Document:

Exhibit 10.2

 

SAFETY-KLEEN EQUITY PLAN

 

1.             Purpose of Plan.  The name of this plan is the Safety-Kleen
Equity Plan (the “Plan”).  The Plan was
adopted by the Board on August 31, 2004 and amended by the Board on March 21,
2006.  The purposes of the Plan are to
motivate selected individuals to attain exceptional performance and to attract
and retain selected individuals with outstanding qualifications.  To accomplish such purposes, the Plan
provides that the Company may grant Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Stock Bonuses and Other Awards.  It is the intention of the Company that the
Plan qualify as a “written compensatory benefit plan” as defined in Rule 701
(“Rule 701”) promulgated under the Securities Act, and the Plan shall be
construed and administered so as to comply with such Rule.

 

2.             Definitions.  For purposes of the Plan, the following terms
shall be defined as set forth below:

 

(a)           “Award”
means any award granted under the Plan, including any Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Bonus or
Other Award.

 

(b)           “Award
Agreement” means, with respect to each Award, a written agreement between
the Company and a Participant setting forth the terms and conditions of the
Award.

 

(c)           “Board”
means the Board of Directors of the Company.

 

(d)           “Call
Right” means the right of the Company to purchase Shares from a Participant
that have been acquired hereunder.

 

(e)           “Cause,”
with respect to any Participant, shall have the definition set forth in any
individual employment, severance or other similar agreement between such
Participant and the Company or one of its Subsidiaries or, if there is no such
agreement or definition in any such agreement, Cause shall mean (unless
otherwise determined by the Committee and set forth in an Award Agreement) (i) the
continued failure by the Participant substantially to perform his or her duties
and obligations to the Company or any of its Subsidiaries (other than any such
failure resulting from his or her incapacity due to physical or mental
illness), knowing violation of law in the course of performance of the duties
of Participant’s employment with the Company or any of its Subsidiaries,
repeated absences from work without a reasonable excuse, or intoxication with
alcohol or illegal drugs while on the Company’s premises or that of any of the
Company’s Subsidiaries; (ii) fraud or material dishonesty against the
Company or any of its Subsidiaries; or (iii) a conviction or plea of
guilty or nolo contendre for the commission of a felony or a crime involving
material dishonesty.  Determination of
Cause shall be made by the Committee in its good faith discretion.  Unless otherwise 

 

As Amended March 21, 2006

 

 

determined by a majority vote of the Board,
the termination of a director’s service on the Board shall not be treated as a
termination for Cause.

 

(f)            “Change
in Capitalization” means, unless otherwise determined by the Committee and
set forth in an Award Agreement, any dividend or other distribution (whether in
the form of cash, Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Company or its Subsidiaries, issuance
of warrants or other rights to purchase Common Stock or other securities of the
Company or its Subsidiaries, or other similar corporate transaction or event.

 

(g)           “Change
in Control” means (unless otherwise determined by the Committee and set
forth in an Award Agreement) the sale, monetization or other disposition of all
or substantially all (greater than 50%) of the assets of the Company, SK
Holding Company, Inc. or Safety-Kleen Systems, Inc., or if a “person”
or “group” (within the meaning of Sections 13(d) and 14(d) of the
Exchange Act, but excluding the Company, SK Holding Company, Inc. or
Safety-Kleen Systems, Inc.) becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 50% of the common
stock of the Company, SK Holding Company, Inc. or Safety-Kleen Systems, Inc.
having the right to vote for the election of members of the applicable board of
directors (but shall not include any initial or secondary public offering of
any of the foregoing companies’ stock under the Securities Act, as in effect
from time to time).  In addition, the
Committee may, in its good faith discretion, determine that a transaction not
described in the preceding sentence constitutes a Change in Control for
purposes of the Plan.

 

(h)           “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto.

 

(i)            “Committee”
means any committee or subcommittee the Board may appoint to administer the
Plan.  If at any time or to any extent a
Committee has not been appointed to administer the Plan, then the authority and
functions of the Committee specified in the Plan shall be held and exercised by
the Board.  From and after the
consummation of a Public Offering, there shall be a Committee to administer the
Plan and the Committee shall, unless otherwise determined by the Board, at all
times consist solely of persons who are (i) “Nonemployee Directors” as
defined in Rule 16b-3 promulgated under the Exchange Act and (ii) “outside
directors” as defined in Section 162(m) of the Code.

 

(j)            “Common
Stock” means the common stock, par value $1.00 per share, of the Company.

 

(k)           “Company”
means Safety-Kleen HoldCo., Inc., a Delaware corporation (or any successor
corporation).

 

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(l)            “Disability”
shall (unless otherwise determined by the Committee and set forth in an Award
Agreement) have the meaning set forth in the long term disability plan of the
Company or its Subsidiaries applicable to a Participant, or, if no such plan is
in effect, shall be determined by the Committee, in its sole discretion.

 

(m)          “Eligible
Recipient” means an officer, director, employee, consultant or advisor of
the Company or any of its Subsidiaries.

 

(n)           “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

 

(o)           “Fair
Market Value” as of a particular date shall (unless otherwise determined by
the Committee and set forth in an Award Agreement) mean the fair market value
of a Share as determined by the Committee in its good faith discretion, taking
into account such factors as it deems appropriate; provided that if the Common Stock is admitted to trading on
a national securities exchange or over-the-counter quotation system, the Fair
Market Value of a Share on any date shall be the closing sale price reported
for such Share on such exchange on the last day preceding such date on which a
sale was reported (if the Shares admitted to quotation on the Nasdaq System but
have not been designated as an NMS security, the Fair Market Value of a Share
on any date shall be the average of the highest bid and lowest asked prices of
such share on such system on the last date preceding such date on which both
bid and ask prices were reported).  In
determining the Fair Market Value of the Common Stock, the Committee shall be
entitled to engage such auditors or other agents as it may determine is
necessary or desirable.

 

(p)           “Option”
means an option to acquire Shares granted pursuant to Section 7.  Options granted pursuant to the Plan will not
constitute “incentive stock options” under the Code.

 

(q)           “Other
Award” means an Award granted pursuant to Section 10.

 

(r)            “Participant”
means any Eligible Recipient selected by the Committee to receive an Award.

 

(s)           “Performance
Goals” means one or more of the following pre-established criteria,
determined in accordance with generally accepted accounting principles, where
applicable:  (i) net earnings; (ii) earnings
per Share; (iii) net sales growth; (iv) net income (before taxes); (v) net
operating profit; (vi) return measures (including, but not limited to,
return on assets, capital, equity or sales); (vii) cash flow (including,
but not limited to, operating cash flow and free cash flow); (viii) earnings
before or after taxes, interest, depreciation, and/or amortization; (ix) productivity
ratios; (x) Share price (including, but not limited to, growth measures
and total stockholder return); (xi) expense targets; (xii) operating efficiency;
(xiii) working capital targets; (xiv) any combination of, or a specified
increase in, any of the foregoing; or (xv) the formation of joint ventures, or
the completion of other corporate transactions. 
Without limiting the generality of the foregoing, the Committee shall
have the authority to make equitable adjustments in the Performance Goals in
recognition of unusual or 

 

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non-recurring events affecting the Company,
in response to changes in applicable laws or regulations, or to account for
items of gain, loss or expense determined to be extraordinary or unusual in
nature or infrequent occurrence or related to the disposal of a segment of a
business or related to a change in accounting principles.

 

(t)            “Public
Offering” shall have the meaning set forth in the Stockholders’ Agreement.

 

(u)           “Restricted
Stock” means Shares granted pursuant to Section 8 that are subject to
certain transfer and forfeiture restrictions.

 

(v)           “Restricted
Stock Unit” means a unit granted pursuant to Section 8 that represents
the right to receive the Fair Market Value of one Share, which is subject to
certain transfer and forfeiture restrictions.

 

(w)          “Securities
Act” means the Securities Act of 1933, as amended.

 

(x)            “Shares”
means shares of Common Stock and any successor security.

 

(y)           “Stockholders
Agreement” means the Stockholders’ Agreement by and among Safety-Kleen
HoldCo., Inc., SK Holding Company, Inc. and the stockholders party
thereto, dated December 24, 2003, as amended from time to time.

 

(z)            “Stock
Appreciation Right” means an Award granted pursuant to Section 7 that
represents the right to receive, upon exercise, an amount equal to the excess,
if any, of the Fair Market Value, as of the date of exercise, of each Share
with respect to which the Award is exercised, over the exercise price of each
such Share specified in the Award Agreement for such Stock Appreciation Right.

 

(aa)         “Stock
Bonus” means an Award granted pursuant to Section 9 consisting of
unrestricted Shares.

 

(bb)         “Subsidiary”
shall mean a “subsidiary corporation” of the Company within the meaning of Section 424(f)
of the Code.

 

(cc)         “Valuation
“ means a valuation of the Shares by the Committee conducted pursuant to Section 16.

 

3.             Administration.

 

(a)           The
Committee shall administer the Plan. 
Pursuant to the terms of the Plan, the Committee shall have the power,
authority and discretion, without limitation:

 

(i)            to select those Eligible Recipients
who shall be Participants;

 

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(ii)           to determine whether and to what
extent Awards are to be granted to Participants;

 

(iii)          to determine the number of Shares to
be covered by each Award;

 

(iv)          to determine the terms and conditions,
not inconsistent with the terms of the Plan, of each Award;

 

(v)           to determine whether an Award
Agreement is to be modified, amended, extended, renewed or cancelled, and
whether a substitute Award is to be granted in consideration of the
cancellation of an Award;

 

(vi)          to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan and Awards as
it shall from time to time deem advisable; and

 

(vii)         to interpret the terms and provisions
of the Plan and any Award and Award Agreement, and to otherwise supervise or
take any action it may deem necessary or appropriate for the administration of
the Plan.

 

(b)           The
Committee may, in its absolute discretion, without amendment to the Plan,
accelerate the lapse of restrictions, or waive any condition imposed hereunder
or otherwise adjust any of the terms applicable to any Award; provided that no action under this Section 3(b) shall
materially and adversely affect any outstanding Award without the consent of
the holder thereof.  All decisions made
by the Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding on all persons, including the Company, the Participants
and any other holder of an Award or any Shares acquired pursuant to an
Award.  All members of the Board or the
Committee and each and any officer or employee of the Company and its
Subsidiaries acting on their behalf shall, to the maximum extent permitted by
law, be fully indemnified and protected by the Company in respect of any
action, determination or interpretation taken or made with respect to the Plan.

 

4.             Shares Reserved
for Issuance Under the Plan.  The
total number of Shares of Common Stock reserved and available for issuance
under the Plan shall be 5,000,000.  Such
Shares may consist, in whole or in part, of authorized and unissued Shares or
treasury shares.  To the extent that an
Award expires or is forfeited or otherwise cancelled or terminated, the Shares
subject to such Award shall again be available for issuance in connection with
future Awards granted under the Plan, to the extent such availability is
consistent with applicable law and regulatory requirements.  From and after the date that the Plan is
intended to comply with the requirements of Section 162(m) of the
Code, the aggregate number of Shares with respect to which Awards may be
granted to any individual Participant during any fiscal year shall not exceed
1,000,000.

 

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5.             Adjustments.  In the event that the Committee determines
that a Change in Capitalization affects the Common Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in good faith and in such manner as it may deem
appropriate and equitable, adjust the number and kind of Shares or other
securities reserved for Awards, the individual limit set forth in Section 4,
the number and kind of Shares or other securities or property subject to
outstanding Awards and the exercise, base or purchase price, as appropriate, of
such Awards, or, if deemed appropriate, make provision for a payment in cash or
other property to the holder of an outstanding Award in cancellation thereof
and, in addition, may make any other adjustments to the terms and conditions of
Awards as it shall determine in its discretion to be appropriate.  Fractional Shares shall not be issued
pursuant to the Plan, and may be paid in cash if the Committee determines such
payment to be appropriate.  The provisions
of the Plan or any Award shall not affect in any way the right of the Company
to engage in any corporate transaction, including but not limited to a
transaction resulting in a Change in Capitalization.

 

6.             Eligibility.  The Participants under the Plan shall be
selected from time to time by the Committee, in its sole discretion, from among
Eligible Recipients who, in the Committee’s judgment, are in positions of
responsibility and whose performance and business decisions may have a
significant positive effect on the performance of the Company and its
Subsidiaries.  The Committee shall have
the authority to grant to any Eligible Recipient any type of Award permissible
under the Plan.

 

7.             Options; Stock
Appreciation Rights.

 

(a)           General.  Options and Stock Appreciation Rights may be
granted alone or in addition to other Awards granted under the Plan.  The provisions of each Option or Stock
Appreciation Right need not be the same with respect to each Participant.  A Participant who is granted an Option or Stock
Appreciation Right shall enter into or receive an Award Agreement with the
Company, in such form as the Committee shall determine.  Stock Appreciation Rights may be settled in
Shares or cash or a combination of Shares and cash, as determined by the Committee
in its sole discretion at the time the Stock Appreciation Right is
granted.  Options and Stock Appreciation
Rights granted under the Plan shall be subject to the terms and conditions set
forth in this Section 7 and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
determine.

 

(b)           Exercise
Price.  The per share exercise price
of Shares purchasable under an Option or with respect to which an Stock
Appreciation Right may be settled shall be determined by the Committee in its
sole discretion and may be less than, equal to or greater than the Fair Market
Value of the Shares at the time of grant.

 

(c)           Option
Term.  The term of each Option and
Stock Appreciation Right shall be fixed by the Committee and set forth in the
Award Agreement, but no Option or Stock Appreciation Right shall be exercisable
more than ten years after the date such Option or Stock Appreciation Right is
granted.

 

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(d)           Vesting
and Exercisability.  An Option or
Stock Appreciation Right shall be vested and exercisable at such time or times
and subject to such terms and conditions, including the attainment of
preestablished Performance Goals (if any), as shall be determined by the
Committee and set forth in the Award Agreement evidencing such Option or Stock
Appreciation Right.  Following its having
become vested and exercisable, an Option or Stock Appreciation Right shall be
exercisable until the expiration of its term (as may be earlier terminated as
provided in the Plan and the applicable Award Agreement).

 

(e)           Stock
Certificates.  If the Committee
determines that any Participant who is granted an Option shall be issued a
stock certificate in respect of Shares acquired pursuant to such Option, such
certificate shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award (including the legend
required by the Stockholders Agreement). 
The Committee may require that the stock certificates acquired with
respect to Options granted hereunder be held in the custody of the Company or
represented in book entry form until the restrictions thereon shall have
lapsed, and may also require that, as a condition of any Option, the Participant
shall have delivered a stock power, endorsed in blank, relating to the Shares
acquired pursuant to such Award.  No
stock certificates shall be issued pursuant to an Option unless and until such
Award is settled in whole or in part in Shares.

 

(f)            Method
of Exercise.  An Option or Stock
Appreciation Right may be exercised in whole or in part by giving written
notice of exercise to the Company specifying the number of Shares with respect
to which the Award is being exercised, accompanied, in the case of an Option,
by payment in full of the aggregate exercise price of the Shares to be
purchased according to any method set forth in Section 15.

 

8.             Restricted
Stock; Restricted Stock Units.

 

(a)           General.  Awards of Restricted Stock or Restricted
Stock Units may be issued either alone or in addition to other Awards granted
under the Plan and shall be evidenced by an Award Agreement in such form as the
Committee shall determine.  Restricted
Stock Units may be payable in Shares or cash or a combination of Shares and
cash, as determined by the Committee in its discretion and set forth in the
Award Agreement.

 

(b)           Stock
Certificates.  If the Committee
determines that any Participant who is granted an award of Restricted Stock
shall be issued a stock certificate in respect of such shares of Restricted
Stock, such certificate shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award (including the
legend required by the Stockholders Agreement). 
The Committee may require that the stock certificates evidencing
Restricted Stock granted hereunder be held in the custody of the Company or
represented in book entry form until the restrictions thereon shall have
lapsed, and may also require that, as a condition of any Award of Restricted
Stock, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Shares covered by such Award. 
No stock certificates shall be issued 

 

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pursuant to an Award of Restricted Stock
Units unless and until such Award is settled in whole or in part in Shares.

 

(c)           Restrictions
on Transfer.  Awards of Restricted
Stock and Restricted Stock Units shall be subject to the restrictions on
transferability set forth in this Section 8(c).  During such period as may be set by the
Committee in the Award Agreement (the “Restricted Period”), the Participant
shall not be permitted to sell, transfer, pledge, hypothecate or assign shares
of Restricted Stock or Restricted Stock Units except by will or the laws of
descent and distribution.  The Committee
may also impose at the time an Award is made such other restrictions and
conditions, including the achievement of preestablished Performance Goals, on an
Award of Restricted Stock or Restricted Stock Units as it deems appropriate
(such restrictions and conditions to be set forth in the applicable Award
Agreement).  In no event shall stock
certificates with respect to all or any portion of an Award of Restricted Stock
or Restricted Stock Units be issued prior to the satisfaction by the
Participant of any liability to the Company arising under Section 19.  Any attempt to dispose of Restricted Stock or
Restricted Stock Units in contravention of any such restrictions shall be null
and void and without effect.

 

(d)           Rights
as a Stockholder.  Except as provided
in Section 8(c), the holder of an Award of Restricted Stock shall possess
all incidents of ownership with respect to such Shares of Restricted Stock
during the Restricted Period; provided,
however, that during the Restricted Period with respect to an Award
of Restricted Stock, any dividends or distributions payable with respect to
such Shares shall be accumulated and deferred until the Restricted Period
expires, at which time the Company shall promptly distribute to the Participant
all dividends and distributions accrued during the Restricted Period.

 

(e)           Vesting
of Restricted Stock and Restricted Stock Units.  When the restrictions to which any portion of
an Award of Restricted Stock or Restricted Stock Units payable in Shares lapse,
the Company shall, subject to Section 20(a), issue to the holder thereof a
stock certificate, which certificate may nevertheless bear any legend deemed
appropriate by the Committee (including the legend required by the Stockholders
Agreement).

 

9.             Stock Bonuses.  In the event that the Committee grants a
Stock Bonus, a certificate for the shares of Common Stock comprising such Stock
Bonus shall be issued or recorded in the name of the Participant to whom such
grant was made and delivered to such Participant as soon as practicable after
the date on which such Stock Bonus is payable, which certificate may
nevertheless bear any legend deemed appropriate by the Committee (including the
legend required by the Stockholders Agreement).

 

10.           Other Awards.  Other Awards valued in whole or in part by
reference to, or otherwise based on, Common Stock may be granted either alone
or in addition to other Awards under the Plan. 
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Eligible Recipients to whom and the time or
times at which such Other Awards shall be granted, the number of Shares to be
granted pursuant to such Other Awards and all other conditions of such Other
Awards, including 

 

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whether the
vesting of such Other Awards shall be subject to the attainment of
preestablished Performance Goals (if any).

 

11.           Deferral of
Awards.  The Committee may (in its
sole discretion) permit a Participant to: (i) have cash that otherwise
would be paid to such Participant as a result of the exercise of an Stock
Appreciation Right or the settlement of an Award payable in cash credited to a
deferred compensation account established for such Participant as an entry on
the Company’s books; (ii) have Shares that otherwise would be delivered to
such Participant as a result of the vesting of Restricted Stock or Restricted
Stock Units or the exercise of an Option or a Stock Appreciation Right converted
into an equal number of units denominated in Shares credited to a deferred
compensation account established for such Participant as an entry on the
Company’s books; or (iii) have Shares that otherwise would be delivered to
such Participant as a result of the exercise of an Option or Stock Appreciation
Right, the vesting of Restricted Stock or Restricted Stock Units or the
settlement of an Award converted into amounts credited to a deferred
compensation account established for such Participant as an entry on the
Company’s books.  A deferred compensation
account established under this Section 11 may be credited with interest or
other forms of investment return, as determined by the Committee.  A Participant for whom such an account is
established shall have no rights other than those of a general, unsecured
creditor of the Company.  Such an account
shall represent an unfunded and unsecured obligation of the Company and shall
be subject to the terms and conditions of the applicable agreement between such
Participant and the Company.  If the
deferral or conversion of awards is permitted or required, the Committee (in
its sole discretion) may establish rules, procedures and forms pertaining to
such awards, including (without limitation) the settlement of deferred
compensation accounts established under this Section 11.

 

12.           Nontransferability
of Awards.  Except as otherwise set
forth in an Award Agreement, a Participant shall not be permitted to sell,
transfer, pledge or assign any Award other than by will and the laws of descent
and distribution and any Option or Stock Appreciation Right shall be
exercisable during the Participant’s lifetime only by the Participant.  Any attempt to dispose of an Award in
contravention of these restrictions shall be null and void and without effect.

 

13.           Change in Control.  Upon the occurrence of a Change in Control,
the Committee shall, in good faith, make such adjustments to Awards granted
hereunder as it deems equitable and necessary or appropriate, including,
without limitation, (a) causing Awards to be converted into similar or
replacement awards of the acquiror or successor entity having substantially
similar economic value and terms and conditions, (b) causing the vesting
and/or exercisiablity of Awards granted hereunder to be fully or partially
accelerated and/or (c) providing Participants with a reasonable period of
time prior to the Change in Control during which outstanding Awards (whether or
not otherwise vested and exercisable) may be exercised and, to the extent that
such Awards then remain unexercised, providing that such Awards terminate.  Notwithstanding the foregoing, the Committee
may set forth a different Change in Control treatment in an Award Agreement.

 

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14.           Termination of
Employment or Service.  If a
Participant’s employment with or service as an employee, director, consultant
or advisor to the Company and its Subsidiaries terminates, except as otherwise
set forth in an Award Agreement or as otherwise determined by the Committee,
all outstanding Awards held by such Participant shall immediately terminate and
be forfeited and any price that may have been paid by the Participant to the
Company with respect to such Awards shall be refunded.  For purposes of this Section 14, the
employment or service relationship shall be treated as continuing intact while
the Participant is an active employee of, or providing services to, the Company
or any of its Subsidiaries or is on military leave, sick leave or other bona
fide leave of absence, as determined by the Committee in its good faith
discretion.

 

15.           Payment for
Shares by Participant.  Payment for
Shares acquired pursuant to the Plan may be made in cash (in U.S. dollars) or,
where expressly approved by the Committee or set forth in an Award Agreement
and where permitted by law:

 

(a)           by
check;

 

(b)           by
cancellation of indebtedness of the Company to the Participant;

 

(c)           by
the surrender of Shares; provided,
that Shares so surrendered must have either been acquired other than pursuant
to an Award or, if acquired pursuant to an Award, must have been held free of
restrictions for at least six months;

 

(d)           by
waiver of compensation due or accrued the Participant for services rendered;

 

(e)           pursuant
to a broker exercise procedure approved by the Committee; or

 

(f)            a
combination of the above.

 

16.           Call Rights;
Valuations.  Prior to a Public
Offering, the Committee may provide in an Award Agreement, for such Call
Rights, if any, as it deems appropriate or desirable.  In connection with the purchases of Shares by
the Company contemplated by such Call Rights, the Board may conduct Valuations,
which may be used to establish the Fair Market Value of such Shares for
purposes of such Company purchases.  Any
Call Rights imposed pursuant to this Section 16 and the valuation
obligations of the Board shall be of no further force and effect following a
Public Offering.  The Committee may also,
in its discretion, permit Participants to sell Shares acquired pursuant to the
Plan to the Company at Fair Market Value, it being understood that, unless
otherwise determined by the Committee and set forth in an Award Agreement, no
Participant shall have the right to compel the Company to purchase such Shares.

 

17.           Amendment and
Termination.  The Board may amend,
alter or discontinue the Plan, but no amendment, alteration, or discontinuation
shall be made that would impair the rights of a Participant under any Award
theretofore granted without such Participant’s consent.  Unless the Board determines otherwise, the
Board shall obtain approval of the Company’s stockholders for any amendment
that would require such 

 

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approval in
order to satisfy the requirements of section 162(m) or 422 of the Code,
stock exchange rules or other applicable law.  The Committee may amend the terms of any
Award theretofore granted, prospectively or retroactively, but, subject to Section 5,
no such amendment shall impair the rights of any Participant without his or her
consent.

 

18.           Unfunded Status
of Plan.  The Plan is intended to
constitute an “unfunded” plan for incentive compensation.

 

19.           Tax Matters.  Whenever cash is to be paid pursuant to an
Award, the Company shall have the right to deduct therefrom an amount
sufficient to satisfy any federal, state and local withholding tax requirements
related thereto.  Whenever Shares are to
be delivered pursuant to an Award, the Company shall have the right to require
the Participant to remit to the Company in cash an amount sufficient to satisfy
any federal, state and local withholding tax requirements related thereto prior
to the delivery of such Shares.  The
Committee may also, in its discretion and consistent with applicable law,
permit Participants to enter into deferral agreements with the Company with
respect to Restricted Stock Units or other Awards granted hereunder, under such
terms and conditions as the Committee determines to be appropriate.

 

20.           General
Provisions.

 

(a)           Shares
shall not be issued pursuant to the grant, vesting or exercise of any Award
granted hereunder unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act and the requirements of any stock exchange upon which the Common
Stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.  The Company intends, but shall not be
required to, file a registration statement on Form S-8 with respect to
Shares issued under the Plan, such filing to occur following a Public
Offering.  The Committee may require each
person acquiring Shares to represent to and agree with the Company in writing
that such person is acquiring the Shares without a view to distribution
thereof.  The certificates for such
Shares may include any legend that the Committee deems appropriate to reflect
any restrictions on transfer.  All
certificates for Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock may then be listed, and any applicable federal or state securities law,
and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.  It shall be a condition to the delivery of
Shares with respect to an Award, the Participant to execute the Stockholders
Agreement, with such changes as the Committee shall in good faith determine to
be appropriate.

 

(b)           Subject
to the provisions of Section 8(d) or the applicable Award Agreement,
no Participant or holder of any Award shall have any rights as a stockholder
with respect to any Shares to be distributed under the Plan until such
individual has become the holder of such Shares.

 

11

 

(c)           Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval, if such approval is
required; and such arrangements may be either generally applicable or
applicable only in specific cases. 
Neither the adoption of the Plan nor the grant of an Award under the
Plan shall confer upon any Eligible Recipient or Participant any right to
continued employment or service with the Company or any Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or any
of its Subsidiaries to terminate the employment or service of any of its
Eligible Recipients at any time.

 

(d)           In
connection with any Public Offering for such period as the Company or its
underwriters may request (such period not to exceed 180 days following the date
of the applicable offering), each Participant agrees, as a condition to the
receipt of Awards hereunder, that the Participant shall not, directly or
indirectly, sell, make any short sale of, loan, hypothecate, pledge, offer,
grant or sell any option or other contract for the purchase of, purchase any
option or other contract for the sale of, or otherwise dispose of or transfer,
or agree to engage in any of the foregoing transactions with respect to, any
Shares acquired pursuant to the Plan without the prior written consent of the
Company or its underwriters, as the case may be.  In connection with the foregoing, the
Participant agrees to execute a customary lock-up agreement, if requested to do
so by the Company or its underwriters. 
The restrictions referenced in this Section 20(d) shall not
arise or be in effect prior to the date a request is received from the Company
or its underwriters.

 

(e)           This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to conflicts of laws principles.

 

21.           Effective Date
and Term of Plan.  The Plan shall be
effective as of August 31, 2004 (the “Effective Date”) and amended as of March 21,
2006.  No Award shall be granted pursuant
to the Plan on or after the tenth anniversary of the Effective Date, but Awards
theretofore granted may extend beyond that date.  Notwithstanding any other provision of the
Plan, any Award granted to a Participant prior to the date on which the
stockholders of the Company approve the Plan shall be conditioned upon and
subject to such stockholder approval to the extent required by applicable law.

 

12Exhibit 10.3

 

SAFETY-KLEEN

DEFERRED COMPENSATION PLAN

 

1.                                       Purpose.  The purpose of this Safety-Kleen Deferred
Compensation Plan is to foster and promote the long-term financial success of
the Company and to increase stockholder value by enabling the Company to
attract and retain the services of individuals to serve as directors, officers
and employees of the Company. This Safety-Kleen Deferred Compensation Plan was
adopted by the Board on August 31, 2004.

 

2.                                       Definitions.  For purposes of the Plan, the following terms
shall be defined as set forth below:

 

(a)                                 “Beneficiary” means the
person or persons named by the Participant pursuant to Section 10(b).

 

(b)                                “Board” means the Board of
Directors of the Company.

 

(c)                                 “Code” means the Internal
Revenue Code of 1986, as amended.

 

(d)                                “Committee’’ means any
committee or subcommittee the Board may appoint to administer the Plan.  If at any time or to any extent a Committee
has not been appointed to administer the Plan, then the authority and functions
of the Committee specified in the Plan shall be held and exercised by the
Board.

 

(e)                                 “Company” means Safety-Kleen
HoldCo., Inc., a Delaware corporation (or any successor corporation).

 

(f)                                   “Elective Deferral” has the
meaning given in Section 4.

 

(g)                                “Eligible Individual” means
any director, executive or senior officer or other key employee of the Company
or any of its Subsidiaries.

 

(h)                                “Investment Account” means,
with respect to any Participant, a book entry account established pursuant to
and administered in accordance with Section 5.

 

(i)                                    “Participant” means any
Eligible Individual designated by the Committee to participate in the Plan who
agrees to so participate as provided in Section 3(b).

 

(j)                                    “Plan” means this
Safety-Kleen Deferred Compensation Plan, as in effect and as may be amended
from time to time.

 

 

(k)                                  “Subsidiary” means shall
mean a “subsidiary corporation” of the Company within the meaning of Section 424(f) of
the Code.

 

3.                                       Eligibility and
Participation.

 

(a)                                  Eligibility. The Committee
shall select those Eligible Individuals who shall be offered the opportunity to
participate in the Plan.

 

(b)                                 Agreement to Participate. An
Eligible Individual shall not be required to become a Participant. In
connection with offering an Eligible Individual the opportunity to participate
in the Plan, the Committee shall provide a description setting forth in
reasonable detail the proposed terms that will apply with respect to the
Eligible Individual’s proposed participation in the Plan and any ancillary
documents related thereto. An Eligible Individual who elects to become a
Participant shall agree to do so by entering into such agreement or agreements
as the Committee determines to be appropriate.

 

4.                                       Elective Deferrals.

 

(a)                                  On such terms and conditions
as the Committee shall determine, the Committee may permit a Participant to
elect to defer under the Plan a specified amount that will be deferred from
such Participant’s future compensation (including compensation earned pursuant
to the Safety-Kleen Equity Plan) over such period or periods as the Committee
shall determine (any such amount, an “Elective Deferral”).

 

(b)                                 Phantom or Other Deemed
Investments.  The Committee may establish
under the Plan that a Participant’s Elective Deferrals shall be deemed invested
in such private investments or investments funds or other vehicles as the
Committee shall so specify to the Participant in accordance with Section 3(b),
including, without limitation, a deemed investment in the common stock, par
value $1.00 per share, of the Company. 
Alternatively, the Committee may specify to the Participant in
accordance with Section 3(b) that the Participant’s Elective Deferral
shall earn a return at an interest rate specified by the Committee.

 

5.                                       Accounts.

 

(a)                                  Establishment of Accounts.
The Company shall establish an Investment Account for each Participant. As of
the end of each calendar year (or upon such other schedule as the Committee may
determine), the Company shall provide the Participants with a statement of
their respective Accounts reflecting the income, gains and losses (realized and
unrealized), amounts of deferrals, transfers among and distributions from such
Accounts since the prior statement, in each case, if applicable.

 

2

 

(b)                                 Initial Crediting Investment
Account. The amount of a Participant’s Elective Deferral shall initially be
credited to the Participant’s Investment Account  as of the date the compensation so deferred
would otherwise have been payable to such Participant (or as soon as
administratively practicable thereafter).

 

(c)                                  Payments.  A Participant’s Investment Account shall be
reduced by any payment made to or on behalf of the Participant as of the date
such payment is made.

 

(d)                                 Vesting and Forfeiture.
Unless determined otherwise by the Committee at the time a Participant elects
to participate in the Plan, a Participant shall be fully vested at all times in
such Participant’s Accounts and shall not be subject to forfeiture.

 

6.                                       Distributions.   Distributions from a Participant’s
Investment Account shall be made at the time and in the form and manner agreed
to between the Committee and the Participant at the time the Participant elects
to participate in the Plan. Notwithstanding the preceding sentence, at such
time and in such manner, and on such terms and conditions as the Committee may
determine, a Participant may be permitted to elect to further defer payment of
all or any portion of any amounts that would be payable pursuant to the
agreement described in the preceding sentence.

 

7.                                       Transferability.   Neither a Participant nor such Participant’s
Beneficiary shall have the right or power to sell, exchange, pledge, transfer,
assign or otherwise encumber or dispose of such Participant’s  Investment Accounts, other than pursuant to
the law of decent and distribution.

 

8.                                       Administration. The
administrator of the Plan shall be the Committee. The Committee shall have the
authority, subject to the terms of the Plan and the agreement with a
Participant: to interpret the Plan; to determine the amount of benefits payable
to each Participant under the Plan; to adopt, amend and rescind rules and
regulations for the administration of the Plan; and to make all determinations
necessary or advisable for the administration of the Plan.  Whenever the Plan provides that the Committee
may make any determination or decision, or take any action, the Committee shall
be permitted to do so in its sole and absolute discretion.  In the exercise of its discretion hereunder,
the Committee may treat different Participants, including similarly situated
Participants, differently, and may treat the same Participant differently at
different times, and in so exercising its discretion, may take any factor or
factors in account, and may disregard any factor or factors, as it
determines.  Any action taken or decision
made by the Committee in connection with the Plan, including, without
limitation, the interpretation by the Committee of any provision of the Plan,
shall be final and binding on each affected Eligible Individual and any
Participant and any persons claiming thereunder.

 

3

 

9.                                      Amendment and
Termination   The Committee at any time
may terminate or suspend the Plan, and may from time to time amend or modify the
Plan. No amendment, modification, termination or suspension of the Plan shall
in any manner materially adversely affect any amount theretofore deferred under
the Plan; provided that the Committee may amend the Plan at any time without
any such consent to the extent necessary to ensure compliance with tax,
securities or any other applicable laws.

 

10.                                Miscellaneous

 

(a)                                  Withholding. Any payment
made or other compensation provided under the Plan shall be reduced by any
amounts required to be withheld or paid with respect to such payment or
compensation under all applicable federal, state and local tax and other laws
and regulations which may be in effect as of the date of such payment.

 

(b)                                 Beneficiary Designation.
Each Participant under the Plan may from time to time name any beneficiary or
beneficiaries (who may be named contingently or successively) by whom any right
under the Plan is to be exercised in case of his death. Each designation will
revoke all prior designations by the same Participant, shall be in a form
reasonably prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Committee during his lifetime.

 

(c)                                  No Guarantee of Employment
or Participation. Nothing in the Plan or the deferral agreement shall interfere
with or limit in any way the right of the Company to terminate any Participant’s
employment or service at any time, or confer upon any Participant any right to
continue in the employment or service of the Company.

 

(d)                                 No Rights to Corporate
Assets. The Plan is an unfunded plan of deferred compensation and nothing in
the Plan shall give a Participant, a Beneficiary or any other person any
interest of any kind in the assets of the Company or its affiliates or create a
trust or fiduciary relationship of any kind between the Company and any such
person. The obligations hereunder to any Participant shall be the sole
responsibility of the Company and the Participants shall have only the rights
of a general unsecured creditor of the Company with respect to amounts deferred
hereunder.

 

(e)                                  Compliance with Law. The
Plan shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required. No interest shall be granted or payment made in or under
the Plan, if such grant or payment would result in a violation of applicable
law, including the federal securities laws and any applicable state securities
laws.

 

4

 

(f)                                    Right of Offset.
Notwithstanding anything else contained in this Plan to the contrary, as a
condition of participation in the Plan, each Participant agrees and
acknowledges that any amount due hereunder may, at the discretion of the
Company, be reduced to the maximum extent permitted by applicable law by any
and all amounts due and owing from the Participant to the Company.

 

(g)                                 Governing Law. The Plan, and
all agreements thereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.

 

(h)                                 Section Headings.
Titles and headings to sections are for the purpose of reference only, and in
no way limit or otherwise affect the meaning or interpretation of any provision
of the Plan.

 

5

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