SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended January 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from to
Commission File Number 1-9467
DAVIS WATER & WASTE INDUSTRIES, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0959907
------------------------ ---------------------
(State of incorporation) (I.R.S. Employee
Identification No.)
1820 Metcalf Avenue, Thomasville, Georgia 31792
----------------------------------------------------------
(Address of principal executive offices, including zip code)
(912) 226-5733
----------------------------------------------------
(Registrant's telephone number, including area code)
_________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at March 17, 1995
----------------------------- -----------------------------
Common Stock, $0.01 Par Value 3,262,961 Shares
Page 1 of 85
Index of Exhibits on Page 17
1
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended January 31, 1995
Table of Contents
<TABLE>
<CAPTION>
Item Page
Number PART I -- FINANCIAL INFORMATION Number
------ ------
<S> <C> <C>
1 Financial Statements:
Condensed Consolidated Balance Sheet --
January 31, 1995, April 30, 1994 and
January 31, 1994 3
Condensed Consolidated Statement of
Operations--Three and Nine Months Ended
January 31, 1995 and 1994 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity--
January 31, 1995, April 30, and
January 31, 1994 6
Condensed Consolidated Statement
of Cash Flows--Nine Months Ended
January 31, 1995 and 1994 7
Notes to Condensed Consolidated
Financial Statements 8
2 Management's Discussion and Analysis
of Results of Operations and Financial
Condition 9
PART II--OTHER INFORMATION
6 Exhibits and Reports on Form 8-K 15
SIGNATURES 16
INDEX OF EXHIBITS 17
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET ASSETS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
January 31, April 30, January 31,
1995 1994 1994
---------- --------- ----------
<S> <C> <C> <C>
Current assets:
Cash $ 2,251 $ 2,100 $ 3,808
------- ------- -------
Accounts receivable, less allowance
for doubtful accounts ($1,205 at
January 31, 1995, $1,338 at
April 30, 1994 and $970 at
January 31, 1994) 35,280 39,158 34,768
------- ------- -------
Inventories:
Finished goods and products
purchased for resale 15,807 17,689 16,614
Work-in-progress 1,903 2,667 3,693
Raw material and purchased
components 644 170 483
------- ------- -------
Total inventories 18,354 20,526 20,790
------- ------- -------
Prepaid expenses 1,229 734 1,527
------- ------- -------
Deferred income taxes 5,082 5,837 2,537
------- ------- -------
Costs and estimated earnings
in excess of billings on
uncompleted contracts 592 972 1,609
------- ------- -------
Total current assets 62,788 69,327 65,039
------- ------- -------
Property, plant and equipment 20,638 21,237 21,311
Less-accumulated depreciation (14,327) (13,674) (13,382)
------- ------- -------
6,311 7,563 7,929
------- ------- -------
Intangible assets (Note C) 0 0 2,907
------- ------- -------
Other assets 5,135 5,195 4,889
------- ------- -------
$74,234 $82,085 $80,764
======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statement
3
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
January 31, April 30, January 31,
1995 1994 1994
----------- ---------- -----------
<S> <C> <C> <C>
Current liabilities:
Current portion of long-term debt $ 163 $ 216 $ 244
Accounts payable 17,632 21,237 16,681
Accrued salaries and commissions 3,619 3,275 2,916
Billings in excess of costs and
estimated earnings on
uncompleted contracts 1,931 2,201 1,873
Other accrued liabilities (Note C) 8,071 10,667 3,883
------- ------- -------
Total current liabilities 31,416 37,596 25,597
------- ------- -------
Long-term debt, less current portion 15,654 19,425 23,894
------- ------- -------
Other accrued liabilities 2,102 1,857 1,747
------- ------- -------
Deferred income taxes 410 898 1,600
------- ------- -------
Stockholders' equity:
Common stock, $0.01 par value,
50,000,000 shares authorized and
3,265,308 shares issued 33 33 33
Capital in excess of par value 9,788 9,788 9,788
Retained earnings 14,854 12,539 18,112
------- ------- -------
24,675 22,360 27,933
Treasury stock at cost- 2,347
shares at January 31, 1995,
6,344 shares at April 30,
1994 and 1,188 shares at
January 31, 1994 (23) (51) (7)
------- ------- -------
Total stockholders' equity 24,652 22,309 27,926
------- ------- -------
$74,234 $82,085 $80,764
======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
January 31, January 31,
----------- -----------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $52,730 $49,992 $159,700 $147,305
Cost of products sold 44,862 42,762 135,828 124,990
------- ------- -------- --------
Gross profit margin 7,868 7,230 23,872 22,315
Selling, general and
administrative expenses 6,291 6,858 18,665 21,231
Interest expense 335 334 1,041 950
Other income, net (67) (125) (188) (283)
------- ------- -------- --------
Income before income taxes 1,309 163 4,354 417
------- ------- -------- --------
Provision (benefit) for
income taxes:
Current 564 (26) 1,494 733
Deferred (31) 102 267 (534)
------- ------- -------- --------
533 76 1,761 199
------- ------- -------- --------
Net income $ 776 $ 87 $ 2,593 $ 218
======= ======= ======== ========
PER SHARE INFORMATION:
Net income per share $ .24 $ .03 $ .79 $ .07
======= ======= ======== ========
Dividends per share $ .08 $ .00 $ .08 $ .00
======= ======= ======== ========
Weighted average
shares outstanding 3,263,115 3,269,085 3,262,072 3,262,687
</TABLE>
The results of operations for the three and nine month periods ended
January 31, 1995 and 1994 are not necessarily indicative of the results of
operations on an annual basis. See accompanying notes to condensed
consolidated financial statements.
5
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Capital
in excess Total
Common of par Retained Treasury stockholders'
stock value earnings stock equity
------ --------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1993 $ 33 $ 9,788 $17,922 $ (108) $27,635
Purchase of treasury stock (36) (36)
Issuance of common stock in
connection with employee
benefit plans (28) 137 109
Net income for period 218 218
------ --------- -------- --------- ---------
Balance, January 31, 1994 33 9,788 18,112 (7) 27,926
Purchase of treasury stock (88) (88)
Issuance of common stock in
connection with employee
benefit plans (15) 44 29
Net (loss) for period (5558) (5,558)
------ --------- -------- --------- ---------
Balance, April 30, 1994 33 9,788 12,539 (51) 22,309
Purchase of treasury stock (64) (64)
Issuance of common stock in
connection with employee
benefit plans (17) 92 75
Dividend paid (261) (261)
Net income for period 2,593 2,593
------ --------- -------- --------- ---------
Balance, January 31,1995 $ 33 $ 9,788 $14,854 $ (23) $24,652
====== ========= ======== ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
January 31,
-----------
1995 1994
-------- ------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,593 $ 218
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,665 2,137
Provision for accounts receivable losses (364) 157
Gain on sale of assets (2) 84
Deferred income taxes 267 (534)
Decrease of accrual for Taulman shutdown (Note C) (1,819) 0
Changes in operating assets and liabilities:
Decrease in accounts receivable 4,242 3,175
Decrease (increase) in inventory 2,172 (2,714)
Decrease (increase) in costs and estimated earnings
in excess of billings on uncompleted contracts 380 (358)
Increase in other assets (566) (436)
Decrease in accounts payable and accrued
expenses (3,793) (1,532)
Decrease in billings in excess of cost and
estimated earnings on uncompleted contracts (270) (296)
-------- --------
Net cash provided by (used in) operating activities 4,505 (99)
-------- --------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,125) (702)
Proceeds from sale of property, plant and equipment 845 60
-------- --------
Net cash used in investing activities (280) (642)
-------- --------
FINANCING ACTIVITIES
Proceeds from revolving and long-term debt 41,432 42,405
Principal payments made on debt (45,256) (39,281)
Proceeds from sale of stock 75 109
Purchase of treasury stock (64) (36)
Dividend paid (261) 0
-------- --------
Net cash (used in) provided by financing activities (4,074) 3,197
-------- --------
CASH
Increase in cash during period 151 2,456
Cash and cash equivalents at beginning of period 2,100 1,352
-------- --------
Cash and cash equivalents at end of period $ 2,251 $ 3,808
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
Notes to Condensed Consolidated Financial Statements
January 31, 1995 (Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated
financial statements reflect all adjustments which, in the
opinion of management, are necessary to present fairly the
Company's financial position as of January 31, 1995 and 1994, and
the results of its operations and its cash flows for the nine
month periods ended January 31, 1995 and 1994. The consolidated
financial statements included herein should be read in con-
junction with the consolidated financial statements and notes
thereto, the Report of Independent Accountants and the Statement
of Management's Responsibility for the Consolidated Financial
Statements included in the Company's 1994 Annual Report.
NOTE B - ACCOUNTING POLICIES
Reference is made to the accounting policies of the Company
described in the Notes to Consolidated Financial Statements
contained in the Company's 1994 Annual Report. The Company has
consistently followed those policies in preparing this report.
NOTE C - PROVISION FOR TAULMAN SHUTDOWN AND RELATED INTANGIBLE
ASSETS
During the fourth quarter of fiscal 1994, the Company
adopted a plan to shutdown or reorganize the operations of its
wholly-owned subsidiary, The Taulman Company (Taulman).
Substantially all of Taulman's operations are contained within
its Turbitrol Instrumentation and Controls division; these
operations will be shutdown following the completion over the
next two years of its obligations under current contracts.
Taulman Composting Systems, an immaterial component of Taulman's
operations, will continue operating as a part of the Company's
Process division. The pre-tax loss provision for these actions
included the write-off of intangible assets totalling $2,908,000
associated with Taulman and the accrual of $5,987,000 to provide
for anticipated losses during the shutdown period.
For the first nine months of fiscal 1995 and 1994, Taulman's
net sales were $8,995,910 and $11,206,755, respectively, while
costs of goods sold were $8,049,793 and $9,809,588, respectively.
The selling, general and administrative expenses for the first
nine months of fiscal 1995 and 1994 were $2,789,695 and
$3,176,380, respectively.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
OVERVIEW
The Company earned $775,826, or $.24 per share, during the
three month period ended January 31, 1995 compared with net
income of $87,739, or $.03 per share, during the comparable
period of 1994. The Company reported net income of $2,592,507,
or $.79 per share, for the nine months ended January 31, 1995 and
$218,512, or $.07 per share, for the nine months ended January
31, 1994. The results for the three and nine month periods ended
January 31, 1995 do not include the costs of the Taulman
shutdown, which were reserved during the quarter ended April 30,
1994 (see Note C of Notes to Condensed Consolidated Financial
Statements). All sales and costs associated with the completion
of Taulman's contractual obligations are applied against this
reserve. Despite the shutdown of Taulman, the Company increased
its net sales by approximately 5.5% during the third quarter of
fiscal 1995 and by approximately 8.4% during the first nine
months of fiscal 1995 as compared to the same periods of the
prior year. These sales increases reflect primarily increases in
sales volume that resulted from increased demand associated with
the improving economy.
NET SALES
Net sales increased by 5.5% and 8.4% for the three and nine
month periods ended January 31, 1995, respectively, as compared
to the corresponding periods of the prior year. The increases in
sales are due primarily to the moderate economic improvement in
the commercial and residential land development and construction
industry which has increased the demand for the Company's
products. Sales by the Company's distribution business increased
by 9.4% and 17.2% for the three and nine month periods
ended January 31, 1995, respectively, as compared to the
corresponding periods of the prior year. The improvement is due
to the Company's increased efforts to promote value-added
services and the continued improvement in the economy. The
distribution business was responsible for 73.8% of the Company's
total net sales for the three month period and 77.0% for the nine
month period ended January 31, 1995. Sales of water and
wastewater treatment and pumping equipment and process material
and supplies decreased by 4.3% and 13.4% for the three and
nine month periods ended January 31, 1995, respectively, as
compared to the corresponding periods of the prior year. The
decrease in sales was primarily due to the Taulman shutdown.
Excluding Taulman, net sales for the remainder of the water and
wastewater treatment and pumping portion of the Company's
business increased 28.1% and 13.3% in the three and nine month
periods ended January 31, 1995, respectively, as compared to the
corresponding three and nine month periods of the prior year.
The water and wastewater treatment and pumping equipment business was
9
<PAGE>
responsible for 26.2% and 23.0% of the Company's total net sales
for the three and nine month periods ended January 31, 1995,
respectively.
COST OF PRODUCTS SOLD
The gross profit margin (the difference between net sales
and cost of products sold expressed as a percentage of net sales)
was 14.9% and 15.0% for the three and nine month periods ended
January 31, 1995, respectively, and 14.5% and 15.2% for the three
and nine month periods ended January 31, 1994, respectively. The
gross profit margins for the distribution business were 11.9% and
11.7% for the three and nine month periods ended January 31,
1995, respectively, as compared to 12.0% and 11.8% for the three
and nine month periods ended January 31, 1994, respectively. The
slight decrease in the distribution business margin for the nine
month period ended January 31, 1995 as compared to the
corresponding nine month period ended January 31, 1994 was
attributable to management's efforts to expand sales volume in
the improved market. Gross profit margins for the water and
wastewater treatment and pumping equipment business were 23.4%
and 25.8% for the three and nine month periods ended January 31,
1995, respectively, and 20.5% and 23.4% for the three and nine
month periods ended January 31, 1994, respectively. The
improvement in margins for this product line was attributable to
the shutdown of Taulman, which historically had lower margins
than the remaining portions of the water and wastewater treatment
business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
When measured as a percentage of net sales, selling, general
and administrative expenses were 11.9% and 11.7% for the three
and nine month periods ended January 31, 1995, respectively, and
13.7% and 14.4% for the three and nine month periods ended
January 31, 1994, respectively. The dollar amount of selling,
general and administrative expenses decreased by 8.3% and 12.1%,
respectively, for the three and nine month periods ended January
31, 1995 as compared to the corresponding periods of the prior
year. The percentage and dollar amount decreases in selling,
general and administrative expenses were due primarily to the
Taulman shutdown. During the second quarter of fiscal 1992, the
Company implemented a cost reduction program to keep costs of
operations in line with the amount of available business.
Management continually reviews all areas of operations to ensure
that the Company is operating at a level to maximize income while
reducing costs.
INTEREST EXPENSE
Interest expense increased by less than 1% for the three
month period and 9.6% for the nine month period ended January 31,
1995 as compared to the corresponding periods of the previous
fiscal year. The increase was primarily due to an increase of
approximately 150 basis points in the Company's weighted average
10
<PAGE>
borrowing rate. The Company's borrowing rate floats with the
prime commercial rate established by the Company's primary
lender, Sun Bank N. A. (SBNA). The Company's average borrowings
for the nine month period ended January 31, 1995 declined by
9.7%, or by $2,006,000, when compared to the corresponding nine
month period ended January 31, 1994. This decrease was due to
reduced cash needs resulting from improved operating results and
more efficient management of accounts receivable and inventory.
PROVISION FOR INCOME TAX EXPENSE
The effective tax rates for the three and nine month periods
ended January 31, 1995 were 40.7% and 40.5%, respectively, and
for the three and nine month periods ended January 31, 1994 were
46.4% and 47.7%, respectively. These rates reflect the Company's
estimated effective rates for fiscal 1995 and 1994, respectively,
and do not include any unusual adjustments or credits.
LIQUIDITY AND CAPITAL RESOURCES
The funds generated from operations are the primary source
of liquidity for the Company. Set forth below is information
regarding the sources and amounts of internally generated funds
(see "Results of Operations" above):
<TABLE>
<CAPTION>
Nine Months Ended
January 31, Fiscal Year Ended
1995 1994 April 30, 1994
------ ------ -----------------
(in thousands)
<S> <C> <C> <C>
Net income (loss)............ $2,593 $ 218 ($5,340)
Depreciation and amortization 1,665 2,137 2,689
Deferred taxes (benefit)..... 267 (534) (4,536)
(Decrease) increase of accrual
for Taulman shutdown ....... (1,819) 0 8,895
------ ------ ------
$2,706 $1,821 $1,708
====== ====== ======
</TABLE>
When internally generated funds are insufficient to support
operations and capital expenditures, the Company has been able to
borrow funds to meet its needs. On January 31, 1995, the Company
had $17,917,000 available under bank lines of credit aggregating
$32,000,000 as compared to $33,000,000 available under these same
bank lines of credit on January 31, 1994. The funds available on
January 31, 1995, together with a cash balance of $2,251,000,
placed the Company's potential cash availability at $20,168,000
on January 31, 1995, which is believed by management to be
sufficient to support operations for the foreseeable future.
The Company's loan agreement with SBNA requires the Company
to maintain specific working capital, equity and earnings ratios
as well as minimum levels of tangible net worth. The Company was
11
<PAGE>
in compliance with the financial covenants of the loan agreement
as of January 31, 1995.
The arrangement with SBNA also requires the Company to
obtain SBNA's prior approval before payment of any cash
dividends. In December 1994, the Company's Board of Directors,
with SBNA's approval, authorized a cash dividend of $.08 per
share, which was paid on January 6, 1995, to shareholders of
record on December 27, 1994. This cash dividend was the first
cash dividend paid by the Company since the third quarter of
fiscal 1992, when the Board of Directors elected to forego the
payment of regular quarterly cash dividends as a result of
previous losses sustained by the Company. The payment of any
additional cash dividends will depend on, among other factors,
earnings, capital requirements, and the operating and financial
condition of the Company.
The Company's working capital position at January 31, 1995
decreased by 1.1% when compared to April 30, 1994 and by 20.5%
when compared to January 31, 1994. The main reasons for the
decrease in the Company's working capital position as of January
31, 1995 when compared to April 30, 1994 were due to decreases
of $3,878,003 in accounts receivable, $2,171,850 in inventories,
offset by decreases of $3,605,282 in accounts payable and
$2,596,532 in other accrued liabilities. The decrease in the
Company's working capital position at January 31, 1995 when
compared to January 31, 1994 was due primarily to a decrease of
$1,556,929 in cash and a decrease of $2,435,673 in inventories
and an increase of $4,188,638 in other accrued liabilities. Set
forth below is the Company's working capital position and certain
liquidity comparisons as of the dates indicated.
<TABLE>
<CAPTION>
Nine Months Ended
January 31, Fiscal Year Ended
1995 1994 April 30, 1994
------- ------- --------------
(in thousands)
<S> <C> <C> <C>
Working capital............ $31,372 $39,442 $31,731
------- ------- -------
Cash....................... $ 2,251 $ 3,808 $ 2,100
Accounts receivable, net... 35,280 34,768 39,158
Inventories................ 18,354 20,790 20,526
------- ------- -------
55,885 59,366 61,784
Accounts payable........... (17,632) (16,681) (21,237)
Notes payable and current
portion of long-term debt (163) (244) (216)
------- ------- -------
$38,090 $42,441 $40,331
======= ======= =======
</TABLE>
The Company's two most significant assets are its accounts
receivable and inventories. The Company measures the
12
<PAGE>
effectiveness of its accounts receivable management program by a
calculation designed to estimate the number of days which it
takes the Company to collect accounts receivable. This
calculation excludes the effect of any retainage. Average days
to collect accounts receivable decreased by 8.7 days during the
nine month period ended January 31, 1995 when compared to the
fiscal year ended April 30, 1994, and decreased by 3.6 days when
compared to the nine month period ended January 31, 1994.
The Company measures the effectiveness of its inventory
management program by a calculation using average quarterly
inventory amounts to estimate the number of times which inventory
turns on an annual basis. Inventory turns increased by 11.3%
during the nine month period ended January 31, 1995 when compared to
the corresponding nine month period ended January 31, 1994, and remained
relatively constant when compared to the fiscal year ended April
30, 1994. The increase in inventory turns as compared to the
nine month period ended January 31, 1994 is a direct result of
management's efforts to maintain a lower level of inventory in
relation to the amount of available business. The Company has
been able to maintain inventories at relatively low levels during
the nine month period ended January 31, 1995 despite an 8.4% increase
in net sales as compared to the corresponding period of the prior
fiscal year. The table below sets forth the results for the
periods shown:
<TABLE>
<CAPTION>
Nine Months Ended
January 31, Fiscal Year Ended
1995 1994 April 30, 1994
------ ------ -----------------
<S> <C> <C> <C>
Average days to collect
accounts receivable..... 56.9 60.5 65.6
Inventory turns............ 8.9 8.0 8.7
</TABLE>
During the nine month period ended January 31, 1995, average
long-term and short-term borrowings decreased by $2,006,000, or
9.7%, and by $2,559,000, or 12.1%, when compared to the corresponding
nine month period ended January 31, 1994 and the fiscal year
ended April 30, 1994, respectively. However, the weighted
average borrowing rates for the nine month period ended January
31, 1995 increased approximately 150 basis points when compared
to the corresponding period ended January 31, 1994 and the fiscal
year ended April 30, 1994. Interest on the Company's borrowings
floats with the prime rate, which increased over the
corresponding periods. Improved operating results as well as the
Company's efforts to improve collections of accounts receivable
and minimize inventory levels have allowed the Company to reduce
its level of borrowings. Average borrowing balances and interest
rates for the reported periods are presented in the following
table:
13
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
January 31, Fiscal Year Ended
1995 1994 April 30, 1994
------- ------- ----------------
(dollars in thousands)
<S> <C> <C> <C>
Average long-term debt.....$18,006 $20,604 $20,653
Weighted average interest
rate..................... 7.7% 6.2% 6.3%
Average short-term
debt.....................$ 592 $ 0 $ 504
Weighted average interest
rate..................... 6.7% 0 4.4%
</TABLE>
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibit is filed as part of this
report:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
--------- ----------------------
<S> <C>
10(v) 1994 Employees Stock Option Plan
10(w) 1994 Directors Stock Option Plan
11 Computation of net income per share
</TABLE>
(b) Reports on Form 8-K. No Current Reports on Form 8-K
were filed by the Company during the quarter ended
January 31, 1995.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DAVIS WATER & WASTE INDUSTRIES, Inc.
------------------------------------
(Registrant)
Date: March 17, 1995 /s/ Stan White
-----------------------------------
Stan White, Secretary-Treasurer
(Duly Authorized Officer and
Chief Financial Officer)
16
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Page
------- ---------------------- ----
<S> <C> <C>
10(v) 1994 Employees Stock Option Plan 18
10(w) 1994 Directors Stock Option Plan 57
11 Computation of Net Income Per Share 85
</TABLE>
17
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
18
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
ARTICLE 1
Purpose
1.1 General Purpose. The purpose of this Plan is to further the
growth and development of the Company by encouraging employees to
obtain a proprietary interest in the Company by owning its stock.
The Company intends that the Plan will provide such persons with
an added incentive to continue in the employ of the Company and
will stimulate their efforts in promoting the growth, efficiency
and profitability of the Company. The Company also intends that
the Plan will afford the Company a means of attracting to its
service persons of outstanding quality.
1.2 Intended Tax Effects of Options. It is intended that part
of the Plan qualify as an ISO plan and that any option granted in
accordance with such portion of the Plan qualify as an ISO, all
within the meaning of Code 422. The tax effects of any NQSO
granted hereunder should be determined under Code 83.
ARTICLE 2
Definitions
The following words and phrases as used in this Plan shall
have the meanings set forth in this Article unless a different
meaning is clearly required by the context:
2.1 1933 Act shall mean the Securities Act of 1933, as
amended.
2.2 1934 Act shall mean the Securities Exchange Act of
1934, as amended.
2.3 Beneficiary shall mean, with respect to an Optionee,
the Person or Persons who acquire the Options of such Optionee by
bequest or inheritance. To the extent that an Option has not yet
been distributed to such Person or Persons from a deceased
Optionee's estate, an Option may be exercised by the executor or
administrator (as applicable) of the deceased Optionee's estate.
2.4 Board shall mean the Board of Directors of the Company.
2.5 Cause shall mean an act or acts by an individual
involving a felony conviction or the failure to contest
prosecution for a felony, willful misconduct, dishonesty,
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embezzlement, fraud, deceit or civil rights violations, any of
which acts causing the Company or any subsidiary liability or
loss, as determined by the Committee in its sole discretion.
2.6 Change of Control shall mean the occurrence of any one
of the following events:
(a) Acquisition By Person of Substantial Percentage.
The future acquisition by a Person (including "affiliates"
and "associates" of such Person, but excluding the Company,
any "parent" or "subsidiary" of the Company, or any employee
benefit plan of the Company or of any "parent" or
"subsidiary" of the Company) of a sufficient number of
shares of the Common Stock, or securities convertible into
the Common Stock, and whether through direct acquisition of
shares or by merger, consolidation, share exchange,
reclassification of securities or recapitalization of or
involving the Company or any "parent" or "subsidiary" of the
Company, to constitute the Person the beneficial owner of
20% or more of the Common Stock, but only if such
acquisition occurs without approval or ratification by a
majority of the members of the Board of Directors of the
Company;
(b) Transactions Involving Substantial Assets. Any
sale, lease, transfer, exchange, mortgage, pledge or other
disposition, in one transaction or a series of transactions,
of all or substantially all of the assets of the Company or
of any "subsidiary" of the Company to a Person described in
subsection (a) above, but only if such transaction occurs
without approval or ratification by a majority of the
members of the Board of Directors of the Company; or
(c) Substantial Change of Board Members. During any
fiscal year of the Company, individuals who at the beginning
of such year constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election
of each director who was not a director at the beginning of
such period has been approved in advance by a majority of
the directors in office at the beginning of the fiscal year.
For purposes of this Section 2.6, the terms "affiliate,"
"associate," "parent" and "subsidiary" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the 1934 Act.
2.7 Code shall mean the Internal Revenue Code of 1986, as
amended.
2.8 Committee shall mean the committee appointed by the
Board to administer and interpret the Plan in accordance with
Article 3 below. Initially, the Committee shall consist of the
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members of the Company's Compensation Committee.
2.9 Common Stock shall mean the common stock, par value
$0.01 per share, of the Company.
2.10 Company shall mean Davis Water & Waste Industries,
Inc., and shall also mean any parent or subsidiary corporation of
Davis Water & Waste Industries, Inc. unless the context clearly
indicates otherwise.
2.11 Director shall mean an individual who is serving as a
member of the Board (i.e., a director of the Company).
2.12 Disability shall mean, with respect to an individual,
the total and permanent disability of such individual as
determined by the Committee in its sole discretion.
2.13 Effective Date shall mean the date on which this Plan
is adopted by the Board, subject to shareholder approval. See
Article 9 herein.
2.14 Fair Market Value of the Common Stock as of a date of
determination shall mean the following:
(a) Stock Listed and Shares Traded. If the Common
Stock is listed and traded on a national securities exchange
(as such term is defined by the 1934 Act) or on the NASDAQ
National Market System on the date of determination, the
Fair Market Value per share shall be the closing price of a
share of the Common Stock on said national securities
exchange or National Market System on the date of
determination. If the Common Stock is traded in the over-
the-counter market, the Fair Market Value per share shall be
the average of the closing bid and asked prices on the date
of determination.
(b) Stock Listed But No Shares Traded. If the Common
Stock is listed on a national securities exchange or on the
National Market System but no shares of the Common Stock are
traded on the date of determination but there were shares
traded on dates within a reasonable period before the date
of determination, the Fair Market Value shall be the closing
price of the Common Stock on the most recent date before the
date of determination. If the Common Stock is regularly
traded in the over-the-counter market but no shares of the
Common Stock are traded on the date of determination (or if
records of such trades are unavailable or burdensome to
obtain) but there were shares traded on dates within a
reasonable period before the date of determination, the Fair
Market Value shall be the average of the closing bid and
asked prices of the Common Stock on the most recent date
before the date of determination.
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(c) Stock Not Listed. If the Common Stock is not
listed on a national securities exchange or on the National
Market System and is not regularly traded in the
over-the-counter market, then the Committee shall determine
the Fair Market Value of the Common Stock from all relevant
available facts, which may include the average of the
closing bid and ask prices reflected in the over-the-counter
market on a date within a reasonable period either before or
after the date of determination or opinions of independent
experts as to value and may take into account any recent
sales and purchases of such Common Stock to the extent they
are representative.
The Committee's determination of Fair Market Value, which shall
be made pursuant to the foregoing provisions, shall be final and
binding for all purposes of this Plan.
2.15 ISO shall mean an incentive stock option within the
meaning of Code 422(b).
2.16 NQSO shall mean an option to which Code 421 (relating
generally to certain ISO and other options) does not apply.
2.17 Option shall mean ISO's or NQSO's, as applicable,
granted to individuals pursuant to the terms and provisions of
this Plan.
2.18 Option Agreement shall mean a written agreement,
executed and dated by the Company and an Optionee, evidencing an
Option granted under the terms and provisions of this Plan,
setting forth the terms and conditions of such Option, and
specifying the name of the Optionee and the number of shares of
stock subject to such Option.
2.19 Option Price shall mean the purchase price of the
shares of Common Stock underlying an Option.
2.20 Optionee shall mean an individual who is granted an
Option pursuant to the terms and provisions of this Plan.
2.21 Person shall mean any individual, organization,
corporation, partnership or other entity.
2.22 Plan shall mean this Davis Water & Waste Industries,
Inc. 1994 Employees Stock Option Plan.
ARTICLE 3
Administration
3.1 General Administration. The Plan shall be administered
and interpreted by the Committee. Subject to the express
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provisions of the Plan, the Committee shall have authority to
interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and
provisions of the Option Agreements by which Options shall be
evidenced (which shall not be inconsistent with the terms of the
Plan), and to make all other determinations necessary or
advisable for the administration of the Plan, all of which
determinations shall be final, binding and conclusive.
3.2 Appointment. Initially, the members of the
Compensation Committee of the Company shall constitute the
Committee hereunder. The Board from time to time may remove
members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed
of two or more directors. During the period any director is
serving on the Committee and during the 1-year period immediately
preceding the commencement of such service, he shall not be or
have been granted or awarded any Option or other equity
securities of the Company under the Plan (or any other
discretionary stock plan of the Company or any Company affiliate
as defined by Rule 144(a)(1) of the 1933 Act). Notwithstanding
the preceding sentence, a member of the Committee may participate
during such period in (A) a formula plan, (B) an ongoing
securities acquisition program with broad-based employee
participation, and/or (C) a program to elect to receive all or
part of his annual retainer in equity securities of the Company,
all as defined and limited by Rule 16b-3 promulgated under
Section 16 of the 1934 Act. The requirements of this subsection
are intended to comply with the "disinterested administration
rule" of Rule 16b-3 under Section 16 of the 1934 Act or any
successor rule or regulation, and shall be interpreted and
construed in a manner which assures compliance with said Rule.
To the extent said Rule 16b-3 is modified to reduce or increase
the restrictions on who may serve on the Committee, the Plan
shall be deemed modified in a similar manner.
3.3 Organization. The Committee may select one of its
members as its chairman and shall hold its meetings at such times
and at such places as it shall deem advisable. A majority of the
Committee shall constitute a quorum, and such majority shall
determine its actions. The Committee shall keep minutes of its
proceedings and shall report the same to the Board at the meeting
next succeeding.
3.4 Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the
Committee, the members of the Committee, to the extent permitted
by applicable law, shall be indemnified by the Company against
reasonable expenses (including, without limitation, attorneys'
fees) actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with
any appeal, to which they or any of them may be a party by reason
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of any action taken or failure to act under or in connection with
the Plan or any Options granted hereunder, and against all
amounts paid by them in settlement thereof (provided such
settlement is approved to the extent required by and in the
manner provided by the articles of incorporation or the bylaws of
the Company relating to indemnification of directors) or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee
member or members did not act in good faith and in a manner he or
they reasonably believed to be in or not opposed to the best
interest of the Company.
ARTICLE 4
Stock
The stock subject to the Options and other provisions of the
Plan shall be authorized but unissued or reacquired shares of
Common Stock. Subject to readjustment in accordance with the
provisions of Article 7, the total number of shares of Common
Stock for which Options may be granted persons participating in
the Plan shall not exceed in the aggregate 250,000 shares of
Common Stock. Notwithstanding the foregoing, shares of Common
Stock allocable to the unexercised portion of any expired or
terminated Option returned to the Company by forfeiture again may
become subject to Options under the Plan.
ARTICLE 5
Eligibility to Receive and Grant of Options
5.1 Individuals Eligible for Grants of Options. The
individuals eligible to receive Options hereunder shall be
employees of the Company or of any parent or subsidiary
corporation of the Company, including such employees who are also
members of the Board or of the board of directors of any parent
or subsidiary corporation of the Company; provided, no non-
employee director shall be eligible to receive any Options
pursuant to this Plan, and provided further, that only employees
of the Company and its "parent" or "subsidiary" corporations
within the meaning of subsections (e) and (f) of Code 424 shall
be eligible to receive ISO's.
5.2 Grants of Options. Subject to the provisions of the
Plan, the Committee shall have the authority and sole discretion
to determine and designate, from time to time, those individuals
(from among the individuals eligible for a grant of Options under
the Plan pursuant to Section 5.1 above) to whom Options will
actually be granted, the Option Price of the shares covered by
any Options granted, the manner in and conditions under which
Options are exercisable (including, without limitation, any
limitations or restrictions thereon), and the time or times at
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which Options shall be granted. In making such determinations,
the Committee may take into account the nature of the services
rendered by the respective employees to whom Options may be
granted, their present and potential contributions to the
Company's success and such other factors as the Committee, in its
sole discretion, shall deem relevant. In its authorization of
the granting of an Option hereunder, the Committee shall specify
the name of the Optionee, the number of shares of stock subject
to such Option and whether such Option is an ISO or a NQSO. The
Committee may grant, at any time, new Options to an Optionee who
previously has received Options, whether such Options include
prior Options that still are outstanding, previously have been
exercised in whole or in part, have expired or are canceled in
connection with the issuance of new Options. No individual shall
have any claim or right to be granted Options under the Plan.
5.3 Limitation on Exercisability of ISO's. Notwithstanding
anything herein to the contrary, the aggregate Fair Market Value
of ISO's which are granted to any employee under the Plan or any
other stock option plan adopted by the Company that are first
exercisable in any one calendar year shall not exceed $100,000.
The Committee shall interpret and administer the limitations set
forth in this Section in accordance with Code 422(d).
ARTICLE 6
Terms and Conditions of Options
Options granted hereunder and Option Agreements shall comply
with and be subject to the following terms and conditions:
6.1 Requirement of Option Agreement. Upon the grant of an
Option hereunder, the Committee shall prepare (or cause to be
prepared) an Option Agreement. The Committee shall present such
Option Agreement to the Optionee. Upon execution of such Option
Agreement by the Optionee, such Option shall be deemed to have
been granted effective as of the date of grant. The failure of
the Optionee to execute the Option Agreement within 30 days after
the date of the receipt of same shall render the Option Agreement
and the underlying Option null and void ab initio.
6.2 Optionee and Number of Shares. Each Option Agreement
shall state the name of the Optionee and the total number of
shares of the Common Stock to which it pertains, the Option
Price, and the date as of which the Option was granted under this
Plan.
6.3 Vesting.
(a) Each Option shall first become exercisable (i.e.,
vested) with respect to such portions of the shares subject
to such Option as are specified in the schedule set forth
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hereinbelow; provided, if an Optionee ceases to be an
employee of the Company, his rights with regard to all non-
vested Options shall cease immediately except as provided in
subsection (b) below.
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, 20% of the shares subject to such
Option. Prior to said date, the Option shall be
unexercisable in its entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(iii) Commencing as of the third anniversary
of the date the Option is granted, the Optionee shall
have the right to exercise the Option with respect to,
and to thereby purchase, an additional 20% of the
shares subject to the Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, the remainder of the shares subject
to such Option.
(b) Notwithstanding the above, all Options previously
granted to an Optionee shall become immediately vested and
exercisable for 100% of the number of shares subject to the
Options upon a Change of Control.
See also Section 6.13 herein.
6.4 Option Price. The Option Price of the shares of Common
Stock underlying each Option shall be the Fair Market Value of
the Common Stock on the date the Option is granted, unless
otherwise determined by the Committee; provided, in no event
shall the Option Price of any ISO be less than 100% (110% in the
case of ISO's of Optionees who own more than ten percent of the
voting power of all classes of stock of either the Company or any
"parent" or "subsidiary" corporation of the Company (within the
meaning of subsections (e) and (f) of Code 424)) of the Fair
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Market Value of the Common Stock on the date the Option is
granted. Upon execution of an Option Agreement by both the
Company and Optionee, the date as of which the Committee granted
the Option as specified in the Option Agreement shall be
considered the date on which such Option is granted.
6.5 Terms of Options. Terms of Options granted under the
Plan shall commence on the date of grant and shall expire on such
date as the Committee may determine for each Option; provided, in
no event shall any Option be exercisable after ten years (five
years in the case of ISO's granted to Optionees who own more than
ten percent of the voting power of all classes of stock of either
the Company or any parent or subsidiary) from the date the Option
is granted. No Option shall be granted hereunder after ten years
from the earlier of (a) the date the Plan is approved by the
shareholders, or (b) the date the Plan is adopted by the Board.
6.6 Terms of Exercise. The exercise of an Option may be
for less than the full number of shares of Common Stock subject
to such Option, but such exercise shall not be made for less than
(i) 100 shares or (ii) the total remaining shares subject to the
Option, if such total is less than 100 shares. Subject to the
other restrictions on exercise set forth herein, the unexercised
portion of an Option may be exercised at a later date by the
Optionee.
6.7 Method of Exercise. All Options granted hereunder
shall be exercised by written notice directed to the Secretary of
the Company at its principal place of business or to such other
person as the Committee may direct. Each notice of exercise
shall identify the Option which the Optionee is exercising (in
whole or in part) and shall be accompanied by payment of the
Option Price for the number of shares specified in such notice
and by any documents required by Section 8.1. The Company shall
make delivery of such shares within a reasonable period of time;
provided, if any law or regulation requires the Company to take
any action (including, but not limited to, the filing of a
registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to the
shares specified in such notice before the issuance thereof, then
the date of delivery of such shares shall be extended for the
period necessary to take such action.
6.8 Medium and Time of Payment.
(a) The Option Price shall be payable upon the
exercise of the Option in an amount equal to the number of
shares then being purchased times the per share Option
Price. Payment, at the election of the Optionee (or his
successors as provided in subsection (c) of Section 6.9),
shall be (A) in cash; (B) by delivery to the Company of a
certificate or certificates for shares of the Common Stock
duly endorsed for transfer to the Company with signature
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guaranteed by a member firm of a national stock exchange or
by a national or state bank or a federally chartered thrift
institution (or guaranteed or notarized in such other manner
as the Committee may require) or by instructing the Company
to retain shares of Common Stock upon the exercise of the
Option with a Fair Market Value equal to the exercise price
as payment; (C) by delivery to the Company of such other
property or by the performance for the Company of such
services as may be acceptable to the Committee and allowed
under applicable law; or (D) by a combination of (A), (B)
and (C).
(b) If all or part of the Option Price is paid by
delivery of shares of the Common Stock, on the date of such
payment, the Optionee must have held such shares for at
least six months from (i) the date of acquisition, in the
case of shares acquired other than through a stock option or
other stock award plan, or (ii) the date of grant or award
in the case of shares acquired through such a plan; and the
value of such Common Stock (which shall be the Fair Market
Value of such Common Stock on the date of exercise) shall be
less than or equal to the total Option Price payment. If
the Optionee delivers Common Stock with a value that is less
than the total Option Price, then such Optionee shall pay
the balance of the total Option Price in cash, other
property or services, as provided in subsection (a) above.
(c) In addition to the payment of the purchase price
of the shares then being purchased, an Optionee also shall
pay in cash (or have withheld from his normal pay) an amount
equal to the amount, if any, which the Company at the time
of exercise is required to withhold under the income tax or
Federal Insurance Contribution Act tax withholding
provisions of the Code, of the income tax laws of the state
of the Optionee's residence, and of any other applicable
law.
6.9 Effect of Termination of Employment, Disability or
Death. Except as provided in subsections (a), (b) and (c) below,
no Option shall be exercisable unless the Optionee thereof shall
have been an employee of the Company from the date of the
granting of the Option until the date of exercise; provided, the
Committee, in its sole discretion, may waive the application of
this Section with respect to any NQSO's granted hereunder and,
instead, may provide a different expiration date or dates in a
NQSO Option Agreement.
(a) Termination of Employment. In the event an
Optionee ceases to be an employee of the Company for any
reason other than death or Disability, any Option or
unexercised portion thereof granted to him shall terminate
on and shall not be exercisable after the earliest to occur
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of (i) the expiration date of the Option, (ii) twelve months
(three months in the case of an ISO Option) after
termination of employment or (iii) the date on which the
Company gives notice to such Optionee of termination of
employment if employment is terminated by the Company for
Cause (an Optionee's resignation in anticipation of
termination of employment by the Company for Cause shall
constitute a notice of termination by the Company);
provided, the Committee may provide in the Option Agreement
that such Option or any unexercised portion thereof shall
terminate sooner or later, subject to the provisions of
Section 6.5 above. Notwithstanding the foregoing, in the
event that an Optionee's employment terminates for a reason
other than death or Disability at any time after a Change of
Control, the term of all Options of that Optionee shall be
extended through the end of the twelve-month (three months
in the case of an ISO Option) period immediately following
the date of such termination; provided, this extension shall
apply to ISO's only to the extent it does not cause the term
of such ISO's to exceed the maximum term permitted under
Code 422 or does not cause such ISO's to lose their status
as ISO's. Prior to the earlier of the dates specified in
the preceding sentences of this subsection (a), the Option
shall be exercisable only in accordance with its terms and
only for the number of shares exercisable on the date of
termination of employment. The question of whether an
authorized leave of absence or absence for military or
government service or for any other reason shall constitute
a termination of employment for purposes of the Plan shall
be determined by the Committee, which determination shall be
final and conclusive.
(b) Disability. Upon the termination of an Optionee's
employment due to Disability, any Option or unexercised
portion thereof granted to him which is otherwise
exercisable shall terminate on and shall not be exercisable
after the earlier to occur of (i) the expiration date of
such Option, or (ii) one year after the date on which such
Optionee ceases to be an employee of the Company due to
Disability; provided, the Committee may provide in the
Option Agreement that such Option or any unexercised portion
thereof shall terminate sooner or later, subject to the
provisions of Section 6.5 above. Prior to the earlier of
such date, such Option shall be exercisable only in
accordance with its terms and only for the number of shares
exercisable on the date such Optionee's employment ceases
due to Disability.
(c) Death. In the event of the death of the Optionee
(i) while he is an employee of the Company, (ii) within
twelve months (three months in the case of an ISO Option)
after the date on which such Optionee's employment
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terminated (for a reason other than Cause) as provided in
subsection (a) above, or (iii) within one year after the
date on which such Optionee's employment terminated due to
his Disability as provided in subsection (b), any Option or
unexercised portion thereof granted to him which is
otherwise exercisable may be exercised by his Beneficiary at
any time prior to the expiration of one year from the date
of death of such Optionee, but in no event later than the
date of expiration of the option period; provided, the
Committee may provide in the Option Agreement that such
Option or any unexercised portion thereof shall terminate
sooner or sooner, subject to the provisions of Section 6.5
above. Such exercise shall be effected pursuant to the
terms of this Section as if such Beneficiary is the named
Optionee.
6.10 Restrictions on Transfer and Exercise of Options. No
Option shall be assignable or transferable by the Optionee except
by will or by the laws of descent and distribution, and any
purported transfer shall be null and void; provided, however,
this sentence shall be applicable to NQSO's only to the extent
required for grants of securities under this Plan to be exempt
from the provisions of Section 16 of the 1934 Act (in accordance
with Rule 16b-3(a)(2) or the corresponding provisions, if any, of
subsequent regulations under Section 16 of the 1934 Act). During
the lifetime of an Optionee, the Option shall be exercisable only
by him; provided, however, that in the event the Optionee is
incapacitated and unable to exercise Options, such Options may be
exercised by such Optionee's legal guardian, legal
representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and
circumstances.
6.11 Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to shares covered by his
Option until date of the issuance of the shares to him and only
after the Option Price of such shares is fully paid. Unless
specified in Article 7, no adjustment will be made for dividends
or other rights for which the record date is prior to the date of
such issuance.
6.12 No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon the Optionee to exercise
such Option.
6.13 Acceleration. The Committee shall at all times have
the power to accelerate the vesting date of Options previously
granted under this Plan.
6.14 Holding Period. Shares underlying any Option granted
hereunder to an Optionee who is an "affiliate" of the Company
subject to the "short-swing profit provisions" of Section 16(b)
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of the 1934 Act are subject to a six-month holding period. Such
holding period will be satisfied if, with regard to any vested
(i.e., exercisable) Option that is exercised within six months of
the date of grant, the shares acquired upon exercise are not
disposed of until a minimum of six months have elapsed from the
date of grant of the Option. Notwithstanding the foregoing, the
Committee may, in its sole discretion, waive the preceding
required holding period with respect to any Optionee.
6.15 Designation of Option as ISO or NQSO. Subject to the
provisions of this Article, each Option granted under the Plan
shall be designated either as an ISO or a NQSO. An Option
Agreement evidencing both an ISO and a NQSO shall identify
clearly the status and terms of each Option.
6.16 ISO's Converted to NQSO's. In the event any part or
all of an Option granted under the Plan which is intended to be
an ISO at any time fails to satisfy all of the requirements of an
ISO, then such ISO shall be split into an ISO and NQSO so that
the portion of the Option, if any, that still qualifies as an ISO
shall remain an ISO and the portion that does not qualify as an
ISO shall become a NQSO. Such split of an Option into an ISO
portion and a NQSO portion shall be evidenced by one or more
Option Agreements, as long as each Option is identified clearly
as to its status as an ISO or NQSO.
ARTICLE 7
Adjustments Upon Changes in Capitalization
7.1 Recapitalization. In the event that the outstanding
shares of the Common Stock of the Company are hereafter increased
or decreased or changed into or exchanged for a different number
or kind of shares or other securities of the Company by reason of
a recapitalization, reclassification, stock split, combination of
shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(a) The Committee shall make an appropriate adjustment
in the number and kind of shares available for the granting
of Options under the Plan.
(b) The Committee also shall make an appropriate
adjustment in the number and kind of shares as to which
outstanding Options, or portions thereof then unexercised,
shall be exercisable; any such adjustment in any outstanding
Options shall be made without change in the total price
applicable to the unexercised portion of such Option and
with a corresponding adjustment in the Option Price per
share. No fractional shares shall be issued or optioned in
making the foregoing adjustments, and the number of shares
available under the Plan or the number of shares subject to
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any outstanding Options shall be the next lower number of
shares, rounding all fractions downward.
(c) Any adjustment to or assumption of ISO's under
this Section shall be made in accordance with Code 424(a)
and the regulations promulgated thereunder so as to preserve
the status of such Options as ISO's under Code 422.
(d) If any rights or warrants to subscribe for
additional shares are given pro rata to holders of
outstanding shares of the class or classes of stock then set
aside for the Plan, each Optionee shall be entitled to the
same rights or warrants on the same basis as holders of the
outstanding shares with respect to such portion of his
Option as is exercised on or prior to the record date for
determining shareholders entitled to receive or exercise
such rights or warrants.
7.2 Reorganization. Subject to any required action by the
shareholders, if the Company shall be a party to any
reorganization involving merger, consolidation, acquisition of
the stock or acquisition of the assets of the Company which does
not constitute a Change of Control, the Committee, in its
discretion, may declare that:
(a) any Option granted but not yet exercised shall
pertain to and apply, with appropriate adjustment as
determined by the Committee, to the securities of the
resulting corporation to which a holder of the number of
shares of the Common Stock subject to such Option would have
been entitled;
(b) any or all outstanding Options granted hereunder
shall become immediately nonforfeitable and fully
exercisable or vested (to the extent permitted under federal
or state securities laws); and/or
(c) any or all Options granted hereunder shall become
immediately nonforfeitable and fully exercisable or vested
(to the extent permitted under federal or state securities
laws) and are to be terminated after giving at least 30
days' notice to the Optionees to whom such Options have been
granted.
7.3 Dissolution and Liquidation. If the Board adopts a
plan of dissolution and liquidation that is approved by the
shareholders of the Company, the Committee shall give each
Optionee written notice of such event at least ten days prior to
its effective date, and the rights of all Optionees shall become
immediately nonforfeitable and fully exercisable or vested (to
the extent permitted under federal or state securities laws).
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7.4 Limits on Adjustments. Any issuance by the Company of
stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Article. The grant of
Options pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or
assets. All adjustments the Committee makes under this Article
shall be conclusive.
ARTICLE 8
Agreement by Optionee and Securities Registration
8.1 Agreement. If, in the opinion of counsel to the
Company, such action is necessary or desirable, no Options shall
be granted to any Optionee, and no Stock Option shall be
exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee (i) represents and warrants that he
will acquire the Common Stock for investment only and not for
purposes of resale or distribution, and (ii) makes such further
representations and warranties as are deemed necessary or
desirable by counsel to the Company with regard to holding and
resale of the Common Stock. The Optionee shall, upon the request
of the Committee, execute and deliver to the Company an agreement
or affidavit to such effect. Should the Committee have
reasonable cause to believe that such Optionee did not execute
such agreement or affidavit in good faith, the Company shall not
be bound by the grant of the Option or by the exercise of the
Option. All certificates representing shares of Common Stock
issued pursuant to the Plan shall be marked with the following
restrictive legend or similar legend, if such marking, in the
opinion of counsel to the Company, is necessary or desirable:
The shares represented by this certificate [have not
been registered under the Securities Act of 1933, as
amended, or the securities laws of any state] [and]
[are held by an "affiliate" (as such term is defined in
Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as
amended) of the Corporation]. Accordingly, these
shares may not be sold, hypothecated, pledged or
otherwise transferred except (i) pursuant to an
effective registration statement under the Securities
Act of 1933, as amended, and any applicable securities
laws or regulations of any state with respect to such
shares, (ii) in accordance with Securities and Exchange
Commission Rule 144, or (iii) upon the issuance to the
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<PAGE>
Corporation of a favorable opinion of counsel or the
submission to the Corporation of such other evidence as
may be satisfactory to the Corporation that such
proposed sale, assignment, encumbrance or other
transfer will not be in violation of the Securities Act
of 1933, as amended, or any applicable securities laws
of any state or any rules or regulations thereunder.
Any attempted transfer of this certificate or the
shares represented hereby which is in violation of the
preceding restrictions will not be recognized by the
Corporation, nor will any transferee be recognized as
the owner thereof by the Corporation.
If the Common Stock is (A) held by an Optionee who is not an
"affiliate," as that term is defined in Rule 144 of the 1933 Act,
or who ceases to be an "affiliate," or (B) registered under the
1933 Act and all applicable state securities laws and regulations
as provided in Section 8.2, the Committee, in its discretion and
with the advice of counsel, may dispense with or authorize the
removal of the restrictive legend set forth above or the portion
thereof which is inapplicable.
8.2 Registration. In the event that the Company in its
sole discretion shall deem it necessary or advisable to register,
under the 1933 Act or any state securities laws or regulations,
any shares with respect to which Options have been granted
hereunder, then the Company shall take such action at its own
expense before delivery of the certificates representing such
shares to an Optionee. In such event, and if the shares of
Common Stock of the Company shall be listed on any national
securities exchange or on NASDAQ at the time of the exercise of
any Option, the Company shall make prompt application at its own
expense for the listing on such stock exchange or NASDAQ of the
shares of Common Stock to be issued.
ARTICLE 9
Effective Date
The Plan shall be effective as of the Effective Date, and no
Options shall be granted hereunder prior to said date. Adoption
of the Plan shall be approved by the shareholders of the Company
at the earlier of (i) the annual meeting of the shareholders of
the Company which immediately follows the date of the first grant
or award of Options hereunder, or (ii) 12 months after the
adoption of the Plan by the Board, but in no event earlier than
12 months prior to the adoption of the Plan by the Board.
Shareholder approval shall be made by a majority of the votes
cast at a duly held meeting at which a quorum representing a
majority of all outstanding voting stock is, either in person or
by proxy, present and voting on the Plan, or by the written
consent in lieu of a meeting of the holders of all of the
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<PAGE>
outstanding voting stock; provided, however, such shareholder
approval, whether by vote or by written consent in lieu of a
meeting, must be solicited substantially in accordance with the
rules and regulations in effect under Section 14(a) of the 1934
Act. Failure to obtain such approval shall render the Plan and
any Options granted hereunder null and void ab initio.
ARTICLE 10
Amendment and Termination
10.1 Amendment and Termination By the Board. Subject to
Section 10.2 below, the Board shall have the power at any time to
add to, amend, modify or repeal any of the provisions of the
Plan, to suspend the operation of the entire Plan or any of its
provisions for any period or periods or to terminate the Plan in
whole or in part. In the event of any such action, the Committee
shall prepare written procedures which, when approved by the
Board, shall govern the administration of the Plan resulting from
such addition, amendment, modification, repeal, suspension or
termination.
10.2 Restrictions on Amendment and Termination.
Notwithstanding the provisions of Section 10.1 above, the
following restrictions shall apply to the Board's authority under
Section 10.1 above:
(a) Prohibition Against Adverse Affects on Outstanding
Options. No addition, amendment, modification, repeal,
suspension or termination shall adversely affect, in any
way, the rights of the Optionees who have outstanding
Options without the consent of such Optionees;
(b) Shareholder Approval Required for Certain
Modifications. No modification or amendment of the Plan may
be made without the prior approval of the shareholders of
the Company if (i) such modification or amendment would
cause the applicable portions of the Plan to fail to qualify
as an ISO plan pursuant to Code 422, (ii) such modification
or amendment would materially increase the benefits accruing
to participants under the Plan, (iii) such modification or
amendment would materially increase the number of securities
which may be issued under the Plan, or (iv) such
modification or amendment would materially modify the
requirements as to eligibility for participation in the
Plan. Clauses (ii), (iii) and (iv) of the preceding
sentence shall be interpreted in accordance with the
provisions of paragraph (b)(2) of Rule 16b-3 of the 1934
Act. Shareholder approval shall be made by a majority of
the votes cast at a duly held meeting at which a quorum
representing a majority of all outstanding voting stock is,
either in person or by proxy, present and voting, or by the
written consent in lieu of a meeting of the holders of all
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<PAGE>
of the outstanding voting stock; provided, however, that for
modifications described in clauses (ii), (iii) and (iv)
above, such shareholder approval, whether by vote or by
written consent in lieu of a meeting, must be solicited
substantially in accordance with the rules and regulations
in effect under Section 14(a) of the 1934 Act as required by
paragraph (b)(2) of Rule 16b-3 of the 1934 Act.
ARTICLE 11
Miscellaneous Provisions
11.1 Application of Funds. The proceeds received by the
Company from the sale of the Common Stock subject to the Options
granted hereunder will be used for general corporate purposes.
11.2 Notices. All notices or other communications by an
Optionee to the Committee pursuant to or in connection with the
Plan shall be deemed to have been duly given when received in the
form specified by the Committee at the location, or by the
person, designated by the Committee for the receipt thereof.
11.3 Term of Plan. Subject to the terms of Article 10, the
Plan shall terminate upon the later of (i) the complete exercise
or lapse of the last outstanding Option, or (ii) the last date
upon which Options may be granted hereunder.
11.4 Compliance with Rule 16b-3. This Plan is intended to
be in compliance with the requirements of Rule 16b-3 as
promulgated under Section 16 of the 1934 Act.
11.5 Governing Law. The Plan shall be governed by and
construed in accordance with the laws of the State of Georgia.
11.6 Additional Provisions By Committee. The Option
Agreements authorized under the Plan may contain such other
provisions, including, without limitation, restrictions upon the
exercise of an Option, as the Committee shall deem advisable.
11.7 Plan Document Controls. In the event of any conflict
between the provisions of an Option Agreement and the Plan, the
Plan shall control.
11.8 Gender and Number. Wherever applicable, the masculine
pronoun shall include the feminine pronoun, and the singular
shall include the plural.
11.9 Headings. The titles in this Plan are inserted for
convenience of reference; they constitute no part of the Plan and
are not to be considered in the construction hereof.
11.10 Legal References. Any references in this Plan to
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<PAGE>
a provision of law which is, subsequent to the Effective Date of
this Plan, revised, modified, finalized or redesignated, shall
automatically be deemed a reference to such revised, modified,
finalized or redesignated provision of law.
11.11 No Rights to Employment. Nothing contained in the
Plan, or any modification thereof, shall be construed to give any
individual any rights to employment with the Company or any
parent or subsidiary corporation of the Company.
11.12 Unfunded Arrangement. The Plan shall not be
funded, and except for reserving a sufficient number of
authorized shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any grant under
the Plan.
ADOPTED BY BOARD OF DIRECTORS ON DECEMBER 9, 1994
APPROVED BY SHAREHOLDERS AS OF ____________ ___, 1995
37
<PAGE>
INCENTIVE STOCK OPTION NO. ________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is
entered into as of the ____ day of ________________, _______,
by and between Davis Water & Waste Industries, Inc. (the
"Company") and ____________________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company (which term as used herein shall
include any parent or subsidiary of the Company) has adopted the
Davis Water & Waste Industries, Inc. 1994 Employees Stock Option
Plan (the "Plan") which is administered by a committee appointed
by the Company's Board of Directors (the "Committee"); and
WHEREAS, effective as of ________________, ________, the
Committee granted to Optionee an incentive stock option under,
and in accordance with, the terms of the Plan to reward Optionee
for his efforts
on behalf of the Company and to encourage his continued loyalty
and diligence; and
WHEREAS, to comply with the terms of the Plan and to further
the interests of the Company and Optionee, the parties hereto
have set forth the terms of such option in writing in this
Agreement;
NOW, THEREFORE, for and in consideration of the premises and
mutual promises herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as
follows:
1. Grant of Option. Effective as of _________________,
________, the Committee granted Optionee an incentive stock
option. Under that option and subject to the terms and
conditions set forth herein, Optionee shall have the right to
purchase ________ shares of the $0.01 par value common stock of
the Company (the "Common Stock"); such _________ shares
hereinafter are referred to as the "Optioned Shares," and this
option hereinafter is referred to as the "Option". The Option is
intended to be an incentive stock option within the meaning of
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<PAGE>
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Option Price. The price per share for each of the
Optioned Shares shall be $________________ (the "Option
Price"), which is not less than 100% (110% if the Optionee owns
more than 10% of the voting power of all classes of stock of
either the Company or any "parent" or "subsidiary" corporation of
the Company) of the per share Fair Market Value of the Optioned
Shares on the date of grant specified above.
3. Exercise of Option.
(a) General. The Option may be exercised by
Optionee's delivery to the Secretary of the Company of a written
notice of exercise executed by Optionee (the "Notice of
Exercise"). The Notice of Exercise shall be substantially in the
form set forth as Exhibit A, attached hereto and made a part
hereof, and shall identify the Option and the number of Optioned
Shares that are being exercised.
(b) Beginning of Exercise Period. The Option first
shall become exercisable (i.e., vested) according to the
following schedule; provided, if Optionee ceases to be an
employee of the Company, his rights with regard to all non-vested
Options shall cease immediately:
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, 20% of the shares subject to such Option. Prior
to said date, the Option shall be unexercisable in its
entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, an additional 20% of the shares subject to the
Option.
(iii) Commencing as of the third anniversary of
the date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, an additional 20% of the shares subject to the
Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, an additional 20% of the shares subject to the
Option.
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<PAGE>
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, the remainder of the shares subject to such
Option.
Notwithstanding the foregoing, the Option shall become 100%
vested immediately upon a Change in Control, and may become 100%
vested immediately in the sole discretion of the Committee.
(c) Partial Exercise. Optionee may exercise the
Option for less than the full number of exercisable Optioned
Shares, but such exercise may not be made for less than 100
shares or the total remaining shares subject to the Option, if
less than 100 shares.
4. Termination of Option. Notwithstanding any provisions
to the contrary herein, the Option shall not be exercisable
either in whole or in part after the earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first
anniversary of the date on which Optionee dies (i) while employed
by the Company, (ii) within the three-month period that begins on
the date on which Optionee ceases to be an employee of the
Company for any reason other than death or Disability or (iii)
within the one-year period that begins on the date on which
Optionee ceases to be an employee of the Company due to
Disability;
(c) The date of expiration of the one-year period that
begins on the date on which Optionee ceases to be an employee of
the Company due to Disability; provided, if Optionee dies during
such one-year period, the terms of subsection (b) shall control;
(d) The date of expiration of the three-month period
that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or
Disability; provided, if Optionee dies during such three-month
period, the terms of subsection (b) shall control;
(e) The date on which the Company gives notice (or is
deemed to have given notice) to Optionee of his termination of
employment for Cause, all as described in Section 6.9(a) of the
Plan; or
(f) Such other earlier date as may be required under
the terms of the Plan.
5. Option Non-Transferable. The Option shall not be
transferable by Optionee other than by will or by the laws of
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<PAGE>
descent and distribution, and any purported transfer shall be
null and void; provided, however, this sentence shall only be
applicable to the extent required for grants of securities under
this Plan to be exempt from the provisions of Section 16 of the
1934 Act (in accordance with Rule 16b-3(a)(2) or the
corresponding provisions, if any, of subsequent regulations under
Section 16 of the 1934 Act). During the lifetime of Optionee,
the Option shall be exercisable only by Optionee (or, if he
becomes disabled or otherwise incapacitated, by the guardian of
his property or his duly appointed attorney-in-fact), and shall
not be assignable or transferable by Optionee and, subject to
Section 6 hereof, no other person shall acquire any rights in the
Option.
6. Death of Optionee and Transfer of Option. In the event
of the death of Optionee while in the employ of the Company,
within a period of one year after the termination of his
employment with the Company due to Disability, or within a three-
month period after the employee ceases to be an employee of the
Company for any reason other than for cause, all or any of the
unexercised portion of the Option owned by the deceased Optionee
may be exercised by Optionee's Beneficiary (as defined in Section
2.3 of the Plan) at any time prior to the first anniversary of
the date of the death of Optionee, but in no event later than the
date as of which such Option expires pursuant to Section 4
hereof. Such exercise shall be effected in accordance with the
terms hereof as if such Beneficiary was Optionee herein.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by
Optionee (or his successors in accordance with Section 6 hereof)
upon exercise of the Option and shall be paid in cash, in shares
of the Common Stock (or by instructing the Company to retain
shares as payment), in other property or services acceptable to
the Committee and allowed under the terms of the Plan and
applicable law, or any combination thereof.
(b) Payment in Shares of the Common Stock. If
Optionee pays all or part of the Option Price with shares of the
Common Stock, the following conditions shall apply:
(i) Optionee shall deliver to the Secretary of
the Company a certificate or certificates for shares of the
Common Stock duly endorsed for transfer to the Company with
signature guaranteed by a member firm of a national stock
exchange or by a national or state bank (or guaranteed or
notarized in such other manner as the Committee may
require);
(ii) Optionee must have held any shares of the
Common Stock used to pay the Option Price for at least six
41
<PAGE>
months prior to the date such payment is made;
(iii) Such shares shall be valued on the basis
of the Fair Market Value of the Common Stock on the date of
exercise pursuant to the terms of the Plan; and
(iv) The value of such Common Stock shall be less
than or equal to the Option Price. If Optionee delivers
Common Stock with a value that is less than the Option
Price, then Optionee shall pay the balance of the Option
Price in a form allowed under subsection (a) above.
In addition to the payment of the Option Price, Optionee also
shall pay in cash (or have withheld from his normal pay) an
amount equal to the amount, if any, which the Company at the time
of exercise is required to withhold under the income tax and FICA
withholding provisions of the Code and of the income tax laws of
the state of Optionee's residence, and of any other applicable
law.
8. Agreement of Optionee. Optionee acknowledges that he
has read Article 8 of the Plan and understands that certain
restrictions may apply with respect to shares of the Common Stock
acquired by him pursuant to his exercise of the Option (including
restrictions on resale applicable to "affiliates" under Rule 144
of the Securities Act of 1933, as amended, and restrictions on
resale applicable to shares of the Common Stock that have not
been registered under the Securities Act of 1933, as amended, and
applicable state securities laws). Optionee hereby agrees to
execute such documents and take such actions as the Company may
require with respect to state and federal securities laws and any
restrictions on the resale of such shares which may pertain.
9. Delivery of Stock Certificates. As promptly as
practical after the date of exercise of the Option and the
receipt by the Company of full payment therefor, the Company
shall deliver to Optionee a stock certificate representing the
shares of the Common Stock acquired by Optionee pursuant to his
exercise of the Option.
10. Notices. All notices or other communications hereunder
shall be in writing and shall be effective (i) when personally
delivered by courier (including overnight carriers) or otherwise
to the party to be given such notice or other communication or
(ii) on the third business day following the date deposited in
the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt
requested and postage thereon fully prepaid. The addresses for
such notices shall be as follows:
If to the Company:
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<PAGE>
Davis Water & Waste Industries, Inc.
Attention: Corporate Secretary
P.O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may
change its address for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms
and conditions set forth herein, the Option is subject to and
governed by the other terms and conditions set forth in the Plan,
which is hereby incorporated by reference. In the event of any
conflict between the provisions of this Agreement and the Plan,
the Plan shall control.
12. Miscellaneous.
(a) The granting of the Option and the execution of
this Agreement shall not give Optionee any rights to similar
grants in future years or any right to be retained in the employ
of the Company or to interfere in any way with the right of the
Company to terminate Optionee's employment at any time.
(b) Unless and except as otherwise specifically
provided in this Agreement, Optionee shall have no rights of a
shareholder with respect to any shares covered by the Option
until the date of issuance of a stock certificate to him for such
shares.
(c) If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal
regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that this Agreement will not permit
Optionee to acquire the full number of Optioned Shares as
provided in Section 1 hereof, it is the express intention of the
Company to allow Optionee to acquire such lesser number of shares
as may be permissible without any amendment or modification
hereof.
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<PAGE>
(d) This Agreement shall be construed and enforced in
accordance with the laws of Georgia.
(e) This Agreement, together with the Plan, contains
the entire understanding among the parties and supersedes any
prior understanding and agreements between them representing the
subject matter hereof. There are no representations, agreements,
arrangements or understandings, oral or written, between and
among the parties hereto relating to the subject matter hereof
which are not fully expressed herein and in the Plan.
(f) Section and other headings contained in this
Agreement are for reference purposes only and are in no way
intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
(g) This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which shall constitute one agreement, and the signatures of
any party or any counterpart shall be deemed to be a signature
to, and may be appended to, any other counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the first date written above.
DAVIS WATER & WASTE INDUSTRIES, INC.
By:_____________________________________
Title:_________________________________
OPTIONEE:
_______________________________________
Signature
_______________________________________
Print or type name
44
<PAGE>
EXHIBIT A
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
NOTICE OF EXERCISE FOR INCENTIVE STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of
the Incentive Stock Option Agreement, dated _________________,
_______, between Davis Water & Waste Industries, Inc. (the
"Company") and the undersigned Optionee (the "Agreement"), which
Agreement represents Stock Option No. _______ and which is made a
part hereof and incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to
purchase _______ of his Optioned Shares. Optionee hereby
delivers, together with this written statement of exercise, the
full Option Price with respect to the exercised Optioned Shares,
which consists of: [COMPLETE ONLY ONE]
cash in the total amount of $_________________.
_________ shares of the Company's Common Stock.
cash in the total amount of $__________________ and
_________ shares of the Company's Common Stock.
other (specify): _____________________________________
ACKNOWLEDGEMENT. Optionee hereby acknowledges that, to the
extent he is an "affiliate" of the Company (as that term is
defined in Rule 144 promulgated under the Securities Act of 1933,
as amended) or to the extent that the Optioned Shares have not
been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's
Common Stock acquired by him as a result of his exercise of the
Option pursuant to this Notice are subject to, and the
certificates representing such shares shall be legended to
reflect, certain trading restrictions under applicable securities
laws (including particularly the Securities and Exchange
Commission's Rule 144), all as described in Article 8 of the
Plan, and Optionee hereby agrees to comply with all such
restrictions and to execute such documents or take such other
actions as the Company may require in connection with such
restrictions.
Executed this ______ day of __________________, ________.
OPTIONEE:
_______________________________________
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<PAGE>
Signature
_______________________________________
Print or Type Name
Davis Water & Waste Industries, Inc. hereby acknowledges
receipt of this Notice of Exercise and receipt of payment in the
form and amount indicated above, all on this ______ day of
__________________, ________.
DAVIS WATER & WASTE INDUSTRIES, INC.
By: ___________________________________
Title: ________________________________
46
<PAGE>
NONQUALIFIED STOCK OPTION NO. ________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement")
is entered into as of the ____ day of ___________________,
________, by and between Davis Water & Waste Industries, Inc.
(the "Company") and
________________________________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company (which term as used herein shall
include any parent or subsidiary of the Company) has adopted the
Davis Water & Waste Industries, Inc. 1994 Employees Stock Option
Plan (the "Plan") which is administered by a committee appointed
by the Company's Board of Directors (the "Committee"); and
WHEREAS, effective as of _________________, ________, the
Committee granted to Optionee a non-incentive stock option under,
and in accordance with, the terms of the Plan to reward Optionee
for his efforts on behalf of the Company and to encourage his
continued loyalty and diligence; and
WHEREAS, to comply with the terms of the Plan and to further
the interests of the Company and Optionee, the parties hereto
have set forth the terms of such option in writing in this
Agreement;
NOW, THEREFORE, for and in consideration of the premises and
mutual promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Grant of Option. Effective as of _________________,
________, the Committee granted Optionee a non-incentive stock
option. Under that option and subject to the terms and
conditions set forth herein, Optionee shall have the right to
purchase ________ shares of the $0.01 par value common stock of
the Company (the "Common Stock"); such ________ shares
hereinafter are referred to as the "Optioned Shares", and this
option hereinafter is referred to as the "Option". The Option is
intended to be a nonqualified option.
2. Option Price. The price per share for each of the
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<PAGE>
Optioned Shares shall be $________________ (the "Option
Price"), which is the per share Fair Market Value of the Optioned
Shares on the date of grant specified above.
3. Exercise of Option.
(a) General. The Option may be exercised by
Optionee's delivery to the Secretary of the Company of a written
notice of exercise executed by Optionee (the "Notice of
Exercise"). The Notice of Exercise shall be substantially in the
form set forth as Exhibit A, attached hereto and made a part
hereof, and shall identify the Option and the number of Optioned
Shares that are being exercised.
(b) Beginning of Exercise Period. The Option first
shall become exercisable (i.e., vested) according to the
following schedule; provided, if Optionee ceases to be an
employee of the Company, his rights with regard to all non-vested
Options:
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, 20% of the shares subject to such Option. Prior
to said date, the Option shall be unexercisable in its
entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, an additional 20% of the shares subject to the
Option.
(iii) Commencing as of the third anniversary of
the date the Option is granted, the Optionee shall
have the right to exercise the Option with respect to,
and to thereby purchase, an additional 20% of the
shares subject to the Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to thereby
purchase, an additional 20% of the shares subject to the
Option.
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, the remainder of the shares subject
to such Option.
Notwithstanding the foregoing, the Option shall become
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immediately 100% vested upon a Change in Control, and may become
100% vested immediately in the sole discretion of the Committee.
(c) Partial Exercise. Optionee may exercise the
Option for less than the full number of exercisable Optioned
Shares, but such exercise may not be made for less than 100
shares or the total remaining shares subject to the Option, if
less than 100 shares.
4. Termination of Option. Notwithstanding any provisions
to the contrary herein, and except as otherwise specified in
Attachment I (if any) hereto, the Option shall not be exercisable
either in whole or in part after the earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first
anniversary of the date on which Optionee dies (i) while employed
by the Company, (ii) within the twelve-month period that begins
on the date on which Optionee ceases to be an employee of the
Company for any reason other than death or Disability or (iii)
within the twelve-month period that begins on the date on which
Optionee ceases to be an employee of the Company due to
Disability;
(c) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be an
employee of the Company due to Disability; provided, if Optionee
dies during such twelve-month period, the terms of subsection (b)
shall control;
(d) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be an
employee of the Company for any reason other than death or
Disability; provided, if Optionee dies during such twelve-month
period, the terms of subsection (b) shall control;
(e) The date on which the Company gives notice (or is
deemed to have given notice) to Optionee of his termination of
employment for Cause, all as described in Section 6.9(a) of the
Plan; or
(f) Such other earlier date as may be required under
the terms of the Plan.
5. Option Non-Transferable. The Option shall not be
transferable by Optionee other than by will or by the laws of
descent and distribution, and any purported transfer shall be
null and void; provided, however, this sentence shall only be
applicable to the extent required for grants of securities under
the Plan to be exempt from the provisions of Section 16 of the
1934 Act (in accordance with Rule 16b-3(a)(2) or the
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corresponding provisions, if any, of subsequent regulations under
Section 16 of the 1934 Act). During the lifetime of Optionee,
the Option shall be exercisable only by Optionee (or, if he
becomes disabled or otherwise incapacitated, by the guardian of
his property or his duly appointed attorney-in-fact), and shall
not be assignable or transferable by Optionee and, subject to
Section 6 hereof, no other person shall acquire any
rights in the Option.
6. Death of Optionee and Transfer of Option. Except as
otherwise specified in Attachment I (if any) hereto, in the event
of the death of Optionee while in the employ of the Company,
within a period of twelve-months after the termination of his
employment with the Company due to Disability, or within a
twelve-month period after the employee ceases to be an employee
of the Company for any reason other than for cause, all or any of
the unexercised portion of the Option owned by the deceased
Optionee may be exercised by Optionee's Beneficiary (as defined
in Section 2.3 of the Plan) at any time prior to the first
anniversary of the date of the death of Optionee, but in no event
later than the date as of which such Option expires pursuant to
Section 4 hereof. Such exercise shall be effected in accordance
with the terms hereof as if such Beneficiary was Optionee herein.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by
Optionee (or his successors in accordance with Section 6 hereof)
upon exercise of the Option and shall be paid in cash or shares
of the Common Stock, or any combination thereof.
(b) Payment in Shares of the Common Stock. If
Optionee pays all or part of the Option Price with shares of the
Common Stock, the following conditions shall apply:
(i) Optionee shall deliver to the Secretary of
the Company a certificate or certificates for shares of the
Common Stock duly endorsed for transfer to the Company with
signature guaranteed by a member firm of a national stock
exchange or by a national or state bank (or guaranteed or
notarized in such other manner as the Committee may require);
(ii) Optionee must have held any shares of the
Common Stock used to pay the Option Price for at least six
months prior to the date such payment is made;
(iii) Such shares shall be valued on the basis
of the Fair Market Value of the Common Stock on the date of
exercise pursuant to the terms of the Plan; and
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(iv) The value of such Common Stock shall be less
than or equal to the Option Price. If Optionee delivers
Common Stock with a value that is less than the Option
Price, then Optionee shall pay the balance of the Option
Price in a form allowed under subsection (a) above.
In addition to the payment of the Option Price, Optionee also
shall pay in cash (or have withheld from his normal pay) an
amount equal to the amount, if any, which the Company at the time
of exercise is required to withhold under the income tax and FICA
withholding provisions of the Internal Revenue Code of 1986, as
amended, and of the income tax laws of the state of Optionee's
residence, and of any other applicable law.
8. Agreement of Optionee. Optionee acknowledges that he
has read Article 8 of the Plan and understands that certain
restrictions may apply with respect to shares of the Common Stock
acquired by him pursuant to his exercise of the Option (including
restrictions on resale applicable to "affiliates" under Rule 144
of the Securities Act of 1933, as amended, and restrictions on
resale applicable to shares of the Common Stock that have not
been registered under the Securities Act of 1933, as amended, and
applicable state securities laws). Optionee hereby agrees to
execute such documents and take such actions as the Company
may require with respect to state and federal securities laws and
any restrictions on the resale of such shares which may pertain.
9. Delivery of Stock Certificates. As promptly as
practical after the date of exercise of the Option and the
receipt by the Company of full payment therefor, the Company
shall deliver to Optionee a stock certificate representing the
shares of the Common Stock acquired by Optionee pursuant to his
exercise of the Option.
10. Notices. All notices or other communications hereunder
shall be in writing and shall be effective (i) when personally
delivered by courier (including overnight carriers) or otherwise
to the party to be given such notice or other communication or
(ii) on the third business day following the date deposited in
the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt
requested and postage thereon fully prepaid. The addresses for
such notices shall be as
follows:
If to the Company:
Davis Water & Waste Industries, Inc.
Attention: Corporate Secretary
P.O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
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If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may
change its address for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms
and conditions set forth herein, the Option is subject to and
governed by the other terms and conditions set forth in the Plan
which is hereby incorporated by reference. In the event of any
conflict between the provisions of this Agreement and the Plan,
the Plan shall control.
12. Miscellaneous.
(a) The granting of the Option and the execution of
this Agreement shall not give Optionee any rights to similar
grants in future years or any right to be retained in the employ
of the Company or to interfere in any way with the right of the
Company to terminate Optionee's employment at any time.
(b) Unless and except as otherwise specifically
provided in this Agreement, Optionee shall have no rights of a
shareholder with respect to any shares covered by the Option
until the date of issuance of a stock certificate to him for such
shares.
(c) If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal
regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that this Agreement will not permit
Optionee to acquire the full number of Optioned Shares as
provided in Section 1 hereof, it is the express intention of the
Company to allow Optionee to acquire such lesser number of shares
as may be permissible without any amendment or modification
hereof.
(d) This Agreement shall be construed and enforced in
accordance with the laws of Georgia.
(e) This Agreement, together with the Plan, contains
the entire understanding among the parties and supersedes any
prior understanding and agreements between them representing the
subject matter hereof. There are no representations, agreements,
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arrangements or understandings, oral or written, between and
among the parties hereto relating to the subject matter hereof
which are not fully expressed herein and in the Plan.
(f) Section and other headings contained in this
Agreement are for reference purposes only and are in no way
intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
(g) This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which shall constitute one agreement, and the signatures of
any party or any counterpart shall be deemed to be a signature
to, and may be appended to, any other counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the first date written above.
DAVIS WATER & WASTE INDUSTRIES, INC.
By:_________________________________________
Title:______________________________________
OPTIONEE:
___________________________________________
Signature
___________________________________________
Print or type name
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NONQUALIFIED STOCK OPTION NO. ________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ATTACHMENT I
ADDITIONAL TERMS AND PROVISIONS REGARDING OPTION
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EXHIBIT A
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 EMPLOYEES STOCK OPTION PLAN
NOTICE OF EXERCISE FOR NONQUALIFIED STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of
the Nonqualified Stock Option Agreement, dated _______________,
_______, between Davis Water & Waste Industries, Inc. (the
"Company") and the undersigned Optionee (the "Agreement"), which
Agreement represents Nonqualified Stock Option No. ________ and
which is made a part hereof and incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to
purchase _______ of his Optioned Shares. Optionee hereby
delivers, together with this written statement of exercise, the
full Option Price with respect to the exercised Optioned Shares,
which consists of: [COMPLETE ONLY ONE]
cash in the total amount of $________________.
________ shares of the Company's Common Stock.
cash in the total amount of $_________________ and
_________ shares of the Company's Common Stock.
other (specify): _____________________________________
ACKNOWLEDGEMENT. Optionee hereby acknowledges that, to the
extent he is an "affiliate" of the Company (as that term is
defined in Rule 144 promulgated under the Securities Act of 1933,
as amended) or to the extent that the Optioned Shares have not
been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's
Common Stock acquired by him as a result of his exercise of the
Option pursuant to this Notice are subject to, and the
certificates representing such shares shall be legended to
reflect, certain trading restrictions under applicable securities
laws (including particularly the Securities and Exchange
Commission's Rule 144), all as described in Article 8 of the
Plan, and Optionee hereby agrees to comply with all such
restrictions and to execute such documents or take such other
actions as the Company may require in connection with such
restrictions.
Executed this ______ day of _________________, _________.
OPTIONEE:
_______________________________________
Signature
_______________________________________
Print or Type Name
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<PAGE>
Davis Water & Waste Industries, Inc. hereby acknowledges
receipt of this Notice of Exercise and receipt of payment in the
form and amount indicated above, all on this ______ day of
____________________, ________.
DAVIS WATER & WASTE INDUSTRIES, INC.
By: ___________________________________
Title: ________________________________
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<PAGE>
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
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DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
ARTICLE 1
Purpose
1.1 General Purpose. The purpose of this Plan is to
further the growth and development of the Company by encouraging
Directors who are not employees of the Company to obtain a
proprietary interest in the Company by owning its stock. The
Company intends that the Plan will provide such persons with an
added incentive to continue to serve as Directors and will
stimulate their efforts in promoting the growth, efficiency and
profitability of the Company. The Company also intends that the
Plan will afford the Company a means of attracting persons of
outstanding quality to service on the Board.
1.2 Intended Tax Effects of Options. It is intended that
the tax effects of any NQSO granted hereunder should be
determined under Code 83.
ARTICLE 2
Definitions
The following words and phrases as used in this Plan shall
have the meanings set forth in this Article unless a different
meaning is clearly required by the context:
2.1 1933 Act shall mean the Securities Act of 1933, as
amended.
2.2 1934 Act shall mean the Securities Exchange Act of
1934, as amended.
2.3 Beneficiary shall mean, with respect to an Optionee,
the Person or Persons who acquire the Options of such Optionee by
bequest or inheritance. To the extent that an Option has not yet
been distributed to such Person or Persons from a deceased
Optionee's estate, an Option may be exercised by the executor or
administrator (as applicable) of the deceased Optionee's estate.
2.4 Board shall mean the Board of Directors of the Company.
2.5 Cause shall mean an act or acts by an individual
involving a felony conviction or the failure to contest
prosecution for a felony, willful misconduct, dishonesty,
embezzlement, fraud, deceit or civil rights violations, any of
which acts causing the Company or any subsidiary liability or
loss, as determined by the Committee in its sole discretion.
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2.6 Change of Control shall mean the occurrence of any one
of the following events:
(a) Acquisition By Person of Substantial Percentage.
The future acquisition by a Person (including "affiliates"
and "associates" of such Person, but excluding the Company,
any "parent" or "subsidiary" of the Company, or any employee
benefit plan of the Company or of any "parent" or
"subsidiary" of the Company) of a sufficient number of
shares of the Common Stock, or securities convertible into
the Common Stock, and whether through direct acquisition of
shares or by merger, consolidation, share exchange,
reclassification of securities or recapitalization of or
involving the Company or any "parent" or "subsidiary" of the
Company, to constitute the Person the beneficial owner of
20% or more of the Common Stock, but only if such
acquisition occurs without approval or ratification by a
majority of the members of the Board of Directors of the
Company;
(b) Transactions Involving Substantial Assets. Any
sale, lease, transfer, exchange, mortgage, pledge or other
disposition, in one transaction or a series of transactions,
of all or substantially all of the assets of the Company or
of any "subsidiary" of the Company to a Person described in
subsection (a) above, but only if such transaction occurs
without approval or ratification by a majority of the
members of the Board of Directors of the Company; or
(c) Transactions Requiring Regulatory Approval.
During any fiscal year of the Company, individuals who at
the beginning of such year constitute the Board of Directors
of the Company cease for any reason ton constitute at least
a majority thereof, unless the election of each director who
was not a director at the beginning of such period has been
approved in advance by a majority of the directors in office
at the beginning of the fiscal year.
For purposes of this Section 2.6, the terms "affiliate,"
"associate," "parent" and "subsidiary" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the 1934 Act.
2.7 Code shall mean the Internal Revenue Code of 1986, as
amended.
2.8 Committee shall mean the committee appointed by the
Board to administer and interpret the Plan in accordance with
Article 3 below. Initially, the Committee shall consist of the
members of the Company's Compensation Committee.
2.9 Common Stock shall mean the common stock, par value
$0.01 per share, of the Company.
2.10 Company shall mean Davis Water & Waste Industries,
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Inc., and shall also mean any parent or subsidiary corporation of
Davis Water & Waste Industries, Inc., unless the context clearly
indicates otherwise.
2.11 Director shall mean an individual who is serving as a
member of the Board (i.e., a director of the Company).
2.12 Disability shall mean, with respect to an individual,
the total and permanent disability of such individual as
determined by the Committee in its sole discretion.
2.13 Effective Date shall mean the date on which this Plan
is adopted by the Board, subject to shareholder approval. See
Article 9 herein.
2.14 Fair Market Value of the Common Stock as of a date of
determination shall mean the following:
(a) Stock Listed and Shares Traded. If the Common
Stock is listed and traded on a national securities exchange
(as such term is defined by the 1934 Act) or on the NASDAQ
National Market System on the date of determination, the
Fair Market Value per share shall be the closing price of a
share of the Common Stock on said national securities
exchange or National Market System on the date of
determination. If the Common Stock is traded in the over-
the-counter market, the Fair Market Value per share shall be
the average of the closing bid and asked prices on the date
of determination.
(b) Stock Listed But No Shares Traded. If the Common
Stock is listed on a national securities exchange or on the
National Market System but no shares of the Common Stock are
traded on the date of determination but there were shares
traded on dates within a reasonable period before the date
of determination, the Fair Market Value shall be the closing
price of the Common Stock on the most recent date before the
date of determination. If the Common Stock is regularly
traded in the over-the-counter market but no shares of the
Common Stock are traded on the date of determination (or if
records of such trades are unavailable or burdensome to
obtain) but there were shares traded on dates within a
reasonable period before the date of determination, the Fair
Market Value shall be the average of the closing bid and
asked prices of the Common Stock on the most recent date
before the date of determination.
(c) Stock Not Listed. If the Common Stock is not
listed on a national securities exchange or on the National
Market System and is not regularly traded in the
over-the-counter market, then the Committee shall determine
the Fair Market Value of the Common Stock from all relevant
available facts, which may include the average of the
closing bid and ask prices reflected in the over-the-counter
market on a date within a reasonable period either before or
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after the date of determination or opinions of independent
experts as to value and may take into account any recent
sales and purchases of such Common Stock to the extent they
are representative.
The Committee's determination of Fair Market Value, which shall
be made pursuant to the foregoing provisions, shall be final and
binding for all purposes of this Plan.
2.15 NQSO shall mean an option to which Code 421 (relating
generally to certain ISO and other options) does not apply.
2.16 Option shall mean NQSO's granted to individuals
pursuant to the terms and provisions of this Plan.
2.17 Option Agreement shall mean a written agreement,
executed and dated by the Company and an Optionee, evidencing an
Option granted under the terms and provisions of this Plan,
setting forth the terms and conditions of such Option, and
specifying the name of the Optionee and the number of shares of
stock subject to such Option.
2.18 Option Price shall mean the purchase price of the
shares of Common Stock underlying an Option.
2.19 Optionee shall mean an individual who is granted an
Option pursuant to the terms and provisions of this Plan.
2.20 Person shall mean any individual, organization,
corporation, partnership or other entity.
2.21 Plan shall mean this Davis Water & Waste Industries,
Inc. 1994 Directors Stock Option Plan.
ARTICLE 3
Administration
3.1 General Administration. The Plan shall be administered
and interpreted by the Committee. Subject to the express
provisions of the Plan, the Committee shall have authority (to
the extent that such authority does not disqualify the Plan from
being a "formula plan" within the meaning of paragraph (c)(2)(ii)
of Rule 16b-3 of the 1934 Act) to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the terms and provisions of the Option
Agreements by which Options shall be evidenced (which shall not
be inconsistent with the terms of the Plan), and to make all
other determinations necessary or advisable for the
administration of the Plan, all of which determinations shall be
final, binding and conclusive.
3.2 Appointment. Initially, the members of the
Compensation Committee of the Company shall constitute the
Committee hereunder. The Board from time to time may remove
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members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed
of two or more directors.
3.3 Organization. The Committee may select one of its
members as its chairman and shall hold its meetings at such times
and at such places as it shall deem advisable. A majority of the
Committee shall constitute a quorum, and such majority shall
determine its actions. The Committee shall keep minutes of its
proceedings and shall report the same to the Board at the meeting
next succeeding.
3.4 Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the
Committee, the members of the Committee, to the extent permitted
by applicable law, shall be indemnified by the Company against
reasonable expenses (including, without limitation, attorneys'
fees) actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with
any appeal, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with
the Plan or any Options granted hereunder, and against all
amounts paid by them in settlement thereof (provided such
settlement is approved to the extent required by and in the
manner provided by the articles of incorporation or the bylaws of
the Company relating to indemnification of directors) or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee
member or members did not act in good faith and in a manner he or
they reasonably believed to be in or not opposed to the best
interest of the Company.
ARTICLE 4
Stock
The stock subject to the Options and other provisions of the
Plan shall be authorized but unissued or reacquired shares of
Common Stock. Subject to readjustment in accordance with the
provisions of Article 7, the total number of shares of Common
Stock for which Options may be granted persons participating in
the Plan shall not exceed in the aggregate 75,000 shares of
Common Stock. Notwithstanding the foregoing, shares of Common
Stock allocable to the unexercised portion of any expired or
terminated Option returned to the Company by forfeiture again may
become subject to Options under the Plan.
ARTICLE 5
Eligibility to Receive and Grant of Options
5.1 Individuals Eligible for Grants of Options. The
individuals eligible to receive Options hereunder shall be solely
those individuals who are "outside" Directors. For purposes of
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the preceding sentence, an "outside" Director shall be a Director
(1) who is not a current employee of the Company (or any
corporation affiliated with the Company under Code 1504), (2)
who is not a former employee of the Company (or any corporation
affiliated with the Company under Code 1504) receiving
compensation for prior services (other than benefits under a tax-
qualified retirement plan), (3) who is not and has never been an
officer of the Company (or any corporation affiliated with the
Company under Code 1504), and (4) who is not receiving
remuneration (directly or indirectly) from the Company (or any
corporation affiliated with the Company under Code 1504) in any
capacity other than as a Director. Such Directors shall receive
Options hereunder in accordance with the provisions of Section
5.2 below.
5.2 Grant of Options. Options shall be granted to those
Directors who are eligible under Section 5.1 above (an "eligible
Director") in accordance with the following formulas:
(a) Option Upon Initially Becoming a Director. Upon
initially becoming an eligible Director, an individual shall
be granted an Option to purchase 8,000 shares of Common
Stock, with such Option subject to the provisions of Article
6 below. The Options granted under this subsection (a)
shall not be granted to a Director who has previously served
as a Director and who is again becoming a Director, but
shall only be granted upon an individual's initially
becoming an eligible Director.
(b) Transitional Rules. Each eligible Director as of
the Effective Date shall be granted Options under the terms
and provisions of subsection (a) above as of the Effective
Date as if such Director had initially become an eligible
Director on the Effective Date. Except as provided in this
subsection (b), no individual who is serving as a Director
as of the Effective Date of this Plan shall be entitled to
any Options under this Plan.
ARTICLE 6
Terms and Conditions of Options
Options granted hereunder and Option Agreements shall comply
with and be subject to the following terms and conditions:
6.1 Requirement of Option Agreement. Upon the grant of an
Option hereunder, the Committee shall prepare (or cause to be
prepared) an Option Agreement. The Committee shall present such
Option Agreement to the Optionee. Upon execution of such Option
Agreement by the Optionee, such Option shall be deemed to have
been granted effective as of the date of grant. The failure of
the Optionee to execute the Option Agreement within 30 days after
the date of the receipt of same shall render the Option Agreement
and the underlying Option null and void ab initio.
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6.2 Optionee and Number of Shares. Each Option Agreement
shall state the name of the Optionee and the total number of
shares of the Common Stock to which it pertains, the Option
Price, and the date as of which the Option was granted under this
Plan.
6.3 Vesting.
(a) Each Option shall first become exercisable (i.e.,
vested) with respect to such portions of the shares subject
to such Option as are specified in the schedule set forth
hereinbelow; provided, if an Optionee ceases to be a
Director, his rights with regard to all non-vested Options
shall cease immediately except as provided in subsection (b)
below.
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, 20% of the shares subject to such
Option. Prior to said date, the Option shall be
unexercisable in its entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(iii) Commencing as of the third anniversary
of the date the Option is granted, the Optionee shall
have the right to exercise the Option with respect to,
and to thereby purchase, an additional 20% of the
shares subject to the Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, the remainder of the shares subject
to such Option.
(b) Notwithstanding the above, all Options previously
granted to an Optionee shall become immediately vested and
exercisable for 100% of the number of shares subject to the
Options upon a Change of Control.
See also Section 6.13 herein.
6.4 Option Price. The Option Price of the shares of Common
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Stock underlying each Option shall be the Fair Market Value of
the Common Stock on the date the Option is granted. Upon
execution of an Option Agreement by both the Company and
Optionee, the date as of which the Option was granted under this
Plan as noted in the Option Agreement shall be considered the
date on which such Option is granted.
6.5 Terms of Options. Terms of Options granted under the
Plan shall commence on the date of grant and shall expire on such
date as the Committee may determine for each Option; provided, in
no event shall any Option be exercisable after ten years from the
date the Option is granted. No Option shall be granted hereunder
after five years from the earlier of (a) the date the Plan is
approved by the shareholders, or (b) the date the Plan is adopted
by the Board.
6.6 Terms of Exercise. The exercise of an Option may be
for less than the full number of shares of Common Stock subject
to such Option, but such exercise shall not be made for less than
(i) 100 shares or (ii) the total remaining shares subject to the
Option, if such total is less than 100 shares. Subject to the
other restrictions on exercise set forth herein, the unexercised
portion of an Option may be exercised at a later date by the
Optionee.
6.7 Method of Exercise. All Options granted hereunder
shall be exercised by written notice directed to the Secretary of
the Company at its principal place of business or to such other
person as the Committee may direct. Each notice of exercise
shall identify the Option which the Optionee is exercising (in
whole or in part) and shall be accompanied by payment of the
Option Price for the number of shares specified in such notice
and by any documents required by Section 8.1. The Company shall
make delivery of such shares within a reasonable period of time;
provided, if any law or regulation requires the Company to take
any action (including, but not limited to, the filing of a
registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to the
shares specified in such notice before the issuance thereof, then
the date of delivery of such shares shall be extended for the
period necessary to take such action.
6.8 Medium and Time of Payment.
(a) The Option Price shall be payable upon the
exercise of the Option in an amount equal to the number of
shares then being purchased times the per share Option
Price. Payment, at the election of the Optionee (or his
successors as provided in subsection (c) of Section 6.9),
shall be (A) in cash; (B) by delivery to the Company of a
certificate or certificates for shares of the Common Stock
duly endorsed for transfer to the Company with signature
guaranteed by a member firm of a national stock exchange or
by a national or state bank or a federally chartered thrift
institution (or guaranteed or notarized in such other manner
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as the Committee may require) or by instructing the Company
to retain shares of Common Stock upon the exercise of the
Option with a Fair Market Value equal to the exercise price
as payment; (C) by delivery to the Company of such other
property or by the performance for the Company of such
services as may be acceptable to the Committee and allowed
under applicable law; or (D) by a combination of (A), (B)
and (C).
(b) If all or part of the Option Price is paid by
delivery of shares of the Common Stock, on the date of such
payment, the Optionee must have held such shares for at
least six months from (i) the date of acquisition, in the
case of shares acquired other than through a stock option or
other stock award plan, or (ii) the date of grant or award
in the case of shares acquired through such a plan; and the
value of such Common Stock (which shall be the Fair Market
Value of such Common Stock on the date of exercise) shall be
less than or equal to the total Option Price payment. If
the Optionee delivers Common Stock with a value that is less
than the total Option Price, then such Optionee shall pay
the balance of the total Option Price in cash, other
property or services, as provided in subsection (a) above.
(c) In addition to the payment of the purchase price
of the shares then being purchased, an Optionee also shall
pay in cash (or have withheld from his normal pay) an amount
equal to the amount, if any, which the Company at the time
of exercise is required to withhold under the income tax
or Federal Insurance Contributions Act tax withholding
provisions of the Code, of the income tax laws of the state
of the Optionee's residence, and of any other applicable
law.
6.9 Effect of Termination of Service, Disability or Death.
Except as provided in subsections (a), (b) and (c) below, no
Option shall be exercisable unless the Optionee thereof shall
have been a Director from the date of the granting of the Option
until the date of exercise; provided, the Committee, in its sole
discretion, may waive the application of this Section and,
instead, may provide a different expiration date or dates in an
Option Agreement.
(a) Termination of Service. In the event an Optionee
ceases to be a Director for any reason other than death or
Disability, any Option or unexercised portion thereof
granted to him shall terminate on and shall not be
exercisable after the earliest to occur of (i) the
expiration date of the Option, (ii) twelve months after the
date the Optionee ceases to be a Director or (iii) the date
on which the Company gives notice to such Optionee of
termination of his service as a Director if service is
terminated by the Company or by its shareholders for Cause
(an Optionee's resignation in anticipation of termination of
service by the Company or by its shareholders for Cause
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shall constitute a notice of termination by the Company);
provided, the Committee may provide in the Option Agreement
that such Option or any unexercised portion thereof shall
terminate sooner or later, subject to the provisions of
Section 6.5 above. Notwithstanding the foregoing, in the
event that an Optionee's service as a Director terminates
for a reason other than death or Disability at any time
after a Change of Control, the term of all Options of that
Optionee shall be extended through the end of the twelve-
month period immediately following the date of such
termination of service. Prior to the earlier of the dates
specified in the preceding sentences of this subsection (a),
the Option shall be exercisable only in accordance with its
terms and only for the number of shares exercisable on the
date of termination of service as a Director. The question
of whether an authorized leave of absence or absence for
military or government service or for any other reason shall
constitute a termination of service as a Director for
purposes of the Plan shall be determined by the Committee,
which determination shall be final and conclusive.
(b) Disability. Upon the termination of an Optionee's
service as a Director due to Disability, any Option or
unexercised portion thereof granted to him which is
otherwise exercisable shall terminate on and shall not be
exercisable after the earlier to occur of (i) the expiration
date of such Option, or (ii) one year after the date on
which such Optionee ceases to be a Director due to
Disability; provided, the Committee may provide in the
Option Agreement that such Option or any unexercised portion
thereof shall terminate sooner or later subject to the
provisions of Section 6.5 above. Prior to the earlier of
such date, such Option shall be exercisable only in
accordance with its terms and only for the number of shares
exercisable on the date such Optionee's service as a
Director ceases due to Disability.
(c) Death. In the event of the death of the Optionee
(i) while he is a Director, (ii) within twelve months after
the date on which such Optionee's service as a Director is
terminated (for a reason other than Cause) as provided in
subsection (a) above, or (iii) within one year after the
date on which such Optionee's service as a Director
terminated due to his Disability, any Option or unexercised
portion thereof granted to him which is otherwise
exercisable may be exercised by the Optionee's Beneficiary
at any time prior to the expiration of one year from the
date of death of such Optionee, but in no event later than
the date of expiration of the option period; provided, the
Committee may provide in the Option Agreement that such
Option or any unexercised portion thereof shall terminate
sooner or later subject to the provisions of Section 6.5
above. Such exercise shall be effected pursuant to the
terms of this Section as if such Beneficiary is the named
Optionee.
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6.10 Restrictions on Transfer and Exercise of Options. No
Option shall be assignable or transferable by the Optionee except
by will or by the laws of descent and distribution, and any
purported transfer shall be null and void; provided, however,
this sentence shall be applicable only to the extent required for
grants of securities under this Plan to be exempt from the
provisions of Section 16 of the 1934 Act (in accordance with Rule
16b-3(a)(2) or the corresponding provisions, if any, of
subsequent regulations under Section 16 of the 1934 Act). During
the lifetime of an Optionee, the Option shall be exercisable only
by him; provided, however, that in the event the Optionee is
incapacitated and unable to exercise Options, such Options may be
exercised by such Optionee's legal guardian, legal
representative, fiduciary or other representative whom the
Committee deems appropriate based on applicable facts and
circumstances.
6.11 Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to shares covered by his
Option until date of the issuance of the shares to him and only
after the Option Price of such shares is fully paid. Unless
specified in Article 7, no adjustment will be made for dividends
or other
rights for which the record date is prior to the date of such
issuance.
6.12 No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon the Optionee to exercise
such Option.
6.13 Acceleration. The Committee shall at all times have
the power to accelerate the vesting date of Options previously
granted under this Plan.
6.14 Holding Period. Shares underlying any Option granted
hereunder to an Optionee who is an "affiliate" of the Company
subject to the "short-swing profit provisions" of Section 16(b)
of the 1934 Act are subject to a six-month holding period. Such
holding period will be satisfied if, with regard to any vested
(i.e., exercisable) Option that is exercised within six months of
the date of grant, the shares acquired upon exercise are not
disposed of until a minimum of six months have elapsed from the
date of grant of the Option. Notwithstanding the foregoing, the
Committee may, in its sole discretion, waive the preceding
required holding period with respect to any Optionee.
ARTICLE 7
Adjustments Upon Changes in Capitalization
7.1 Recapitalization. In the event that the outstanding
shares of the Common Stock of the Company are hereafter increased
or decreased or changed into or exchanged for a different number
or kind of shares or other securities of the Company by reason of
a recapitalization, reclassification, stock split, combination of
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shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(a) The Committee shall make an appropriate adjustment
in the number and kind of shares available for the granting
of Options under the Plan.
(b) The Committee also shall make an appropriate
adjustment in the number and kind of shares as to which
outstanding Options, or portions thereof then unexercised,
shall be exercisable; any such adjustment in any outstanding
Options shall be made without change in the total price
applicable to the unexercised portion of such Option and
with a corresponding adjustment in the Option Price per
share. No fractional shares shall be issued or optioned in
making the foregoing adjustments, and the number of shares
available under the Plan or the number of shares subject to
any outstanding Options shall be the next lower number of
shares, rounding all fractions downward.
(c) If any rights or warrants to subscribe for
additional shares are given pro rata to holders of
outstanding shares of the class or classes of stock then set
aside for the Plan, each Optionee shall be entitled to the
same rights or warrants on the same basis as holders of the
outstanding shares with respect to such portion of his
Option as is exercised on or prior to the record date for
determining shareholders entitled to receive or exercise
such rights or warrants.
7.2 Reorganization. Subject to any required action by the
shareholders, if the Company shall be a party to any
reorganization involving merger, consolidation, acquisition of
the stock or acquisition of the assets of the Company which does
not constitute a Change of Control, the Committee, in its
discretion, may declare that:
(a) any Option granted but not yet exercised shall
pertain to and apply, with appropriate adjustment as
determined by the Committee, to the securities of the
resulting corporation to which a holder of the number of
shares of the Common Stock subject to such Option would have
been entitled;
(b) any or all outstanding Options granted hereunder
shall become immediately nonforfeitable and fully
exercisable or vested (to the extent permitted under federal
or state securities laws); and/or
(c) any or all Options granted hereunder shall become
immediately nonforfeitable and fully exercisable or vested
(to the extent permitted under federal or state securities
laws) and are to be terminated after giving at least 30
days' notice to the Optionees to whom such Options have been
granted.
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7.3 Dissolution and Liquidation. If the Board adopts a
plan of dissolution and liquidation that is approved by the
shareholders of the Company, the Committee shall give each
Optionee written notice of such event at least ten days prior to
its effective date, and the rights of all Optionees shall become
immediately nonforfeitable and fully exercisable or vested (to
the extent permitted under federal or state securities laws).
7.4 Limits on Adjustments. Any issuance by the Company of
stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Article. The grant of
Options pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or
assets. All adjustments the Committee makes under this Article
shall be conclusive.
ARTICLE 8
Agreement by Optionee and Securities Registration
8.1 Agreement. If, in the opinion of counsel to the Company,
such action is necessary or desirable, no Options shall be
granted to any Optionee, and no Stock Option shall be
exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee (i) represents and warrants that he
will acquire the Common Stock for investment only and not for
purposes of resale or distribution, and (ii) makes such further
representations and warranties as are deemed necessary or
desirable by counsel to the Company with regard to holding and
resale of the Common Stock. The Optionee shall, upon the request
of the Committee, execute and deliver to the Company an agreement
or affidavit to such effect. Should the Committee have
reasonable cause to believe that such Optionee did not execute
such agreement or affidavit in good faith, the Company shall not
be bound by the grant of the Option or by the exercise of the
Option. All certificates representing shares of Common Stock
issued pursuant to the Plan shall be marked with the following
restrictive legend or similar legend, if such marking, in the
opinion of counsel to the Company, is necessary or desirable:
The shares represented by this certificate [have not
been registered under the Securities Act of 1933, as
amended, or the securities laws of any state and] are
held by an "affiliate" (as such term is defined in Rule
144 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as
amended) of the Corporation. Accordingly, these shares
may not be sold, hypothecated, pledged or otherwise
transferred except (i) pursuant to an effective
registration statement under the Securities Act of
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1933, as amended, and any applicable securities laws or
regulations of any state with respect to such shares,
(ii) in accordance with Securities and Exchange
Commission Rule 144, or (iii) upon the issuance to the
Corporation of a favorable opinion of counsel or the
submission to the Corporation of such other evidence as
may be satisfactory to the Corporation that such
proposed sale, assignment, encumbrance or other
transfer will not be in violation of the Securities Act
of 1933, as amended, or any applicable securities laws
of any state or any rules or regulations thereunder.
Any attempted transfer of this certificate or the
shares represented hereby which is in violation of the
preceding restrictions will not be recognized by the
Corporation, nor will any transferee be recognized as
the owner thereof by the Corporation.
If the Common Stock is (A) held by an Optionee who ceases to be
an "affiliate," as that term is defined in Rule 144 of the 1933
Act, or (B) registered under the 1933 Act and all applicable
state securities laws and regulations as provided in Section 8.2,
the Committee, in its discretion and with the advice of counsel,
may dispense with or authorize the removal of the restrictive
legend set forth above or the portion thereof which is
inapplicable.
8.2 Registration. In the event that the Company in its
sole discretion shall deem it necessary or advisable to register,
under the 1933 Act or any state securities laws or regulations,
any shares with respect to which Options have been granted
hereunder, then the Company shall take such action at its own
expense before delivery of the certificates representing such
shares to an Optionee. In such event, and if the shares of
Common Stock of the Company shall be listed on any national
securities exchange or on NASDAQ at the time of the exercise of
any Option, the Company shall make prompt application at its own
expense for the listing on such stock exchange or NASDAQ of the
shares of Common Stock to be issued.
ARTICLE 9
Effective Date
The Plan shall be effective as of the Effective Date, and no
Options shall be granted hereunder prior to said date. Adoption
of the Plan shall be approved by the shareholders of the Company
at the earlier of (i) the annual meeting of the shareholders of
the Company which immediately follows the date of the first grant
or award of Options hereunder, or (ii) 12 months after the
adoption of the Plan by the Board. Shareholder approval shall be
made by a majority of the votes cast at a duly held meeting at
which a quorum representing a majority of all outstanding voting
stock is, either in person or by proxy, present and voting on the
Plan, or by the written consent in lieu of a meeting of the
holders of all of the outstanding voting stock; provided,
however, such shareholder approval, whether by vote or by written
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consent in lieu of a meeting, must be solicited substantially in
accordance with the rules and regulations in effect under Section
14(a) of the 1934 Act. Failure to obtain such approval shall
render the Plan and any Options granted hereunder null and void
ab initio.
ARTICLE 10
Amendment and Termination
10.1 Amendment and Termination By the Board. Subject to
Section 10.2 below, the Board shall have the power at any time to
add to, amend, modify or repeal any of the provisions of the
Plan, to suspend the operation of the entire Plan or any of its
provisions for any period or periods or to terminate the Plan in
whole or in part. In the event of any such action, the Committee
shall prepare written procedures which, when approved by the
Board, shall govern the administration of the Plan resulting from
such addition, amendment, modification, repeal, suspension or
termination.
10.2 Restrictions on Amendment and Termination.
Notwithstanding the provisions of Section 10.1 above, the
following restrictions shall apply to the Board's authority under
Section 10.1 above:
(a) Prohibition Against Adverse Affects on Outstanding
Options. No addition, amendment, modification, repeal,
suspension or termination shall adversely affect, in any
way, the rights of the Optionees who have outstanding
Options without the consent of such Optionees;
(b) Shareholder Approval Required for Certain
Modifications. No modification or amendment of the Plan may
be made without the prior approval of the shareholders of
the Company if (i) such modification or amendment would
materially increase the benefits accruing to participants
under the Plan, (ii) such modification or amendment would
materially increase the number of securities which may be
issued under the Plan, or (iii) such modification or
amendment would materially modify the requirements as to
eligibility for participation in the Plan. The preceding
sentence shall be interpreted in accordance with the
provisions of paragraph (b)(2) of Rule 16b-3 of the 1934
Act. Shareholder approval shall be made by a majority of
the votes cast at a duly held meeting at which a quorum
representing a majority of all outstanding voting stock is,
either in person or by proxy, present and voting, or by the
written consent in lieu of a meeting of the holders of all
of the outstanding voting stock; provided, however, that for
modifications described in the first sentence of this
subsection (b), such shareholder approval, whether by vote
or by written consent in lieu of a meeting, must be
solicited substantially in accordance with the rules and
regulations in effect under Section 14(a) of the 1934 Act as
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required by paragraph (b)(2) of Rule 16b-3 of the 1934 Act;
and
(c) Six Month Restriction on Amendments. No provision
of this Plan may be modified or amended more than once every
six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations promulgated
thereunder. The preceding sentence shall be interpreted in
accordance with the provisions of paragraph (c)(ii)(B) of
Rule 16b-3 of the 1934 Act.
ARTICLE 11
Miscellaneous Provisions
11.1 Application of Funds. The proceeds received by the
Company from the sale of the Common Stock subject to the Options
granted hereunder will be used for general corporate purposes.
11.2 Notices. All notices or other communications by an
Optionee to the Committee pursuant to or in connection with the
Plan shall be deemed to have been duly given when received in the
form specified by the Committee at the location, or by the
person, designated by the Committee for the receipt thereof.
11.3 Term of Plan. Subject to the terms of Article 10, the
Plan shall terminate upon the later of (i) the complete exercise
or lapse of the last outstanding Option, or (ii) the last date
upon which Options may be granted hereunder.
11.4 Compliance with Rule 16b-3. This Plan is intended to
be in compliance with the requirements of Rule 16b-3 as
promulgated under Section 16 of the 1934 Act.
11.5 Governing Law. The Plan shall be governed by and
construed in accordance with the laws of the State of Georgia.
11.6 Additional Provisions By Committee. The Option
Agreements authorized under the Plan may contain such other
provisions, including, without limitation, restrictions upon the
exercise of an Option, as the Committee shall deem advisable.
The Restriction Agreements authorized under the Plan may contain
such other provisions, including, without limitation, as the
Committee shall deem advisable.
11.7 Plan Document Controls. In the event of any conflict
between the provisions of an Option Agreement and the Plan, or
between a Restriction Agreement and the Plan, the Plan shall
control.
11.8 Gender and Number. Wherever applicable, the masculine
pronoun shall include the feminine pronoun, and the singular
shall include the plural.
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11.9 Headings. The titles in this Plan are inserted for
convenience of reference; they constitute no part of the Plan and
are not to be considered in the construction hereof.
11.10 Legal References. Any references in this Plan to
a provision of law which is, subsequent to the Effective Date of
this Plan, revised, modified, finalized or redesignated, shall
automatically be deemed a reference to such revised, modified,
finalized or redesignated provision of law.
11.11 No Rights to Perform Services. Nothing contained
in the Plan, or any modification thereof, shall be construed to
give any individual any rights to perform services for the
Company or any parent or subsidiary corporation of the Company.
11.12 Unfunded Arrangement. The Plan shall not be
funded, and except for reserving a sufficient number of
authorized shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any grant under
the Plan.
ADOPTED BY BOARD OF DIRECTORS ON DECEMBER 9, 1994
APPROVED BY SHAREHOLDERS AS OF ____________ ___, 1995
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NONQUALIFIED STOCK OPTION NO. __________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement")
is entered into as of the ____ day of ___________________,
________, by and between Davis Water & Waste Industries, Inc.
(the "Company") and __________________________________________
("Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Davis Water & Waste
Industries, Inc. 1994 Directors Stock Option Plan (the "Plan")
which is administered by a committee appointed by the Company's
Board of Directors (the "Committee"); and
WHEREAS, effective as of _________________, _______, the
Committee granted to Optionee a nonqualified stock option under,
and in accordance with, the terms of the Plan to reward Optionee
for his efforts on behalf of the Company and to encourage his
continued loyalty and diligence; and
WHEREAS, to comply with the terms of the Plan and to further
the interests of the Company and Optionee, the parties hereto
have set forth the terms of such option in writing in this
Agreement;
NOW, THEREFORE, for and in consideration of the premises and
mutual promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Grant of Option. Effective as of _________________,
________, Optionee was granted a nonqualified stock option under
the Plan. Under that option and subject to the terms and
conditions set forth herein, Optionee shall have the right to
purchase 8,000 shares of the $0.01 par value common stock of the
Company (the "Common Stock"); such 8,000 shares hereinafter are
referred to as the "Optioned Shares", and this option hereinafter
is referred to as the "Option". The Option is intended to be a
nonqualified stock option.
2. Option Price. The price per share for each of the
Optioned Shares shall be $________________ (the "Option
Price"), which is the per share Fair Market Value of the Optioned
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Shares on the date of grant specified above.
3. Exercise of Option.
(a) General. The Option may be exercised by
Optionee's delivery to the Secretary of the Company of a written
notice of exercise executed by Optionee (the "Notice of
Exercise"). The Notice of Exercise shall be substantially in the
form set forth as Exhibit A, attached hereto and made a part
hereof, and shall identify the Option and the number of Optioned
Shares that are being exercised.
(b) Beginning of Exercise Period. The Option first
shall become exercisable (i.e., vested) according to the
following schedule; provided, if Optionee ceases to be a director
of the Company, his rights with regard to all non-vested Options
shall cease immediately:
(i) Commencing as of the first anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, 20% of the shares subject to such
Option. Prior to said date, the Option shall be
unexercisable in its entirety.
(ii) Commencing as of the second anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(iii) Commencing as of the third anniversary
of the date the Option is granted, the Optionee shall
have the right to exercise the Option with respect to,
and to thereby purchase, an additional 20% of the
shares subject to the Option.
(iv) Commencing as of the fourth anniversary of
the date the Option is granted, the Optionee shall have
the right to exercise the Option with respect to, and
to thereby purchase, an additional 20% of the shares
subject to the Option.
(v) Commencing as of the fifth anniversary of the
date the Option is granted, the Optionee shall have the
right to exercise the Option with respect to, and to
thereby purchase, the remainder of the shares subject
to such Option.
Notwithstanding the foregoing, the Option shall become 100%
vested immediately upon a Change in Control, and may become 100%
vested immediately in the sole discretion of the Committee.
(c) Partial Exercise. Optionee may exercise the
Option for less than the full number of exercisable Optioned
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Shares, but such exercise may not be made for less than 100
shares or the total remaining shares subject to the Option, if
less than 100 shares.
4. Termination of Option. Notwithstanding any provisions
to the contrary herein, and except as otherwise specified in
Attachment I (if any) hereto, the Option shall not be exercisable
either in whole or in part after the earliest of:
(a) Ten years from the date of grant;
(b) The date that is immediately prior to the first
anniversary of the date on which Optionee dies (i) while a
director of the Company, (ii) within the twelve-month period that
begins on the date
on which Optionee ceases to be a director of the Company for any
reason other than death or disability (as determined by the
Committee in its sole discretion) or (iii) within the twelve-
month period that begins on the date on which Optionee ceases to
be a director of the Company due to disability (as determined by
the Committee in its sole discretion);
(c) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be a director
of the Company due to disability (as determined by the Committee
in its sole discretion); provided, if Optionee dies during such
twelve-month period, the terms of subsection (b) shall control;
(d) The date of expiration of the twelve-month period
that begins on the date on which Optionee ceases to be a director
of the Company for any reason other than death or disability (as
determined by the Committee in its sole discretion); provided, if
Optionee dies during such twelve-month period, the terms of
subsection (b) shall control;
(e) The date on which the Company gives notice (or is
deemed to have given notice) to Optionee of his termination of
service as a director for Cause, all as described in Section
6.9(a) of the Plan.
(f) Such other earlier date as may be required under
the terms of the Plan.
5. Option Non-Transferable. The Option shall not be
transferable by Optionee other than by will or by the laws of
descent and distribution, and any purported transfer shall be
null and void; provided, however, this sentence shall only be
applicable to the extent required for grants of securities under
the Plan to be exempt from the provisions of Section 16 of the
1934 Act (in accordance with Rule 16b-3(a)(2) or the
corresponding provisions, if any, of subsequent regulations under
Section 16 of the 1934 Act). During the lifetime of Optionee,
the Option shall be exercisable only by Optionee (or, if he
becomes disabled or otherwise incapacitated, by the guardian of
his property or his duly appointed attorney-in-fact), and shall
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not be assignable or transferable by Optionee and, subject to
Section 6 hereof, no other person shall acquire any rights in the
Option.
6. Death of Optionee and Transfer of Option. Except as
otherwise specified in Attachment I (if any) hereto, in the event
of the death of Optionee while a director of the Company, within
a period of twelve-months after the termination of his service as
a director of the Company due to disability (as determined by the
Committee in its sole discretion), or within a twelve-month
period after the director ceases to be a director of the Company
for any reason other than for cause, all or any of the
unexercised portion of the Option owned by the deceased Optionee
may be exercised by Optionee's Beneficiary (as defined in Section
2.3 of the Plan) at any time prior to the first anniversary of
the date of the death of Optionee, but in no event later than the
date as of which such Option expires pursuant to Section 4
hereof. Such exercise shall be effected in accordance with the
terms hereof as if such Beneficiary was Optionee herein.
7. Medium and Time of Payment of Option Price.
(a) General. The Option Price shall be payable by
Optionee (or his successors in accordance with Section 6 hereof)
upon exercise of the Option and shall be paid in cash, in shares
of the Common Stock (or by instructing the Company to retain
shares as payment), in other property or services acceptable to
the Committee and allowed under the terms of the Plan and
applicable law, or any combination thereof.
(b) Payment in Shares of the Common Stock. If
Optionee pays all or part of the Option Price with shares of the
Common Stock, the following conditions shall apply:
(i) Optionee shall deliver to the Secretary of
the Company a certificate or certificates for shares of the
Common Stock duly endorsed for transfer to the Company with
signature guaranteed by a member firm of a national stock
exchange or by a national or state bank (or guaranteed or
notarized in such other manner as the Committee may
require);
(ii) Optionee must have held any shares of the
Common Stock used to pay the Option Price for at least six
months prior to the date such payment is made;
(iii) Such shares shall be valued on the basis
of the fair market value of the Common Stock on the date of
exercise pursuant to the terms of the Plan; and
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<PAGE>
(iv) The value of such Common Stock shall be less
than or equal to the Option Price. If Optionee delivers
Common Stock with a value that is less than the Option
Price, then Optionee shall pay the balance of the Option
Price in a form allowed under subsection (a) above.
8. Agreement of Optionee. Optionee acknowledges that he
has read Article 8 of the Plan and understands that certain
restrictions may apply with respect to shares of the Common Stock
acquired by him pursuant to his exercise of the Option (including
restrictions on resale applicable to "affiliates" under Rule 144
of the Securities Act of 1933, as amended, and restrictions on
resale applicable to shares of the Common Stock that have not
been registered under the Securities Act of 1933, as amended, and
applicable state securities laws). Optionee hereby agrees to
execute such documents and take such actions as the Company may
require with respect to state and federal securities laws and any
restrictions on the resale of such shares which may pertain.
9. Delivery of Stock Certificates. As promptly as
practical after the date of exercise of the Option and the
receipt by the Company of full payment therefor, the Company
shall deliver to Optionee a stock certificate representing the
shares of the Common Stock acquired by Optionee pursuant to his
exercise of the Option.
10. Notices. All notices or other communications hereunder
shall be in writing and shall be effective (i) when personally
delivered by courier (including overnight carriers) or otherwise
to the party to be given such notice or other communication or
(ii) on the third business day following the date deposited in
the United States mail if such notice or other communication is
sent by certified or registered mail with return receipt
requested and postage thereon fully prepaid. The addresses for
such notices shall be as follows:
If to the Company:
Davis Water & Waste Industries, Inc.
Attention: Corporate Secretary
P.O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
If to Optionee:
__________________________
__________________________
__________________________
__________________________
Any party hereto, by notice of the other party hereunder, may
change its address for receipt of notices hereunder.
11. Other Terms and Conditions. In addition to the terms
79
<PAGE>
and conditions set forth herein, the Option is subject to and
governed by the other terms and conditions set forth in the Plan
which is hereby incorporated by reference. In the event of any
conflict between the provisions of this Agreement and the Plan,
the Plan shall control.
12. Miscellaneous.
(a) The granting of the Option and the execution of
this Agreement shall not give Optionee any rights to similar
grants in future years or any right to be retained in the service
of the Company or to interfere in any way with the right of the
Company to terminate Optionee's services at any time.
(b) Unless and except as otherwise specifically
provided in this Agreement, Optionee shall have no rights of a
stockholder with respect to any shares covered by the Option
until the date of issuance of a stock certificate to him for such
shares.
(c) If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal
regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that this Agreement will not permit
Optionee to acquire the full number of Optioned Shares as
provided in Section 1 hereof, it is the express intention of the
Company to allow Optionee to acquire such lesser number of shares
as may be permissible without any amendment or modification
hereof.
(d) This Agreement shall be construed and enforced in
accordance with the laws of Georgia.
(e) This Agreement, together with the Plan, contains
the entire understanding among the parties and supersedes any
prior understanding and agreements between them representing the
subject matter hereof. There are no representations, agreements,
arrangements or understandings, oral or written, between and
among the parties hereto relating to the subject matter hereof
which are not fully expressed herein, or in the Plan.
(f) Section and other headings contained in this
Agreement are for reference purposes only and are in no way
intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
(g) This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which shall constitute one agreement, and the signatures of
any party or any counterpart shall be deemed to be a signature
to, and may be appended to, any other counterpart.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the first date written above.
DAVIS WATER & WASTE INDUSTRIES, INC.
By:_______________________________________________
Title: ____________________________________________
OPTIONEE:
__________________________________________________
Signature
__________________________________________________
Print or type name
81
<PAGE>
NONQUALIFIED STOCK OPTION NO. __________
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ATTACHMENT I
ADDITIONAL TERMS AND PROVISIONS REGARDING OPTION
82
<PAGE>
EXHIBIT A
DAVIS WATER & WASTE INDUSTRIES, INC.
1994 DIRECTORS STOCK OPTION PLAN
NOTICE OF EXERCISE FOR NONQUALIFIED STOCK OPTION AGREEMENT
This Notice of Exercise is given pursuant to the terms of
the Nonqualified Stock Option Agreement, dated
__________________, ________, between Davis Water & Waste
Industries, Inc. (the "Company") and the undersigned Optionee
(the "Agreement"), which Agreement represents Nonqualified Stock
Option No. ________ and which is made a part hereof and
incorporated herein by reference.
EXERCISE OF OPTION. Optionee hereby exercises his option to
purchase _______ of his Optioned Shares. Optionee hereby
delivers, together with this written statement of exercise, the
full Option Price with respect to the exercised Optioned Shares,
which consists of: [COMPLETE ONLY ONE]
cash in the total amount of $________________.
________ shares of the Company's Common Stock.
cash in the total amount of $_________________ and
_________ shares of the Company's Common Stock.
other (specify): _____________________________________
ACKNOWLEDGEMENT. Optionee hereby acknowledges that, to the
extent he is an "affiliate" of the Company (as that term is
defined in Rule 144 promulgated under the Securities Act of 1933,
as amended) or to the extent that the Optioned Shares have not
been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, any shares of the Company's
Common Stock acquired by him as a result of his exercise of the
Option pursuant to this Notice are subject to, and the
certificates representing such shares shall be legended to
reflect, certain trading restrictions under applicable securities
laws (including particularly the Securities and Exchange
Commission's Rule 144), all as described in Article 8 of the
Plan, and Optionee hereby agrees to comply with all such
restrictions and to execute such documents or take such other
actions as the Company may require in connection with such
restrictions.
Executed this ______ day of _________________, ________.
OPTIONEE:
___________________________________________________
Signature
___________________________________________________
Print or Type Name
83
<PAGE>
Davis Water & Waste Industries, Inc. hereby acknowledges
receipt of this Notice of Exercise and receipt of payment in the
form and amount indicated above, all on this ______ day of
____________________, ________.
DAVIS WATER & WASTE INDUSTRIES, INC.
By: _______________________________________________
Title: ____________________________________________
84
<PAGE>
EXHIBIT 11
DAVIS WATER & WASTE INDUSTRIES, Inc.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
January 31, January 31,
----------- -----------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income $ 775,826 $ 87,739 $2,592,507 $ 218,512
---------- ---------- ---------- ----------
Number of shares used in
calculation of per share data:
Weighted average number of
common shares outstanding
during the period 3,263,115 3,263,811 3,262,072 3,257,413
Add common equivalent
shares (determined by the
treasury stock method)
composed of shares
issuable upon award of
performance shares 0 5,274 0 5,274
--------- --------- --------- ---------
Weighted average number of
shares used in calculating
net income per share 3,263,115 3,269,085 3,262,072 3,262,687
========= ========= ========= =========
Net income $ .24 $ .03 $ .79 $ .07
===== ===== ===== =====
</TABLE>
85
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000027326
<NAME> DAVIS WATER & WASTE INDUSTRIES, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> JAN-31-1995
<CASH> 2,251
<SECURITIES> 0
<RECEIVABLES> 36,485
<ALLOWANCES> 1,205
<INVENTORY> 18,354
<CURRENT-ASSETS> 62,788
<PP&E> 20,638
<DEPRECIATION> 14,327
<TOTAL-ASSETS> 74,234
<CURRENT-LIABILITIES> 31,416
<BONDS> 0
<COMMON> 33
0
0
<OTHER-SE> 24,619
<TOTAL-LIABILITY-AND-EQUITY> 74,234
<SALES> 159,700
<TOTAL-REVENUES> 159,700
<CGS> 135,828
<TOTAL-COSTS> 135,828
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,041
<INCOME-PRETAX> 4,354
<INCOME-TAX> 1,761
<INCOME-CONTINUING> 2,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,593
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
