and understands that all rights
and liabilities with respect to the Award granted under the Agreement are set
forth in such Agreement and the Plan; and
(b) Acknowledges that as of the date of the Award set forth in such
Agreement, the Agreement sets forth the entire understanding between the
undersigned participant and the Company and it Subsidiaries regarding the
acquisition of Stock pursuant to the Award and supersedes all prior oral and
written agreements on that subject.
_______________________________________
RESTRICTED STOCK PARTICIPANT
Address:_______________________________
_______________________________________
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ANNEX C
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RESTRICTED STOCK UNIT AGREEMENT
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Dear _______________:
Waste Connections, Inc. (the "Company") has awarded you Restricted Stock Units
under the Company's 2004 Equity Incentive Plan (the "Plan"). The units will
entitle you to receive shares of the Company's common stock in a series of
installments over your period of continued service with the Company. Each
Restricted Stock Unit represents the right to receive one share of the Company's
common stock ("Common Stock") on the vesting date of that unit. Unlike a typical
stock option program, the shares will be issued to you as a bonus for your
continued service over the vesting period, without any cash payment required
from you. However, you must pay the applicable income and employment withholding
taxes (described below) when due.
The award (the "Award") under this Restricted Stock Unit Agreement (the
"Agreement") is in connection with and in furtherance of the Company's
compensatory benefit plan for participation of the Company's Employees,
Directors and Consultants. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Plan.
The Award granted hereunder is subject to and governed by the following terms
and conditions:
1. AWARD DATE: __________________.
2. NUMBER OF SHARES SUBJECT TO AWARD: _________ shares of the
Company's common stock (the "Shares").
3. VESTING SCHEDULE: The Shares will vest and become issuable in a
series of four (4) successive equal annual installments upon your completion of
each year of Continuous Status as an Employee, Director or Consultant over the
four (4) year period measured from the Award Date. However, no Shares which vest
in accordance with such schedule will actually be issued until you satisfy all
applicable income and employment withholding taxes.
4. FORFEITABILITY: Should your Continuous Status as an Employee,
Director or Consultant cease for any reason prior to vesting in one or more
Shares subject to your Award, then your Award will be cancelled with respect to
those unvested Shares and the number of your Restricted Stock Units will be
reduced accordingly, and you will cease to have any right or entitlement to
receive any Shares under those cancelled units.
5. TRANSFERABILITY: Prior to your actual receipt of the Shares in
which you vest under your Award, you may not transfer any interest in your Award
or the underlying Shares or pledge or otherwise hedge the sale of those Shares,
including (without limitation) any short sale, put or call option or any other
instrument tied to the value of those Shares. Any attempt by you to do so will
result in an immediate forfeiture of the Restricted Stock Units awarded to you
hereunder. However, your right to receive any Shares which have vested under
your Restricted Stock Units but which remain unissued at the time of your death
may be transferred pursuant to the provisions of your will or the laws of
inheritance or to your designated beneficiary following your death. In
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the event the Shares which vest hereunder are to be issued to the executors,
administrators, heirs or distributees of your estate or to your designated
beneficiary, the Company shall be under no obligation to effect such issuance
unless and until the Committee is satisfied that the person to receive those
Shares is the duly appointed legal representative of your estate or the proper
legatee or distributee thereof or your named beneficiary.
Any Shares issued to you pursuant to the terms of this
Agreement may not be sold or transferred in contravention of (i) any market
black-out periods the Company may impose from time to time or (ii) the Company's
insider trading policies to the extent applicable to you.
6. ADJUSTMENTS. The number, class and kind of securities subject to
your Restricted Stock Units hereunder shall be appropriately adjusted by the
Committee in its discretion to preserve the benefits or potential benefits
intended to be made available under the Plan or with respect to those Restricted
Stock Units or as otherwise necessary to reflect any such change, if the Company
shall (i) pay a dividend in, or make a distribution of, shares of Common Stock
(or securities convertible into, exchangeable for or otherwise entitling a
holder thereof to receive such Common Stock), or evidences of indebtedness or
other property or assets, on the outstanding Common Stock, (ii) subdivide the
outstanding shares of Common Stock into a greater number of shares, (iii)
combine the outstanding shares of Common Stock into a smaller number of shares
or (iv) issue any shares of its capital stock in a reclassification of such
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the resulting corporation). An
adjustment made pursuant to this Section 6 shall, in the case of a dividend or
distribution, be made as of the record date therefor and, in the case of a
subdivision, combination or reclassification, be made as of the effective date
thereof.
7. FEDERAL INCOME TAXATION: You will recognize ordinary income for
federal income tax purposes on the date the Shares subject to your Award vest,
and you must satisfy the income tax withholding obligation applicable to that
income. The amount of your taxable income will be equal to the closing selling
price per share of Common Stock on the New York Stock Exchange on the vesting
date times the number of Shares which vest on that date.
8. FICA TAXES: You will be liable for the payment of the employee
share of the FICA (Social Security and Medicare) taxes applicable to the Shares
subject to your Award at the time those shares vest. FICA taxes will be based on
the closing selling price of the shares on the New York Stock Exchange on the
date those Shares vest under your Award.
9. WITHHOLDING TAXES: You must pay all applicable federal and state
income and employment withholding taxes when due. Those taxes will be deducted
from your paycheck on the pay day coincident with or next following the date on
which such liability arises, unless you elect to satisfy your withholding tax
liability through either of the following alternatives:
- the delivery of your separate check payable to the Company or,
- the use the proceeds from a same-date sale of the Shares issued to
you, provided such a sale is permissible under the Company's trading
policies governing your sale of Company shares and you are not at
the time an executive officer subject to the short-swing trading
restrictions of the federal securities laws.
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Notwithstanding the above, the Committee may, in its
discretion and pursuant to procedures approved by the Committee, permit you to
satisfy the federal, state and/or local income and employment withholding taxes
applicable to the Shares which vest under your Award by having the Company
withhold a portion of those vested Shares with a Fair Market Value (measured as
of the vesting date) equal to such withholding tax liability; PROVIDED, HOWEVER,
that the amount of any Shares so withheld shall not exceed the amount necessary
to satisfy the Company's required tax withholding obligations using the minimum
statutory withholding rates for federal, state and/or local tax purposes,
including payroll taxes, that are applicable to supplemental taxable income.
10. STOCKHOLDER RIGHTS: You will not have any stockholder rights,
including voting rights and actual dividend rights, with respect to the Shares
subject to your Award until you become the record holder of those Shares
following their actual issuance to you and your satisfaction of the applicable
withholding taxes.
11. [OPTIONAL PROVISION] DIVIDEND EQUIVALENT RIGHTS: Should a
regular cash dividend be declared on the Common Stock at a time when unissued
shares of such Common Stock are subject to your Award, then the number of Shares
at that time subject to your Award will automatically be increased by an amount
determined in accordance with the following formula, rounded down to the nearest
whole share:
X = (A x B)/C, where
X = the additional number of Shares which will become
subject to your Award by reason of the cash
dividend;
A = the number of unissued Shares subject to this
Award as of the record date for such dividend;
B = the per Share amount of the cash dividend; and
C = the closing selling price per share of Common
Stock on the Nasdaq National Market on the payment
date of such dividend.
The additional Shares resulting from such calculation
will be subject to the same terms and conditions as the unissued Shares to
which they relate under your Award.
12. CHANGE IN CONTROL In the event of a Change in Control, the
vesting of the Shares subject to your Award will accelerate in full immediately
upon such Change in Control and the shares subject to your Award shall be
issued, subject to your satisfaction of all applicable federal, state, local
and/or foreign income and employment withholding taxes.
13. SECURITIES LAW COMPLIANCE. No Shares will be issued pursuant to
your Award if such issuance would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system on which the Common Stock
may then be listed. In addition, no Shares will be issued unless (a) a
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registration statement under the Securities Act is in effect at that time with
respect to the Shares to be issued or (b) in the opinion of legal counsel to the
Company, those Shares may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance of any Shares hereunder shall relieve the
Company of any liability in respect of the failure to issue such Shares as to
which such requisite authority shall not have been obtained. As a condition to
the issuance of any Shares, the Company may require you to satisfy any
qualifications that may be necessary or appropriate to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.
14. NOTICE. Any notice or other communication to be given under or
in connection with this Agreement or the Plan shall be given in writing and
shall be deemed effectively given on receipt or, in the case of notices from the
Company to you, five days after deposit in the United States mail, postage
prepaid, addressed to you at the address specified below or at such other
address as you may hereafter designate by notice to the Company.
15. REMAINING TERMS. The remaining terms and conditions of your
Award are governed by the Plan, and your Award is also subject to all
interpretations, amendments, rules and regulations which may from time to time
be adopted under the Plan. The official prospectus summarizing the principal
features of the Plan is available for review on the Company's website at
http://www.wasteconnections.com. Please review the plan prospectus carefully so
that you fully understand your rights and benefits under your Award and the
limitations, restrictions and vesting provisions applicable to the Award. In the
event of any conflict between the provisions of this Agreement and those of the
Plan, the provisions of the Plan shall be controlling.
16. LIMITATIONS: Nothing in this Agreement or the Plan shall confer
on you or any other person:
(A) Any rights or claims under the Plan except in accordance with
the provisions of the Plan and the applicable agreement;
(B) Any right with respect to continuation of employment or a
consulting or directorship arrangement with the Company or any Subsidiary, nor
shall they interfere in any way with the right of the Company or any Subsidiary
that employs you or engages you as a consultant or director to terminate your
employment or consulting or directorship arrangement at any time, with or
without cause;
(C) Any right to be selected to participate in the Plan or to be
granted an Award; or
(D) Any right to receive any bonus, whether payable in cash or in
Common Stock, or in any combination thereof, from the Company or its
Subsidiaries, nor be construed as limiting in any way the right of the Company
or its Subsidiaries to determine, in its sole discretion, whether or not it
shall pay any employee, consultant or director bonuses, and, if so paid, the
amount thereof and the manner of such payment.
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Please execute the Acknowledgment section below to indicate your acceptance of
the terms and conditions of your Award.
WASTE CONNECTIONS, INC.
BY: ______________________________________
TITLE:
___________________________________
ACKNOWLEDGMENT
--------------
I hereby acknowledge and accept the foregoing terms and conditions
of the restricted stock unit award evidenced hereby. I further acknowledge and
agree that the foregoing sets forth the entire understanding between the Company
and me regarding my entitlement to receive the shares of the Company's common
stock subject to such award and supersedes all prior oral and written agreements
on that subject.
SIGNATURE:
PRINTED NAME: _____________________________
DATED: , 2004
EXHIBIT I
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PROSPECTUS
FOR
2004 EQUITY INCENTIVE PLAN
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