ROLLINS ENVIRONMENTAL SERVICES, INC.
1993 Stock Option Plan
1. PURPOSE. The 1993 Stock Option Plan (the "Plan") is intended to
advance the best interests of Rollins Environmental Services, Inc. (the
"Company") by providing its employees and the employees of its subsidiaries with
additional incentive and by increasing their proprietary interest in the success
of the Company and its subsidiary corporations.
2. ADMINISTRATION. The Plan shall be administered by the Stock Option
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall consist of two or more Directors of the Company, each of whom
shall be a disinterested person and shall not have been granted or awarded,
during the one year prior to service as an administrator of the Plan, any equity
securities pursuant to the Plan or any other plan of the Company or any of its
affiliates, except as permitted by Rule 16b-3 of the Securities Exchange Act of
1934. Meetings shall be held at such time and place as shall be determined by
the Committee. A majority of the members of the Committee shall constitute a
quorum for the transaction of business, and the vote of a majority of those
members present at any meeting shall decide any questions brought before that
meeting. In addition, the Committee may take any action otherwise proper under
the Plan by the unanimous written consent of its members. No member of the
Committee shall be liable for any act or omission of any other member of the
Committee or for any act or omission on his own part, including, but not limited
to, the exercise of any power or discretion given to him under the Plan, except
those resulting from his own gross negligence or willful misconduct. All
questions of interpretation and application of the Plan, or of options granted
hereunder (the "Options"), shall be subject to the determination, which shall be
final and binding, of a majority of the whole Committee.
3. OPTION SHARES. The stock subject to the Options and other provisions
of the Plan shall be shares of the Company's Common Stock, $1.00 par value (the
"Stock"). The total amount of the Stock with respect to which Options may be
granted shall not exceed in the aggregate 900,000 shares; provided, however,
that the class and aggregate number of shares which may be subject to Options
granted hereunder shall be subject to adjustment in accordance with the
provisions of Paragraph 16 hereof. Such shares may be treasury shares or
authorized but unissued shares. In the event that any outstanding Option for any
reason shall expire, the shares of Stock allocable to the unexercised portion of
such Option may again be subject to an Option under the Plan.
4. TERMINATION OF PLAN. The Plan shall terminate on April 30, 1994,
unless prior to that time it has been approved by the vote or written consent of
the holders of not less than a majority of the then outstanding common stock of
the Company. If such approval is given, the Plan shall terminate on April 30,
2003; provided, however, that the Board of Directors of the Company within its
absolute discretion may terminate the Plan at any time. No such termination,
other than as provided for in Section 16 hereof, shall in any way affect any
Option then outstanding.
1
<PAGE>
5. AUTHORITY TO GRANT OPTIONS. The Committee may grant from time to
time, to such eligible individuals as it shall from time to time determine, an
Option, or Options, to buy a stated number of shares of Stock under the terms
and conditions of the Plan. Subject only to any applicable limitations set forth
in the Plan, the number of shares of Stock to be covered by any Option shall be
as determined by the Committee. The Committee shall determine whether an Option
shall be an "incentive stock option" qualified under Section 422A of the
Internal Revenue Code of 1986 as amended (the "Code"), or a "non-qualified stock
option" (that is, any Option which is not considered an incentive stock option).
The aggregate fair market value (determined as provided in Section 7 of the
Plan) of the Stock with respect to which incentive stock options are granted
hereunder which are exercisable for the first time by such employee during any
calendar year (under all the stock option plans maintained by the Company and
subsidiary corporations) shall not exceed $100,000 in accordance with Section
422A of the Code. No option shall be granted under the Plan after ten (10) years
from the date the Plan is adopted.
6. ELIGIBILITY. The individuals who shall be eligible to participate in
the Plan shall be employees of the Company, or of any subsidiary corporation, as
the Committee shall determine from time to time; provided, however, that no
employee owning more than ten percent (10%) of the stock of the Company at the
time an option is granted shall be eligible to participate in the Plan. For all
purposes of the Plan, the term "subsidiary corporation" shall mean any
corporation of which the Company is the "parent corporation" as that term is
defined in Section 425(e) of the Code.
7. OPTION PRICE. The price at which shares may be purchased pursuant to
an Option shall be not less than the fair market value of the shares of Stock on
the date the Option is granted, and the Committee in its discretion may provide
that the price at which shares may be purchased shall be more than such fair
market value. The "fair market value" of the Stock shall be the closing price of
the Stock on the New York Stock Exchange as reported in The Wall Street Journal
for the trading day on which the Option is granted, or if the Option is not
granted on a trading day, then such fair market value shall be determined on the
trading day before the Option is granted.
8. DURATION OF OPTIONS. No Option shall be exercisable after the
expiration of ten years from the date such Option is granted; and the Committee
in its discretion may provide that an Option shall be exercisable throughout
such ten-year period or during any lesser period of time commencing on or after
the date of grant of the Option and ending upon or before the expiration of such
ten-year period.
9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as it is
valid and outstanding, from time to time in part or as a whole, subject to any
limitations with respect to the number of shares for which the Option may be
exercised at a particular time and to such other conditions as the Committee in
its discretion may specify upon granting the Option.
10. EXERCISE OF OPTIONS. Options shall be exercised by the delivery of
written notice to the Company setting forth the number of shares with respect to
which the Option is to be exercised, together with cash, personal check, bank
draft or postal or express money order payable to the order of the Company for
an amount equal to the Option price of such shares, and
2
<PAGE>
specifying the address to which the certificates for such shares are to be
mailed. Such notice may be delivered in person to a member of the Committee, or
the Secretary of the Company, or may be sent by registered mail, return receipt
requested, to a member of the Committee, or the Secretary of the Company, in
which case delivery shall be deemed made on the date such notice is deposited in
the mail. As promptly as practicable after receipt of such written notification
and payment, the Company shall deliver to the optionee certificates for the
number of shares with respect to which such Option has been so exercised, issued
in the optionee's name; provided, however, that such delivery shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
optionee, at the address specified pursuant to this Paragraph 10.
11. TRANSFERABILITY OF OPTIONS. Options shall not be transferrable by
the optionee other than by will or under the laws of descent and distribution,
and shall be exercisable, during his lifetime, only by the optionee.
12. TERMINATION OF EMPLOYMENT BY OPTIONEE. Except as may be otherwise
expressly provided herein, Options shall terminate on such date as shall be
selected by the Committee in its discretion and specified in the Option
agreement not in excess of one day less than three months following severance of
the employment relationship between the Company or its subsidiary corporation
and the optionee for any reason, for or without cause. Whether authorized leave
of absence, or absence on military or government service, shall constitute
severance of the employment relationship between the Company or its subsidiary
corporation and the optionee shall be determined by the Committee at the time
thereof. If, before the date of expiration of the Option, the optionee shall be
retired in good standing from the employ of the Company for reasons of age or
disability under the then established rules of the Company, the Option shall
terminate on the earlier of such date of expiration or one day less than three
months after the date of such retirement. In the event of such retirement, the
optionee shall have the right prior to the termination of such Option to
exercise the Option to the extent to which he was entitled to exercise such
Option immediately prior to such retirement. After the death of the optionee,
his executors, administrators, or any person or persons to whom his Option may
be transferred by will or by the laws of descent and distribution, shall have
the right, at any time prior to the earlier of the date of expiration or one
year following the date of such death, to exercise the Option, in whole or in
part (without regard to any limitations set forth in or imposed pursuant to
Paragraph 9 hereof).
13. REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any shares under an Option if the issuance of such shares constitute a
violation by the optionee or the Company of any provisions of any law or
regulation or any governmental authority. In addition, in connection with the
Securities Act of 1933 (as now in effect or hereafter amended), upon exercise of
any Option, the Company shall not be required to issue such shares unless the
Committee has received evidence satisfactory to it to the effect that the holder
of such Option will not transfer such shares except pursuant to a registration
statement in effect under such Act or unless an opinion of counsel to the
Company has been received by the Company to the effect that such registration is
not required. Any determination in this connection by the Committee shall be
final, binding and conclusive. In the event the shares issuable on exercise of
an Option
3
<PAGE>
are not registered under the Securities Act of 1 933, the Company may imprint
the following legend or any other legend which counsel for the Company considers
necessary or advisable to comply with the Securities Act of 1933:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any State and may not be sold or transferred except upon such
registration or upon receipt by the Company of an opinion of counsel
satisfactory to the Company, in form and substance satisfactory to the
Company, that registration is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended); and in the event any shares are so registered
the Company may remove any legend on certificates representing such shares. The
Company shall not be obligated to take any other affirmative action in order to
cause the exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.
14. NO RIGHTS AS SHAREHOLDER. No optionee shall have rights as a
shareholder with respect to shares covered by his Option until the date of
issuance of a stock certificate for such shares; and, except as otherwise
provided in Paragraph 16 hereof, no adjustment for dividends, or otherwise,
shall be made if the record date thereof is prior to the date of issuance of
such certificate.
15. EMPLOYMENT OBLIGATION. The granting of any Option shall not impose
upon the Company any obligation to employ or continue to employ any optionee;
and the right of the Company to terminate the employment of any employee shall
not be dismissed or affected by reason of the fact that an Option has been
granted to him.
16. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Stock outstanding, without receiving
compensation therefor in money, services or property, then (a) the number,
class, and per share price of shares of stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a manner as to entitle an
optionee to receive upon exercise of any Option, for the same aggregate cash
consideration, the same total number and class of shares as he would have
received had he exercised his Option in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares then reserved
for issuance under the Plan shall be adjusted by substituting for the total
number
4
<PAGE>
and class of shares of Stock then reserved that number and class of shares of
stock that would have been received by the owner of an equal number of
outstanding shares of each class of Stock as the result of the event requiring
the adjustment.
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each holder of an outstanding Option shall,
at no additional cost, be entitled upon exercise of such Option to receive
(subject to any required action by shareholders) in lieu of the number and class
of shares as to which such Option would have been so exercisable in the absence
of such event, the number and class of shares of stock or other securities to
which such holder would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such merger or
consolidation, such holder had been the holder of record of the number and class
of shares of Stock equal to the number and class of shares as to which such
Option shall be so exercised.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated, or sells or otherwise disposes of substantially all
of its assets to another corporation while unexercised Options remain
outstanding under the Plan: (i) subject to the provisions of clause (iii) below,
after the effective date of such merger, consolidation or sale, as the case may
be, each holder of an outstanding Option shall be entitled, upon exercise of
such Option, to receive, in lieu of shares of the Stock, shares of such stock or
other securities as the holders of shares of such class of Stock received
pursuant to the terms of the merger, consolidation or sale; (ii) the Board of
Directors may waive any limitations set forth in or imposed pursuant to
Paragraph 9 hereof so that all Options, from and after a date prior to the
effective date of such merger, consolidation, liquidation or sale, as the case
may be, specified by the Board, shall be exercisable in full; and (iii) all
outstanding Options may be canceled by the Board of Directors as of the
effective date of any such merger, consolidation, liquidation or sale provided
that (x) notice of such cancellation shall be given to each holder of an Option
and (y) each holder of an Option shall have the right to exercise such Option in
full (without regard to any limitations set forth in or imposed pursuant to
Paragraph 9 hereof) during a 30-day period preceding the effective date of such
merger, consolidation, liquidation or sale.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number, class or price of shares of Stock then
subject to outstanding Options.
17. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may
modify, revise or terminate this Plan at any time and from time to time;
provided, however, that without the further approval of the holders of at least
a majority of the outstanding shares of Stock, the Board may not increase the
aggregate number of shares which may be issued under Options pursuant to the
provisions of the Plan and that any amendment, modification, revision or
termination shall not effect any outstanding options.
5
<PAGE>
18. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied
in a written option agreement, which shall be subject to the terms and
conditions prescribed above and shall be signed by the optionee and by the
President or any Executive Officer of the Company for and in the name and on
behalf of the Company. Such an option agreement shall contain such other
provisions as the Committee in its discretion shall deem advisable.
19. INDEMNIFICATION OF COMMITTEE. The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company for, all expenses (including the amount of judgments and the amount
of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee, whether or not he continues to be such member of the Committee at the
time of incurring such expenses; provided, however, that such indemnity shall
not include any expenses incurred by any such member of the Committee (a) in
respect of matters as to which he shall be finally adjudged in any such action,
suit or proceeding to have been guilty of gross negligence or willful misconduct
in the performance of his duty as such member of the Committee, or (b) in
respect of any matter in which any settlement is effected, to any amount in
excess of the amount approved by the Company on the advice of its legal counsel;
and provided further, that no right of indemnification under the provisions set
forth herein shall be available to or enforceable by any such member of the
Committee unless, within sixty (60) days after institution of any such action,
suit or proceeding, he shall have offered the Company, in writing, the
opportunity to handle and defend same at its own expense. The foregoing right of
indemnification shall inure to the benefit of the heirs, executors or
administrators of each such member of the Committee and shall be in addition to
all other rights to which such member of the Committee may be entitled as a
matter of law, contract or otherwise.
20. EFFECTIVE DATE OF PLAN. The Plan shall become effective and shall
be deemed to have been adopted on April 30, 1993.
6
<PAGE>
