WASTE CONNECTIONS, INC.
2002 STOCK OPTION PLAN
The
purpose of the Plan is to provide a means for the Company and
any Subsidiary, through the grant of Nonqualified Stock
Options to selected Employees and Consultants, to attract and
retain persons of ability as Employees and Consultants, and to
motivate such persons to exert their best efforts on behalf of
the Company and any Subsidiary.
(a)
“Board” means the Company’s Board of
Directors.
(b)
“Change in Control” means:
(i)
any
reorganization, liquidation or consolidation of the Company, or any
merger or other business combination of the Company with any other
corporation, other than any such merger or other combination that
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such
transaction;
(ii) any
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company; or
(iii) any
“person” (as defined in Section 13(d) and 14(d) of the
Exchange Act) shall become the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the Company’s
outstanding voting securities (except that for purposes of this
definition, “person” shall not include any person (or
any person that controls, is controlled by or is under common
control with such person) who as of the date of an Option Agreement
owns ten percent (10%) or more of the total voting power
represented by the outstanding voting securities of the Company, or
a trustee or other fiduciary holding securities under any employee
benefit plan of the Company, or a corporation that is owned
directly or indirectly by the stockholders of the Company in
substantially the same percentage as their ownership of the
Company).
A
transaction shall not constitute a Change in Control if its
sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be
owned in substantially the same proportions by the persons who
held the Company’s securities immediately before such
transaction.
(c)
“Code” means the Internal Revenue Code of 1986,
as amended from time to time.
(d)
“Committee” means a committee appointed by the
Board in accordance with section 4(b) of the
Plan.
(e)
“Company” means Waste Connections, Inc., a
Delaware corporation.
(f)
“Consultant” means any person, including an
advisor, engaged by the Company or a Subsidiary to render
consulting services and who is compensated for such services;
provided that the term “Consultant” shall not include
Directors.
(g)
“Continuous Status as an Employee or Consultant”
means the employment or relationship as a Consultant is not
interrupted or terminated. The Board, in its sole
discretion, may determine whether Continuous Status as an Employee
or Consultant shall be considered interrupted in the case of
(i) any leave of absence approved by the Board, including sick
leave, military leave or any other personal leave, or
(ii) transfers between locations of the Company or between the
Company and a Subsidiary or their successors.
(h)
“Director” means a member of the Company’s
Board.
(i)
“Disability” means permanent and total
disability within the meaning of section 422(c)(6) of the
Code.
(j)
“Employee” means any person, other than officers
and Directors, employed by the Company or any Subsidiary of the
Company. Service as a Consultant shall not be sufficient
to constitute “employment” by the Company.
(k)
“Exchange Act” means the Securities Exchange Act
of 1934, as amended.
(l)
“ Fair Market Value
”
means, as of any date, the value of Stock determined as
follows:
(i)
If
the Stock is listed on any established stock exchange or a national
market system, its Fair Market Value shall be the closing sales
price for the Stock (or the closing bid, if no sales were reported)
as quoted on such exchange or system on the market trading day of
the date of determination, or, if the date of determination is not
a market trading day, the last market trading day prior to the date
of determination, in each case as reported in The Wall Street
Journal or such other sources as the Board deems
reliable;
(ii) If
the Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the
mean between the high bid and low asked prices for the Stock on the
market trading day of the date of determination, or, if the date of
determination is not a market trading day, the last market trading
day prior to the date of determination; or
(iii) In
absence of an established market for the Stock, the Fair Market
Value thereof shall be determined in good faith by the
Board.
(m)
“Non-Employee Director” means a Director who
satisfies the requirements established from time to time by the
Securities and Exchange Commission for non-employee directors under
Rule 16b-3.
(n)
“Nonqualified Stock Options” means Options that
are not intended to qualify as incentive stock options within the
meaning of section 422 of the Code.
(o)
“Option Agreement” means a written agreement
between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant. Each Option
Agreement shall be subject to the terms and conditions of the
Plan.
(p)
“Optionee” means an Employee or Consultant who
holds an outstanding Option.
(q)
“Options” means Nonqualified Stock
Options.
(r)
“Outside Director” means a member of the Board
who satisfies the requirements established from time to time for
outside directors under section 162(m) of the
Code.
(s)
“Plan” means this Waste Connections, Inc. 2002
Stock Option Plan.
(t)
“Rule 16b-3” means Rule 16b-3 under
the Exchange Act or any successor to Rule 16b-3, as amended
from time to time.
(u)
“Securities Act” means the Securities Act of
1933, as amended.
(v)
“Stock” means the Common Stock of the
Company.
(w)
“Subsidiary” means any corporation that at the
time an Option is granted under the Plan qualifies as a subsidiary
of the Company under the definition of “subsidiary
corporation” contained in section 424(f) of the Code, or
any similar provision hereafter enacted.
3.
SHARES SUBJECT TO THE PLAN.
Subject
to adjustment as provided in section 6 for changes in Stock,
the Stock that may be sold pursuant to Options shall not
exceed in the aggregate 5,625,000 shares. Such
number of shares shall be reserved for Options (subject to
adjustment as provided in section 6). If any Option
for any reason terminates, expires or is cancelled without
having been exercised in full, the Stock not purchased under
such Option shall revert to and again become available for
issuance under the Plan.
(a) The
Plan shall be administered by the Board or, at the election of the
Board, by a Committee, as provided in subsection (b), or, as to
certain functions, by an officer of the Company, as provided in
subsection (c). Subject to the Plan, the Board
shall:
(i)
determine
and designate from time to time those Employees and Consultants to
whom Options are to be granted;
(ii) authorize
the granting of Options;
(iii) determine
the number of shares subject to each Option and the Exercise Price
of each Option;
(iv) determine
the time or times when and the manner in which each Option shall be
exercisable and the duration of the exercise period;
(v)
construe
and interpret the Plan and the Options, and establish, amend and
revoke rules and regulations for the Plan’s administration,
and correct any defect, omission or inconsistency in the Plan or
any Option Agreement in a manner and to the extent it deems
necessary or expedient to make the Plan fully
effective;
(vi) determine
the Fair Market Value;
(vii) approve
forms of agreements for use under the Plan; and
(viii) make
such other determinations as it may be authorized to make in the
Plan and as it may deem necessary and desirable for the purposes of
the Plan.
Notwithstanding
the foregoing, however, no Option shall be granted after the
expiration of ten years from the effective date of the Plan
specified in section 9 below.
(b)
The
Board may delegate administration of the Plan to one or more
Committees of the Board. Each such Committee shall
consist of one or more members appointed by the
Board. Subject to the foregoing, the Board may from time
to time increase the size of any such Committee and appoint
additional members, remove members (with or without cause) and
appoint new members in substitution therefor, or fill vacancies,
however caused. If the Board delegates administration of
the Plan to a Committee, the Committee shall have the same powers
theretofore possessed by the Board with respect to the
administration of the Plan (and references in this Plan to the
Board shall apply to the Committee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board
may abolish any such Committee at any time and revest in the Board
the previously delegated administration of the Plan.
(c)
The
Board may delegate administration of sections 4(a)(i) through
4(a)(iii) above to the Chief Executive Officer of the Company;
provided, however, that such officer may not issue Options to
purchase more than 5,625,000 shares of Stock and may not designate
a Consultant as an Optionee.
5.
TERMS AND CONDITIONS OF OPTIONS.
Each
Option granted shall be evidenced by an Option Agreement in
substantially the form attached hereto as Annex A or such
other form as may be approved by the Board. Each
Option Agreement shall include the following terms and
conditions and such other terms and conditions as the Board
may deem appropriate:
(a)
OPTION TERM. Each Option Agreement shall specify
the term for which the Option thereunder is granted and shall
provide that such Option shall expire at the end of such
term. The Board may extend such term; provided that the
term of any Option, including any such extensions, shall not exceed
ten years from the date of grant.
(b)
EXERCISE PRICE. Each Option Agreement shall
specify the exercise price per share, as determined by the Board at
the time the Option is granted.
(c)
VESTING. Each Option Agreement shall specify
when it is exercisable. The total number of shares of
Stock subject to an Option may, but need not, be allotted in
periodic installments (which may, but need not be,
equal). An Option Agreement may provide that from time
to time during each of such installment periods, the Option may
become exercisable (“vest”) with respect to some
or all of the shares allotted to that period, and may be exercised
with respect to some or all of the shares allotted to such period
or any prior period as to which the Option shall have become vested
but shall not have been fully exercised. An Option may
be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or
other criteria) as the Board deems appropriate.
(d)
PAYMENT OF PURCHASE PRICE ON EXERCISE. Each
Option Agreement shall provide that the purchase price of the
shares as to which such Option may be exercised shall be paid to
the Company at the time of exercise either (i) in cash, or
(ii) in the absolute discretion of the Board (which discretion
may be exercised in a particular case without regard to any other
case or cases), at the time of the grant or thereafter, (A) by
the withholding of shares of Stock issuable on exercise of the
Option or the delivery to the Company of other Stock owned by the
Optionee, provided in either case that the Optionee has owned
shares of Stock equal in number to the shares so withheld for a
period sufficient to avoid a charge to the Company’s reported
earnings, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of
the foregoing, the use of Stock) with the person to whom the
Option is granted or to whom the Option is transferred pursuant to
section 5(e), (C) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for
the assignment to the Company of the proceeds of a sale or loan
with respect to some or all of the Stock being acquired upon the
exercise of the Option, including, without limitation, through an
exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the
Federal Reserve System (a “cashless exercise”), or
(D) in any other form or combination of forms of legal
consideration that may be acceptable to the Board.
In
the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at the
minimum rate necessary to avoid the treatment as interest,
under any applicable provisions of the Code, of any amounts
other than amounts stated to be interest under the deferred
payment arrangement, or if less, the maximum rate permitted by
law.
(e)
NONTRANSFERABILITY. An Option shall not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed
of by the Optionee during his or her lifetime, whether by operation
of law or otherwise, other than by will or the laws of descent and
distribution applicable to the Optionee, and shall not be made
subject to execution, attachment or similar process; provided that
the Board may in its discretion at the time of approval of the
grant of an Option or thereafter permit an Optionee to transfer an
Option to a trust or other entity established by the Optionee for
estate planning purposes, and may permit further transferability or
impose conditions or limitations on any permitted
transferability. Otherwise, during the lifetime of an
Optionee, an Option shall be exercisable only by such
Optionee.
(f)
CONDITIONS ON EXERCISE OF OPTIONS AND ISSUANCE OF
SHARES.
(i)
SECURITIES LAW COMPLIANCE. The Plan, the grant
and exercise of Options thereunder and the obligation of the
Company to sell and deliver shares on exercise of Options shall be
subject to all applicable Federal and state laws, rules and
regulations and to such approvals by any government or regulatory
agency as may be required, in the opinion of the
Board. Options may not be exercised if the issuance of
shares of Stock upon exercise would constitute a violation of any
applicable federal, state or foreign securities laws or other law
or regulations or the requirements of any stock exchange or market
system upon which the Stock may then be listed. In
addition, no Option may be exercised unless (a) a registration
statement under the Securities Act shall at the time of exercise of
the Option be in effect with respect to the shares issuable upon
exercise of the Option or (b) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may
be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities
Act. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed
by the Company’s legal counsel to be necessary to the lawful
issuance and sale of any shares hereunder shall relieve the Company
of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been
obtained. As a condition to the exercise of any Option,
the Company may require the Optionee to satisfy any qualifications
that may be necessary or appropriate to evidence compliance with
any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the
Company.
(ii)
INVESTMENT REPRESENTATION. The Company may
require any Optionee, or any person to whom an Option is
transferred, as a condition of exercising such Option, to
(A) give written assurances satisfactory to the Company as to
the Optionee’s knowledge and experience in financial and
business matters or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative,
the merits and risks of exercising the Option, and (B) to give
written assurances satisfactory to the Company stating that such
person is acquiring the Stock subject to the Option for such
person’s own account and not with any present intention of
selling or otherwise distributing the Stock. The
foregoing requirements, and any assurances given pursuant to such
requirements, shall not apply if (1) the issuance of the Stock
on the exercise of the Option has been registered under a then
currently effective registration statement under the Securities
Act, or (2) counsel for the Company determines as to any
particular requirement that such requirement need not be met in the
circumstances under the then applicable securities
laws. The Company may, with the advice of its counsel,
place such legends on stock certificates issued under the Plan as
the Company deems necessary or appropriate to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the Stock.
(g)
EXERCISE AFTER DEATH OF OPTIONEE. If an Optionee
dies (i) while an Employee or Consultant, or (ii) within
three months after termination of the Optionee’s Continuous
Status as an Employee or Consultant because of his or her
Disability or retirement, his or her Options may be exercised (to
the extent that the Optionee was entitled to do so on the date of
death or termination) by the Optionee’s estate or by a
person who shall have acquired the right to exercise the Options by
bequest or inheritance, but only within the period ending on the
earlier of (A) one year after the Optionee’s death (or
such shorter or longer period specified in the Option Agreement,
which period shall not be less than six months), or (B) the
expiration date specified in the Option Agreement. If,
after the Optionee’s death, the Optionee’s estate or
the person who acquired the right to exercise the Optionee’s
Options does not exercise the Options within the time specified
herein, the Options shall terminate and the shares covered by such
Options shall revert to and again become available for issuance
under the Plan.
(h)
EXERCISE AFTER TERMINATION OF OPTIONEE’S CONTINUOUS STATUS AS
AN EMPLOYEE OR CONSULTANT AS A RESULT OF DISABILITY OR
RETIREMENT . If an Optionee’s Continuous
Status as an Employee or Consultant terminates as a result of the
Optionee’s Disability or retirement, and the Optionee does
not die within the following three months, the Optionee may
exercise his or her Options (to the extent that the Optionee was
entitled to exercise them on the date of termination), but only
within the period ending on the earlier of (i) six months
after Disability or retirement (or such longer period specified in
the Option Agreement), and (ii) the expiration of the term set
forth in the Option Agreement. If, after termination,
the Optionee does not exercise his or her Options within the time
specified herein, the Options shall terminate, and the shares
covered by such Options shall revert to and again become available
for issuance under the Plan.
(i)
NO EXERCISE AFTER TERMINATION OF OPTIONEE’S CONTINUOUS STATUS
AS AN EMPLOYEE OR CONSULTANT OTHER THAN AS A RESULT OF DEATH,
DISABILITY OR RETIREMENT . If an Optionee’s
Continuous Status as an Employee or Consultant
terminates
