EMPLOYMENT AGREEMENTWASTE MANAGEMENT, INC., for and on behalf of its affiliated corporations(collectively referred to as the "Company") and ROBERT G. SIMPSON (the"Employee") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated asof October 15, 1998, as follows:1. EMPLOYMENT.The Company shall employ Employee, and Employee shall be employed by the Companyupon the terms and subject to the conditions set forth in this Agreement.2. TERM OF EMPLOYMENT.The period of Employee's employment under this Agreement shall begin as ofNovember 17, 1998, and shall continue for a period of three (3) years thereafter(the "Initial Term") and shall be automatically renewed for successive one (1)year periods thereafter, unless Employee's employment is terminated inaccordance with Section 6 below.3. DUTIES AND RESPONSIBILITIES. (a) Employee shall serve as Vice President, Taxation. In such capacity, Employee shall perform such duties as may be assigned to Employee from time to time by the Company. (b) Employee shall faithfully serve the Company and/or its affiliated corporations, devote Employee's full working time, attention and energies to the business of the Company and/or its affiliated corporations, and perform the duties under this Agreement to the best of Employee's abilities. (c) Employee shall (i) comply with all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory, and administrative bodies; (ii) comply with the Company's rules, procedures, policies, requirements, and directions; and (iii) not engage in any other business or employment without the written consent of the Company, except as otherwise specifically provided herein.4. COMPENSATION AND BENEFITS. (a) BASE SALARY. During the Employment Term, the Company shall pay Employee a base salary at the annual rate of Two Hundred Fifty Thousand ($250,000) Dollars per year, or such higher rate as may be determined from time to time by the Company ("Base Salary"). Such Base Salary shall be paid in accordance with the Company's standard payroll practice for employees. (b) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Employee for the ordinary and necessary business expenses incurred by Employee Page 1 of 11 2 in the performance of Employee's duties hereunder in accordance with the Company's customary practices applicable to employees, provided that such expenses are incurred and accounted for in accordance with the Company's policy. (c) BENEFIT PLANS. Employee shall be eligible to participate in or receive benefits under any pension plan, profit sharing plan, medical and dental benefits plan, life insurance plan, short-term and long-term disability plans, supplemental and/or incentive compensation plans, or any other benefit plan or arrangement generally made available by the Company to employees of similar status and responsibilities (hereinafter referred to as "similarly situated employees"). (d) INCENTIVE/BONUS. Employee shall be eligible for a bonus or incentive compensation payment ("bonus") of up to fifty (50%) percent of Employee's base pay. Qualification for the bonus shall be pursuant to the applicable Bonus Plan in effect for the year in which the bonus is earned. Employee is guaranteed a 1998 bonus in the amount of Fifty Thousand ($50,000) Dollars, to be paid at the same time as other corporate office bonuses are paid (in 1999, following the release of earning for the 1998 calendar year). (e) STOCK OPTIONS. Employee shall be awarded fifty thousand (50,000) Waste Management stock options, subject to the approval of the Compensation Committee of the Board of Directors. The award, vesting and exercise of all options shall be subject to the provisions of the Waste Management, Inc., 1993 Stock Incentive Plan.5. TERMINATION OF EMPLOYMENT.Employee's employment hereunder may be terminated under the followingcircumstances: (a) DEATH. Employee's employment hereunder shall terminate upon Employee's death. (b) TOTAL DISABILITY. The Company may terminate Employee's employment hereunder upon Employee's becoming "Totally Disabled". For purposes of this Agreement, Employee shall be "Totally Disabled" if Employee is physically or mentally incapacitated so as to render Employee incapable of performing Employee's usual and customary duties under this Agreement. Employee's receipt of disability benefits under the Company's long-term disability plan, or receipt of Social Security disability benefits, shall be deemed conclusive evidence of Total Disability for purpose of this Agreement; provided, however, that in the absence of Employee's receipt of such long-term disability benefits or Social Security benefits, the Company may, in its reasonable discretion (but based upon appropriate medical evidence), determine that Employee is Totally Disabled. (c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate Employee's employment hereunder for "Cause" at any time after providing written notice to Employee. Page 2 of 11 3 (i) For purposes of this Agreement, the term "Cause" shall mean any of the following: (A) conviction of a crime (including conviction on a nolo contendere plea) involving a felony or, in the good faith judgment of the Company, fraud, dishonesty, or moral turpitude; (B) deliberate and continual refusal to perform employment duties reasonably requested by the Company or an affiliate after thirty (30) days' written notice by certified mail of such failure to perform, specifying that the failure constitutes cause (other than as a result of vacation, sickness, illness or injury); (C) fraud or embezzlement determined in accordance with the Company's normal, internal investigative procedures consistently applied in comparable circumstances; (D) gross misconduct or gross negligence in connection with the business of the Company or an affiliate which has substantial effect on the Company or the affiliate; or (E) breach of any of the covenants set forth in Section 8 hereof. (ii) An individual will be considered to have been terminated for Cause if the Company determines that the individual engaged in an act constituting Cause at any time prior to a payment date for an award, regardless of whether the individual terminates employment voluntarily or is terminated involuntarily, and regardless of whether the individual's termination initially was considered to have been for Cause. (iii) Any determination of Cause under this Agreement shall be made by the Company after giving Employee a reasonable opportunity to be heard. (d) VOLUNTARY TERMINATION BY EMPLOYEE. Employee may terminate employment hereunder at any time after providing ninety (90) days' written notice to the Company. (e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate Employee's employment hereunder without Cause at any time after providing written notice to Employee.6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.In the event that Employee's employment hereunder is terminated, Employee shallbe entitled to the following compensation and benefits upon such termination: (a) TERMINATION BY REASON OF DEATH. In the event that Employee's employment is terminated by reason of Employee's death, the Company shall pay the following amounts to Employee's beneficiary or estate: (i) Any accrued but unpaid Base Salary for services rendered to the date of death, any accrued but unpaid expenses required to be reimbursed under this Agreement, and any vacation accrued to the date of death. Page 3 of 11 4 (ii) Any benefits to which Employee may be entitled pursuant to the plans, policies and arrangements referred to in Section 4(c) hereof as determined and paid in accordance with the terms of such plans, policies and arrangements. (iii) An amount equal to the Base Salary (at the rate in effect as of the date of Employee's death) which would have been payable to Employee if Employee had continued in employment until the end of the 12-month period beginning on the date of Employee's death. Such amount shall be paid in a single lump sum cash payment within thirty (30) days after Employee's death. (b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that Employee's employment is terminated by reason of Employee's Total Disability as determined in accordance with Section 5(b), the Company shall pay the following amounts to Employee: (i) Any accrued but unpaid Base Salary for services rendered to the date of termination, any accrued but unpaid expenses required to be reimbursed under this Agreement, any vacation accrued to the date of termination. Employee shall also be entitled to a bonus or incentive compensation payment to the extent such awards are made to similarly situated executives, pro-rated for the year in which Executive is terminated and paid at the same time as similarly situated executives are paid. (ii) Any benefits to which Employee may be entitled pursuant to the plans, policies and arrangements referred to in Section 4(c) hereof shall be determined and paid in accordance with the terms of such plans, policies and arrangements. (iii) An amount equal to (A) the Base Salary (at the rate in effect as of the date of Employee's Total Disability) which would have been payable to Employee if Employee had continued in active employment until the end of the 12-month period beginning on the date of Employee's termination; reduced by (B) the maximum annual amount of the long term disability benefits payable to Employee under the Company's long-term disability plan as determined prior to the reduction of such benefits under the terms of the plan for other disability income. Payment shall be made at the same time and in the same manner as such compensation would have been paid if Employee had remained in active employment until the end of such period. Page 4 of 11 5 (c) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION BY EMPLOYEE. In the event that Employee's employment is terminated by the Company for Cause pursuant to Section 5(c), or Employee terminates employment pursuant to Section 5(d), the Company shall pay the following amounts to Employee: (i) Any accrued but unpaid Base Salary for services rendered to the date of termination, any accrued but unpaid expenses required to be reimbursed under this Agreement, any vacation accrued to the date of termination. (ii) Any benefits to which Employee may be entitled pursuant to the plans, policies and arrangements referred to in Section 4(c) hereof shall be determined and paid in accordance with the terms of such plans, policies and arrangements. (d) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Employee's employment is terminated by the Company pursuant to Section 5(e) for reasons other than death, Total Disability or Cause, the Company shall pay the following amounts to Employee: (i) Any accrued but unpaid Base Salary for services rendered to the date of termination, any accrued but unpaid expenses required to be reimbursed under this Agreement, any vacation accrued to the date of termination. (ii) Any benefits to which Employee may be entitled pursuant to the plans, policies and arrangements referred to in Section 4(c) hereof shall be determined and paid in accordance with the terms of such plans, policies and arrangements. (iii) The Base Salary (at the rate in effect as of the date of Employee's termination) which would have been payable to Employee if Employee had continued in active employment until the later of: (A) the period ending on the last day of the Initial Term; or (B) the end of the 12-month period beginning on the date of Employee's termination. Payment shall be made at the same time and in the same manner as such compensation would have been paid if Employee had remained in active employment until the end of such period. The Employee shall also be eligible for a bonus or incentive compensation payment, to the extent bonuses are paid to similarly situated employees, pro-rated for the year in which the Employee is terminated, and paid at the same time as similarly situated employees are paid. (iv) The Company, completely at its expense, will continue for Employee and Employee's spouse and dependents, group health plans, programs or arrangements, in which Employee was entitled to participate at any time during the twelve-month period prior to the date of termination, until the earlier of: (A) last day of period during which Employee receives payment in Page 5 of 11 6 accordance with clause (iii) above; (B) Employee's death (provided that benefits payable to Employee's beneficiaries shall not terminate upon Employee's death); or (C) with respect to any particular plan, program or arrangement, the date Employee becomes covered by a comparable benefit provided by a subsequent employer. (e) NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under this Agreement, under the terms of any incentive compensation, employee benefit, or fringe benefit plan applicable to Employee at the time of Employee's termination or resignation of employment, Employee shall have no right to receive any other compensation, or to participate in any other plan, arrangement or benefit, with respect to future periods after such termination or resignation. (f) SUSPENSION OR TERMINATION OF BENEFITS AND COMPENSATION. In the event that the Company, in its sole discretion determines that, without the Company's express written consent, Employee has (i) directly or indirectly engaged in, assisted or have any active interest or involvement whether as an employee, agent, consultant, creditor, advisor, officer, director, stockholder (excluding holding of less than 1% of the stock of a public company), partner, proprietor, or any type of principal whatsoever, in any person, firm, or business entity which is directly or indirectly competitive with the Company or any of its affiliates, or (ii) directly or indirectly, for or on behalf of any person, firm, or business entity which is directly or indirectly competitive with the Company or any of its affiliates (A) solicited or accepted from any person or entity who is or was a client of the Company during the term of Employee's employment hereunder or during any of the twelve calendar months preceding or following the termination of Employee's employment any business for services similar to those rendered by the Company, (B) requested or advised any present or future customer of the Company to withdraw, curtail or cancel its business dealings with the Company, or (C) requested or advised any employee of the Company to terminate his or her employment with the Company; the Company shall have the right to suspend or terminate any or all remaining benefits payable pursuant to Section 6 of this Agreement. Such suspension or termination of benefits shall be in addition to and shall not limit any and all other rights and remedies that the Company may have against Employee.7. RESTRICTIVE COVENANTS (a) COMPETITIVE ACTIVITY. Employee covenants and agrees that at all times during Employee's period of employment with the Company, and while Employee is receiving payments pursuant to Section 6 of this Agreement, Employee will not, Page 6 of 11 7 directly or indirectly, engage in, assist, or have any active interest or involvement, whether as an employee, agent, consultant, creditor, advisor, officer, director, stockholder (excluding holding of less than 1% of the stock of a public company), partner, proprietor or any type of principal whatsoever in any person, firm, or business entity which, directly or indirectly, is engaged in the same business as that conducted and carried on by the Company, without the Company's specific written consent to do so. Furthermore, for a period of one (1) year after the date of termination of Employee's employment, whether such termination is voluntary or involuntary, by wrongful discharge, or otherwise, or one (1) year following the cessation of payments made pursuant to Section 6 of this Agreement, or for a period of one (1) year following the date of termination, whichever date is later, Employee will not directly or indirectly, within 75 miles of the principal place of business of the Company, the principal place of business of any corporation or other entity owned, controlled by (or otherwise affiliated with) the Company by which Employee may also be employed or served by Employee, or any other geographic location in which Employee has specifically represented the interests of the Company or such other affiliated entity, during the twelve (12) months prior to the termination of Employee's employment, engage in, assist, or have any active interest or involvement, whether as an employee, agent, consultant, creditor, advisor, officer, director, stockholder (excluding holding of less than 1% of the stock of a public company), partner, proprietor or any type of principal whatsoever in any person, firm, or business entity which, directly or indirectly, is engaged in the same business as that conducted and carried on by the Company, without the Company's specific written consent to do so. (b) NON-SOLICITATION. Employee covenants and agrees that at all times during Employee's period of employment with the Company, and for a period of one (1) year after the date of termination of Employee's employment, whether such termination is voluntary or involuntary by wrongful discharge, or otherwise, or the date of the cessation of payments made to the Employee pursuant to Section 6 of this Agreement, whichever date is later. Employee will not directly or indirectly (i) induce any customers of the Company or corporations affiliated with the Company to patronize any similar business which competes with any material business of the Company; (ii) canvass, solicit or accept any similar business from any customer of the Company or corporations affiliated with the Company; (iii) directly or indirectly request or advise any customers of the Company or corporations affiliated with the Company to withdraw, curtail or cancel such customer's business with the Company; (iv) directly or indirectly disclose to any other person, firm or corporation the names or addresses of any of the customers of the Company or corporations affiliated with the Company; or (v) individually of through any person, firm, association or corporation with which Employee is now or may hereafter become associated, cause, solicit, entice, or induce any present or future employee of the Company, or any corporation affiliated with the Company to leave the employ of the Company, or such other corporation to accept employment with, or compensation from, the Employee or any such person, firm, association or corporation without the prior written consent of the Company. Page 7 of 11 8 (c) NON-DISPARAGEMENT. Employee covenants and agrees that Employee shall not engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumors, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or good will of the Company, its management, or of management of corporations affiliated with the Company. (d) PROTECTED INFORMATION. Employee recognizes and acknowledges that Employee has had and will continue to have access to various confidential or proprietary information concerning the Company and corporations affiliated with the Company, of a special and unique value which may include, without limitation, (i) books and records relating to operation, finance, accounting, sales, personnel and management, (ii) policies and matters relating particularly to operations such as customer service requirements, costs of providing service and equipment, operating costs and pricing matters, and (iii) various trade or business secrets, including business opportunities, marketing or business diversification plans, business development and bidding techniques, methods and processes, financial data and the like (collectively, the "Protected Information"). Employee therefore covenants and agrees that Employee will not at any time, either while employed by the Company or afterwards, knowingly make any independent use of, or knowingly disclose to any other person or organization (except as authorized by the Company) any of the Protected Information.8. ENFORCEMENT OF COVENANTS. (a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Employee agrees that any breach by Employee of any of the covenants set forth in Section 7 hereof during Employee's employment by the Company, shall be grounds for immediate dismissal of Employee and forfeiture of any accrued and unpaid salary, bonus, commissions or other compensation of such Employee as liquidated damages, which shall be in addition to and not exclusive of any and all other rights and remedies the Company may have against Employee. (b) RIGHT TO INJUNCTION. Employee acknowledges that a breach of the covenants set forth in Section 7 hereof will cause irreparable damage to the Company with respect to which the Company's remedy at law for damages will be inadequate. Therefore, in the event of breach of anticipatory breach of the covenants set forth in this section by Employee, Employee and the Company agree that the Company shall be entitled to the following particular forms of relief, in addition to remedies otherwise available to it at law or equity; (i) injunctions, both preliminary and permanent, enjoining or retraining such breach or anticipatory breach and Employee hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction; and (ii) recovery of all reasonable sums Page 8 of 11 9 expended and costs, including reasonable attorney's fees, incurred by the Company to enforce the covenants set forth in this section. (c) SEPARABILITY OF COVENANTS. The covenants contained in Section 7 hereof constitute a series of separate covenants, one for each applicable State in the United States and the District of Columbia, and one for each applicable foreign country. If in any judicial proceeding, a court shall hold that any of the covenants set forth in Section 7 exceed the time, geographic, or occupational limitations permitted by applicable laws, Employee and the Company agree that such provisions shall and are hereby reformed to the maximum time, geographic, or occupational limitations permitted by such laws. Further, in the event a court shall hold unenforceable any of the separate covenants deemed included herein, then such unenforceable covenant or covenants shall be deemed eliminated from the provisions of this Agreement for the purpose of such proceeding to the extent necessary to permit the remaining separate covenants to be enforced in such proceeding. Employee and the Company further agree that the covenants in Section 7 shall each be construed as a separate agreement independent of any other provisions of this Agreement, and the existence of any claim or cause of action by Employee against the Company whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any of the covenants of Section 7.9. WITHHOLDING OF TAXES.The Company may withhold from any compensation and benefits payable under thisAgreement all applicable federal, state, local, or other taxes.10. NON-DISCLOSURE OF AGREEMENT TERMS.Employee agrees that Employee will not disclose the terms of this Agreement toany third party other than Employee's immediate family, attorney, accountants,or other consultants or advisors or except as may be required by anygovernmental authority.11. SOURCE OF PAYMENTS.All payments provided under this Agreement, other than payments made pursuant toa plan which provides otherwise, shall be paid from the general funds of theCompany, and no special or separate fund shall be established, and no othersegregation of assets made, to assure payment. Employee shall have no right,title or interest whatever in or to any investments which the Company may maketo aid the Company in meeting its obligations hereunder. To the extent that anyperson acquires a right to receive payments from the Company hereunder, suchright shall be no greater than the right of an unsecured creditor of theCompany. Page 9 of 11 1012. ASSIGNMENT.Except as otherwise provided in this Agreement, this Agreement shall inure tothe benefit of and be binding upon the parties hereto and their respectiveheirs, representatives, successors and assigns. This Agreement shall not beassignable by Employee.13. ENTIRE AGREEMENT; AMENDMENT.This Agreement shall supersede any and all existing oral or written agreements,representations, or warranties between Employee and the Company or any of itssubsidiaries or affiliated entities relating to the terms of Employee'semployment by the Company. It may not be amended except by a written agreementsigned by both parties.14. GOVERNING LAW.This Agreement shall be governed by and construed in accordance with the laws ofthe State of Texas, applicable to agreements made and to be performed in thatState, without regard to its conflict of laws provisions.15. NOTICES.Any notice, consent, request or other communication made or given in connectionwith this Agreement shall be in writing and shall be deemed to have been dulygiven when delivered or mailed by registered or certified mail, return receiptrequested, or by facsimile or by hand delivery, to those listed below at theirfollowing respective addresses or at such other address as each may specify bynotice to the others: To the Company: Waste Management, Inc. 1001 Fannin, Suite 4000 Houston, Texas 77002 Attention: Corporate Secretary To Employee: At the address for Employee set forth below.16. MISCELLANEOUS. (a) WAIVER. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (b) SEPARABILITY. Subject to Section 8 hereof, if any term or provision of this Agreement is declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such term or provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. Page 10 of 11 11 (c) HEADINGS. Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement. (d) RULES OF CONSTRUCTION. Whenever the context so requires, the use of the singular shall be deemed to include the plural and vice versa. (e) COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts will together constitute but one Agreement.IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as ofthe day and year first above written.WASTE MANAGEMENT, INC.By: /s/ Earl E. DeFrates --------------------------------------------Name: Earl E. DeFrates ------------------------------------------Title: Executive Vice President & CFO -----------------------------------------Date: October 15, 1998 ------------------------------------------EMPLOYEE /s/ Robert G. Simpson-----------------------------------------------Date: October 15, 1998 ------------------------------------------Address: 5627 Palisade Falls Trail --------------------------------------- Kingwood, TX 77345----------------------------------------------- Page 11 of 11/Compensation/Employment AgreementsWaste Management Inc.2009-10-18/compensation/employment//content/hippo/files/default.www/content/contract/contract/W/Waste-Management-Inc-/1831
18322000 Broad-Based Employee Plan - Waste Management Inc. WASTE MANAGEMENT, INC. 2000 BROAD-BASED EMPLOYEE PLAN FEBRUARY 28, 2000 2 TABLE OF CONTENTS PAGE ---- ARTICLE I. GENERAL...................................................1 Section 1.1. Purpose..........................................1 Section 1.2. Administration...................................1 Section 1.3. Eligibility for Participation....................2 Section 1.4. Types of Awards Under Plan.......................2 Section 1.5. Aggregate Limitation on Awards...................2 Section 1.6. Effective Date and Term of Plan..................3ARTICLE II. STOCK OPTIONS............................................4 Section 2.1. Award of Stock Options...........................4 Section 2.2. Stock Option Agreements..........................4 Section 2.3. Stock Option Price...............................4 Section 2.4. Term and Exercise................................4 Section 2.5. Manner of Payment................................4 Section 2.6. Delivery of Shares...............................5 Section 2.7. Death, Retirement and Termination of Employment of Optionee..........................5 Section 2.8. Tax Election.....................................5 Section 2.9. Effect of Exercise...............................6ARTICLE III. INCENTIVE STOCK OPTIONS.................................6 Section 3.1. Award of Incentive Stock Options.................6 Section 3.2. Incentive Stock Option Agreements................6 Section 3.3. Incentive Stock Option Price.....................6 Section 3.4. Term and Exercise................................6 Section 3.5. Maximum Amount of Incentive Stock Option Grant...7 Section 3.6. Death of Optionee................................7 Section 3.7. Retirement or Disability.........................7 Section 3.8. Termination for Other Reasons....................7 Section 3.9. Applicability of Stock Options Sections..........7ARTICLE IV. RELOAD OPTIONS...........................................8 Section 4.1. Authorization of Reload Options..................8 Section 4.2. Reload Option Amendment..........................8 Section 4.3. Reload Option Price..............................8 Section 4.4. Term and Exercise................................8 Section 4.5. Termination of Employment........................8 Section 4.6. Applicability of Stock Options Sections..........9ARTICLE V. ALTERNATE APPRECIATION RIGHTS.............................9 Section 5.1. Award of Alternate Appreciation Rights...........9 i 3 Section 5.2. Alternate Appreciation Rights Agreement..........9 Section 5.3. Exercise.........................................9 Section 5.4. Amount of Payment................................9 Section 5.5. Form of Payment..................................9 Section 5.6. Effect of Exercise...............................10 Section 5.7. Termination of Employment, Retirement, Death or Disability.............................10ARTICLE VI. LIMITED RIGHTS...........................................10 Section 6.1. Award of Limited Rights..........................10 Section 6.2. Limited Rights Agreement.........................10 Section 6.3. Exercise Period..................................10 Section 6.4. Amount of Payment................................10 Section 6.5. Form of Payment..................................11 Section 6.6. Effect of Exercise...............................11 Section 6.7. Retirement or Disability.........................11 Section 6.8. Death of Optionee or Termination for Other Reasons...................................11 Section 6.9. Termination Related to a Change in Control.......11ARTICLE VII. SUBSTITUTION AWARDS.....................................12ARTICLE VIII. BONUS STOCK AWARDS.....................................12 Section 8.1. Award of Bonus Stock.............................12 Section 8.2. Stock Bonus Agreements...........................12ARTICLE IX. MISCELLANEOUS............................................12 Section 9.1. General Restriction..............................12 Section 9.2. Non-Assignability................................13 Section 9.3. Withholding Taxes................................13 Section 9.4. Right to Terminate Employment....................13 Section 9.5. Non-Uniform Determination........................13 Section 9.6. Rights as a Shareholder..........................13 Section 9.7. Definitions......................................14 Section 9.8. Leaves of Absence................................15 Section 9.9. Newly Eligible Employees.........................15 Section 9.10. Adjustments......................................15 Section 9.11. Changes in the Company's Capital Structure.......16 Section 9.12. Change in Control................................17 Section 9.13. Amendment of the Plan............................18 Section 9.14. Effective Date...................................18 ii 4 WASTE MANAGEMENT, INC. 2000 BROAD-BASED EMPLOYEE PLAN ARTICLE I. GENERAL Section 1.1. Purpose. The purposes of this Broad-Based Employee Plan (the"Plan") are to: (1) closely associate the interests of the employees andconsultants of Waste Management, Inc. and its Subsidiaries and Affiliates(collectively referred to as the "Company") with the shareholders to generate anincreased incentive to contribute to the Company's future success andprosperity, thus enhancing the value of the Company for the benefit of itsstockholders; (2) provide employees and consultants with a proprietary ownershipinterest in the Company commensurate with Company performance, as reflected inincreased shareholder value; (3) maintain competitive compensation levelsthereby attracting and retaining highly competent and talented employees andconsultants; and (4) provide an incentive to employees and consultants forcontinuous employment with or services to the Company. Section 1.2. Administration. (a) The Plan shall be administered by a committee of non-employeedirectors appointed by the Board of Directors of the Company (the "Committee"),as constituted from time to time. (b) The Committee shall have the authority, in its sole discretion andfrom time to time to: (i) designate the employees and consultants or classes of employees of and consultants to the Company eligible to participate in the Plan; (ii) grant awards ("Awards") provided in the Plan in such form and amount as the Committee shall determine; (iii) impose such limitations, restrictions, and conditions, not inconsistent with this Plan, upon any such Award as the Committee shall deem appropriate; and (iv) interpret the Plan and any agreement, instrument, or other document executed in connection with the Plan; adopt, amend, and rescind rules and regulations relating to the Plan; and make all other determinations and take all other action necessary or advisable for the implementation and administration of the Plan. 1 5 (c) Decisions and determinations of the Committee on all matters relatingto the Plan shall be in its sole discretion and shall be final, conclusive, andbinding upon all persons, including the Company, any participant, anystockholder of the Company, and any employee or consultant. A majority of themembers of the Committee may determine its actions and fix the time and place ofits meetings. No member of the Committee shall be liable for any action taken ordecision made in good faith relating to the Plan or any Award thereunder. Section 1.3. Eligibility for Participation. Participants in the Plan("Participants") shall be selected by the Committee from the employees of andconsultants to the Company who are responsible for or contribute to themanagement, growth, success and profitability of the Company and who are notofficers of the Company. In making this selection and in determining the formand amount of Awards, the Committee shall consider any factors deemed relevant,including the individual's functions, responsibilities, value of services to theCompany, and past and potential contributions to the Company's profitability andgrowth. Section 1.4. Types of Awards Under Plan. Awards under the Plan may be inthe form of any one or more of the following: (i) Stock Options, as described in Article II; (ii) Incentive Stock Options, as described in Article III; (iii) Reload Options, as described in Article IV; (iv) Alternate Appreciation Rights, as described in Article V; (v) Limited Rights, as described in Article VI; (vi) Substitution Awards, as described in Article VII; and/or (vii) Stock Bonus Awards, as described in Article VIII.Awards under the Plan shall be evidenced by an Award Agreement between theCompany and the recipient of the Award, in form and substance satisfactory tothe Committee, and not inconsistent with this Plan. 2 6 Section 1.5. Aggregate Limitation on Awards. (a) Shares of stock which may be issued under the Plan shall be authorizedand unissued or treasury shares of Common Stock $.01 par value, of the Company("Common Stock"). Subject to the further provisions of this Section 1.5 andSection 9.10, the maximum number of shares of Common Stock which may be issuedunder the Plan shall be 3,000,000. (b) For purposes of calculating the maximum number of shares of CommonStock that may be issued under the Plan: (i) all the shares issued (including the shares, if any, withheld for tax withholding requirements) shall be counted when cash is used as full payment for shares issued upon exercise of a Stock Option, Incentive Stock Option, or Reload Option; (ii) only the shares issued (including the shares, if any, withheld for tax withholding requirements) as a result of an exercise of Alternate Appreciation Rights shall be counted; and (iii) only the net shares issued (including the shares, if any, withheld for tax withholding requirements) shall be counted when shares of Common Stock or another Award under the Plan are used or withheld as full or partial payment for shares issued upon exercise of a Stock Option, Incentive Stock Option, or Reload Option;provided, however, in all events the maximum number of shares of Common Stockthat may be issued pursuant to Incentive Stock Options is 3,000,000. (c) In addition to shares of Common Stock actually issued pursuant to theexercise of Stock Options, Incentive Stock Options, Reload Options, or AlternateAppreciation Rights, there shall be deemed to have been issued a number ofshares equal to the number of shares of Common Stock in respect of which LimitedRights (as described in Article VI) shall have been exercised. (d) Shares tendered by a Participant or withheld as payment for sharesissued upon exercise of a Stock Option, Incentive Stock Option, or Reload Optionshall be available for issuance under the Plan. Any shares of Common Stocksubject to a Stock Option, Incentive Stock Option, or Reload Option that for anyreason is terminated unexercised or expires shall again be available forissuance under the Plan, but shares subject to a Stock Option, Incentive StockOption, or Reload Option that are not issued as a result of the exercise ofLimited Rights shall not again be available for issuance under the Plan. 3 7 (e) The maximum number of shares of Common Stock with respect to which anyParticipant may receive Awards in any calendar year is 500,000. Section 1.6. Effective Date and Term of Plan. (a) The Plan shall become effective on the date it is approved by theBoard of Directors of the Company. (b) No Awards shall be made under the Plan after the tenth anniversary ofthe effective date of this Plan; provided, however, that the Plan and all Awardsmade under the Plan prior to such date shall remain in effect until such Awardshave been satisfied or terminated in accordance with the Plan and the terms ofsuch Awards. ARTICLE II. STOCK OPTIONS Section 2.1. Award of Stock Options. The Committee may from time to time,and subject to the provisions of the Plan and such other terms and conditions asthe Committee may prescribe, grant to any Participant in the Plan one or moreoptions to purchase the number of shares of Common Stock ("Stock Options")allotted by the Committee. The date a Stock Option is granted shall mean thedate selected by the Committee as of which the Committee allots a specificnumber of shares to a Participant pursuant to the Plan. Section 2.2. Stock Option Agreements. The grant of a Stock Option shall beevidenced by a written Award Agreement, executed by the Company and the holderof the Stock Option (the "Optionee"), stating the number of shares of CommonStock subject to the Stock Option evidenced thereby, and in such form as theCommittee may from time to time determine. Section 2.3. Stock Option Price. The Option Price per share of CommonStock deliverable upon the exercise of a Stock Option shall be an amountselected by the Committee and shall not be less than 100% of the Fair MarketValue of a share of Common Stock on the date the Stock Option is granted. Section 2.4. Term and Exercise. A Stock Option shall not be exercisableprior to six months from the date of its grant unless a shorter period isprovided by the Committee or by another Section of this Plan, and may beexercised during the period established by the Committee, but not after tenyears from the date of grant thereof (the "Option Term"). No Stock Option shallbe exercisable after the expiration of its Option Term. Section 2.5. Manner of Payment. Each Award Agreement providing for StockOptions shall set forth the procedure governing the exercise of the Stock Optiongranted thereunder, and shall provide that, upon such exercise in respect of anyshares of 4 8Common Stock subject thereto, the Optionee shall pay to the Company, in full,the Option Price for such shares with cash, which may be pursuant to a"cashless-broker" exercise pursuant to procedures established by the Committeefrom time to time, or with previously owned Common Stock, or at the discretionof the Committee, in whole or in part with, the surrender of another Award underthe Plan, the withholding of shares of Common Stock issuable upon exercise ofsuch Stock Option, other property, or any combination thereof (each based on theFair Market Value of such Common Stock, Award or other property on the date theStock Option is exercised as determined by the Committee). Section 2.6. Delivery of Shares. As soon as practicable after receipt ofpayment, the Committee shall deliver to the Optionee a certificate orcertificates for such shares of Common Stock. The Optionee shall become ashareholder of the Company with respect to Common Stock represented by sharecertificates so issued and as such shall be fully entitled to receive dividends,to vote and to exercise all other rights of a shareholder. Section 2.7. Death, Retirement and Termination of Employment of Optionee.Unless otherwise provided in an Award Agreement or otherwise agreed to by theCommittee: (a) Upon the death of the Optionee, any rights to the extent exercisableby the Optionee on the date of termination of employment or consulting, as thecase may be, may be exercised by the Optionee's estate, or by a person whoacquires the right to exercise such Stock Option by bequest or inheritance or byreason of the death of the Optionee, provided that such exercise occurs withinboth the remaining effective term of the Stock Option and one year after theOptionee's death. The provisions of this Section shall apply notwithstanding thefact that the Optionee's employment may have terminated prior to death. (b) Upon termination of the Optionee's employment by reason of retirementor permanent disability (as each is determined by the Committee), the Optioneemay, within 36 months from the date of termination, exercise any Stock Optionsto the extent such Stock Options are exercisable on the date of such terminationof employment. (c) Except as provided in Subsections (a) and (b) of this Section 2.7, orexcept as otherwise determined by the Committee, all Stock Options shallterminate three months after the date of the termination of the Optionee'semployment or consulting, as the case may be, and shall be exercisable duringsuch period only to the extent exercisable on the date of termination ofemployment or consulting. Section 2.8. Tax Election. Recipients of Stock Options who are directorsor executive officers of the Company or who own more than 10% of the CommonStock of the Company ("Section 16(a) Option Holders") at the time of exercise ofa Stock Option may elect, in lieu of paying to the Company an amount required tobe withheld under 5 9applicable tax laws in connection with the exercise of a Stock Option in wholeor in part, to have the Company withhold shares of Common Stock having a fairmarket value equal to the amount required to be withheld. Such election may notbe made prior to six months following the grant of the Stock Option, except inthe event of a Section 16(a) Option Holders's death or disability. The electionmay be made at the time the Stock Option is exercised by notifying the Companyof the election, specifying the amount of such withholding and the date on whichthe number of shares to be withheld is to be determined ("Tax Date"), whichshall be either (i) the date the Stock Option is exercised or (ii) a date sixmonths after the Stock Option was granted, if later. The number of shares ofCommon Stock to be withheld to satisfy the tax obligation shall be the amount ofsuch tax liability divided by the fair market value of the Common Stock on theTax Date (or if not a business day, on the next closest business day). If theTax Date is not the exercise date, the Company may issue the full number ofshares of Common Stock to which the Section 16(a) Option Holders is entitled,and such option holder shall be obligated to tender to the Company on the TaxDate a number of such shares necessary to satisfy the withholding obligation.Certificates representing such shares of Common Stock shall bear a legenddescribing such Section 16(a) Option Holders obligation hereunder. Section 2.9. Effect of Exercise. The exercise of any Stock Option shallcancel that number of related Alternate Appreciation Rights and/or LimitedRights, if any, that is equal to the number of shares of Common Stock purchasedpursuant to said option unless otherwise agreed by the Committee in an AwardAgreement or otherwise. ARTICLE III. INCENTIVE STOCK OPTIONS Section 3.1. Award of Incentive Stock Options. The Committee may, fromtime to time and subject to the provisions of the Plan and such other terms andconditions as the Committee may prescribe, grant to any employee of the Companyor a Subsidiary one or more "incentive stock options" (intended to qualify assuch under the provisions of Section 422 of the Internal Revenue Code of 1986,as amended (the "Code") ("Incentive Stock Options") to purchase the number ofshares of Common Stock allotted by the Committee. The date an Incentive StockOption is granted shall mean the date selected by the Committee as of which theCommittee allots a specific number of shares to a participant pursuant to thePlan. Section 3.2. Incentive Stock Option Agreements. The grant of an IncentiveStock Option shall be evidenced by a written Award Agreement, executed by theCompany and the holder of an Incentive Stock Option (the "Optionee"), statingthe number of shares of Common Stock subject to the Incentive Stock Optionevidenced thereby, and in such form as the Committee may from time to timedetermine. Section 3.3. Incentive Stock Option Price. The Option Price per share ofCommon Stock deliverable upon the exercise of an Incentive Stock Option shall beat 6 10least 100% of the Fair Market Value of a share of Common Stock on the date theIncentive Stock Option is granted; provided, however, the Option Price per shareof Common Stock deliverable upon the exercise of an Incentive Stock Optiongranted to any owner of 10% or more of the total combined voting power of allclasses of stock of the Company and its subsidiaries shall be at least 110% ofthe fair market value of a share of Common Stock on the date the Incentive StockOption is granted. Section 3.4. Term and Exercise. Each Incentive Stock Option shall not beexercisable prior to six months from the date of its grant unless a shorterperiod is provided by the Committee or another Section of this Plan, and may beexercised during the period established by the Committee, but not after tenyears from the date of grant thereof (the "Option Term"). No Incentive StockOption shall be exercisable after the expiration of its Option Term. Section 3.5. Maximum Amount of Incentive Stock Option Grant. To the extentthat the aggregate Fair Market Value (determined at the time the respectiveIncentive Stock Option is granted) of Common Stock with respect to whichIncentive Stock Options granted are exercisable for the first time by anindividual during any calendar year under all incentive stock option plans ofthe Company and its parent and subsidiary corporations exceeds $100,000, suchIncentive Stock Options shall be treated as Options which do not constituteIncentive Stock Options. Section 3.6. Death of Optionee. Unless otherwise provided in an AwardAgreement: (a) Upon the death of the Optionee, any Incentive Stock Option exercisableby the Optionee on the date of termination of employment may be exercised by theOptionee's estate or by a person who acquires the right to exercise suchIncentive Stock Option by bequest or inheritance or by reason of the death ofthe Optionee, provided that such exercise occurs within both the remainingoption term of the Incentive Stock Option and one year after the Optionee'sdeath. (b) The provisions of this Section shall apply notwithstanding the factthat the Optionee's employment may have terminated prior to death. Section 3.7. Retirement or Disability. Unless otherwise provided in anAward Agreement, upon the termination of the Optionee's employment by reason ofpermanent disability or retirement (as each is determined by the Committee), theOptionee may, within 36 months from the date of such termination of employment,exercise any Incentive Stock Options to the extent such Incentive Stock Optionswere exercisable at the date of such termination of employment. Notwithstandingthe foregoing, the tax treatment available pursuant to Section 422 of the Codeupon the exercise of an Incentive Stock Option will not be available to anOptionee who exercises any Incentive Stock Options more than (i) 12 months afterthe date of termination of employment due to 7 11permanent disability or (ii) three months after the date of termination ofemployment due to retirement. Section 3.8. Termination for Other Reasons. Except as provided in Sections3.6 and 3.7 or except as otherwise determined by the Committee, all IncentiveStock Options shall terminate three months after the date of the termination ofthe Optionee's employment and shall be exercisable during such period only tothe extent exercisable on the date of termination of employment. Section 3.9. Applicability of Stock Options Sections. Sections 2.5, Mannerof Payment; 2.6, Delivery of Shares; 2.8, Tax Elections and 2.9, Effect ofExercise, applicable to Stock Options, shall apply equally to Incentive StockOptions. Such Sections are incorporated by reference in this Article III asthough fully set forth herein. ARTICLE IV. RELOAD OPTIONS Section 4.1. Authorization of Reload Options. Concurrently with orsubsequent to the award of Stock Options to any Participant in the Plan, theCommittee may authorize reload options ("Reload Options") to purchase shares ofCommon Stock. The number of Reload Options shall equal (i) the number of sharesof Common Stock used to pay the exercise price of the underlying Stock Optionsor Incentive Stock Options and (ii) to the extent authorized by the Committee,the number of shares of Common Stock withheld by the Company in payment of theexercise price underlying the Stock Option or Incentive Stock Option or used tosatisfy any tax withholding requirement incident to the exercise of theunderlying Stock Options or Incentive Stock Options. The grant of a ReloadOption will become effective upon the exercise of underlying Stock Options,Incentive Stock Options, or Reload Options through the use of shares of CommonStock held by the Optionee or the withholding of shares by the Company inpayment of the exercise price of the underlying Stock Option or Incentive StockOption held by the Optionee. Notwithstanding the fact that the underlying optionmay be an Incentive Stock Option, a Reload Option is not intended to qualify asan "incentive stock option" under Section 422 of the Code. Section 4.2. Reload Option Amendment. Each Award Agreement shall statewhether the Committee has authorized Reload Options with respect to the StockOptions and/or Incentive Stock Options covered by such Award Agreement. Upon theexercise of an underlying Stock Option, Incentive Stock Option, or other ReloadOption, the Reload Option will be evidenced by an amendment to the underlyingAward Agreement in such form as the Committee shall approve. Section 4.3. Reload Option Price. The Option Price per share of CommonStock deliverable upon the exercise of a Reload Option shall be the Fair MarketValue of a share of Common Stock on the date the grant of the Reload Optionbecomes effective. 8 12 Section 4.4. Term and Exercise. Each Reload Option is fully exercisablesix months from the effective date of grant. The term of each Reload Optionshall be equal to the remaining option term of the underlying Stock Optionand/or Incentive Stock Option. Section 4.5. Termination of Employment. Unless otherwise determined by theCommittee in an Award Agreement or otherwise, no additional Reload Options shallbe granted to Optionees when Stock Options, Incentive Stock Options, and/orReload Options are exercised pursuant to the terms of this Plan followingtermination of the Optionee's employment. Section 4.6. Applicability of Stock Options Sections. Sections 2.5, Mannerof Payment; 2.6 Delivery of Shares; 2.7, Death, Retirement and Termination ofEmployment of Optionee; 2.8, Tax Elections; and 2.9, Effect of Exercise,applicable to Stock Options, shall apply equally to Reload Options. SuchSections are incorporated by reference in this Article IV as though fully setforth herein. ARTICLE V. ALTERNATE APPRECIATION RIGHTS Section 5.1. Award of Alternate Appreciation Rights. Concurrently with orsubsequent to the award of any Stock Option, Incentive Stock Option, or ReloadOption to purchase one or more shares of Common Stock, the Committee may,subject to the provisions of the Plan and such other terms and conditions as theCommittee may prescribe, award to the Optionee with respect to each share ofCommon Stock covered by an Option, a related alternate appreciation rightpermitting the Optionee to be paid the appreciation on the Option in lieu ofexercising the Option ("Alternate Appreciation Right"). Section 5.2. Alternate Appreciation Rights Agreement. AlternateAppreciation Rights shall be evidenced by written Award Agreements in such formas the Committee may from time to time determine. Section 5.3. Exercise. An Optionee who has been granted AlternateAppreciation Rights may, from time to time, in lieu of the exercise of an equalnumber of Options, elect to exercise one or more Alternate Appreciation Rightsand thereby become entitled to receive from the Company payment in Common Stockof the number of shares determined pursuant to Section 5.4 and 5.5. AlternateAppreciation Rights shall be exercisable only to the same extent and subject tothe same conditions as the Options related thereto are exercisable, as providedin this Plan. The Committee may, in its discretion, prescribe additionalconditions to the exercise of any Alternate Appreciation Rights. Section 5.4. Amount of Payment. The amount of payment to which an Optioneeshall be entitled upon the exercise of each Alternate Appreciation Right shallbe equal to 9 13100% of the amount, if any, by which the Fair Market Value of a share of CommonStock on the exercise date exceeds the Option Price per share on the Optionrelated to such Alternate Appreciation Right. A Section 16(a) Option Holder mayelect to withhold shares of Common Stock issued under this Section to pay taxesas described in Section 2.8. Section 5.5. Form of Payment. The number of shares to be paid shall bedetermined by dividing the amount of payment determined pursuant to Section 5.4by the Fair Market Value of a share of Common Stock on the exercise date of suchAlternate Appreciation Rights. As soon as practicable after exercise, theCompany shall deliver to the Optionee a certificate or certificates for suchshares of Common Stock. Section 5.6. Effect of Exercise. Unless otherwise provided in an AwardAgreement or agreed to by the Committee, the exercise of any AlternateAppreciation Rights shall cancel an equal number of Stock Options, IncentiveStock Options, Reload Options, and Limited Rights, if any, related to saidAlternate Appreciation Rights. Section 5.7. Termination of Employment, Retirement, Death or Disability.Unless otherwise provided in an Award Agreement or agreed to by the Committee: (a) Upon termination of the Optionee's employment (including employment as a director of the Company after an Optionee terminates employment as an employee of the Company) by reason of permanent disability or retirement (as each is determined by the Committee) or consulting, the Optionee may, within six months from the date of such termination, exercise any Alternate Appreciation Rights to the extent such Alternate Appreciation Rights are exercisable during such six-month period. (b) Except as provided in Section 5.7(a), all Alternate Appreciation Rights shall terminate three months after the date of the termination of the Optionee's employment, consulting or upon the death of the Optionee. ARTICLE VI. LIMITED RIGHTS Section 6.1. Award of Limited Rights. Concurrently with or subsequent tothe award of any Stock Option, Incentive Stock Option, Reload Option, orAlternate Appreciation Right, the Committee may, subject to the provisions ofthe Plan and such other terms and conditions as the Committee may prescribe,award to the Optionee with respect to each share of Common Stock covered by anOption, a related limited right permitting the Optionee, during a specifiedlimited time period, to be paid the appreciation on the Option in lieu ofexercising the Option ("Limited Right"). 10 14 Section 6.2. Limited Rights Agreement. Limited Rights granted under thePlan shall be evidenced by written Award Agreements in such form as theCommittee may from time to time determine. Section 6.3. Exercise Period. Limited Rights are exercisable in full for aperiod of seven months following the date of a Change in Control of the Company(the "Exercise Period"); provided, however, that Limited Rights may not beexercised under any circumstances until the expiration of the six-month periodfollowing the date of grant. Section 6.4. Amount of Payment. The amount of payment to which an Optioneeshall be entitled upon the exercise of each Limited Right shall be equal to 100%of the amount, if any, which is equal to the difference between the Option Priceper share of Common Stock covered by the related Option and the Market Price ofa share of such Common Stock. "Market Price" is defined to be the greater of (i)the highest price per share of the Company's Common Stock paid in connectionwith any Change in Control and (ii) the highest price per share of the Company'sCommon Stock reflected in the consolidated trading tables of The Wall StreetJournal (presently the New York Stock Exchange - Composite Transactions) duringthe 60-day period prior to the Change in Control. Section 6.5. Form of Payment. Payment of the amount to which an Optioneeis entitled upon the exercise of Limited Rights, as determined pursuant toSection 6.4, shall be made solely in cash. Section 6.6. Effect of Exercise. If Limited Rights are exercised, theStock Options, Incentive Stock Options, Reload Options, and AlternateAppreciation Rights, if any, related to such Limited Rights shall cease to beexercisable to the extent of the number of shares with respect to which theLimited Rights were exercised. Upon the exercise or termination of the StockOptions, Incentive Stock Options, Reload Options, and Alternate AppreciationRights, if any, related to such Limited Rights, the Limited Rights granted withrespect thereto terminate to the extent of the number of shares as to which therelated options and Alternate Appreciation Rights were exercised or terminated. Section 6.7. Retirement or Disability. Upon termination of the Optionee'semployment (including employment as a director of the Company after an Optioneeterminates employment as an employee of the Company) by reason of permanentdisability or retirement (as each is determined by the Committee) or consulting,the Optionee may, within six months from the date of such termination, exerciseany Limited Right to the extent such Limited Right is exercisable during suchsix-month period. Section 6.8. Death of Optionee or Termination for Other Reasons. Except asprovided in Sections 6.7 and 6.9, or except as otherwise determined by theCommittee, all 11 15Limited Rights granted under the Plan shall terminate upon the termination ofthe Optionee's employment, consulting or upon the death of the Optionee. Section 6.9. Termination Related to a Change in Control. The requirementthat an Optionee be terminated by reason of retirement or permanent disabilityor be employed by the Company at the time of exercise pursuant to Sections 6.7and 6.8, respectively, is waived during the Exercise Period as to an Optioneewho (i) was employed by the Company at the time of the Change in Control and(ii) is subsequently terminated by the Company other than for just cause or whovoluntarily terminates if such termination was the result of a good faithdetermination by the Optionee that as a result of the Change in Control he isunable to effectively discharge his present duties or the duties of the positionwhich he occupied just prior to the Change in Control. As used herein "justcause" shall mean willful misconduct or dishonesty or conviction of or failureto contest prosecution for a felony, or excessive absenteeism unrelated toillness. 12 16 ARTICLE VII. SUBSTITUTION AWARDS Section 7.1. Awards may be granted under the Plan from time to time insubstitution for stock options held by individuals employed by corporations whobecome employees of the Company as a result of a merger or consolidation of theemploying corporation with the Company, or the acquisition by the Company of theassets of the employing corporation, or the acquisition by the Company of stockof the employing corporation with the result that such employing corporationbecomes a Subsidiary or an Affiliate. ARTICLE VIII. BONUS STOCK AWARDS Section 8.1. Award of Bonus Stock. The Committee may from time to time,and subject to the provisions of this Plan and such other terms and conditionsas the Committee may prescribe, grant to any Participant in the Plan shares ofCommon Stock ("Stock Bonus"). A Stock Bonus shall vest (i) in the case ofperformance-based vesting criteria, no sooner than one year following the dateof the Stock Bonus grant, and (ii) in the case of time-based vesting criteria,no sooner than one-third of the grant on each subsequent anniversary of the dateof grant. Notwithstanding the foregoing, the Committee may grant a fully vestedStock Bonus in lieu of an earned cash bonus. Section 8.2. Stock Bonus Agreements. The grant of a Stock Bonus shall beevidenced by a written Award Agreement, executed by the Company and therecipient of a Stock Bonus, in such form as the Committee may from time to timedetermine, providing for the terms of such grant, including any vestingschedule, restrictions on the transfer of such Common Stock or other matters. ARTICLE IX. MISCELLANEOUS Section 9.1. General Restriction. Each Award under the Plan shall besubject to the requirement that, if at any time the Committee shall determinethat (i) the listing, registration, or qualification of the shares of CommonStock subject to or related thereto upon any securities exchange or under anystate or federal law, or (ii) the consent or approval of any governmentregulatory body, or (iii) an agreement by the grantee of an Award with respectto the disposition of shares of Common Stock, is necessary or desirable as acondition of, or in connection with, the granting of such Award or the issue orpurchase of shares of Common Stock thereunder, such Award may not be consummatedin whole or in part unless such listing, registration, qualification, consent,approval or agreement shall have been effected or obtained free of anyconditions not acceptable to the Committee. 13 17 Section 9.2. Non-Assignability. Except as provided below, no Award underthe Plan shall be assignable or transferable by the recipient thereof, except bywill or by the laws of descent and distribution, and during the life of therecipient, such Award shall be exercisable only by such person or by suchperson's guardian or legal representative. Notwithstanding the foregoing, as provided by the Committee in an AwardAgreement, Awards (other than Incentive Stock Options) may be transferred (inwhole or in part in a form approved by the Company) by a Participant to (i) thespouse, children or grandchildren of the Participant ("Immediate FamilyMembers"), (ii) a trust or trusts for the exclusive benefit of the ImmediateFamily Members and, if applicable, the Participant, or (iii) a partnership inwhich such Immediate Family Members and, if applicable, the Participant are theonly partners. Following any such transfer, the Award shall continue to besubject to the same terms and conditions as were applicable to the Awardimmediately prior to the transfer. A transferee of an Award may not transfer theAward except to an Immediate Family Member or the Participant. Section 9.3. Withholding Taxes. Whenever the Company proposes or isrequired to issue or transfer shares of Common Stock under the Plan, the Companyshall have the right to require the grantee to remit to the Company an amountsufficient to satisfy any federal, state and/or local withholding taxrequirements prior to the delivery of any certificates for such shares.Alternatively, the Company may issue or transfer such shares of the Company netof the number of shares sufficient to satisfy the withholding tax requirements.For withholding tax purposes, the shares of Common Stock shall be valued on thedate the withholding obligation is incurred. Section 9.4. Right to Terminate Employment. Nothing in the Plan or in anyagreement entered into pursuant to the Plan shall confer upon any Participantthe right to continue in the employment of, or consulting to, the Company oreffect any right which the Company may have to terminate the employment orconsulting relationship of such Participant. Section 9.5. Non-Uniform Determination. The Committee's determinationsunder the Plan (including without limitation determinations of the persons toreceive Awards, the form, amount and timing of such Awards, the terms andprovisions of such Awards and the agreements evidencing same) need not beuniform and may be made by it selectively among persons who receive, or areeligible to receive, awards under the Plan, whether or not such persons aresimilarly situated. Section 9.6. Rights as a Shareholder. The recipient of any Award under thePlan shall have no right as a shareholder with respect thereto unless and untilcertificates for shares of Common Stock are issued to him. 14 18 Section 9.7. Definitions. In this Plan the following definitions shallapply: (a) "Subsidiary" means any corporation of which, at the time more than 50% of the shares entitled to vote generally in an election of directors are owned directly or indirectly by the Company or any subsidiary thereof. (b) "Affiliate" means any person or entity which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Company. (c) "Fair Market Value" as of any date and in respect or any share of Common Stock means the lowest reported trading price on such date or on the next business day, if such date is not a business day, of a share of Common Stock reflected in the consolidated trading tables of The Wall Street Journal (presently the New York Stock Exchange - Composite Transactions) or any other publication selected by the Committee, provided that, if shares of Common Stock shall not have been quoted on the New York Stock Exchange for more than 10 days immediately preceding such date or if deemed appropriate by the Committee for any other reason, the fair market value of shares of Common Stock shall be as determined by the Committee in such other manner as it may deem appropriate. In no event shall the Fair Market Value of any share of Common Stock be less than its par value. (d) "Option" means Stock Option, Incentive Stock Option, or Reload Option. (e) "Option Price" means the purchase price per share of the Common Stock deliverable upon the exercise of a Stock Option, Incentive Stock Option, or Reload Option. (f) "Change in Control" means the occurrence, at any time during the specified term of an Option granted under the Plan, of any of the following events: (i) The Company is merged or consolidated or reorganized into or with another corporation or other legal person (an "Acquiror") and as a result of such merger, consolidation or reorganization less than 75% of the outstanding voting securities or other capital interests of the surviving, resulting or acquiring corporation or other legal person are owned in the aggregate by the stockholders of the Company, directly or indirectly, immediately prior to such merger, consolidation or reorganization, other than the Acquiror or any corporation or other legal person controlling, controlled by or under common control with the Acquiror; 15 19 (ii) The Company sells all or substantially all of its business and/or assets to an Acquiror, of which less than 75% of the outstanding voting securities or other capital interests are owned in the aggregate by the stockholders of the Company, directly or indirectly, immediately prior to such sale, other than any corporation or other legal person controlling, controlled by or under common control with the Acquiror; (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any person or group (as the terms "person" and "group" are used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and the rules and regulations promulgated thereunder) has become the beneficial owner (as the term "beneficial owner") is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 20% or more of the issued and outstanding shares of voting securities of the Company; or (iv) During any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director of the Company was approved by a vote of at least two-thirds of such directors of the Company then still in office who were directors of the Company at the beginning of any such period. Section 9.8. Leaves of Absence. The Committee shall be entitled to makesuch rules, regulations, and determinations as it deems appropriate under thePlan in respect of any leave of absence taken by the recipient of any Award.Without limiting the generality of the foregoing, the Committee shall beentitled to determine (i) whether or not any such leave of absence shallconstitute a termination of employment within the meaning of the Plan and (ii)the impact, if any, of any such leave of absence on Awards under the Plantheretofore made to any recipient who takes such leave of absence. Section 9.9. Newly Eligible Employees. The Committee shall be entitled tomake such rules, regulations, determinations and awards as it deems appropriatein respect of any employee who becomes eligible to participate in the Plan orany portion thereof after the commencement of an award or incentive period. Section 9.10. Adjustments. In any event of any change in the outstandingCommon Stock by reason of a stock dividend or distributions, recapitalization,merger, consolidation, split-up, combination, exchange of shares or the like,the Committee may 16 20appropriately adjust the number of shares of Common Stock that may be issuedunder the Plan, the number of shares of Common Stock subject to Optionstheretofore granted under the Plan, and any and all other matters deemedappropriate by the Committee. Section 9.11. Changes in the Company's Capital Structure. (a) The existence of outstanding Options, Alternative Appreciation Rights, or Limited Rights shall not affect in any way the right or power of the Company or its stockholders 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 Common 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. (b) If, while there are outstanding Options, the Company shall effect a subdivision or consolidation of shares or other increase or reduction of the number of shares of the Common Stock outstanding without receiving compensation therefor in money, services or property, then (i) in the event of an increase in the number of such shares outstanding, the number of shares of Common Stock then subject to Options hereunder shall be proportionately increased; and (ii) in the event of a decrease in the number of such shares outstanding the number of shares then available for Option hereunder shall be proportionately decreased. (c) 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 stockholders) in lieu of the number of shares as to which such Option shall then be so exercisable, the number and class of stock or other securities to which such holder would have been entitled to receive 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 a number of shares of the Company equal to the number of shares as to which such Option had been exercisable. (d) If the Company is merged into or consolidated with another corporation or other entity under circumstances where the Company is not the surviving corporation, or if the Company sells or otherwise disposes of substantially all of its assets to another corporation or other entity while unexercised Options remain outstanding, then the Committee may direct that any of the following shall occur: 17 21 (i) If the successor entity is willing to assume the obligation to deliver shares of stock or securities after the effective date of the merger, consolidation or sale of assets, as the case may be, each holder of an outstanding Option shall be entitled to receive, upon the exercise of such Option and payment of the Option Price, in lieu of shares of Common Stock, such shares of stock or other securities as the holder of such Option would have been entitled to receive had such Option been exercised immediately prior to the consummation of such merger, consolidation or sale, and any related Alternate Appreciation Right and Limited Right associated with such Option shall apply as nearly as practicable to the shares of stock or other securities purchasable upon exercise of the Option following such merger, consolidation or sale of assets. (ii) The Committee may waive any limitations set forth in or imposed pursuant to this Plan or any Award Agreement with respect to such Option and any related Alternate Appreciation Right or Limited Option such that such Option and related Alternate Appreciation Right and Limited Right shall become exercisable prior to the record or effective date of such merger, consolidation or sale of assets. (iii) The Committee may cancel all outstanding Options and Alternate Appreciation Rights (but not Limited Rights) as of the effective date of any such merger, consolidation, or sale of assets provided that prior notice of such cancellation shall be given to each holder of an Option at least 30 days prior to the effective date of such merger, consolidation, or sale of assets, and each holder of an Option shall have the right to exercise such Option and any related Alternate Appreciation Right in full during a period of not less than 30 days prior to the effective date of such merger, consolidation, or sale of assets. No action taken by the Committee under this subsection shall have the effect of terminating, and nothing in this subsection shall permit the Committee to terminate, any Limited Right held by an Optionee. (c) Except as herein provided, the issuance by the Company of Common Stock or any other shares of capital stock or services convertible into shares of capital stock, for cash property, labor done or other consideration, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to outstanding Options. Section 9.12. Change in Control. Any Award granted under the Plan prior tothe date of a Change in Control shall be immediately exercisable in full on suchdate, without regard to any times of exercise established under its AwardAgreement; provided, 18 22however, in no event shall Stock Options or Incentive Stock Options beexerciseable after the tenth anniversary of their respective grant dates. Section 9.13. Amendment of the Plan. (a) The Committee may without further action by the shareholders and without receiving further consideration from the Participants, amend this Plan or condition or modify Awards under this Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to this Plan or to comply with stock exchange rules or requirements. (b) The Committee may at any time and from time to time terminate or modify or amend the Plan in any respect. The termination or any modification or amendment of the Plan, except as provided in subsection (a), shall not, without the consent of a Participant, affect his or her rights under an Award previously granted to him or her. Section 9.14. Effective Date. The Plan shall become effective as ofFebruary 29, 2000. 19