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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
COMMISSION FILE NUMBER 1-12154
USA WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-1309529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 FANNIN STREET, SUITE 4000
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 512-6200
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EXCHANGED ON WHICH REGISTERED
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Common Stock, $.01 par value New York Stock Exchange
7 1/8% Senior Notes Due 2017
7 1/8% Senior Notes Due 2007
7% Senior Notes Due 2004
6 1/2% Senior Notes Due 2002
5% Convertible Subordinated Notes Due 2006
4 1/2% Convertible Subordinated Notes Due 2001
4% Convertible Subordinated Debentures Due 2002
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulations S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant at March 16, 1998, was approximately $10,073,799,486. The
aggregate market value was computed by using the closing price of the common
stock as of that date on the New York Stock Exchange. (For purposes of
calculating this amount only, all directors and executive officers of the
registrant have been treated as affiliates.)
The number of shares of Common Stock, $.01 par value, of the registrant
outstanding at March 16, 1998, was 218,995,641.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT INCORPORATED AS TO
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Proxy Statement for the
1998 Annual Meeting of Stockholders Part III
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TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 16
Item 3. Legal Proceedings........................................... 16
Item 4. Submission of Matters to a Vote of Security Holders......... 17
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 19
Item 6. Selected Financial Data..................................... 20
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Item 8. Financial Statements and Supplementary Data................. 33
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 63
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 63
Item 11. Executive Compensation...................................... 63
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 63
Item 13. Certain Relationships and Related Transactions.............. 63
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 64
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PART I
ITEM 1. BUSINESS.
GENERAL
USA Waste Services, Inc. ("USA Waste" or the "Company") is the third
largest integrated solid waste management company in North America, as measured
by revenues for the 1997 fiscal year, and currently serves the full spectrum of
commercial, industrial, municipal and residential customers in 48 states, the
District of Columbia, Canada, and Puerto Rico. The Company's solid waste
management services include collection, transfer, and disposal operations and,
to a lesser extent, recycling and certain other waste management services. At
December 31, 1997, USA Waste owned or operated an extensive network of
landfills, transfer stations, and collection operations and had a diversified
customer base in excess of seven million with no single customer accounting for
more than 5% of the Company's operating revenues during 1997. The Company
employed approximately 17,700 people as of December 31, 1997.
The terms "USA Waste" and the "Company" refer to USA Waste Services, Inc.,
a Delaware corporation incorporated on April 28, 1995, and includes its
predecessors, subsidiaries, and affiliates, unless the context requires
otherwise. USA Waste's executive offices are located at 1001 Fannin Street,
Suite 4000, Houston, Texas 77002, and its telephone number is (713) 512-6200.
The Company's common stock is listed on the New York Stock Exchange under the
trading symbol "UW."
For the year ended December 31, 1997, approximately 62%, 10%, 24%, and 4%
of the Company's revenues were attributable to collection, transfer, disposal,
and other waste management services, respectively. Information regarding the
Company's domestic and foreign operations is included in Note 10 to the
Company's Consolidated Financial Statements included elsewhere herein.
INDUSTRY BACKGROUND
USA Waste operates in the nonhazardous solid waste segment of the waste
management industry. Despite the size of this industry, it has historically been
a fragmented industry, with a multitude of local private operators and municipal
operators servicing relatively centralized areas. In recent years, the industry
has undergone a period of significant consolidation. However, local private and
municipal operations continue to service a large percentage of the North
American nonhazardous solid waste business.
One of the forces causing consolidation within the solid waste management
industry has been increased regulation and enforcement of collection and
disposal activities. In October 1991, the Environmental Protection Agency
("EPA") adopted new regulations pursuant to Subtitle D of the Resource
Conservation and Recovery Act governing the disposal of solid waste. These
regulations led to a variety of requirements applicable to landfill disposal
sites, including the construction of liners and the installation of leachate
collection systems, groundwater monitoring systems, and methane gas recovery
systems. The regulations also required enhanced control systems to monitor more
closely the waste streams being disposed at the landfills, post-closure
monitoring of sites and financial assurances that landfill operators will comply
with the stringent regulations. The result of these regulatory requirements has
been increased costs in various segments of the industry, particularly for
landfill operators.
The costs associated with the new industry regulations have caused some of
the consolidation and acquisition activity within the industry. Large waste
management companies are typically able to generate economies of scale and bring
existing operations into compliance. They have also acquired operations which
either complement existing businesses or otherwise improve their cost structure
and flexibility. The Company expects waste management companies active in
various segments of the industry to continue to seek vertical integration to
enable them to become more cost effective and competitive. Despite this industry
consolidation, many of the smaller localized companies have low cost positions
and provide strong competition in local markets.
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STRATEGY
The Company is focused on continuing to pursue profitable growth and
operational efficiencies in the nonhazardous solid waste business in North
America. Key components of the Company's strategy are:
Growth
Internal Growth
- Increasing revenues through the expansion of existing operations. The
Company continually strives to enhance its existing operations and
increase volume.
External Growth
- Increasing revenues and enhancing profitability through tuck-in and other
acquisitions. The Company continually seeks to expand its services
through the acquisition of additional solid waste management businesses
and operations that can be effectively integrated with the Company's
existing operations. These acquisitions typically involve adding
collection operations, transfer stations, or landfills that are
complementary to existing operations and that permit the Company to
implement operating efficiencies and increase asset utilization.
- Expanding into new markets through acquisitions. The Company pursues
acquisitions in new markets where the Company believes it can strengthen
its overall competitive position as an important provider of integrated
solid waste management services and where opportunities exist to apply
the Company's operating and management expertise to enhance the
performance of acquired operations. The completion of the Company's
recently announced proposed merger with Waste Management, Inc. ("WMI")
will significantly expand the Company's operations, both nationally and
internationally. It will also result in adding operations, such as
hazardous waste disposal, waste to energy operations and environmental
engineering activities, which are outside the Company's traditional
emphasis on solid waste disposal activities.
- Benefiting from the privatization of solid waste services provided by
municipalities. Municipalities currently provide a large percentage of
the solid waste management services in North America. Due to the capital
and regulatory requirement demands as well as the economics of the solid
waste industry, certain portions of these services have been privatized
each year. The Company pursues privatization opportunities where it
believes solid waste services can be provided at a cost efficient yet
profitable level.
Operational Efficiencies
- Increasing productivity and operating efficiencies in existing and
acquired operations. The Company seeks to increase productivity, achieve
administrative and operating efficiencies, and improve profitability in
existing operations and acquired businesses, with the objective of
becoming the low cost operator in each of its markets. Measures taken by
the Company in this area include consolidating and implementing uniform
administrative and management systems, restructuring and consolidating
collection routes, improving equipment utilization, and increasing
employee productivity through incentive compensation and training
programs. The Company's management believes that its ability to serve
markets as a low cost operator is fundamental to achieving sustainable
internal growth and to realizing the benefits of its acquisition
activity.
- Internalization. The Company strives to strengthen its position in its
existing markets by expanding the scope of services through the
integration of its collection, transfer station, and landfill operations.
Internalization (expressed as a percentage) is the amount of waste
collected by the Company that is disposed at a landfill owned or operated
by the Company. Waste that can be internalized generally has greater
profitability than waste that is disposed of at a third party landfill.
The utilization of internal disposal capacity is an integral component of
the Company's ability to achieve its financial goals and objectives.
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- Decentralized management. Because the Company believes the solid waste
industry in North America is a local and regional business, the Company
is organized based upon a decentralized management and a streamlined
corporate structure. The Company believes this approach enhances its
ability to manage the local aspects of daily operations and service its
customers more effectively.
Financial Flexibility and Strength
- Preserving the financial foundation. The Company monitors the financial
demands of its existing operations, acquisition activities, and capital
expenditures program in an attempt to maintain its financial flexibility
and strength and its ability to capitalize on future opportunities. In
managing its financial resources, the Company utilizes commercial banks,
equity and debt offerings, and issues equity instruments in certain
acquisitions. The Company believes that its ability to continue as an
industry consolidator is directly related to its ability to maintain its
financial flexibility and strength.
The Company's business is subject to extensive federal, state, and local
regulation and legislative initiatives. Further, in some states and
municipalities, its business is subject to environmental regulation, mandatory
recycling laws, prohibitions on the deposit of certain types of waste in
landfills, and restrictions on the flow of solid waste. Because of continuing
public awareness and influence regarding the collection, transfer, and disposal
of waste and the preservation of the environment, and uncertainty with respect
to the enactment and enforcement of future laws and regulations, the Company
cannot always accurately predict the impact that any future regulations or laws
may have on its operations. See "Regulation" and "Legal Proceedings" for
additional information.
ACQUISITION ACTIVITY IN 1997
On March 12, 1997, the Company acquired substantially all of the Canadian
solid waste subsidiaries of Allied Waste Industries Inc., ("Allied") for
approximately $518,000,000 in cash. Those businesses represented 41 collection
operations, seven landfills, and eight transfer stations in the provinces of
Alberta, British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan with
annualized revenues of approximately $270,000,000.
On April 1, 1997, the Company acquired substantially all of the assets of
Mid-American Waste Systems, Inc. for approximately $201,000,000, consisting
primarily of cash and the assumption of a limited amount of debt. The assets
acquired included 11 collection operations, 11 landfills, six transfer stations,
and three recycling operations, with annualized revenues of approximately
$115,000,000.
On June 10, 1997, the Company acquired the majority of WMI's Canadian solid
waste businesses for $124,000,000 in cash and 1,705,757 shares of the Company's
common stock. The assets acquired included 13 collection operations, one
landfill, and three transfer stations in the provinces of Alberta, British
Columbia, Ontario, and Quebec, with annualized revenues totaling approximately
$124,000,000.
On August 26, 1997, the Company consummated a merger with United Waste
Systems, Inc. ("United") accounted for as a pooling of interests (the "United
Merger"). Under the terms of the United Merger, the Company issued 1.075 shares
of its common stock for each outstanding share of United common stock.
Additionally, at the effective date of the United Merger, United stock options,
whether or not such stock options had vested or become exercisable, were
cancelled in exchange for shares of the Company's common stock equal in market
value to the fair value of such United stock options, as determined by an
independent third party. The United Merger increased the Company's outstanding
shares of common stock by approximately 51,900,000 shares, which included
approximately 1,900,000 shares exchanged for United stock options. United owned
and operated nonhazardous waste disposal, treatment, collection, transfer
station, and recycling businesses and complementary operations. At the time of
the United Merger, United owned or operated 39 landfills, 78 transfer stations,
and 80 collection operations.
In addition to the consummation of the aforementioned acquisition
transactions, the Company acquired 236 collection operations, 31 transfer
stations, and 26 landfills with annualized revenues aggregating approximately
$960,000,000 during 1997.
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RECENT DEVELOPMENTS
On December 9, 1997, the Company announced that it had executed a
definitive agreement to acquire the solid waste divisions of City Management
Holdings Trust ("City Management"), and on January 14, 1998, consummated such
transaction for approximately $735,000,000 consisting primarily of cash and a
limited amount of debt assumed. The businesses acquired include 20 collection
operations, ten landfills, and 12 transfer stations primarily in the state of
Michigan.
On January 27, 1998, the Company announced that it had entered into a
definitive agreement to acquire TransAmerican Waste Industries, Inc.
("TransAmerican") for approximately 2,000,000 shares of the Company's common
stock, subject to certain adjustments, and approximately $43,000,000 in
assumption of debt. This acquisition, which is subject to regulatory approval
and approval of TransAmerican shareholders, is expected to close during the
first half of 1998 and is anticipated to be accounted for as a pooling of
interests. The businesses to be acquired include five collection operations,
nine landfills, and two transfer stations located throughout the southern region
of the United States.
The Company entered into a definitive agreement on February 6, 1998, with
American Waste Systems, Inc. ("American"), to acquire American's solid waste
businesses for approximately $150,000,000 in cash. This transaction, which is
subject to regulatory approval and approval of American's shareholders, is also
expected to close in the first half of 1998. The operations to be acquired
include three landfills and one collection operation located in Ohio.
On March 10, 1998, the Company entered into a definitive agreement and plan
of merger pursuant to which a subsidiary of the Company will be merged with and
into WMI and WMI will become a wholly owned subsidiary of the Company (the "WMI
Merger"). As of the effective time of the WMI Merger, each outstanding share of
WMI, other than shares held in WMI's treasury or owned by WMI, the Company or
any of their wholly owned subsidiaries, will be converted into the right to
receive 0.725 shares of the Company. This transaction, which is expected to
close during 1998, is subject to regulatory approval and approval of the
stockholders of the Company and WMI. It is anticipated that the Company will
issue approximately 345,000,000 shares of its common stock related to this
transaction and that this merger will be accounted for as a pooling of
interests.
OPERATIONS
The Company provides collection, transfer, disposal, and recycling services
to commercial, industrial, municipal and residential customers in various
locations in the United States, Canada, and Puerto Rico.
Management of the Company's solid waste operations is achieved through an
alignment that currently includes five regions organized by geographic area.
Each region is headed by a regional vice president ("RVP"). Each RVP is
responsible for the oversight of the following departments: sales and marketing,
administration and finance, operations, and maintenance. In addition, each RVP
typically has a small staff that works interactively with the corporate office
in the areas of regulatory compliance and reporting, legal services, engineering
services, internal and external development, and strategic planning.
Geographically, a region generally encompasses a multi-state or multi-province
area and may have up to 175 districts. Regions are divided into districts headed
by a district manager. Each district manager is responsible for the day-to-day
oversight of the district's field operations, with direct responsibility for
customer satisfaction, employee motivation, labor and equipment productivity,
internal growth, financial budgets, and profit and loss activity. A district
generally encompasses a city, county, or metropolitan area. In certain areas, a
divisional vice president, reporting to a RVP, may oversee several districts.
Collection Operations. Solid waste collection is provided under two primary
types of arrangements depending on the customer being served. Commercial and
industrial collection services are generally performed under one to three-year
service agreements, and fees are determined by such factors as collection
frequency, type of collection equipment furnished by the Company, type and
volume or weight of the waste collected, the distance to the disposal facility,
labor cost, and cost of disposal. Most residential solid waste collection
services are performed under contracts with, or franchises granted by,
municipalities or regional
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authorities that have granted the Company exclusive rights to service all or a
portion of the homes in their respective jurisdictions. Such contracts or
franchises usually range in duration from one to five years. Recently, some
municipalities have requested bids on their residential collection contracts
based on the volume of waste collected. Residential collection fees are either
paid by the municipalities from their tax revenues or service charges or are
paid directly by the residents receiving the service.
As part of its services, the Company provides steel containers to most of
its commercial and industrial customers to store solid waste. These containers,
ranging in size from one to 45 cubic yards, are designed to be lifted
mechanically and either emptied into a collection vehicle's compaction hopper or
directly into a disposal site in the case of industrial customers. The use of
containers enables the Company to service most of its commercial and industrial
customers with collection vehicles operated by a single employee.
The Company often obtains waste collection accounts through acquisitions,
including the purchase of customer lists and equipment. Once a collection
operation is acquired, programs designed to improve equipment utilization,
employee productivity, operating efficiencies, and overall profitability are
implemented. The Company also solicits commercial and industrial customers in
areas surrounding acquired residential collection markets as a means of further
improving operating efficiencies and increasing volumes of solid waste
collection.
The Company's collection operations internalized approximately 53.8% of
disposal costs paid to landfills for the year ended December 31, 1997 as
compared to 49.8% for the comparable prior year period. In the remaining
markets, waste is collected and delivered to a municipal, county or privately
owned unaffiliated landfill or transfer station.
Transfer Stations. A transfer station is a facility located near
residential and commercial collection routes where solid waste is received from
collection vehicles and then transferred to and compacted in large,
specially-constructed trailers for transportation to disposal facilities. This
consolidation reduces costs by improving utilization of collection personnel and
equipment. Fees are generally based on such factors as the type and volume or
weight of the waste transferred and the transportation distance to disposal
sites. Transfer stations can also be used to facilitate internalizing disposal
costs by giving Company collection operations more cost effective access to
landfills owned or operated by the Company.
Landfills. Municipal solid waste landfills are the primary depository for
solid waste in North America. These disposal facilities are located on land with
geological and hydrological properties that limit the possibility of water
pollution, and are operated under prescribed procedures. A landfill must be
maintained carefully to meet federal, state, and local regulations. Maintenance
includes excavation, continuous spreading and compacting of waste, and covering
of waste with earth or other inert material at least once a day. The cost of
transporting solid waste to a disposal location places a geographic restriction
on solid waste companies. Access to a disposal facility, such as a landfill, is
a necessity for all solid waste management companies. While access can be
obtained to disposal facilities owned or operated by unaffiliated parties, the
Company believes that it is generally preferable for its collection operations
to utilize disposal facilities owned or operated by affiliated parties so that
access can be assured on favorable terms. Customers are charged disposal
charges, known as "tipping fees", based on market factors and the type and
volume or weight of solid waste deposited and the type and size of vehicles used
in the conveyance of solid waste.
The ownership or lease of a landfill site enables the Company to dispose of
waste without payment of tipping fees to unaffiliated parties. The Company does
not own or lease a landfill site in every metropolitan area in which it is
engaged in waste collection. To date, the Company has not experienced excessive
difficulty securing the use of disposal facilities owned or operated by
unaffiliated parties in those metropolitan areas in which it does not own or
operate its own landfill. The Company's landfills are also used by unaffiliated
waste collection companies and government agencies. The Company's average
landfill volume for the year ended December 31, 1997, was approximately 127,300
tons per day, and the average remaining life of the Company's landfills owned or
operated was approximately 25 years based on remaining permitted capacity and
current average daily disposal volumes.
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Recycling. In response to the increasing public environmental awareness and
expanding federal, state, and local regulations pertaining to waste recycling,
the Company has developed recycling as a component of its environmentally
responsible integrated solid waste management plan. Curbside collection of
recyclable materials for residential customers, commercial and industrial
collection of recyclable materials, and material recovery/waste reduction
facilities are services in which the Company has become involved to complement
its collection and transfer station operations. Although the Company continues
to provide the service of collecting recyclable products, to date the Company
has not made material capital investments in material recovery/waste reduction
facilities. Opportunities for expansion in these areas will continue to be
evaluated.
The Company operates curbside recycling programs in connection with its
residential collection operations in a number of markets and in association with
a number of its transfer stations. Fees are determined by such considerations as
market factors, frequency of collection, the type and volume or weight of
recycled material, labor costs, the distance the recycled material must be
transported, and the value of the recycled material. Overall, however, the
Company is not materially affected financially by fluctuations in commodity
pricing for recyclable materials.
COMPETITION
The solid waste industry is highly competitive. The industry is comprised
of a number of companies of various sizes, numerous municipalities and other
regional or multi-county authorities, and large commercial and industrial
companies handling their own waste collection or disposal operations.
Municipalities and counties are often able to offer lower direct charges to the
customer for the same service by subsidizing the cost of such services through
the use of tax revenues and tax-exempt financing. Generally, however,
municipalities do not provide significant commercial and industrial collection
or waste disposal.
The Company competes for landfill business on the basis of tipping fees,
geographical location, and quality of operations. The Company's ability to
obtain landfill business may be limited by the fact that some major collection
companies also own or operate landfills to which they internalize their waste.
The Company competes for collection accounts primarily based on price and the
quality of its services. Intense competition is encountered for both quality of
service and pricing. From time to time, competitors may reduce the price of
their services and accept lower profit margins in an effort to expand or
maintain market share or to competitively win bid contracts.
The Company provides residential collection services under a number of
municipal contracts. As is the case in the industry, such contracts come up for
competitive bidding periodically and there is no assurance that the Company will
be the successful bidder and will be able to retain such contracts. If the
Company is unable to replace any contract lost through the competitive bidding
process with a comparable contract within a reasonable time period or to use any
surplus equipment in other service areas, the earnings of the Company could be
adversely affected. However, during 1997, no one commercial customer or
municipal contract accounted for more than 5% of the Company's operating
revenues. As the Company continues to grow, the loss of any one contract will
have less of an impact on the Company's operations as a whole.
Increased public environmental awareness and certain mandated state
regulations have resulted in increased recycling efforts in many different areas
of the country that are currently and will in the future reduce the amount of
solid waste destined for landfills. In addition, the Company could face
competition from companies engaged in waste incineration and other alternatives
to landfill disposal. Although the Company believes that landfills will continue
to be the primary depository for solid waste well into the future, there can be
no assurance that recycling, incineration, and waste reduction efforts will not
affect future landfill disposal volumes. The effect, if any, on such volumes
could also vary between different regions of the country as well as within
individual market areas in each region.
PRICING
Operating costs, disposal costs, and collection fees vary widely throughout
the geographic areas in which the Company operates. The prices that the Company
charges are determined locally, and typically vary by the volume or weight, type
of waste collected, treatment requirements, risks involved in the handling or
disposing
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of waste, frequency of collections, distance to final disposal sites, labor
costs and amount and type of equipment furnished to the customer. Under certain
contracts, the Company's ability to pass on cost increases is limited. Long-term
solid waste collection contracts typically contain a formula, generally based on
published price indices, for automatic adjustment of fees to cover increases in
some, but not all, operating costs.
EMPLOYEES
At December 31, 1997, the Company had approximately 17,700 full-time
employees, of which approximately 2,550 were employed in clerical,
administrative, and sales positions, 800 in management, and the balance in
collection, transfer, and disposal operations. Approximately 4,060 of the
Company's employees are covered by collective bargaining agreements. The Company
has not experienced a work stoppage, and management considers its employee
relations to be good.
INSURANCE AND FINANCIAL ASSURANCE OBLIGATIONS
The Company carries a broad range of insurance coverages, which management
considers prudent for the protection of the Company's assets and operations.
Some of these coverages are subject to varying retentions of risk by the
Company. At December 31, 1997, the casualty coverages included $2,000,000
primary commercial general liability and $1,000,000 primary automobile liability
supported by $200,000,000 in umbrella insurance protection. The property policy
provides insurance coverages for all of the Company's real and personal
property, including California earthquake perils. The Company also carries
$200,000,000 in aircraft liability protection.
The Company maintains workers' compensation insurance in accordance with
laws of the various states and countries in which it has employees. The Company
also currently has an environmental impairment liability ("EIL") insurance
policy for certain of its landfills, transfer stations, and recycling facilities
that provides coverage for property damages and/or bodily injuries to third
parties caused by off-site pollution emanating from such landfills, transfer
stations, or recycling facilities. This policy provides $5,000,000 of coverage
per loss with a $10,000,000 aggregate limit.
To date, the Company has not experienced any difficulty in obtaining
insurance. However, if the Company in the future is unable to obtain adequate
insurance, or decides to operate without insurance, a partially or completely
uninsured claim against the Company, if successful and of sufficient magnitude,
could have a material adverse effect upon the Company's financial condition,
results of operations or cash flows. Additionally, continued availability of
casualty and EIL insurance with sufficient limits at acceptable terms is an
important aspect of obtaining revenue-producing waste service contracts.
Municipal and governmental waste management contracts typically require
performance bonds or bank letters of credit to secure performance. In addition,
the Company is required to provide financial assurance for closure and
post-closure obligations with respect to its landfills. The Company has not
experienced difficulty in obtaining performance bonds or letters of credit for
its current operations. As of December 31, 1997, the Company had provided
letters of credit of approximately $567,729,000 and surety bonds of
approximately $75,271,000 to municipalities and other customers and other
regulatory authorities supporting tax-exempt bonds, performance of landfill
closure and post-closure requirements, insurance contracts, and other contracts.
Continued availability of surety bonds and letters of credit in sufficient
amounts at acceptable rates is an important aspect of obtaining additional
municipal collection contracts and obtaining or retaining landfill operating
permits.
REGULATION
General -- Potential Adverse Effect of Government Regulations
All of the Company's principal business activities are subject to extensive
and evolving environmental, health, safety, and transportation laws and
regulations at the federal, state, and local levels. These regulations are
administered by the EPA in the United States and various other federal, state,
and local environmental,
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zoning, health, and safety agencies in the United States and elsewhere, many of
which periodically examine the Company's operations to monitor compliance with
such laws and regulations.
The development, expansion, and operation of landfills and transfer
stations are subject to extensive regulations governing siting, design,
operations, monitoring, site maintenance, corrective actions, financial
assurance, and closure and post-closure obligations. In order to construct,
expand, and operate a landfill or transfer station, the Company must obtain and
maintain one or more construction or operating permits and licenses and, in
certain instances, applicable zoning approvals. Obtaining the necessary permits
and approvals in connection with the acquisition, development, or expansion of a
landfill or transfer station is difficult, time-consuming (often taking two to
three years or more), and expensive, and is frequently opposed by local citizen
as well as environmental groups. Once obtained, operating permits are subject to
modification and revocation by the issuing agency. Compliance with current and
future regulatory requirements may require the Company, as well as others in the
waste management industry, from time to time, to make significant capital and
operating expenditures.
In the collection segment of the industry, regulation takes such forms as
licensing collection vehicles, health and safety requirements, vehicular weight
limitations, and, in certain localities, limitations on weight, area, time, and
frequency of collection.
Federal, state, and local governments have from time to time proposed or
adopted other types of laws, regulations, or initiatives with respect to the
environmental services industry, including laws, regulations, and initiatives to
ban or restrict the international, interstate, or intrastate shipment of wastes,
impose higher taxes on out-of-state waste shipments than on in-state shipments,
limit the types of wastes that may be disposed of at existing landfills, mandate
waste minimization initiatives, require recycling and yard waste composting,
reclassify certain categories of nonhazardous waste as hazardous, and regulate
disposal facilities as public utilities. Congress has from time to time
considered legislation that would enable or facilitate such bans, restrictions,
taxes, and regulations, many of which could adversely affect the demand for the
Company's services. Similar types of laws, regulations, and initiatives have
also from time to time been proposed or adjusted in other jurisdictions in which
the Company operates. The effect of these and similar laws could be a reduction
of the volume of waste that would otherwise be disposed of in Company landfills.
The Company makes a continuing effort to anticipate regulatory, political, and
legal developments that might affect operations, but it is not always able to do
so. The Company cannot predict the extent to which any legislation or regulation
that may be enacted, amended, repealed, reinterpreted, or enforced in the future
may affect its operations. Such actions could adversely affect the Company's
operations or impact the Company's financial condition or earnings for one or
more fiscal quarters or years.
Governmental authorities have the power to enforce compliance with
regulations and permit conditions and to obtain injunctions or impose fines in
case of violations. During the ordinary course of its operations, the Company
may from time to time receive citations or notices from such authorities that a
facility is not in full compliance with applicable environmental or health and
safety regulations. Upon receipt of such citations or notices, the Company will
work with the authorities to address their concerns. Failure to correct the
problems to the satisfaction of the authorities could lead to monetary
penalties, curtailed operations, jail terms, facility closure, or an inability
to obtain permits for additional sites.
As a result of changing government and public attitudes in the area of
environmental regulation and enforcement, management anticipates that
continually changing requirements in health, safety, and environmental
protection laws will require the Company and others engaged in the solid waste
management industry to continually modify or replace various facilities and
alter methods of operation at costs that may be substantial. Most of the
Company's expenditures incurred in the operation of its landfills relate to
complying with the requirements of laws concerning the environment. These
expenditures relate to facility upgrades, corrective actions, and facility
closure and post-closure care. The majority of these expenditures are made in
the normal course of the Company's business and neither materially adversely
affect the Company's earnings nor place the Company at any competitive
disadvantage. Moreover, the Company has not expended any material amount to
remedy any potential impacts of the Company's solid waste operations on the
public or the environment resulting from changes in such environmental
protection laws. Although the Company, to its
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knowledge, is currently in compliance in all material respects with all
applicable federal, state, and local laws, permits, regulations, and orders
affecting its operations where noncompliance would result in a material adverse
effect on the Company's financial condition, results of operations or cash
flows, there is no assurance that the Company will not have to expend
substantial amounts for such actions in the future.
The Company expects to grow in part by acquiring existing landfills,
transfer stations, and collection operations. Although the Company conducts due
diligence investigations of the past waste management practices of the
businesses that it acquires, it can have no assurance that, through its
investigation, it will identify all potential environmental problems or risks.
As a result, the Company may have acquired, or may in the future acquire,
landfills or other properties that have unknown environmental problems and
related liabilities. The Company will be subject to similar risks and
uncertainties in connection with the acquisition of closed facilities that had
been previously operated by businesses acquired by the Company. The Company
seeks to mitigate the foregoing risks by obtaining environmental representations
and indemnities from the sellers of the businesses that it acquires. However,
there can be no assurance that the Company will be able to rely on any such
indemnities if an environmental liability exists.
Federal Regulation
The primary U.S. federal statutes affecting the business of the Company are
summarized below.
(1) The Solid Waste Disposal Act ("SWDA"), as amended by the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"). The SWDA and its
implementing regulations establish a framework for regulating the handling,
transportation, treatment, and disposal of hazardous and nonhazardous waste.
They also require states to develop programs to insure the safe disposal of
solid waste in landfills.
Subtitle D of RCRA establishes a framework for federal, state, and local
government cooperation in controlling the management of nonhazardous solid
waste. Under Subtitle D, the EPA has adopted regulations that establish minimum
standards for solid waste disposal facilities, which include location standards,
hydrogeological investigations, facility design requirements (including liners
and leachate collection systems), enhanced operating and control criteria,
groundwater and methane gas monitoring, corrective action standards, closure and
extended post-closure requirements, and financial assurance standards. These
federal regulations must be implemented by the states, although states may
impose requirements for landfill sites that are more stringent than the federal
Subtitle D standards. The Company could incur significant costs in complying
with such regulations; however, the Company does not believe that the costs of
complying with such standards will have a material adverse effect on its
operations. All of the Company's planned landfill expansions will be engineered
to meet or exceed all applicable Subtitle D requirements.
(2) The Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended ("CERCLA"). CERCLA, among other things, provides for the
cleanup of sites from which there is a release or threatened release of a
hazardous substance into the environment. CERCLA imposes joint and several
liability for the costs of cleanup and for damages to natural resources upon the
present and former owners or operators of facilities or sites from which there
is a release or threatened release of hazardous substances to the extent the
disposal of hazardous substances for which there is a release occurred during
their period of ownership or operation. Waste generators and transporters
(including a contract carrier who has accepted a hazardous substance for
transportation) are also strictly liable. Under the authority of CERCLA and its
implementing regulations, detailed requirements apply to the manner and degree
of remediation of facilities and sites where hazardous substances have been or
are threatened to be released into the environment.
Liability under CERCLA is not dependent upon the intentional disposal of
"hazardous wastes," as defined under RCRA. It can be founded upon the release or
threatened release, even as a result of lawful, unintentional, and non-negligent
action, of any one of more than 700 "hazardous substances," including very small
quantities of such substances. CERCLA requires the EPA to establish a National
Priorities List ("NPL") of sites at which hazardous substances have been or are
threatened to be released and which require investigation or cleanup. More than
23% of the sites on the NPL are solid waste landfills that ostensibly never
received any regulated "hazardous wastes." Thus, even if the Company's landfills
have never received "hazardous wastes" as such, it is likely that one or more
hazardous substances have come to be located at its
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landfills. Because of the extremely broad definition of "hazardous substances,"
the same is true of other industrial properties with which the Company or its
predecessors has been, or with which the Company may become, associated as an
owner or operator. Consequently, if there is a release or threatened release of
such substances into the environment from a site currently or previously owned
or operated by the Company, the Company could be liable under CERCLA for the
cost of removing such hazardous substances at the site, remediation of
contaminated soil or groundwater, and for damages to natural resources, even if
those substances were deposited at the Company's facilities before the Company
acquired or operated them. The costs of a CERCLA cleanup can be very
substantial. Given the limited amount of environmental impairment liability
insurance maintained by the Company, a finding of such liability could have a
material adverse impact on the Company's business and financial condition.
Although the Company maintains environmental impairment liability insurance in
amounts the Company believes are compliant with state and federal requirements,
these coverages apply only to third party claims and might be insufficient to
cover a significant CERCLA mandated cleanup.
Although the Company may not be liable under CERCLA for the cleanup of a
disposal site containing hazardous wastes transported to such site by the
Company so long as the site was selected by the generator of such waste, the
Company would be responsible for any hazardous waste during actual
transportation. Also, the Company could be liable under CERCLA for off-site
environmental contamination caused by the release of hazardous substances
transported by the Company, or a waste transporter acquired by the Company,
where the transporter selected the disposal site. CERCLA imposes liability for
certain environmental response measures upon transporters who arranged for the
disposal site at which the release or threatened release of hazardous substances
occurred. It therefore is common in the solid waste transport business to
receive information requests from EPA about transporting activities to third
party disposal sites. The Company has received potentially responsible party
information requests regarding third party disposal sites. The environmental
agencies or other potentially responsible parties could assert that the Company
is liable for environmental response measures arising out of disposal at a site
that was selected by the Company, a waste transporter acquired by the Company,
or a waste transporter with whom the Company contracted.
Several bills are presently pending before the U.S. Congress to reauthorize
and substantially amend CERCLA. In addition to possible changes in the statute's
funding mechanisms and provisions for allocating cleanup responsibility,
Congress may also fundamentally alter the statute's provisions governing the
selection of appropriate site cleanup remedies. In this regard, new approaches
to cleanup, removal, treatment, and remediation of hazardous substance
contamination may be adopted which rely on nationally or site-specific risk
based standards. These types of policy changes could significantly affect the
stringency and extent of site remediation, the types of remediation techniques
employed, and the types of hazardous waste management facilities that may be
used for the treatment and disposal of hazardous substances. Congress may
additionally consider revision of the liability imposed by CERCLA on current
owners of property for contamination caused prior to a party's acquisition of
the site. This consideration could potentially reduce the Company's
responsibility for remediation obligations under CERCLA.
The EPA's primary way of determining whether a site is to be included on
the NPL is the Hazard Ranking System, which evaluates the relative potential for
uncontrolled hazardous substances to pose a threat to human health or the
environment pursuant to a scoring system based on factors grouped into three
categories: (1) likelihood of release, (2) waste characteristics, and (3)
targets. As of February 1998, the EPA had proposed or identified approximately
9,500 sites for preliminary assessment. These sites are compiled on the
Comprehensive Environmental Response, Compensation, and Liability Information
System ("CERCLIS") list. The identification of a site on the CERCLIS list
indicates only that the site has been brought to the attention of the EPA and
will undergo an assessment of environmental conditions thereon, but it does not
necessarily mean that an actual health or environmental threat currently exists
or has ever existed.
(3) The Federal Water Pollution Control Act of 1972 (the "Clean Water
Act"). The Clean Water Act establishes rules for regulating the discharge of
pollutants into streams, rivers, groundwater, or other surface waters from a
variety of sources, including nonhazardous solid waste disposal sites. Should
run-off from the Company's landfills or transfer stations be discharged into
surface waters, the Clean Water Act could require the Company to apply for and
obtain discharge permits, conduct sampling and monitoring, and, under certain
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circumstances, reduce the quantity of pollutants in those discharges. In 1990,
the EPA issued additional rules under the Clean Water Act which establish
standards for management of storm water runoff from landfills and which require
landfills to obtain storm water discharge permits. In addition, if a landfill or
a transfer station discharges wastewater through a sewage system to a publicly
owned treatment works, the facility must comply with discharge limits imposed by
the treatment works. Also, if development of a landfill may alter or affect
"wetlands," a permit may have to be obtained before such development could
commence. This requirement is likely to affect the construction or expansion of
many landfill sites. The Clean Water Act provides civil, criminal, and
administrative penalties for violations of its provisions.
(4) The Clean Air Act. The Clean Air Act provides for the federal, state,
and local regulation of the emission of air pollutants. These regulations impose
emission limitations and monitoring and reporting requirements on various
operations of the Company, including its landfills and waste collection
vehicles. The EPA has construed the Clean Air Act to apply to landfills which
may emit methane gas and other air pollutants. The costs of compliance with
Clean Air Act permitting and emission control requirements are not anticipated
to have a material adverse effect on the Company.
(5) The Occupational Safety and Health Act of 1970 (the "OSHA Act"). The
OSHA Act authorizes the Occupational Safety and Health Administration to
promulgate occupational safety and health standards. Various of these standards,
including standards for notices of hazards, safety in excavation and demolition
work, and the handling of asbestos, may apply to the Company's operations.
State and Local Regulation
The states in which the Company operates have their own laws and
regulations that may be more strict than comparable federal laws and regulations
governing hazardous and nonhazardous solid waste disposal, water and air
pollution, releases and cleanup of hazardous substances and liability for such
matters. The states also have adopted regulations governing the siting, design,
operation, maintenance, closure, and post-closure maintenance of landfills and
transfer stations. The Company's facilities and operations are likely to be
subject to many, if not all, of these types of requirements. In addition, the
Company's collection and landfill operations may be affected by the trend in
many states toward requiring the development of waste reduction and recycling
programs. For example, several states recently have enacted laws that require
counties to adopt comprehensive plans to reduce, through waste planning,
composting, recycling, or other programs, the volume of solid waste deposited in
landfills. Additionally, the disposal of yard waste in solid waste landfills has
recently been banned in several states. Legislative and regulatory measures to
mandate or encourage waste reduction at the source and waste recycling have also
been considered from time to time by the U.S. Congress and the EPA.
Various states have enacted, or are considering enacting, laws that
restrict the disposal within the state of hazardous and nonhazardous solid waste
generated outside the state. While laws that overtly discriminate against
out-of-state waste have been found to be unconstitutional, some laws that are
less overtly discriminatory have been upheld in court. Additionally, certain
state and local governments have enacted "flow control" regulations, which
attempt to require that all waste generated within the state or local
jurisdiction be deposited at specific disposal sites. In May 1994, the U.S.
Supreme Court ruled that a flow control ordinance was unconstitutional.
Challenges to other such laws are pending. The outcome of pending litigation and
the likelihood that other such laws will be passed and will survive
constitutional challenge are uncertain. From time to time, the U.S. Congress has
considered legislation authorizing states to adopt regulations, restrictions, or
taxes on the importation of extraterritorial waste, and granting states and
local governments authority to enact partial flow control legislation. To date,
such congressional efforts have been unsuccessful. The U.S. Congress' adoption
of such legislation allowing for restrictions on importation of extraterritorial
waste or certain types of flow control, or the adoption of legislation affecting
interstate transportation of waste at the federal or state level, could
adversely affect the Company's solid waste management services, including
collection, transfer, disposal, and recycling operations, and in particular the
Company's ability to expand landfill operations acquired in certain areas.
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Many states and local jurisdictions in which the Company operates have
enacted "fitness" laws that allow agencies having jurisdiction over waste
services contracts or site permits to decline to award such or revoke contracts
or deny or revoke such permits on the basis of an applicant's (or permit
holder's) compliance history. These laws authorize the agencies to make
determinations of an applicant's fitness to be awarded a contract or to operate
a facility and to deny or revoke a contract or permit because of unfitness
absent a showing that the applicant has been rehabilitated through the adoption
of various operating policies and procedures put in place to assure future
compliance with applicable laws and regulations.
FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS
In the normal course of its business, the Company, in an effort to help
keep its stockholders and the public informed about the Company's operations,
may from time to time issue or make certain statements, either in writing or
orally, that are or contain forward-looking statements, as that term is defined
in the U.S. federal securities laws. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, projected or anticipated benefits from
acquisitions made by or to be made by the Company, or projections involving
anticipated revenues, earnings, or other aspects of operating results. The words
"expect," "believe," "anticipate," "project," "estimate," and similar
expressions are intended to identify forward-looking statements. The Company
cautions readers that such statements are not guarantees of future performance
or events and are subject to a number of factors that may tend to influence the
accuracy of the statements and the projections upon which the statements are
based, including but not limited to those discussed below. As noted elsewhere in
this report, all phases of the Company's operations are subject to a number of
uncertainties, risks, and other influences, many of which are outside the
control of the Company, and any one of which, or a combination of which, could
materially affect the results of the Company's operations and whether
forward-looking statements made by the Company ultimately prove to be accurate.
The following discussion outlines certain factors that could affect the
Company's consolidated results of operations for 1998 and beyond and cause them
to differ materially from those that may be set forth in forward-looking
statements made by or on behalf of the Company:
No Assurance of Successful Management and Maintenance of Growth
The Company has experienced rapid growth, primarily through acquisitions.
The Company's future financial results and prospects depend in large part on its
ability to successfully manage and improve the operating efficiencies and
productivity of these acquired operations. In particular, whether the
anticipated benefits of acquired operations are ultimately achieved will depend
on a number of factors, including the ability of the combined companies to
achieve administrative cost savings, rationalization of collection routes,
insurance and bonding cost reductions, general economies of scale, and the
ability of the Company, generally, to capitalize on its combined asset base and
strategic position. Moreover, the ability of the Company to continue to grow
will depend on a number of factors, including competition from other waste
management companies, availability of attractive acquisition opportunities,
availability of working capital, ability to maintain margins on existing or
acquired operations, and the management of costs in a changing regulatory
environment. There can be no assurance that the Company will be able to continue
to expand and successfully manage its growth or that the site or pace of its
growth will not adversely affect its existing or acquired operations.
Acquisition Strategy
The Company regularly pursues opportunities to expand its services through
the acquisition of additional solid waste management businesses and operations
that can be effectively integrated with the Company's existing operations. In
addition, the Company regularly pursues mergers and acquisition transactions,
some of which are significant, in new markets where the Company believes that it
can successfully become a provider of integrated solid waste management
services. Since 1990, the Company has consummated mergers with five publicly
traded companies, purchased assets from several other publicly traded companies,
and acquired hundreds of privately owned entities in the solid waste industry.
As one of the leading industry consolidators,
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the Company could announce other transactions with either publicly or privately
owned businesses at any time. The Company's acquisition strategy involves
certain potential risks associated with assessing, acquiring, and integrating
the operations of acquired companies. Although the Company generally has been
successful in implementing its acquisition strategy, there can be no assurance
that attractive acquisition opportunities will continue to be available to the
Company, that the Company will have access to the capital required to finance
potential acquisitions on satisfactory terms, or that any businesses acquired
will prove profitable. Future acquisitions may result in the incurrence of
additional indebtedness or the issuance of additional equity securities.
International Operations and Expansion
Significant portions of the Company's current operations are conducted in
Canada, and the Company intends to continue to expand its Canadian operations.
The Company's international operations will also significantly expand upon the
consummation of the WMI Merger. See "Recent Developments." Operations in foreign
countries generally are subject to a number of risks inherent in any business
operating in foreign countries, including political, social, and economic
instability, general strikes, nationalization of assets, currency restrictions
and exchange rate fluctuations, nullification, modification or renegotiation of
contracts, and governmental regulation, all of which are beyond the control of
the Company. No prediction can be made as to how existing or future foreign
governmental regulations in any jurisdiction may affect the Company in
particular or the solid waste management industry in general.
Impact of WMI Transaction
Successful consummation of the WMI Merger will initially alter the nature
of the Company's business by significantly expanding the Company's domestic and
international operations and by adding operations, such as hazardous waste
disposal, waste to energy operations and environmental engineering activities.
If the WMI Merger is consummated, the Company's financial position is expected
to become more leveraged, which may limit its ability to incur additional
indebtedness and maintain its financial flexibility and strength. The success of
the WMI Merger will depend upon a number of factors, most importantly the
ability of the Company to realize expected synergies from the combined
operations of WMI and the Company. The consummation of the transaction is
subject to numerous conditions, and there can be no assurance that the WMI
Merger will occur as planned.
Need for Capital; Future Debt and Equity Financings
The Company expects to require additional capital from time to time to
pursue its acquisition strategy and to fund internal growth. A portion of the
Company's future capital requirements may be provided through future debt
incurrences or issuances of equity securities. There can be no assurance that
the Company will be successful in obtaining additional capital through such debt
incurrences or issuances of additional equity securities.
The Company has historically used variable rate debt under revolving bank
credit arrangements as one method of financing its rapid growth. Although recent
financings by the Company have reduced the amount of variable rate debt
currently outstanding, the Company intends to continue to use variable rate debt
as a financing alternative. To the extent that variable interest rates tend to
fluctuate as general interest rates change, an increase in interest rates could
have a material adverse effect on the Company's earnings in the future.
Profitability May be Affected by Factors Beyond the Company's Control,
Including Competition
The waste management industry is highly competitive and requires
substantial capital resources. The industry consists of two other large national
waste management companies, WMI and Browning-Ferris Industries, Inc. ("BFI"), as
well as numerous local and regional companies of varying sizes and financial
resources. The Company competes with numerous waste management companies, some
of which have significantly larger operations and greater resources than the
Company. On March 10, 1998, the Company and
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WMI entered into a agreement and plan of merger pursuant to which WMI will
become a wholly owned subsidiary of the Company. See "Recent Developments." The
Company also competes with those counties and municipalities that maintain their
own waste collection and disposal operations. These counties and municipalities
may have financial advantages due to the availability to them of tax revenues
and tax-exempt financing. In addition, competitors may reduce the price of their
services in an effort to expand sales volume or to win competitively bid
municipal contracts. Profitability may also be affected by the increasing
national emphasis on recycling, composting, incineration, and other waste
reduction programs that could reduce the volume of solid waste collected or
deposited in landfills.
Capitalized Expenditures
In accordance with generally accepted accounting principles, the Company
capitalizes certain expenditures and advances relating to their acquisitions,
pending acquisitions, and landfill development and expansion projects. Indirect
acquisition costs, such as executive salaries, general corporate overhead,
public affairs and other corporate services, are expensed as incurred. The
Company's policy is to charge against earnings any unamortized capitalized
expenditures and advances (net of any portion thereof that the Company estimates
will be recoverable, through sale or otherwise) relating to any operation that
is permanently shut down, any pending acquisition that is not consummated, and
any landfill development or expansion project that is not successfully
completed. There can be no assurance that the Company in future periods will not
be required to incur a charge against earnings in accordance with such policy,
which charge, depending on the magnitude thereof, could have a material adverse
effect on the Company's financial position or results of operations.
Potential Adverse Effect of Government Regulation
The Company's operations are subject to and substantially affected by
federal, state and local laws, regulations, orders, and permits which govern
environmental protection, health and safety, zoning, and other matters. These
laws, regulations, orders, and permits may impose restrictions on operations
that could adversely affect the Company's results, such as limitations on the
expansion of disposal facilities, limitations on or the banning of disposal of
out-of-state waste or certain categories of waste, or mandates regarding the
disposal of solid waste. In particular, the Company is subject to extensive and
evolving environmental and land use laws and regulations, which have become
increasingly stringent. These laws and regulations affect the Company's
businesses in a variety of ways. In order to develop and operate a landfill or
other solid waste management facility, it is necessary to obtain and maintain in
effect various facility permits and other governmental approvals, including
those relating to zoning, environmental protection and land use. These permit
approvals are difficult, time consuming and costly to obtain and may be subject
to community opposition by various local officials or citizens, regulatory
delays, subsequent modifications and other uncertainties. There can be no
assurance that the Company will be successful in obtaining and maintaining in
effect permits and approvals required for the successful operation and growth of
its business, including permits and approvals for the development of additional
disposal capacity needed to replace existing capacity that is exhausted. The
siting, design, operation and closure of landfills are also subject to extensive
federal and state regulations. These regulations could also require the Company
to undertake investigatory or remedial activities, to curtail operations or to
close a landfill temporarily or permanently. Furthermore, future changes in
these regulations may require the Company to modify, supplement, or replace
equipment or facilities at costs which could be substantial.
Potential Environmental Liability
The Company may be subject to liability for environmental damage that its
landfills, transfer stations, and collection operations may have caused or may
cause nearby landowners, particularly as a result of the contamination of
drinking water sources or soil, including damage resulting from conditions
existing prior to the acquisition of such assets or operations. Liability may
also arise from any off-site environmental contamination caused by hazardous
substances, the transportation, treatment or disposal of which was arranged for
by the Company or predecessor owners of operations or assets acquired by the
Company. Any
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substantial liability for environmental damage could materially adversely affect
the operating results and financial condition of the Company.
In the ordinary course of its business, the Company may become involved in
a variety of legal and administrative proceedings relating to land use and
environmental laws and regulations. These may include proceedings by federal,
state or local agencies seeking to impose civil or criminal penalties on the
Company for violations of such laws and regulations, or to impose liability on
the Company under federal or state statutes, or to revoke or deny renewal of a
permit; actions brought by citizens groups, adjacent landowners or governmental
ethics opposing the issuance of a permit or approval to the Company or alleging
violations of the permits pursuant to which the Company operates or laws or
regulations to which the Company is subject; and actions seeking to impose
liability on the Company for any environmental damage at its owned or operated
facilities (or at facilities formerly owned by the Company or its predecessors)
or damage that those facilities or other properties may have caused to adjacent
landowners or others, including groundwater or soil contamination. The adverse
outcome of one or more of these proceedings could have a material adverse effect
on the Company's financial position, results of operations or cash flows.
During the ordinary course of operations, the Company has from time to time
received, and expects that it may in the future from time to time receive,
citations or notices from governmental authorities that its operations are not
in compliance with its permits or certain applicable environmental or land use
laws and regulations. The Company generally seeks to work with the authorities
to resolve the issues raised by such citations or notices. There can be no
assurance, however, that the Company will always be successful in this regard or
that such future citations or notices will not have a materially adverse effect
on the Company's financial position, results of operations or cash flows.
The Company's insurance for environmental liability is very limited because
the Company believes that the cost for such insurance is high relative to the
coverage it would provide. Due to the limited nature of such insurance coverage
for environmental liability, if the Company were to incur liability for
environmental damage, such liability could have a material adverse effect on the
Company's financial position, results of operations or cash flows.
Alternatives to Landfill Disposal
Alternatives to landfill disposal, such as recycling and composting, are
increasingly being used. In addition, in certain of the Company's markets,
incineration is an alternative to landfill disposal. There also has been an
increasing trend at the state and local levels to mandate recycling and waste
reduction at the source and to prohibit the disposal of certain types of wastes,
such as yard wastes, at landfills. These developments may result in the volume
of waste going to landfills being reduced in certain areas, which may affect the
Company's ability to operate its landfills at full capacity and the prices that
can be charged for landfill disposal services.
Shares Eligible for Future Sale May Adversely Affect Market Price of Stock
Sales of substantial amounts of the Company's common stock in the public
market could adversely affect the market price of such stock. The Company
maintains a shelf registration statement for the benefit of certain stockholders
relating to 4,000,000 shares of the Company's common stock. Such shares are
immediately saleable in the open market. In addition, the Company maintains a
shelf registration statement covering approximately 17,700,000 shares of the
Company's common stock at March 1, 1998, which may be issued in acquisitions. In
the event the market price of the Company's stock were adversely affected by
such sales, the Company's access to equity capital markets could be adversely
affected, and issuances of stock by the Company in connection with acquisitions,
or otherwise, could dilute earnings per share.
Seasonality
The Company's operating revenues tend to be somewhat lower in the winter
months. This is generally reflected in the Company's first and fourth quarter
results of operations. This is primarily attributed to the fact that (i) the
volume of waste relating to construction and demolition activities tends to
increase in the spring
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and summer months and (ii) the volume of industrial and residential waste in
certain regions where the Company operates tends to decrease during the winter
months.
ITEM 2. PROPERTIES.
The principal property and equipment of the Company consists of land
(primarily landfill sites, transfer stations, and bases for collection
operations), buildings, and vehicles and equipment. The Company owns or leases
real property in most states in which it is doing business. At December 31,
1997, the Company's solid waste landfills aggregated approximately 47,500 total
acres, including approximately 14,000 acres that are currently permitted.
The Company leases approximately 85,770 square feet of office space in
Houston, Texas, for its executive office under a ten year lease expiring in
2007. The Company owns real estate, buildings, and other physical properties
that it employs in substantially all of its solid waste collection operations.
The Company also leases a portion of its transfer stations, offices, and garage
and shop facilities. For the year ended December 31, 1997, aggregate annual
rental payments on real estate leased by the Company were approximately
$17,732,000.
The Company owns approximately 13,450 items of equipment, including waste
collection vehicles and related support vehicles, as well as bulldozers,
compactors, earth movers, and related heavy equipment and vehicles used in
landfill operations. The Company has approximately 918,900 steel containers in
use, ranging from one to 45 cubic yards, and a number of stationary compactors
and self-dumping hoppers.
The Company believes that its vehicles, equipment, and operating properties
are well maintained and adequate for its current operations. However, the
Company expects to make substantial investments in additional equipment and
property for expansion, for replacement of assets, and in connection with future
acquisitions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
ITEM 3. LEGAL PROCEEDINGS.
As of December 31, 1997, the Company or its subsidiaries has been notified
that they are potentially responsible parties ("PRPs") in connection with six
locations listed on the Superfund National Priorities List ("NPL"). None of the
six NPL sites at which claims have been made against the Company are owned by
the Company, and they are at different procedural stages under Superfund. At
four of the NPL sites, the Company's liability is well defined as a consequence
of a governmental decision as to the appropriate remedy. At the others, where
investigations have not been completed, remedies not selected or responsible
parties have been unable to reach agreement, the Company's liability is less
certain. While the Company, based on its status reviews of its PRP claims, does
not currently anticipate that the amount of such liabilities will have a
material adverse effect on the Company's operations, financial condition or cash
flows, the measurement of environmental liabilities is inherently difficult and
the possibility remains that technological, regulatory or enforcement
developments, the results of environmental studies, or other factors could
materially alter this expectation at any time.
The Company has been advised by the U.S. Department of Justice that United
is a target of a federal investigation relating to alleged violations of the
Clean Water Act at the Laurel Ridge Landfill in Kentucky. The investigation
relates to a period prior to the Company's acquisition of United. The Company is
not a target of the investigation and has pledged its full cooperation to the
government.
The Company and certain of its subsidiaries are parties to various other
litigation matters arising in the ordinary course of business. Management
believes that the ultimate resolution of these matters will not have a material
adverse impact on the Company's financial position, results of operations or
cash flows. In the normal course of its business and as a result of the
extensive government regulation of the solid waste industry, the Company
periodically may become subject to various judicial and administrative
proceedings and investigations involving federal, state, or local agencies. To
date, the Company has not been required to pay any material fine or judgment for
violation of an environmental law. From time to time, the Company also may be
subjected to actions brought by citizen's groups in connection with the
permitting of landfills or transfer stations, or alleging violations of the
permits pursuant to which the Company operates. The Company is also
16
19
subject from time to time to claims for personal injury or property damage
arising out of accidents involving its vehicles.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the stockholders of the Company during the
fourth quarter of 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages, as of March 1, 1998, of the
Company's executive officers (as defined by regulations of the Securities and
Exchange Commission), the positions they hold with the Company, and summaries of
their business experience.
John E. Drury, age 53, has been Chairman of the Board since June 30, 1995,
and Chief Executive Officer and a director of USA Waste since May 27, 1994. From
1991 to May 1994, Mr. Drury served as a Managing Director of Sanders Morris
Mundy Inc. ("SMMI"), a Houston based investment banking firm. Prior thereto, Mr.
Drury served in various management capacities at BFI, including President and
Chief Operating Officer of BFI from 1982 to 1991.
Rodney R. Proto, age 49, has been President, Chief Operating Officer, and a
director since joining USA Waste in August 1996. Prior to joining USA Waste, Mr.
Proto was President, Chief Operating Officer, and a director of Sanifill, Inc.
("Sanifill") since February 1992. Prior to such time, Mr. Proto was employed by
BFI for twelve years where he served, among other positions, as President of
Browning-Ferris Industries Europe, Inc. from 1987 through 1991 and Chairman of
BFI Overseas from 1985 through 1987.
Earl E. DeFrates, age 54, has been Executive Vice President and Chief
Financial Officer since May 1994. From October 1990 to April 1995, he was also
Secretary. Mr. DeFrates joined USA Waste as Vice President-Finance in October
1990 and was elected Executive Vice President in May 1994. Prior thereto, Mr.
DeFrates was employed by Acadiana Energy Inc. (formerly Tatham Oil & Gas, Inc.)
serving in various officer capacities including the company's Chief Financial
Officer, since 1980.
Susan J. Piller, age 45, has been Senior Vice President -- Employee
Relations since May 1996. Prior to joining the Company, Ms. Piller was at BFI
from 1984 until 1996, where she held various labor and employment positions,
including Vice President -- Employee Relations. Prior thereto, Ms. Piller was
employed by the Houston law firm of Fulbright & Jaworski.
William A. Rothrock, age 45, has been Senior Vice President -- Business
Development of the Company since August 1996. Mr. Rothrock held similar business
development positions with Sanifill from 1990 to 1996 and BFI from 1985 to 1990.
Ronald H. Jones, age 47, has been Vice President and Treasurer since
joining USA Waste in June 1995. Prior to joining USA Waste, Mr. Jones was
employed by Chambers Development Company, Inc. ("Chambers") as Vice President
and Treasurer from July 1992 to June 1995, Director, Corporate Development from
December 1990 to July 1992, and Assistant Vice President -- Finance from July
1989 to December 1990. Prior to joining Chambers, Mr. Jones was a Vice President
and Manager of the Cincinnati regional office engaged in corporate and middle
market lending with Bank of New York (formerly Irving Trust Company) and with
Chase Manhattan Bank.
Gregory T. Sangalis, age 42, has been Vice President, General Counsel and
Secretary since April 4, 1995. Prior to joining USA Waste, Mr. Sangalis was
employed by a solid waste subsidiary of WMI serving in various legal capacities
since 1986 and including Group Vice President and General Counsel from August
1992 to April 1995. Prior to joining WMI, he was General Counsel of Peavey
Company and had been engaged in the private practice of law in Minnesota.
Bruce E. Snyder, age 42, has been Vice President and Chief Accounting
Officer of USA Waste since July 1, 1992. Prior to joining USA Waste, Mr. Snyder
was employed by the international accounting firm of Coopers & Lybrand L.L.P.,
serving there since 1989 as an audit manager. From 1985 to 1989, Mr. Snyder held
various financial positions with Price Edwards Henderson & Co., a privately held
real estate development
17
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and management company in Oklahoma City, Oklahoma, and its affiliated companies,
ultimately serving as Senior Vice President.
18
21
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange
("NYSE") under the symbol "UW." The following table sets forth the range of the
high and low per share sales prices for the common stock as reported on the NYSE
Composite Tape.
HIGH LOW
------ ------
1996
First Quarter............................................. $25.63 $17.25
Second Quarter............................................ 32.63 24.00
Third Quarter............................................. 34.13 22.75
Fourth Quarter............................................ 34.25 28.63
1997
First Quarter............................................. $38.88 $28.63
Second Quarter............................................ 39.25 29.50
Third Quarter............................................. 44.13 38.00
Fourth Quarter............................................ 41.75 32.63
1998
First Quarter (through March 16, 1998).................... $46.00 $34.44
On March 16, 1998, the closing sale price as reported on the NYSE was
$46.00 per share. The number of holders of record of common stock based on the
transfer records of the Company at March 16, 1998, was 4,032. On March 10, 1998,
the last trading day prior to the announcement of the WMI transaction, the
closing stock price as reported on the NYSE was $39.13 per share.
The Company has never paid cash dividends on its common stock. Although
payment of dividends on the common stock is currently restricted by the terms of
the Company's revolving credit facility, the Board of Directors may review its
dividend policy in the future. See Note 4 to the Consolidated Financial
Statements of the Company included elsewhere herein.
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ITEM 6. SELECTED FINANCIAL DATA.
The following selected consolidated financial information as of December
31, 1997 and 1996, and for each of the years in the three year period ended
December 31, 1997, has been derived from the audited consolidated financial
statements of the Company included elsewhere herein. This information should be
read in conjunction with such Consolidated Financial Statements and related
notes thereto. The selected consolidated financial information as of December
31, 1995, 1994 and 1993, and for each of the years in the two year period ended
December 31, 1994, has been derived from audited consolidated financial
statements of the Company, that have been previously included in the Company's
reports under the Exchange Act, that are not included herein. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Operating revenues......................................... $2,613,768 $1,649,131 $1,216,082 $1,043,687 $ 887,972
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Operating (exclusive of depreciation and amortization
shown below)........................................... 1,345,769 881,401 672,117 596,868 514,483
General and administrative............................... 284,946 200,101 169,686 159,097 144,623
Depreciation and amortization............................ 303,241 191,044 143,878 127,108 108,024
Merger costs............................................. 109,411 126,626 26,539 3,782 --
Unusual items............................................ 24,720 63,800 4,733 8,863 2,672
---------- ---------- ---------- ---------- ----------
2,068,087 1,462,972 1,016,953 895,718 769,802
---------- ---------- ---------- ---------- ----------
Income from operations..................................... 545,681 186,159 199,129 147,969 118,170
---------- ---------- ---------- ---------- ----------
Other income (expense):
Shareholder litigation settlement and other litigation
related costs.......................................... -- -- -- (79,400) (5,500)
Interest expense:
Nonrecurring........................................... -- -- (10,994) (1,254) --
Other.................................................. (104,261) (60,497) (58,619) (54,102) (50,737)
Interest income.......................................... 7,634 6,699 6,682 5,085 5,072
Other income, net........................................ 14,213 6,376 4,891 2,629 1,749
---------- ---------- ---------- ---------- ----------
(82,414) (47,422) (58,040) (127,042) (49,416)
---------- ---------- ---------- ---------- ----------
Income before income taxes and extraordinary item.......... 463,267 138,737 141,089 20,927 68,754
Provision for income taxes................................. 189,944 70,398 60,313 8,959 29,170
---------- ---------- ---------- ---------- ----------
Income before extraordinary item........................... 273,323 68,339 80,776 11,968 39,584
Extraordinary item, net of taxes........................... (6,293) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income................................................. $ 267,030 $ 68,339 $ 80,776 $ 11,968 $ 39,584
========== ========== ========== ========== ==========
Basic earnings per common share:
Income before extraordinary item......................... $ 1.31 $ 0.39 $ 0.56 $ 0.08 $ 0.32
Extraordinary item....................................... (0.03) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income................................................. $ 1.28 $ 0.39 $ 0.56 $ 0.08 $ 0.32
========== ========== ========== ========== ==========
Diluted earnings per common share:
Income before extraordinary item......................... $ 1.26 $ 0.37 $ 0.54 $ 0.08 $ 0.32
Extraordinary item....................................... (0.03) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income............................................... $ 1.23 $ 0.37 $ 0.54 $ 0.08 $ 0.32
========== ========== ========== ========== ==========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................................ $ 86,736 $ 31,842 $ 26,134 $ 1,901 $ 37,565
Intangible assets, net..................................... 1,645,985 804,251 433,944 250,551 196,353
Total assets............................................... 6,622,845 3,631,547 2,455,102 1,833,099 1,617,422
Long-term debt, including current maturities............... 2,763,729 1,504,888 909,050 759,123 711,014
Stockholders' equity....................................... 2,628,976 1,473,990 1,149,885 688,603 623,510
20
23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion reviews the Company's operations for the three
years ended December 31, 1997, and should be read in conjunction with the
Company's Consolidated Financial Statements and related notes thereto included
elsewhere herein. The Company has restated its previously issued financial
statements for years prior to 1997 to reflect the acquisition of United,
consummated August 26, 1997, and accounted for under the pooling of interests
method of accounting.
The following discussion includes statements that are forward-looking in
nature. Whether such statements ultimately prove to be accurate depends upon a
variety of factors that may affect the business and operations of the Company.
Certain of these factors are discussed under "Business -- Factors Influencing
Future Results and Accuracy of Forward-Looking Statements" included in Item 1 of
this report.
INTRODUCTION
The Company provides nonhazardous solid waste management services,
consisting of collection, transfer, disposal, recycling, and other miscellaneous
services in various locations throughout the United States, Canada, and Puerto
Rico. Since August 1990, the Company has experienced significant growth
principally through the acquisition and integration of solid waste businesses
and is currently the third largest nonhazardous solid waste management company
in North America, as measured by revenues for the 1997 fiscal year. As of
December 31, 1997, the Company owned or operated an extensive network of
landfills, transfer stations, and collection operations serving in excess of
seven million customers.
The Company's operating revenues consist primarily of fees charged for its
collection and disposal services. Revenues for collection services include fees
from residential, commercial, industrial, and municipal collection customers. A
portion of these fees are billed in advance; a liability for future service is
recorded upon receipt of payment and operating revenues are recognized as
services are provided. Fees for residential services are normally based on the
type and frequency of service. Fees for commercial and industrial services are
normally based on the type and frequency of service and the volume of solid
waste collected.
The Company's operating revenues from its landfill operations consist of
disposal fees (known as tipping fees) charged to third parties and are normally
billed monthly. Tipping fees are based on the volume or weight of solid waste
being disposed of at the Company's landfill sites. Fees are charged at transfer
stations based on the volume or weight of solid waste deposited, taking into
account the Company's cost of loading, transporting, and disposing of the solid
waste at a landfill. Intercompany revenues between the Company's collection,
transfer, and landfill operations have been eliminated in the Consolidated
Financial Statements presented elsewhere herein.
Operating expenses include direct and indirect labor and the related taxes
and benefits, fuel, maintenance and repairs of equipment and facilities, tipping
fees paid to third party landfills, property taxes, and accruals for future
landfill closure and post-closure costs. Certain direct landfill development
expenditures are capitalized and depreciated over the estimated useful life of a
site as capacity is consumed, and include acquisition, engineering, upgrading,
construction, capitalized interest, and permitting costs. All indirect
development expenses, such as administrative salaries and general corporate
overhead, are expensed in the period incurred.
General and administrative costs include management salaries, clerical and
administrative costs, professional services, facility rentals, and related
insurance costs, as well as costs related to the Company's marketing and sales
force.
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RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the period to
period change in dollars (in thousands) and percentages for the various
Consolidated Statements of Operations line items and for certain supplementary
data.
PERIOD TO PERIOD CHANGE
-----------------------------------------------
FOR THE YEARS ENDED FOR THE YEARS ENDED
DECEMBER 31, 1997 AND DECEMBER 31, 1996 AND
1996 1995
---------------------- ---------------------
STATEMENT OF OPERATIONS:
Operating revenues................................. $964,637 58.5% $433,049 35.6%
-------- --------
Costs and expenses:
Operating (exclusive of depreciation and
amortization shown below)..................... 464,368 52.7 209,284 31.1
General and administrative....................... 84,845 42.4 30,415 17.9
Depreciation and amortization.................... 112,197 58.7 47,166 32.8
Merger costs..................................... (17,215) (13.6) 100,087 377.1
Unusual items.................................... (39,080) (61.3) 59,067 1,248.0
-------- --------
605,115 41.4 446,019 43.9
-------- --------
Income from operations............................. 359,522 193.1 (12,970) (6.5)
-------- --------
Other income (expense):
Interest expense:
Nonrecurring.................................. -- -- 10,994 100.0
Other......................................... (43,764) (72.3) (1,878) (3.2)
Interest income.................................. 935 14.0 17 0.3
Other income, net................................ 7,837 122.9 1,485 30.4
-------- --------
(34,992) (73.8) 10,618 18.3
-------- --------
Income before income taxes and extraordinary
item............................................. 324,530 233.9 (2,352) (1.7)
Provision for income taxes......................... 119,546 169.8 (10,085) (16.7)
-------- --------
Income before extraordinary item................... 204,984 300.0 (12,437) (15.4)
Extraordinary item, net of taxes................... (6,293) (100.0) -- --
-------- --------
Net income......................................... $198,691 290.7% $(12,437) (15.4)%
======== ========
SUPPLEMENTARY DATA:
EBITDA(1).......................................... $471,719 125.1% $ 34,196 10.0%
EBITDA, excluding merger costs and unusual
items(1)......................................... 415,424 73.2 193,350 51.7
- ---------------
(1) EBITDA represents income from operations plus depreciation and amortization
expense. EBITDA, which is not a measure of financial performance under
generally accepted accounting principles, is provided because the Company
understands that such information is used by certain investors when
analyzing the financial position and performance of the Company.
22
25
The following table presents, for the periods indicated, the percentage
relationship that the various Consolidated Statements of Operations line items
and certain supplementary data bear to operating revenues.
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------
STATEMENT OF OPERATIONS:
Operating revenues:
Collection................................................ 62.2% 54.8% 54.3%
Transfer.................................................. 10.2 10.3 8.9
Disposal.................................................. 23.8 27.9 27.9
Other..................................................... 3.8 7.0 8.9
----- ----- -----
100.0 100.0 100.0
----- ----- -----
Costs and expenses:
Operating (exclusive of depreciation and amortization
shown below)........................................... 51.5 53.4 55.2
General and administrative................................ 10.9 12.1 14.0
Depreciation and amortization............................. 11.6 11.6 11.8
Merger costs.............................................. 4.2 7.7 2.2
Unusual items............................................. 0.9 3.9 0.4
----- ----- -----
79.1 88.7 83.6
----- ----- -----
Income from operations...................................... 20.9 11.3 16.4
----- ----- -----
Other income (expense):
Interest expense:
Nonrecurring........................................... -- -- (0.9)
Other.................................................. (4.0) (3.7) (4.8)
Interest Income........................................... 0.3 0.4 0.5
Other income, net......................................... 0.5 0.4 0.4
----- ----- -----
(3.2) (2.9) (4.8)
----- ----- -----
Income before income taxes and extraordinary item........... 17.7 8.4 11.6
Provision for income taxes.................................. 7.2 4.3 5.0
----- ----- -----
Income before extraordinary item............................ 10.5 4.1 6.6
Extraordinary item, net of taxes............................ (0.2) -- --
----- ----- -----
Net income.................................................. 10.3% 4.1% 6.6%
===== ===== =====
SUPPLEMENTARY DATA:
EBITDA(1)................................................... 32.5% 22.9% 28.2%
EBITDA, excluding merger costs and unusual items(1)......... 37.6 34.4 30.8
- ---------------
(1) EBITDA represents income from operations plus depreciation and amortization
expense. EBITDA, which is not a measure of financial performance under
generally accepted accounting principles, is provided because the Company
understands that such information is used by certain investors when
analyzing the financial position and performance of the Company.
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1997
Operating Revenues
Operating revenues increased $964,637,000, or 58.5%, in 1997 as compared to
the respective prior year. This increase was primarily attributable to the
effect of acquisitions of domestic and Canadian solid waste businesses and the
internal growth of comparable operations. Acquisitions of domestic solid waste
businesses consummated during 1997 and the effect of such acquisitions
consummated during 1996 accounted for increases in operating revenues of
$624,200,000, or 37.8%. Acquisitions of Canadian solid waste businesses
consummated during 1997 and the effect of such acquisitions consummated during
1996, accounted for increases in operating revenues of $309,100,000, or 18.7%.
Internal growth of comparable operations resulted
23
26
in increases in operating revenues of $155,600,000, consisting of 3.3% due to
pricing and 6.1% due to volume. Offsetting these increases was the disposition
of certain nonstrategically located solid waste collection and disposal
operations and certain non-core businesses in 1997. Although the Company
operated in one line of business, integrated nonhazardous solid waste management
which encompasses the entire waste stream from collection to transfer station
and landfill, the change in the Company's mix of operating revenues from 1996 to
1997 reflects an increase in collection revenues as a percentage of total
revenues from 54.8% to 62.2%. This change is primarily the result of
acquisitions of certain solid waste businesses with large collection operations
in the first and second quarters of 1997, including the Canadian solid waste
subsidiaries of Allied and a majority of the Canadian solid waste businesses of
WMI.
Operating revenues increased $433,049,000, or 35.6%, in 1996 as compared to
the previous year. This increase was primarily attributable to 1996 acquisitions
and the full year effect of 1995 acquisitions which resulted in increases in
operating revenues of $349,757,000 or 28.8%. Internal growth of comparable
operations resulted in an increase in operating revenues of $100,637,000,
representing a 2.0% price increase and 6.3% volume increase. These increases
were partially offset by a decrease in operating revenues from non-core
businesses and a decrease in operating revenues related to divestitures.
As discussed above, the Company has made significant investments in
Canadian solid waste businesses in 1997 primarily through the acquisitions of
the Canadian solid waste subsidiaries of Allied in the first quarter and a
majority of WMI's Canadian solid waste businesses in the second quarter. As a
result, operating revenues from foreign operations have significantly increased
as a percentage of total operating revenues from 1995 to 1997. The following
table summarizes the Company's operating revenues by geographic area and the
percentage relationship of operating revenue by geographic area to total
operating revenues (dollars in thousands):
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1997 1996 1995
------------------ ------------------ ------------------
United States and Puerto Rico........ $2,265,526 86.7% $1,624,742 98.5% $1,210,827 99.6%
Canada............................... 337,504 12.9 15,039 0.9 -- --
Mexico............................... 10,738 0.4 9,350 0.6 5,255 0.4
---------- ----- ---------- ----- ---------- -----
Total operating revenues... $2,613,768 100.0% $1,649,131 100.0% $1,216,082 100.0%
========== ===== ========== ===== ========== =====
Operating Costs and Expenses (Exclusive of Depreciation and Amortization Shown
Below)
Operating costs and expenses increased $464,368,000, or 52.7%, in 1997 as
compared to the prior year. The increase in operating costs and expenses was
primarily attributable to new acquisitions, however, was offset by the increased
utilization of internal disposal capacity and cost reductions in comparable
operations. The effect of new acquisitions resulted in increases to operating
costs and expenses of $555,939,000, of which, $163,473,000 related to
acquisitions of Canadian solid waste businesses. A decrease in operating costs
and expenses from comparable operations of $56,701,000 resulted primarily from
the increased utilization of internal disposal capacity from 49.8% in 1996 to
53.8% in 1997, and operating synergies realized from tuck-in acquisitions and
the Company's mergers with United, Sanifill, and Western Waste Industries
("Western") in August 1997, August 1996, and May 1996, respectively.
Additionally, a decrease in operating costs and expenses in 1997 as compared to
1996 was the result of the disposition of certain nonstrategically located solid
waste collection and disposal operations and certain non-core businesses.
Operating costs and expenses decreased as a percentage of operating revenues
from 53.4% in 1996 to 51.5% in 1997. This decrease in operating costs and
expenses as a percentage of operating revenues was slightly offset by the effect
in the change in revenue mix as discussed above. Typically, as a percentage of
operating revenues, collection operations have higher operating costs and lower
margin returns than disposal operations.
Operating costs and expenses increased $209,284,000, or 31.1%, in 1996 as
compared to 1995, however, have decreased as a percentage of operating revenues
from 55.2% in 1995 to 53.4% in 1996. The net increases in operating costs and
expenses was primarily attributable to the effect of new acquisitions, net of
dispositions, which resulted in an increase of $283,563,000. This increase was
offset by a decrease of $14,215,000 related to increased internalization of
internal disposal capacity from 44.9% in 1995 to 49.8% in 1996, a decrease of
24
27
$4,506,000 related to the Company's decision to discontinue certain non-core
businesses, and a decrease of $45,258,000 related to improvements in comparable
operations primarily as a result of operating synergies realized from tuck-in
acquisitions and mergers with Chambers, Sanifill, and Western in June 1995,
August 1996, and May 1996, respectively.
General and Administrative
General and administrative expenses increased $84,845,000, or 42.4%, in
1997 as compared to 1996, and increased $30,415,000, or 17.9%, in 1996 as
compared to 1995. As a percentage of operating revenues, however, general and
administrative expenses decreased from 14.0% in 1995 to 12.1% in 1996 to 10.9%
in 1997. The decrease in general and administrative expenses as a percentage of
operating revenues is primarily the result of the Company's ability to integrate
new business acquisitions without a proportionate increase in general and
administrative expenses as well as cost reductions resulting from mergers with
United, Sanifill, Western, and Chambers in August 1997, August 1996, May 1996,
and June 1995, respectively.
Depreciation and Amortization
Depreciation and amortization expense increased $112,197,000, or 58.7%, in
1997 as compared to 1996, and increased $47,166,000, or 32.8%, in 1996 as
compared to 1995. As a percentage of operating revenues, however, depreciation
and amortization decreased from 11.8% in 1995 to 11.6% in 1996 and 1997. The
increase in depreciation and amortization is primarily due to acquisitions,
increased landfill volumes, and upgrades to existing operations. The incremental
depreciation and amortization due to the improved utilization of internal
disposal capacity was offset by the improved utilization of equipment through
internal growth in collection and disposal operations.
Merger Costs
In the third quarter of 1997, the Company recorded $89,152,000 related to
its merger with United and $15,000,000 related to the acquisitions of other
businesses accounted for as poolings of interests. The costs related to the
United Merger included $17,566,000 of transaction costs, $26,198,000 of
severance and other termination benefits, $21,629,000 for the integration of
operations, and $23,759,000 of estimated losses related to the disposition of
duplicate facilities and the disposition of a Pennsylvania landfill ordered by
the United States Department of Justice. In the first and second quarters of
1997, the Company recorded $1,996,000 and $3,263,000, respectively, related to
the acquisition of other businesses accounted for as poolings of interests.
In the third quarter of 1996, the Company recorded $84,751,000 of merger
costs related to acquisitions accounted for as poolings of interests. Of that
amount, $80,000,000 related to the Company's merger with Sanifill, which
included $9,500,000 of transaction costs, $20,000,000 of relocation, severance,
and other termination benefits, $13,000,000 for the integration of operations,
and $37,500,000 for the disposal of duplicate facilities. The Company recorded
$35,000,000 of merger costs in the second quarter of 1996 related to its merger
with Western, which included $6,800,000 of transaction costs, $15,000,000 of
severance and other termination benefits, and $13,200,000 of costs related to
integrating operations and $5,296,000 related to the acquisitions of other
businesses accounted for as poolings of interests. In the fourth quarter of
1996, the Company recorded $1,579,000 related to the acquisition of other
businesses accounted for as poolings of interests.
In 1995, the Company recorded $26,539,000 of merger costs related to
acquisitions accounted for as poolings of interests. Of that amount, $25,073,000
related to the Company's merger with Chambers in June 1995, which included
$11,900,000 of transaction costs, $9,473,000 of severance and other termination
benefits, and $3,700,000 of costs for integrating operations.
Unusual Items
In the third quarter of 1997, the Company recorded charges for unusual
items of $24,720,000, which included $10,400,000 of estimated losses for the
closure and abandonment of two transfer stations in Minnesota, $8,400,000 of
estimated losses related to the closure and abandonment of two landfills in
25
28
Massachusetts, and $5,920,000 of reserves for various other terminated projects.
In the third quarter of 1996, the Company recorded charges for unusual items of
$50,848,000, which included $28,900,000 for estimated losses related to the
disposition of certain non-core business assets, $15,000,000 of project reserves
related to certain operations in Mexico, and $6,948,000 of reserves for various
other terminated projects. In the second quarter of 1996, unusual items included
$4,824,000 of retirement benefits associated with Western's pre-merger
retirement and severance plans and $8,128,000 of estimated future losses related
to municipal solid waste contracts in California as a result of the decline in
the prices of recyclable materials.
Income from Operations
Income from operations increased $359,522,000 in 1997 and decreased
$12,970,000 in 1996 as compared to the respective prior year periods due to the
reasons discussed above. Exclusive of merger costs and unusual items, income
from operations as a percentage of operating revenues was 26.0%, 22.8%, and
18.9% in 1997, 1996, and 1995, respectively. The improvement in recurring
operations was the result of economies of scale realized by the Company as a
result of recent mergers and acquisitions, increased utilization of internal
disposal capacity, and improvements in comparable operations.
Other Income and Expense
Other income and expense consists of interest expense, interest income, and
other income. Interest expense, gross of amounts capitalized, increased due to
the Company's outstanding indebtedness. Interest capitalized was $25,198,000,
$21,189,000, and $13,808,000 in 1997, 1996, and 1995, respectively. The increase
in capitalized interest during each period is due to development activity
incurred in connection with disposal sites acquired in each respective year.
Nonrecurring interest of $10,994,000 in 1995 consists of various extension fees
and other charges related to the refinancing of certain Chambers senior notes in
the second quarter of 1995.
Provision for Income Taxes
The Company recorded a provision for income taxes before extraordinary
items of $189,944,000 in 1997, compared to $70,398,000 and $60,313,000 in 1996
and 1995, respectively. The difference in the provision for income taxes at the
federal statutory rate and the recorded amount primarily relates to
nondeductible merger costs and state and local income taxes.
Income before Extraordinary Item
For reasons discussed above, income before extraordinary item was
$80,776,000 in 1995, $68,339,000 in 1996, and $273,323,000 in 1997. Income
before extraordinary item, exclusive of nonrecurring charges and assuming a 40%
effective tax rate, increased $160,941,000 and $87,485,000 in 1997 and 1996,
respectively, as compared to the corresponding prior year.
Extraordinary Item
During the third quarter of 1997, the Company recorded extraordinary losses
related to the early retirement of two privately placed senior note issuances of
approximately $9,286,000, comprised of prepayment penalties of approximately
$7,975,000 and unamortized deferred offering costs of approximately $1,311,000.
Additionally, during the third quarter of 1997, the Company recorded
extraordinary losses of approximately $1,206,000 primarily related to the
write-off of the unamortized deferred financing costs related to United's credit
facility which was retired upon consummation of its merger with the Company.
Net Income
Net income was $80,776,000, $68,339,000, and $267,030,000 for 1995, 1996,
and 1997, respectively, for reasons discussed above.
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29
Variation in Quarterly Results
The Company has grown significantly through acquisitions, including the
consummation of one merger in 1997 and two mergers in 1996 with other publicly
owned companies as discussed in Note 2 to the Consolidated Financial Statements
included elsewhere herein. These mergers were accounted for as poolings of
interests and, accordingly, operating results for periods prior to these
mergers, including quarterly results, have been restated. Moreover, the Company
incurred nonrecurring charges related to these mergers of $89,152,000 in the
third quarter of 1997 and $35,000,000 and $80,000,000 in the second and third
quarters of 1996, respectively. Additionally, the Company recognized other
nonrecurring charges of $18,248,000 in the second quarter, $55,599,000 in the
third quarter, and $1,579,000 in the fourth quarter of 1996, and $1,996,000 in
the first quarter, $3,263,000 in the second quarter, and $39,720,000 in the
third quarter of 1997, as further discussed in Notes 2, 11 and 13 to the
Consolidated Financial Statements included elsewhere herein.
The merger costs and unusual items (and the tax effects of such charges)
have significantly affected the quarterly trend analysis of the Company's
operating results for 1996 and 1997. A comparison of the reported quarterly
earnings (loss) per share for 1996 and 1997 compared to pro forma earnings per
share, which exclude such merger costs and unusual items and reflect income
taxes at a 40% effective tax rate, is as follows:
AS REPORTED PRO FORMA
---------------- ---------------
BASIC DILUTED BASIC DILUTED
------ ------- ----- -------
1996
First Quarter...................................... $ 0.20 $ 0.19 $0.20 $0.19
Second Quarter..................................... 0.03 0.03 0.27 0.26
Third Quarter...................................... (0.16) (0.16) 0.33 0.31
Fourth Quarter..................................... 0.32 0.30 0.33 0.31
1997
First Quarter...................................... $ 0.30 $ 0.29 $0.31 $0.29
Second Quarter..................................... 0.43 0.40 0.44 0.41
Third Quarter...................................... 0.09 0.09 0.50 0.47
Fourth Quarter..................................... 0.47 0.45 0.47 0.45
The Company's business strategy is to continue to grow through
acquisitions. Consequently, future quarterly results could be impacted by
additional merger costs and related expenses associated with such merger and
acquisition activity.
LIQUIDITY AND CAPITAL RESOURCES
The Company operates in an industry that requires a high level of capital
investment. The Company's capital requirements basically stem from (i) its
working capital needs for its ongoing operations, (ii) capital expenditures for
cell construction and expansion of its landfill sites, as well as new trucks and
equipment for its collection operations, and (iii) business acquisitions. The
Company's strategy is to meet these capital needs first from internally
generated funds and secondly from various financing sources available to the
Company, including the incurrence of debt and the issuance of its common stock.
It is further part of the Company's strategy to minimize working capital while
maintaining available commitments under bank credit agreements to fund any
capital needs in excess of internally generated cash flow.
As of December 31, 1997, the Company had working capital of $86,736,000 (a
ratio of current assets to current liabilities of 1.15:1) and a cash balance of
$51,241,000, which compares to working capital of $31,842,000 (a ratio of
current assets to current liabilities of 1.08:1) and a cash balance of
$26,079,000 as of December 31, 1996. For the year ended December 31, 1997, net
cash from operating activities was approximately $452,832,000, as compared to
$283,351,000 in 1996 and $128,692,000 in 1995, and net cash from financing
activities was approximately $1,603,985,000, as compared to $514,849,000 in 1996
and $382,811,000 in 1995. In 1997, net cash from operating activities and
financing activities was primarily used to fund acquisitions of businesses of
$1,818,996,000, which includes approximately $97,000,000 for a 49% interest in a
partnership formed for the purpose of acquiring shares of WMI (see "Recent
Developments"),
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and for capital expenditures of $436,317,000. The 49% partnership interest is
included in other assets at December 31, 1997, in the Consolidated Financial
Statements included herein. Net cash from operating activities and financing
activities in 1996 and 1995 was also primarily used to fund acquisitions of
businesses of $403,672,000 and $268,687,000, respectively, and for capital
expenditures of $443,247,000 and $252,648,000, respectively.
In general, the Company's capital expenditure and working capital
requirements have increased reflecting the Company's business strategy of growth
through acquisitions and development projects. The Company intends to finance
its 1998 capital expenditures through internally generated cash flow and amounts
available under its senior revolving credit facility.
SIGNIFICANT FINANCING EVENTS
At December 31, 1996, the Company had borrowed $637,000,000 and had letters
of credit issued of $277,994,000 under its $1,200,000,000 senior revolving
credit facility. The credit facility was used to refinance existing bank loans
and letters of credit and to fund additional acquisitions and working capital.
The credit facility was available for standby letters of credit of up to
$400,000,000. Loans under the credit facility bore interest at a rate based on
the Eurodollar rate plus a spread not to exceed 0.75% per annum (spread set at
0.30% per annum, or an applicable interest rate of 5.87% per annum at December
31, 1996). The credit facility required a facility fee not to exceed 0.375% per
annum on the entire available credit facility (facility fee set at 0.15% per
annum at December 31, 1996). The credit facility contained financial covenants
with respect to interest coverage and debt capitalization ratios. The credit
facility also contained limitations on dividends, additional indebtedness,
liens, and asset sales. Principal reductions were not required during the
five-year term of the credit facility. On March 5, 1997, the credit facility was
replaced with a $1,600,000,000 senior revolving credit facility with the same
general terms, covenants, and limitations, which was available for standby
letters of credit of up to $500,000,000. On August 7, 1997, the credit facility
was again replaced with a $2,000,000,000 senior revolving credit facility with
the same general items, covenants, and limitations, which is available for
standby letters of credit up to $650,000,000. At December 31, 1997, the Company
had borrowed $430,000,000 and had letters of credit of $467,029,000 under its
$2,000,000,000 senior revolving credit facility. The applicable interest rate
and facility fee at December 31, 1997, was 6.1% per annum and 0.1125% per annum,
respectively.
On February 7, 1997, the Company issued $535,275,000 of 4% convertible
subordinated notes, due on February 1, 2002 ("Convertible Notes Offering").
Interest is payable semi-annually in February and August. The notes are
convertible by the holders into shares of the Company's common stock at any time
at a conversion price of $43.56 per share. The notes are subordinated in right
of payment to all existing and future senior indebtedness, as defined. The notes
are redeemable after February 1, 2000 at the option of the Company at 101.6% of
the principal amount, declining to 100.8% of the principal amount on February 1,
2001 and thereafter until maturity at which time the notes will be redeemed at
par, plus accrued interest. Deferred offering costs of approximately $14,000,000
were incurred and are being amortized ratably over the life of the notes. The
proceeds were primarily used to repay debt under the Company's credit facility,
to fund acquisitions, and for general corporate purposes.
On February 7, 1997, concurrent with the Convertible Notes Offering, the
Company completed a public offering of 11,500,000 shares of its common stock,
priced at $35.125 per share. The net proceeds of approximately $387,438,000 were
primarily used to repay debt under the Company's credit facility and for general
corporate purposes.
On March 3, 1997, prior to its becoming a wholly owned subsidiary of the
Company, United completed a public offering in which it issued 3,450,000 shares
of its common stock, priced at $36.50 per share (equivalent to 3,708,750 shares
of the Company's common stock, priced at $33.95 per share). The net proceeds of
approximately $119,000,000 were used to repay approximately $47,000,000 of debt
under United's credit facility and for general corporate purposes.
During August 1997 and September 1997, the Company prepaid the holders of
both privately placed senior note issuances an aggregate amount of $182,500,000
with proceeds from its senior revolving credit
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31
facility. Interest on these privately placed senior notes ranged from 7.29% to
8.44%. In connection with this transaction, the Company was required to pay
prepayment penalties of approximately $7,975,000, which was recorded as an
extraordinary item in the third quarter of 1997.
On September 12, 1997, the Company issued $300,000,000 of 7% senior notes
due October 1, 2004, and $300,000,000 of 7 1/8% senior notes due October 1,
2007. The senior notes constitute senior and unsecured obligations of the
Company, ranking equal in right of payment with all other senior and unsecured
obligations of the Company, as defined. The senior notes are redeemable at the
option of the Company at any time and from time to time at par of the principal
amount of such notes, plus accrued interest. Deferred offering costs of
approximately $4,125,000 were incurred and are being amortized ratably over the
life of the senior notes. The proceeds were used to repay debt under the
Company's senior revolving credit facility. In anticipation of this offering,
the Company entered into interest rate locks on July 25, 1997, with various
institutions as a hedging transaction to cover the future issuance of
$600,000,000 of debt. The gain realized from this hedging transaction of
approximately $5,632,000 is being amortized over the life of the related notes
using the effective interest method and has the effect of reducing the
all-inclusive interest rate to 6.90% on the 7% senior notes due October 1, 2004,
and 7.06% on the 7 1/8% senior notes due October 1, 2007. Interest is payable
semiannually on October 1 and April 1.
On December 17, 1997, the Company issued $350,000,000 of 6 1/2% senior
notes due December 15, 2002, and $150,000,000 of 7 1/8% senior notes due
December 15, 2017. The senior notes constitute senior and unsecured obligations
of the Company ranking equal in right of payment with all other senior and
unsecured obligations of the Company, as defined. The 6 1/2% senior notes due
December 15, 2002, are not redeemable. The $150,000,000 of 7 1/8% senior notes
due December 15, 2017, are redeemable, in whole or in part, at the option of the
Company at any time and from time to time at a redemption price equal to the
Make-Whole Price, as defined. Deferred offering costs of approximately
$3,713,000 were incurred and are being amortized ratably over the life of the
senior notes. The proceeds were used to repay debt under the Company's senior
revolving credit facility. In anticipation of this offering, the Company entered
into interest rate locks on December 9, 1997, with various institutions as a
hedging transaction to cover the future issuance of $500,000,000 of debt. The
amount paid by the Company from this hedging transaction of approximately
$6,845,000 is being amortized over the life of the related notes. The all
inclusive interest rate is 6.67% on the 6 1/2% senior notes due December 15,
2002, and is 7.27% on the 7 1/8% senior notes due December 15, 2017. Interest
payable semi-annually on December 15 and June 15.
In July 1997, the Company filed a universal shelf registration statement
with the Securities and Exchange Commission to provide for the issuance of up to
$1,500,000,000 of either debt or equity securities, or a combination thereof, to
be used for general corporate purposes. The Company utilized the universal shelf
registration statement for the issuance of its senior notes in September and
December of 1997. As of December 31, 1997, the Company had available up to
$400,000,000 of either debt or equity securities, or a combination thereof,
under its existing universal shelf registration statement.
ACQUISITION ACTIVITY IN 1997
On March 12, 1997, the Company acquired all of Allied's Canadian solid
waste subsidiaries for approximately $518,000,000 in cash. Those businesses
represented 41 collection operations, seven landfills, and eight transfer
stations in the provinces of Alberta, British Columbia, Manitoba, Ontario,
Quebec, and Saskatchewan, with annualized revenues of approximately
$270,000,000.
On April 1, 1997, the Company acquired substantially all of the assets of
Mid-American Waste Systems, Inc. for approximately $201,000,000, consisting
primarily of cash and the assumption of a limited amount of debt. The assets
acquired included 11 collection operations, 11 landfills, six transfer stations,
and three recycling operations, with annualized revenues of approximately
$115,000,000.
On June 10, 1997, the Company acquired the majority of WMI's Canadian solid
waste businesses for $124,000,000 in cash and 1,705,757 shares of the Company's
common stock. The assets acquired included 13 collection operations, one
landfill, and three transfer stations in the provinces of Alberta, British
Columbia, Ontario, and Quebec, with annualized revenues totaling approximately
$124,000,000.
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32
On August 26, 1997, the Company consummated a merger with United accounted
for as a pooling of interests. Under the terms of the United Merger, the Company
issued 1.075 shares of its common stock for each outstanding share of United
common stock. Additionally, at the effective date of the United Merger, United
stock options, whether or not such stock options had vested or become
exercisable, were cancelled in exchange for the Company's common stock equal in
market value to the fair value of such United stock options, as determined by an
independent third party. The United Merger increased the Company's outstanding
shares of common stock by approximately 51,900,000 shares, which included
approximately 1,900,000 shares exchanged for the United stock options. United
owned and operated nonhazardous waste disposal, treatment, collection, transfer
station, and recycling businesses and complementary operations. At the time of
the United Merger, United owned or operated 39 landfills, 78 transfer stations,
and 80 collection operations.
In addition to the consummation of the aforementioned acquisition
transactions, the Company acquired 236 collection operations, 31 transfer
stations, and 26 landfills with annualized revenues aggregating approximately
$960,000,000 during 1997.
RECENT DEVELOPMENTS
On December 9, 1997, the Company announced that it had executed a
definitive agreement to acquire the solid waste divisions of City Management,
and on January 14, 1998, consummated such transaction for approximately
$735,000,000 consisting primarily of cash and a limited amount of debt assumed.
The businesses acquired include 20 collection operations, ten landfills, and 12
transfer stations primarily in the state of Michigan.
On January 27, 1998, the Company announced that it had entered into a
definitive agreement to acquire TransAmerican for approximately 2,000,000 shares
of the Company's common stock, subject to certain adjustments, and approximately
$43,000,000 in assumption of debt. This acquisition, which is subject to
regulatory approval and approval of TransAmerican shareholders, is expected to
close during the first half of 1998 and is anticipated to be accounted for as a
pooling of interests. The businesses to be acquired include five collection
operations, nine landfills, and two transfer stations located throughout the
southern region of the United States.
The Company entered into a definitive agreement on February 6, 1998, with
American, to acquire American's solid waste businesses for approximately
$150,000,000 in cash. This transaction, which is subject to regulatory approval
and approval of American's shareholders, is also expected to close in the first
half of 1998. The operations to be acquired include three landfills and one
collection operation located in Ohio.
On March 10, 1998, the Company entered into a definitive agreement and plan
of merger pursuant to which a subsidiary of the Company will be merged with and
into WMI and WMI will become a wholly owned subsidiary of the Company. As of the
effective time of the WMI Merger, each outstanding share of WMI, other than
shares held in WMI's treasury or owned by WMI, the Company or any of their
wholly owned subsidiaries, will be converted into the right to receive 0.725
shares of the Company. This transaction, which is expected to close during 1998,
is subject to regulatory approval and approval of the stockholders of the
Company and WMI. It is anticipated that the Company will issue approximately
345,000,000 shares of its common stock related to this transaction and that this
merger will be accounted for as a pooling of interests.
The Company's business plan is to grow through acquisitions as well as
development projects. The Company has issued equity securities in business
acquisitions and expects to do so in the future. Furthermore, the Company's
future growth will depend greatly upon its ability to raise additional capital.
The Company continually reviews various financing alternatives and depending
upon market conditions could pursue the sale of debt and/or equity securities to
help effectuate its business strategy. Management believes that it can arrange
the necessary financing required to accomplish its business plan; however, to
the extent the Company is not successful in its future financing strategies the
Company's growth could be limited.
On August 4, 1997, the Company filed a shelf registration statement with
the Securities and Exchange Commission to provide for the issuance of up to
20,000,000 shares of the Company's common stock that may
30
33
be offered and issued by the Company from time to time in connection with the
acquisition directly or indirectly by the Company of other businesses or
properties or interests therein, and which may be reserved for issuance pursuant
to, or offered and issued upon exercise or conversion of, warrants, options,
convertible notes, or other similar instruments issued by the Company from time
to time in connection with such acquisitions. As of March 1, 1998, the Company
had approximately 17,700,000 shares of its common stock available for future
offerings and issuances under this shelf registration statement.
ENVIRONMENTAL MATTERS
The Company has material financial commitments for the costs associated
with its future closure and post-closure obligations with respect to the
landfills it operates or for which it is otherwise responsible. The Company
bases accruals for these commitments on periodic management reviews, typically
performed at least annually, based on input from its engineers and accountants
and interpretations of current regulatory requirements and proposed regulatory
changes. The accrual for closure and post-closure costs includes final capping
and cover for the site, methane gas control, leachate management and ground
water monitoring, and other operational and maintenance costs to be incurred
after each site discontinues accepting waste. The Company does not discount its
accruals for closure and post-closure obligations.
While the precise amount of these future costs cannot be determined with
certainty, the Company has estimated that the aggregate final closure and
post-closure costs for all sites owned or operated as of December 31, 1997, will
be approximately $477,629,000. As of December 31, 1997 and 1996, the Company had
recorded liabilities of $220,378,000 and $167,290,000, respectively, for closure
and post-closure costs of disposal facilities. The difference between the
closure and post-closure costs accrued at December 31, 1997, and the total
estimated final closure and post-closure costs to be incurred will be accrued
and charged to expense as airspace is consumed such that the total estimated
final closure and post-closure to be incurred will be fully accrued for each
landfill at the time the site stops accepting waste and is closed. As of
December 31, 1997, the Company also expects to incur approximately $956,346,000
related to future capping activities during the remaining operating lives of the
disposal sites, which are also being expensed over the useful lives of the
disposal sites as airspace is consumed.
Management believes that the ultimate disposition of these environmental
matters will not have a material, adverse effect on the financial condition of
the Company. However, the Company's operation of landfills subjects it to
certain operational, monitoring, site maintenance, closure and post-closure
obligations that could give rise to increased costs for monitoring and
corrective measures. The Company cannot predict the effect of any regulations or
legislation enacted in the future on the Company's operations.
SEASONALITY AND INFLATION
The Company's operating revenues tend to be somewhat lower in the winter
months. This is generally reflected in the Company's first quarter and fourth
quarter operating results. This is primarily attributable to the fact that (i)
the volume of waste relating to construction and demolition activities tends to
increase in the spring and summer months and (ii) the volume of industrial and
residential waste in certain regions where the Company operates tends to
decrease during the winter months.
The Company believes that inflation and changing prices have not had, and
are not expected to have, any material adverse effect on the results of
operations in the near future.
YEAR 2000 DATE CONVERSION
In 1997, the Company began to modify its computer information systems to
ensure proper processing of transactions relating to the year 2000 and beyond
and expects to complete the required modifications during 1998. The amount
charged to expense in 1997, as well as the amounts anticipated to be charged to
expense in 1998 related to the year 2000 computer compliance modifications, have
not been and are not expected to be material to the Company's financial
position, results of operations or cash flows.
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NEW ACCOUNTING PRONOUNCEMENTS
In October 1996, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
No. 96-1, Environmental Remediation Liabilities ("SOP No. 96-1"). SOP No. 96-1
provides authoritative guidance on the recognition, measurement, presentation,
and disclosure of environmental remediation liabilities. The adoption of SOP No.
96-1 in 1997 did not have a material effect on the Company's financial position,
results of operations or cash flows.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
No. 130"). SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources and includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. SFAS No. 130 is effective for the Company for the year
ended December 31, 1998. Assuming the Company adopted SFAS No. 130 in 1995,
comprehensive income would have been $263,861,000, $67,273,000, and $73,353,000
for the years ended December 31, 1997, 1996, and 1995, respectively.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. SFAS No.
131 is effective for fiscal years beginning after December 15, 1997. Adoption is
not recognized for interim periods in the initial year of application. Adoption
of this statement will not have a material impact on the consolidated financial
statements of the Company.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
(1) Consolidated Financial Statements:
Report of Independent Accountants...................... 34
Consolidated Balance Sheets as of December 31, 1997 and
1996.................................................. 35
Consolidated Statements of Operations for the Years
Ended December 31, 1997, 1996 and 1995................ 36
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995.......... 37
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995................ 38
Notes to Consolidated Financial Statements............. 39
(2) Consolidated Financial Statement Schedules:
All Consolidated Financial Statement Schedules have been omitted since the
required information is not present or not present in amounts sufficient to
require submission of the schedule, or because the information required is
included in the Consolidated Financial Statements or the notes thereto.
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36
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders of USA Waste Services, Inc.:
We have audited the accompanying consolidated balance sheets of USA Waste
Services, Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of USA Waste
Services, Inc. as of December 31, 1997 and 1996, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Houston, Texas
March 16, 1998
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37
USA WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PAR VALUE AMOUNTS)
ASSETS
DECEMBER 31,
-----------------------
1997 1996
---------- ----------
Current assets:
Cash and cash equivalents................................. $ 51,241 $ 26,079
Accounts receivable, net of allowance for doubtful
accounts of $34,923 and $17,502, respectively.......... 442,347 265,002
Notes and other receivables............................... 56,361 38,495
Deferred income taxes..................................... 52,592 48,561
Prepaid expenses and other................................ 52,845 49,365
---------- ----------
Total current assets.............................. 655,386 427,502
Notes and other receivables................................. 32,386 49,059
Property and equipment, net................................. 3,955,008 2,198,231
Excess of cost over net assets of acquired businesses,
net....................................................... 1,539,927 715,910
Other intangible assets, net................................ 106,058 88,341
Other assets................................................ 334,080 152,504
---------- ----------
Total assets...................................... $6,622,845 $3,631,547
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 237,176 $ 118,823
Accrued liabilities....................................... 228,771 206,591
Deferred revenues......................................... 63,417 35,640
Current maturities of long-term debt...................... 39,286 34,606
---------- ----------
Total current liabilities......................... 568,650 395,660
Long-term debt, less current maturities..................... 2,724,443 1,470,282
Deferred income taxes....................................... 320,439 45,421
Closure, post-closure, and other liabilities................ 380,337 246,194
---------- ----------
Total liabilities................................. 3,993,869 2,157,557
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value; 10,000,000 shares
authorized; none issued................................ -- --
Common stock, $.01 par value; 500,000,000 shares
authorized; 217,805,496 and 181,630,519 shares issued,
respectively........................................... 2,178 1,816
Additional paid-in capital................................ 2,392,797 1,504,449
Retained earnings (accumulated deficit)................... 253,497 (15,948)
Foreign currency translation adjustment................... (19,012) (15,843)
Less treasury stock at cost, 23,485 shares................ (484) (484)
---------- ----------
Total stockholders' equity........................ 2,628,976 1,473,990
---------- ----------
Total liabilities and stockholders' equity........ $6,622,845 $3,631,547
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
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USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
---------- ---------- ----------
Operating revenues....................................... $2,613,768 $1,649,131 $1,216,082
---------- ---------- ----------
Costs and expenses:
Operating (exclusive of depreciation and amortization
shown below)........................................ 1,345,769 881,401 672,117
General and administrative............................. 284,946 200,101 169,686
Depreciation and amortization.......................... 303,241 191,044 143,878
Merger costs........................................... 109,411 126,626 26,539
Unusual items.......................................... 24,720 63,800 4,733
---------- ---------- ----------
2,068,087 1,462,972 1,016,953
---------- ---------- ----------
Income from operations................................... 545,681 186,159 199,129
---------- ---------- ----------
Other income (expense):
Interest expense:
Nonrecurring........................................ -- -- (10,994)
Other............................................... (104,261) (60,497) (58,619)
Interest income........................................ 7,634 6,699 6,682
Other income, net...................................... 14,213 6,376 4,891
---------- ---------- ----------
(82,414) (47,422) (58,040)
---------- ---------- ----------
Income before income taxes and extraordinary item........ 463,267 138,737 141,089
Provision for income taxes............................... 189,944 70,398 60,313
---------- ---------- ----------
Income before extraordinary item......................... 273,323 68,339 80,776
Extraordinary item related to early retirement of debt,
net of tax benefit of $4,195........................... (6,293) -- --
---------- ---------- ----------
Net income............................................... 267,030 68,339 80,776
Preferred dividends...................................... -- -- 373
---------- ---------- ----------
Net income available to common stockholders.............. $ 267,030 $ 68,339 $ 80,403
========== ========== ==========
Basic earnings per common share:
Income before extraordinary item....................... $ 1.31 $ 0.39 $ 0.56
Extraordinary item..................................... (0.03) -- --
---------- ---------- ----------
Net income............................................. $ 1.28 $ 0.39 $ 0.56
========== ========== ==========
Diluted earnings per common share:
Income before extraordinary item....................... $ 1.26 $ 0.37 $ 0.54
Extraordinary item..................................... (0.03) -- --
---------- ---------- ----------
Net income............................................. $ 1.23 $ 0.37 $ 0.54
========== ========== ==========
Weighted average number of common shares outstanding..... 208,246 173,993 143,346
========== ========== ==========
Weighted average number of common and dilutive potential
common shares outstanding.............................. 233,371 182,680 150,575
========== ========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
36
39
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
RETAINED FOREIGN
ADDITIONAL EARNINGS CURRENCY
PREFERRED COMMON PAID-IN (ACCUMULATED TRANSLATION TREASURY
STOCK STOCK CAPITAL DEFICIT) ADJUSTMENT STOCK
--------- ------ ---------- ------------ ----------- --------
Balance, January 1, 1995.................... $ 1 $1,173 $ 836,829 $(140,083) $ (7,354) $(1,961)
Common stock options and warrants
exercised, including tax benefits...... -- 18 14,566 -- -- 142
Common stock issued in business
combinations and development
projects............................... -- 97 159,661 -- -- --
Common stock issued in public offerings
and conversion of subordinated
debentures............................. -- 137 229,876 -- -- --
Conversion of preferred stock into common
stock.................................. (1) 10 (8) -- -- --
Elimination of investment in Western
common stock........................... -- (10) (11,358) -- -- --
Change in Western fiscal year............. -- -- -- (8,865) -- --
Foreign currency translation adjustment... -- -- -- -- (7,423) --
Transactions of pooled companies.......... -- -- 2,660 (8,072) -- --
Preferred stock dividends................. -- -- -- (373) -- --
Other..................................... -- 4 9,443 -- -- --
Net income................................ -- -- -- 80,776 -- --
--- ----- ---------- --------- -------- -------
Balance, December 31, 1995.................. -- 1,429 1,241,669 (76,617) (14,777) (1,819)
Common stock options and warrants
exercised, including tax benefits...... -- 52 68,064 -- -- 2,086
Common stock issued in business
combinations and development
projects............................... -- 89 128,390 -- -- --
Common stock returned for acquisition
settlement............................. -- -- -- -- -- (751)
Common stock issued for conversion of
subordinated debentures................ -- 35 59,590 -- -- --
Foreign currency translation adjustment... -- -- -- -- (1,066) --
Transactions of pooled companies.......... -- 8 1,558 (7,670) -- --
United two-for-one stock split............ -- 196 (196) -- -- --
Other..................................... -- 7 5,374 -- -- --
Net income................................ -- -- -- 68,339 -- --
--- ----- ---------- --------- -------- -------
Balance, December 31, 1996.................. -- 1,816 1,504,449 (15,948) (15,843) (484)
Common stock options and warrants
exercised, including tax benefits...... -- 35 74,614 -- -- --
Common stock issued in business
combinations and development
projects............................... -- 146 260,264 -- -- --
Common stock issued in public offering.... -- 152 506,196 -- -- --
Common stock issued for United stock
options................................ -- 19 25,809 -- -- --
Foreign currency translation adjustment... -- -- -- -- (3,169) --
Transactions of pooled companies.......... -- -- (1,735) 2,415 -- --
Other..................................... -- 10 23,200 -- -- --
Net income................................ -- -- -- 267,030 -- --
--- ----- ---------- --------- -------- -------
Balance, December 31, 1997.................. $-- 2,178 $2,392,797 $ 253,497 $(19,012) $ (484)
=== ===== ========== ========= ======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
37
40
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- ---------
Cash flows from operating activities:
Net income................................................ $ 267,030 $ 68,339 $ 80,776
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 303,241 191,044 143,878
Deferred income taxes................................... 72,846 12,960 16,217
Net gain on disposal of assets.......................... (14,320) (6,040) (1,434)
Effect of nonrecurring charges.......................... 48,479 61,144 --
Change in assets and liabilities, net of effects of
acquisitions and divestitures:
Accounts receivable and other receivables............. (94,073) (81,704) (14,279)
Prepaid expenses and other............................ 6,189 (5,388) (2,199)
Other assets.......................................... (36,511) 10,311 (7,406)
Accounts payable and accrued liabilities.............. (117,860) 63,149 (11,643)
Accrued shareholder litigation settlement............. -- -- (85,300)
Deferred revenues and other liabilities............... 19,747 (29,283) 11,855
Other, net............................................ (1,936) (1,181) (1,773)
----------- ----------- ---------
Net cash provided by operating activities................... 452,832 283,351 128,692
----------- ----------- ---------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired.......... (1,818,996) (403,672) (268,687)
Capital expenditures...................................... (436,317) (443,247) (252,648)
Loans and advances to others.............................. (41,571) (18,399) (19,660)
Collection of loans and advances to others................ 43,480 15,010 4,880
Proceeds from sale of assets.............................. 244,756 80,294 11,181
Other..................................................... (22,828) (30,002) (1,178)
----------- ----------- ---------
Net cash used in investing activities....................... (2,031,476) (800,016) (526,112)
----------- ----------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 3,441,930 1,483,573 778,721
Principal payments on long-term debt...................... (2,384,846) (1,015,277) (642,313)
Net proceeds from issuance of common stock................ 506,348 -- 251,999
Proceeds from exercise of common stock options and
warrants................................................ 36,955 53,518 13,811
Other..................................................... 3,597 (6,965) (19,407)
----------- ----------- ---------
Net cash provided by financing activities................... 1,603,984 514,849 382,811
----------- ----------- ---------
Effect of exchange rate changes on cash and cash
equivalents............................................... (178) 115 (178)
----------- ----------- ---------
Increase (decrease) in cash and cash equivalents............ 25,162 (1,701) (14,787)
Cash and cash equivalents at beginning of year.............. 26,079 27,780 42,567
----------- ----------- ---------
Cash and cash equivalents at end of year.................... $ 51,241 $ 26,079 $ 27,780
=========== =========== =========
Supplemental cash flow information:
Cash paid during the year for:
Interest................................................ $ 110,798 $ 75,551 $ 67,543
Income taxes............................................ 66,044 33,019 51,573
Non-cash investing and financing activities:
Acquisitions of property and equipment through capital
leases................................................ -- -- 8,378
Note receivable from sale of assets..................... 26,583 27,800 --
Conversion of subordinated debentures to common stock... 500 60,000 51,661
Issuance of common stock for preferred stock
dividends............................................. -- -- 10,378
Acquisitions of businesses and development projects:
Liabilities incurred or assumed....................... 184,562 355,767 101,111
Common stock issued................................... 260,410 128,479 159,758
The accompanying notes are an integral part of these consolidated financial
statements.
38
41
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business -- USA Waste Services, Inc. and subsidiaries (the "Company") is
engaged in the nonhazardous solid waste management business and provides solid
waste management services, consisting of collection, transfer, disposal,
recycling, and other miscellaneous services to commercial, industrial, municipal
and residential customers in various locations throughout the United States,
Canada, and Puerto Rico. As discussed in Note 10, during 1997 the Company
contributed the net book value of its Mexico operations to a non-public solid
waste entity focusing on Mexico's solid waste market in exchange for a 37.5%
interest in that entity.
Principles of consolidation -- The accompanying consolidated financial
statements include the accounts of the Company and its majority-owned
subsidiaries after elimination of all material intercompany balances and
transactions. Investments in affiliated companies in which the Company owns 50%
or less are accounted for under the equity method or cost method of accounting,
as appropriate.
Use of estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts for certain revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and cash equivalents -- Cash and cash equivalents consist primarily of
cash on deposit, certificates of deposit, money market accounts, and investment
grade commercial paper purchased with original maturities of three months or
less.
Restricted funds held by trustees -- Restricted funds held by trustees of
$84,475,000 and $61,098,000 at December 31, 1997 and 1996, respectively, are
included in other assets and consist principally of funds deposited in
connection with landfill closure and post-closure obligations, insurance escrow
deposits, and amounts held for landfill construction arising from industrial
revenue financings. Amounts are principally invested in fixed income securities
of federal, state, and local governmental entities and financial institutions.
The Company considers its landfill closure, post-closure, and construction
escrow investments to be held to maturity. At December 31, 1997 and 1996, the
aggregate fair value of these investments approximates their amortized costs and
substantially all of these investments mature within one year. The Company's
insurance escrow funds are invested in pooled investment accounts that hold debt
and equity securities and are considered to be available for sale. The market
value of those pooled accounts approximates their aggregate cost at December 31,
1997 and 1996.
Concentrations of credit risk -- Financial instruments that potentially
subject the Company to concentrations of credit risk consist primarily of cash
investments and accounts receivable. The Company places its cash investments
with high quality financial institutions and limits the amount of credit
exposure with any one institution. Concentrations of credit risk with respect to
accounts receivable are limited because a large number of geographically diverse
customers make up the Company's customer base, thus spreading the trade credit
risk. No single group or customer represents greater than 10% of total accounts
receivable. The Company controls credit risk through credit approvals, credit
limits, and monitoring procedures. The Company performs in-depth credit
evaluations for commercial and industrial customers and performs ongoing credit
evaluations of its customers' financial condition, but generally does not
require collateral to support accounts receivable. The Company maintains an
allowance for doubtful accounts for potential credit losses.
Interest rate swap agreements -- The Company uses interest rate swap
agreements to minimize the impact of interest rate fluctuations on floating
interest rate long-term borrowings. The differential paid or received on
interest rate swap agreements is recognized as an adjustment to interest
expense.
39
42
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property and equipment -- Property and equipment are recorded at cost.
Expenditures for major additions and improvements are capitalized, while minor
replacements, maintenance, and repairs are charged to expense as incurred. When
property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts and any resulting gain or
loss is included in results of operations. Depreciation is provided over the
estimated useful lives of the related assets using the straight-line method and
assuming no salvage value. The estimated useful lives for property and equipment
is as follows (in years):
Vehicles.................................................... 5 to 10
Machinery and equipment..................................... 5 to 10
Containers.................................................. 8 to 12
Buildings and improvements.................................. 20
Furniture and fixtures...................................... 3 to 7
Disposal sites are stated at cost and amortized ratably using the
units-of-production method over the estimated usable life of the site as
airspace of the landfill is consumed. Disposal site costs include expenditures
for the acquisition of land and related airspace, engineering and permitting
costs, direct site improvement costs, and capitalized interest. During the years
ended December 31, 1997, 1996, and 1995, interest costs were $129,459,000,
$81,686,000, and $83,421,000, respectively, of which $25,198,000, $21,189,000,
and $13,808,000 were capitalized, respectively, with respect to landfills and
facilities under construction. Disposal site amortization rates are determined
periodically not less than annually for each disposal site based on estimates
provided by the Company's engineers and accountants. Disposal site amortization
rate calculations consider information provided by aerial surveys, which are
generally performed annually, and other density measures, as well as the future
receipt of a disposal site permit expansion for those sites that the Company
believes permit expansion is probable.
Business Combinations -- The Company assesses each acquisition to determine
whether the pooling of interests or the purchase method of accounting is
appropriate. For those acquisitions accounted for under the pooling of interests
method, the financial statements of the acquired company are combined with those
of the Company at their historical amounts, and, if material, all periods
presented are restated as if the combination occurred on the first day of the
earliest year presented. For those acquisitions accounted for using the purchase
method of accounting, the Company allocates the cost of the acquired business to
the assets acquired and the liabilities assumed based on estimates of fair
values thereof. These estimates are revised during the allocation period as
necessary when information regarding contingencies becomes available to define
and quantify assets acquired and liabilities assumed. The allocation period
varies for each acquisition, however, does not exceed one year. To the extent
contingencies such as preacquisition environmental matters, litigation and
related legal fees, and preacquisition tax matters are resolved or settled
during the allocation period, such items are included in the revised allocation
of the purchase price. After the allocation period, the effect of changes in
such contingencies is included in results of operations in the periods in which
the adjustments are determined. Management of the Company does not believe
potential deviations between its fair value estimates and actual fair values to
be material.
In certain business combinations, the Company will agree to pay additional
amounts to sellers contingent upon achievement by the acquired businesses of
certain negotiated goals, such as targeted revenue levels, targeted disposal
volumes, or the issuance of permits for expanded landfill airspace. Contingent
payments, when incurred, are recorded as purchase price adjustments or
compensation expense, as appropriate, based on the nature of each contingent
payment. Contingent payments recorded as purchase price adjustments are
amortized over the remaining useful life of the related assets.
Excess of cost over net assets of acquired businesses -- The excess of cost
over net assets of acquired businesses is amortized on a straight-line basis
over 40 years commencing on the dates of the respective
40
43
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
acquisitions. Accumulated amortization was $55,041,000 and $38,894,000 at
December 31, 1997 and 1996, respectively.
Other intangible assets -- Other intangible assets consist primarily of
customer lists, covenants not to compete, licenses, permits, and contracts.
Other intangible assets are recorded at cost and amortized on a straight-line
basis. Customer lists are amortized over five to seven years. Covenants not to
compete are amortized over the term of the agreement, which is generally three
to five years. Licenses, permits, and contracts are amortized over the shorter
of the definitive terms of the related agreements or 40 years. Accumulated
amortization was $77,571,000 and $69,824,000 at December 31, 1997 and 1996,
respectively.
Long-lived assets -- Long-lived assets consist primarily of property and
equipment, excess of cost over net assets of acquired businesses, and other
intangible assets. The recoverability of long-lived assets is evaluated at the
operating unit level by an analysis of operating results and consideration of
other significant events or changes in the business environment. If an operating
unit has current operating losses and based upon projections there is a
likelihood that such operating losses will continue, the Company will evaluate
whether impairment exists on the basis of undiscounted expected future cash
flows from operations before interest for the remaining amortization period. If
impairment exists, the carrying amount of the long-lived assets is reduced to
its estimated fair value.
Closure, post-closure, and other liabilities -- The Company has material
financial commitments for the costs associated with its future obligations for
final closure, which is the closure of the final cell of a landfill, and
post-closure of landfills it operates or for which it is otherwise responsible.
While the precise amount of these future costs cannot be determined with
certainty, the Company has estimated that the aggregate final closure and
post-closure costs for all sites owned or operated as of December 31, 1997, will
be approximately $477,629,000. As of December 31, 1997 and 1996, the Company has
accrued $220,378,000 and $167,290,000, respectively, for final closure and
post-closure costs of disposal facilities. The Company does not discount its
accruals for closure and post-closure liabilities. The difference between the
final closure and post-closure costs accrued as of December 31, 1997, and the
total estimated final closure and post-closure costs to be incurred will be
accrued and charged to expense as airspace is consumed such that the total
estimated final closure and post-closure costs will be fully accrued for each
landfill at the time the site discontinues accepting waste and is closed. As of
December 31, 1997, the Company also expects to incur an estimated $956,346,000
related to future capping activities during the remaining operating lives of
these disposal sites. The future capping costs are being charged to expense
through airspace amortization over the useful lives of the disposal sites as
airspace is consumed.
The Company bases its estimates for these accruals on management's reviews,
typically performed not less than annually, including input from its engineers
and accountants and interpretations of current requirements and proposed
regulatory changes. The closure and post-closure requirements are established
under the standards of the U.S. Environmental Protection Agency's Subtitle D
regulations as implemented and applied on a state-by-state basis. Final closure
and post-closure accruals consider estimates for the final cap and cover for the
site, methane gas control, leachate management and groundwater monitoring, and
other operational and maintenance costs to be incurred after the site
discontinues accepting waste, which is generally expected to be for a period of
up to thirty years after final site closure. For disposal sites that were
previously operated by others, the Company assessed and recorded a final closure
and post-closure liability at the time the Company assumed closure
responsibility based upon the estimated total closure and post-closure costs and
the percentage of airspace utilized as of such date. Thereafter, the difference
between the final closure and post-closure costs accrued and the total estimated
closure and post-closure costs to be incurred is accrued and charged to expense
as airspace is consumed.
Income taxes -- Deferred income taxes are determined based on the
difference between the financial reporting and tax bases of assets and
liabilities. Deferred income tax expense represents the change during the period
in the deferred tax assets and deferred tax liabilities. Deferred tax assets
include tax loss and credit
41
44
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
carryforwards and are reduced by a valuation allowance if, based on available
evidence, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
Foreign currency translation -- The functional currency of the Company's
international operations is the local currency. Adjustments resulting from the
translation of financial information are reflected as a separate component of
stockholders' equity or recognized through income as appropriate.
Revenue recognition -- The Company recognizes revenues as services are
provided. Amounts billed and collected prior to services being performed are
included in deferred revenues.
Earnings per common share -- In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("SFAS No. 128"). SFAS No. 128 specifies the computation,
presentation, and disclosure requirements of earnings per share and supercedes
Accounting Principles Board Opinion No. 15, Earnings Per Share. SFAS No. 128
requires a dual presentation of basic and diluted earnings per share. Basic
earnings per share, which is based on the weighted average number of common
shares outstanding, replaces primary earnings per share. Diluted earnings per
share, which is based on the weighted average number of common and dilutive
potential common shares outstanding, replaces fully diluted earnings per share
and utilizes the average market price per share as opposed to the greater of the
average market price per share or ending market price per share when applying
the treasury stock method in determining dilutive potential shares. SFAS No. 128
is effective for the Company in 1997 and requires all prior-period earnings per
share data to be restated to conform to its presentation. Accordingly, the
Company has restated all previously reported earnings per share amounts.
Diluted earnings per common share for the year ended December 31, 1997, has
been calculated assuming conversion of the Company's convertible subordinated
notes and debentures, and therefore interest, net of taxes, of $19,006,000 has
been added back to net income for this calculation. Diluted earnings per common
share for the year ended December 31, 1996, has calculated without assuming
conversion of the Company's convertible subordinated notes and debentures due to
their antidiluted notes for this period.
The following reconciles the number of common shares outstanding to the
weighted average number of common shares outstanding and the weighted average
number of common and dilutive potential common shares outstanding for the
purposes of calculating basic and dilutive earnings per common share,
respectively (in thousands):
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
Number of common shares outstanding................... 217,782 181,631 161,813
Effect of using weighted average common shares
outstanding......................................... (9,536) (7,638) (18,467)
------- ------- -------
Weighted average number of common shares
outstanding......................................... 208,246 173,993 143,346
Dilutive effect of common stock options and
warrants............................................ 3,830 8,687 7,229
Dilutive effect of convertible subordinated notes and
debentures.......................................... 21,295 -- --
------- ------- -------
Weighted average number of common and dilutive
potential common shares outstanding................. 233,371 182,680 150,575
======= ======= =======
New accounting pronouncements -- In October 1996, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants
issued Statement of Position No. 96-1, Environmental Remediation Liabilities
("SOP No. 96-1"). SOP No. 96-1 provides authoritative guidance on the
recognition, measurement, presentation, and disclosure of environmental
remediation liabilities. The adoption of SOP No. 96-1 in 1997 did not have a
material effect on the Company's financial position, results of operations or
cash flows.
42
45
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
No. 130"). SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources and includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. SFAS No. 130 is effective for the Company for the year
ended December 31, 1998. Assuming the Company adopted SFAS No. 130 in 1995,
comprehensive income would have been $263,861,000, $67,273,000, and $73,353,000
for the years ended December 31, 1997, 1996, and 1995, respectively.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. SFAS No.
131 is effective for fiscal years beginning after December 15, 1997. Adoption is
not recognized for interim periods in the initial year of application. Adoption
of this statement will not have a material impact on the consolidated financial
statements of the Company.
2. BUSINESS COMBINATIONS
1997 Pooling of Interests Acquisitions
On August 26, 1997, the Company consummated a merger with United Waste
Systems, Inc. ("United") accounted for as a pooling of interests (the "United
Merger") and, accordingly, the accompanying consolidated financial statements
have been restated to include the accounts and operations of United for all
periods presented. Under the terms of the United Merger, the Company issued
1.075 shares of its common stock for each outstanding share of United common
stock. Additionally, at the effective date of the United Merger, United stock
options, whether or not such stock options had vested or had become exercisable,
were cancelled in exchange for shares of the Company's common stock equal in
market value to the fair value of such United stock options, as determined by an
independent third party. The United Merger increased the Company's outstanding
shares of common stock by approximately 51,900,000 shares, which includes
approximately 1,900,000 shares exchanged for the United stock options. In the
third quarter of 1997, the Company incurred approximately $89,152,000 in merger
related costs associated with the United Merger, of which approximately
$30,630,000 remained in accrued liabilities at December 31, 1997. Of this
amount, $17,566,000 related to transaction costs, $26,198,000 for severance and
other termination benefits, $21,629,000 for integration of operations, and
$23,759,000 for estimated losses related to the disposition of a Pennsylvania
landfill ordered by the United States Department of Justice in connection with
the United Merger and the disposition of other duplicative facilities. The
results of operations for United prior to consummation of the merger for the
restated periods are as follows (in thousands):
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ------------------------
JUNE 30, 1997 1996 1995
---------------- ---------- ----------
(UNAUDITED)
Operating revenues............................ $216,619 $335,743 $228,377
Net income.................................... 23,849 35,393 28,288
The Company consummated 23 additional acquisitions accounted for as
poolings of interests during 1997, pursuant to which Company issued
approximately 7,500,000 shares of its common stock in exchange for all
outstanding shares of acquired companies. Periods prior to consummation of the
mergers were not restated to include the accounts and operations of the acquired
companies as combined results are not materially different from the results as
presented. In connection with these poolings of interests, the Company incurred
43
46
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$1,996,000, $3,263,000, and $15,000,000 in merger related costs in the first,
second, and third quarters of 1997, respectively.
1996 Pooling of Interests Acquisitions
On August 30, 1996, the Company consummated a merger with Sanifill, Inc.
("Sanifill") accounted for as a pooling of interests (the "Sanifill Merger")
and, accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of Sanifill for all periods
presented. Under the terms of the Sanifill Merger, the Company issued 1.70
shares of its common stock for each share of Sanifill outstanding common stock.
The Sanifill Merger increased the Company's outstanding shares of common stock
by approximately 43,414,000 shares and the Company assumed Sanifill's options
and warrants equivalent to approximately 4,361,000 underlying shares of Company
common stock. In the third quarter of 1996, the Company incurred approximately
$80,000,000 in merger related costs associated with the Sanifill Merger, of
which approximately $24,280,000 remained in accrued liabilities at December 31,
1996. The $80,000,000 of merger costs includes $9,500,000 of transaction costs,
$20,000,000 of relocation, severance, and other termination benefits,
$13,000,000 of costs relating to integrating operations, and $37,500,000 of
costs relating to the disposal of duplicate facilities. The results of
operations for Sanifill prior to consummation of the merger for the restated
periods are as follows (in thousands):
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
---------------- -----------------
(UNAUDITED)
Operating revenues.................................. $181,406 $256,705
Net income.......................................... 18,964 27,913
On June 28, 1996, the Company consummated a merger with Salinas Disposal
Service, Inc., Rural Dispos-All Service, Inc., and Madison Lane Properties, Inc.
(collectively the "Salinas Companies") accounted for as a pooling of interests
and, accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of the Salinas Companies for all
periods presented. Under the terms of the merger agreement, approximately
786,000 shares of the Company's common stock were issued in exchange for all
outstanding shares of the Salinas Companies' common stock. Related to this
merger, the Company incurred $2,196,000 of merger costs in the second quarter of
1996. The results of operations for the Salinas Companies prior to consummation
of the merger for the restated periods are as follows (in thousands):
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 1996 DECEMBER 31, 1995
------------------ -----------------
(UNAUDITED)
Operating revenues................................ $4,060 $16,587
Net income (loss)................................. (61) 842
On May 15, 1996, the Company consummated a merger with Grand Central
Sanitation, Inc. and related companies ("Grand Central") accounted for as a
pooling of interests, pursuant to which the Company issued 2,067,605 shares of
its common stock in exchange for all outstanding shares of Grand Central.
Periods prior to 1996 were not restated as combined results are not materially
different from results as presented. Related to this merger, the Company
incurred $2,700,000 of merger costs in the second quarter of 1996.
On May 7, 1996, the Company consummated a merger with Western Waste
Industries ("Western") accounted for as a pooling of interests (the "Western
Merger") and, accordingly, the accompanying consolidated financial statements
have been restated to include the accounts and operations of Western for all
periods presented. Under the terms of the Western Merger, the Company issued
1.50 shares of its common stock for each share of Western outstanding common
stock. Prior to the Western Merger, the Company
44
47
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
owned approximately 4.1% of Western's outstanding shares (634,900 common
shares), which were cancelled on the effective date of the Western Merger. The
Western Merger increased the Company's outstanding shares of common stock by
approximately 22,028,000 shares and the Company assumed options under Western's
stock option plans equivalent to approximately 5,200,000 underlying Company
shares of common stock. In the second quarter of 1996, the Company incurred
approximately $35,000,000 in merger related costs associated with the Western
Merger and approximately $4,800,000 in benefits related to Western's pre-merger
retirement program. The $35,000,000 of merger costs include $6,800,000 of
transaction costs, $15,000,000 of severance and other termination benefits, and
$13,200,000 of costs related to integrating operations. The results of
operations for Western prior to consummation of the merger for the restated
periods are as follows (in thousands):
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 1996 DECEMBER 31, 1995
------------------ -----------------
(UNAUDITED)
Operating revenues................................ $68,441 $273,901
Net income........................................ 4,703 17,021
The Company consummated eight additional acquisitions accounted for as
poolings of interests during 1996, pursuant to which the Company issued
approximately 2,839,000 shares of its common stock in exchange for all
outstanding shares of the acquired companies. Periods prior to consummation of
the mergers were not restated to include the accounts and operations of the
acquired companies as combined results are not materially different from the
results as presented.
1995 Pooling of Interests Acquisitions
On September 29, 1995, the Company consummated a merger with Carmel Marina
Corporation, Neal Road Landfill Corporation, Jolan Road Landfill Corporation,
Cal Sanitation Services, Inc., and Portable Site Services, Inc. (collectively
the "Carmel Marina Companies") accounted for as a pooling of interests and,
accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of the Carmel Marina Companies
for all periods presented. Under the terms of the merger agreement,
approximately 2,422,000 shares of the Company's common stock were issued in
exchange for all outstanding shares of the Carmel Marina Companies' common
stock. Related to this merger, the Company incurred $900,000 of merger costs in
the third quarter of 1995.
On June 30, 1995, the Company consummated a merger with Chambers
Development Company, Inc. ("Chambers") accounted for as a pooling of interests
and, accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of Chambers for all periods
presented. Under the terms of the merger agreement, approximately 27,800,000
shares of the Company's common stock were issued in exchange for all outstanding
shares of Chambers common stock and Class A common stock. Related to this
merger, the Company incurred $25,073,000 in merger costs in the second quarter
of 1995, which includes $11,900,000 of transaction costs, $9,473,000 of
severance and other termination benefits, and $3,700,000 of costs related to
integrating operations.
On May 31, 1995, the Company consummated a merger with Metropolitan
Disposal and Recycling Corporation, Energy Reclamation, Inc., and EE Equipment,
Inc. (collectively "MDC") accounted for as a pooling of interests and,
accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of MDC for all periods
presented. Under the terms of the merger agreement, approximately 1,900,000
shares of the Company's common stock were issued in exchange for all outstanding
shares of MDC common stock. Related to this merger, the Company incurred
$566,000 of merger costs in the second quarter of 1995.
45
48
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company consummated two additional acquisitions accounted for as
poolings of interests, pursuant to which the Company issued approximately
2,588,000 shares of its common stock in exchange for all outstanding shares of
the acquired companies. Periods prior to consummation of these mergers were not
restated to include the accounts and operations of the acquired companies as
combined results are not materially different from the results as presented.
1997 and 1996 Purchase Acquisitions
On March 12, 1997, the Company acquired substantially all of the Canadian
solid waste subsidiaries of Allied Waste Industries Inc. for approximately
$518,000,000 in cash. Those businesses represented 41 collection operations,
seven landfills, and eight transfer stations in the provinces of Alberta,
British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan.
On April 1, 1997, the Company acquired substantially all of the assets of
Mid-American Waste Systems, Inc. for approximately $201,000,000, consisting
primarily of cash and the assumption of a limited amount of debt. The assets
acquired included 11 collection operations, 11 landfills, six transfer stations,
and three recycling operations.
On June 10, 1997, the Company acquired the majority of Waste Management,
Inc.'s ("WMI") Canadian solid waste businesses for $124,000,000 in cash and
1,705,757 shares of the Company's common stock. The assets acquired included 13
collection operations, one landfill, and three transfer stations in the
provinces of Alberta, British Columbia, Ontario, and Quebec.
In addition to the above purchase acquisitions, the Company consummated
several acquisitions that were accounted for under the purchase method of
accounting. Results of operations of companies that were acquired and subject to
purchase accounting are included from the dates of such acquisitions. The total
cost of acquisitions accounted for under the purchase method was $2,280,775,000
in 1997, which includes approximately $97,000,000 for a 49% interest in a
partnership formed for the purpose of acquiring shares of WMI (see Note 14), and
$638,788,000 in 1996, respectively. The 49% partnership interest is included in
other assets at December 31, 1997. The excess of the aggregate purchase price
over the fair value of net assets acquired in 1997 and 1996 was approximately
$942,175,000 and $351,797,000, respectively.
The pro forma information set forth below assumes acquisitions in 1997 and
1996 accounted for as purchases had occurred at the beginning of 1996. The pro
forma information is presented for informational purposes only and is not
necessarily indicative of the results of operations that actually would have
been achieved had the acquisitions been consummated at that time (in thousands,
except per share amounts):
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
Operating revenues.......................................... $3,099,007 $2,972,979
Income before extraordinary item............................ 301,746 141,408
Net income.................................................. 295,453 141,408
Basic earnings per common share:
Income before extraordinary item.......................... 1.43 0.78
Net income................................................ 1.40 0.78
Diluted earnings per common share:
Income before extraordinary item.......................... 1.36 0.74
Net income................................................ 1.33 0.74
46
49
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
DECEMBER 31,
------------------------
1997 1996
---------- ----------
Disposal sites, including costs incurred for expansion
projects in process of $64,971 and $68,075,
respectively.............................................. $3,143,860 $1,695,628
Vehicles.................................................... 687,087 404,839
Machinery and equipment..................................... 251,523 186,231
Containers.................................................. 302,793 215,473
Buildings and improvements.................................. 250,008 191,463
Furniture and fixtures...................................... 46,031 40,979
Land........................................................ 162,715 130,912
---------- ----------
4,844,017 2,865,525
Less accumulated depreciation and amortization.............. (889,009) (667,294)
---------- ----------
$3,955,008 $2,198,231
========== ==========
Depreciation and amortization expenses for property and equipment was
$268,197,000, $162,949,000, and $118,785,000 for the years ended December 31,
1997, 1996, and 1995, respectively.
4. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
DECEMBER 31,
------------------------
1997 1996
---------- ----------
Senior revolving credit facility............................ $ 430,000 $ 637,000
United credit facility...................................... -- 31,450
6 1/2% Senior notes due 2002, net of unamortized discount of
$2,229.................................................... 347,771 --
7% Senior notes due 2004, net of unamortized discount of
$2,455.................................................... 297,545 --
7 1/8% Senior notes due 2007, net of unamortized discount of
$2,919.................................................... 297,081 --
7 1/8% Senior notes due 2017, net of unamortized discount of
$1,533.................................................... 148,467 --
Senior notes, maturing in varying annual installments
through September 2005, interest ranging from 7.29% to
8.44%..................................................... -- 182,500
4% Convertible subordinated notes due 2002.................. 535,275 --
4 1/2% Convertible subordinated notes due 2001.............. 149,500 150,000
5% Convertible subordinated debentures due 2006............. 115,000 115,000
Tax-exempt bonds, principal payable in periodic
installments, maturing through 2021, fixed and variable
interest rates ranging from 4.00% to 9.25% at December 31,
1997...................................................... 265,355 196,439
Other....................................................... 177,735 192,499
---------- ----------
2,763,729 1,504,888
Less current maturities..................................... 39,286 34,606
---------- ----------
$2,724,443 $1,470,282
========== ==========
The aggregate estimated payments, including scheduled minimum maturities,
of long-term obligations outstanding at December 31, 1997 for the five years
ending December 31, 1998 through 2002 are: 1998 -- $39,286,000,
1999 -- $27,558,000, 2000 -- $22,174,000, 2001 -- $28,220,000, and
2002 -- $170,734,000.
47
50
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On February 7, 1997, the Company issued $535,275,000 of 4% convertible
subordinated notes, due on February 1, 2002 ("Convertible Notes Offering").
Interest is payable semi-annually in February and August. The notes are
convertible by the holders into shares of the Company's common stock at any time
at a conversion price of $43.56 per share. The notes are subordinated in right
of payment to all existing and future senior indebtedness, as defined. The notes
are redeemable after February 1, 2000 at the option of the Company at 101.6% of
the principal amount, declining to 100.8% of the principal amount on February 1,
2001 and thereafter until maturity at which time the notes will be redeemed at
par, plus accrued interest. Deferred offering costs of approximately $14,000,000
were incurred and are being amortized ratably over the life of the notes. The
proceeds were primarily used to repay debt under the Company's credit facility,
to fund acquisitions, and for general corporate purposes.
On February 7, 1997, concurrent with the Convertible Notes Offering, the
Company completed a public offering of 11,500,000 shares of its common stock,
priced at $35.125 per share. The net proceeds of approximately $387,438,000 were
primarily used to repay debt under the Company's credit facility and for general
corporate purposes.
On March 3, 1997, prior to its becoming a wholly owned subsidiary of the
Company, United completed a public offering in which it issued 3,450,000 shares
of its common stock, priced at $36.50 per share (equivalent to 3,708,750 shares
of the Company's common stock, priced at $33.95 per share). The net proceeds of
approximately $119,000,000 were used to repay approximately $47,000,000 of debt
under United's credit facility, to fund acquisitions, and for general corporate
purposes.
During August 1997 and September 1997, the Company prepaid the holders of
both privately placed senior note issuances an aggregate amount of $182,500,000
with proceeds from its senior revolving credit facility. Interest on these
privately placed senior notes ranged from 7.29% to 8.44%. In connection with
this transaction, the Company was required to pay prepayment penalties of
approximately $7,975,000, which was recorded as an extraordinary item in the
third quarter of 1997.
On September 12, 1997, the Company issued $300,000,000 of 7% senior notes
due October 1, 2004, and $300,000,000 of 7 1/8% senior notes due October 1,
2007. The senior notes constitute senior and unsecured obligations of the
Company, ranking equal in right of payment with all other senior and unsecured
obligations of the Company, as defined. The senior notes are redeemable at the
option of the Company at any time and from time to time at par of the principal
amount of such notes, plus accrued interest. Deferred offering costs of
approximately $4,125,000 were incurred and are being amortized ratably over the
life of the senior notes. The proceeds were used to repay debt under the
Company's senior revolving credit facility. In anticipation of this offering,
the Company entered into interest rate locks on July 25, 1997, with various
institutions as a hedging transaction to cover the future issuance of
$600,000,000 of debt. The gain realized from this hedging transaction of
approximately $5,632,000 is being amortized over the life of the related notes
using the effective interest method and has the effect of reducing the
all-inclusive interest rate to 6.90% on the 7% senior notes due October 1, 2004,
and 7.06% on the 7 1/8% senior notes due October 1, 2007. Interest is payable
semiannually on October 1 and April 1.
On December 17, 1997, the Company issued $350,000,000 of 6 1/2% senior
notes due December 15, 2002, and $150,000,000 of 7 1/8% senior notes due
December 15, 2017. The senior notes constitute senior and unsecured obligations
of the Company ranking equal in right of payment with all other senior and
unsecured obligations of the Company, as defined. The 6 1/2% senior notes due
December 15, 2002, are not redeemable. The $150,000,000 of 7 1/8% senior notes
due December 15, 2017, are redeemable, in whole or in part, at the option of the
Company at any time and from time to time at a redemption price equal to the
Make-Whole Price, as defined. Deferred offering costs of approximately
$3,713,000 were incurred and are being amortized ratably over the life of the
senior notes. The proceeds were used to repay debt under the Company's senior
revolving credit facility. In anticipation of this offering, the Company entered
into interest rate locks on December 9, 1997, as a hedging transaction to cover
the future issuance of $500,000,000 of debt. The amount
48
51
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
paid by the Company from this hedging transaction of approximately $6,845,000 is
being amortized over the life of the related notes. The all inclusive interest
rate is 6.67% on the 6 1/2% senior notes due December 15, 2002, and is 7.27% on
the 7 1/8% senior notes due December 15, 2017. Interest is payable semi-annually
on December 15 and June 15.
On May 7, 1996, in connection with the Western Merger, the Company replaced
its existing credit facility with a $750,000,000 senior revolving credit
facility and retired amounts outstanding under Western's credit facility. The
credit facility was used to refinance existing bank loans and letters of credit,
to fund additional acquisitions, and for working capital. The credit facility
was available for standby letters of credit, to fund additional acquisitions,
and for the working capital. The credit facility was available for standby
letters of credit of up to $300,000,000. Loans under the credit facility bore
interest at a rate based on the Eurodollar rate plus a spread not to exceed
0.75% per annum (spread initially set at 0.405% per annum). The credit facility
required a facility fee not to exceed 0.375% per annum on the entire available
credit facility (facility fee initially set at 0.22% per annum.)
On August 30, 1996, in connection with the Sanifill Merger, the Company
replaced the $750,000,000 senior revolving credit facility with a $1,200,000,000
senior revolving credit facility and retired amounts under Sanifill's senior
revolving credit facility. The senior revolving credit facility was used to
refinance existing bank loans and letters of credit and to fund additional
acquisitions and working capital. The senior revolving credit facility was
available for standby letters of credit of up to $400,000,000. Loans under the
senior revolving credit facility bore interest at a rate based on the Eurodollar
rate plus a spread not to exceed 0.75% per annum (spread set at 0.30% per annum,
or an applicable interest rate of 5.87% per annum at December 31, 1996). The
senior revolving credit facility required a facility fee not to exceed 0.375%
per annum on the entire available senior revolving credit facility (facility fee
set at 0.15% per annum at December 31, 1996). The senior revolving credit
facility contained financial covenants with respect to interest coverage and
debt capitalization ratios. The senior revolving credit facility also contained
limitations on dividends, additional indebtedness, liens, and asset sales.
Principal reductions were not required during the five-year term of the senior
revolving credit facility. On March 5, 1997, the senior revolving credit
facility was replaced with a $1,600,000,000 senior revolving credit facility
with the same general terms, covenants, and limitations, which was available for
standby letters of credit of up to $500,000,000. On August 7, 1997, the
$1,600,000,000 senior revolving credit facility was replaced with a
$2,000,000,000 senior revolving credit facility with the same general terms,
covenants, and limitations, which is available for $650,000,000 of standby
letters of credit. At December 31, 1997, the Company had borrowed $430,000,000
and had issued letters of credit of $467,029,000 under its $2,000,000,000 senior
revolving credit facility. The applicable interest rate and facility fee at
December 31, 1997, was 6.1% and 0.1125% per annum, respectively.
United's credit facility provided for a three year, $190,000,000 revolving
credit facility due December 1999. Outstanding loans under the United credit
facility bore interest at a rate per annum equal to the Eurodollar Rate (Reserve
Adjusted) (as defined in the loan agreement providing for the United credit
facility) applicable to each interest period plus 0.625% to 1.25% per annum or
the Alternate Reference Rate (as defined) from time to time in effect. At
December 31, 1996, the weighted average interest rate was 6.98%. The credit
facility also allowed United to obtain up to $90,000,000 in letters of credit.
The aggregate amount that United was permitted to borrow under its credit
facility was reduced by the aggregate face amount of all outstanding letters of
credit issued thereunder. United's credit facility required United to comply
with covenants including the maintenance of certain financial ratios,
limitations on additional indebtedness, limitations on capital expenditures, and
a prohibition on United's payment of cash dividends on its common stock. In
connection with the United Merger, the Company retired amounts outstanding under
United's credit facility with proceeds from its senior revolving credit
facility.
On June 5, 1996, United issued $150,000,000 of 4 1/2% convertible
subordinated notes, due June 1, 2001. Interest is payable semi-annually in June
and December. The notes are convertible into shares of the
49
52
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's common stock at a conversion price of $30.23 per share. The notes are
subordinated in right of payment to all existing and future senior indebtedness,
as defined. The notes are redeemable after June 1, 1999, at the option of the
Company at 101.8% of the principle amount, declining annually to par on June 1,
2001, plus accrued interest. Deferred offering costs of approximately $5,287,000
were incurred and are being amortized ratably over the life of the notes. The
proceeds were used to repay outstanding indebtedness of approximately
$75,000,000 under United's credit facility, fund acquisitions and capital
expenditures, and for general corporate purposes.
On March 4, 1996, Sanifill issued $115,000,000 of 5% convertible
subordinated debentures, due on March 1, 2006. Interest is payable semi-annually
in March and September. The debentures are convertible into shares of the
Company's common stock at a conversion price of $28.31 per share. The debentures
are subordinated in right of payment to all existing and future senior
indebtedness, as defined. The debentures are redeemable after March 15, 1999 at
the option of the Company at 102.5% of the principal amount, declining annually
to par on March 1, 2002, plus accrued interest. Deferred offering costs of
approximately $2,900,000 were incurred and are being amortized ratably over the
life of the debentures. The proceeds were used to repay debt under Sanifill's
credit facility.
On March 18, 1996, Sanifill called for redemption all of its $60,000,000 of
7 1/2% convertible subordinated debentures due June 1, 2006, at redemption price
of 104.5% of their face amount plus accrued interest from December 1, 1995, to,
and including, the redemption date of April 17, 1996. Alternatively, holders of
these debentures were allowed to convert their debentures into common stock at
any time prior to the close of business on April 10, 1996, at a conversion price
equal to $28.82 per share (equivalent to $16.95 for the Company's common stock).
Holders electing to convert received 34.7 shares of Sanifill's common stock
(equivalent to 59 shares of the Company's common stock) for each $1,000
principal amount of debentures surrendered. The $60,000,000 of debentures were
ultimately converted to approximately 3,570,000 shares of Company common stock.
Deferred offering costs of approximately $1,700,000 were recorded as a reduction
to additional paid-in-capital.
The Company has guaranteed specific obligations of certain unconsolidated
affiliates or businesses totaling approximately $58,749,000 and $25,000,000 at
December 31, 1997 and 1996, respectively. The Company believes that these
unconsolidated affiliates or businesses will be able to perform under their
respective obligations and that no payments will be required and, due to the
Company's ability to assume a senior debt position, no losses will be incurred
under such guarantees.
In August 1995, the Company entered into a three year interest rate swap
agreement whereby the Company fixed a maximum interest rate on $125,000,000 of
its senior revolving credit facility. The interest rate was a fixed annual rate
of approximately 5.9% plus the applicable spread over the Eurodollar rate (not
to exceed 1.75% per annum) as determined under the Company's senior revolving
credit facility (6.2% at December 31, 1997 and 1996.)
The Company has completed several tax-exempt bond issues totaling
$265,355,000 and $196,439,000 at December 31, 1997 and 1996, respectively, with
maturities ranging through 2021. Certain of the bonds are subject to annual
sinking fund redemptions and proceeds of the issues are restricted to fund
certain assets of the related projects. Certain of the bonds are supported by
irrevocable letters of credit and bear interest at floating rates with rates
reset weekly by a remarketing agent. An interest rate swap agreement with
approximately two years remaining at December 31, 1997, has fixed the rate at
6.29% on $24,000,000 of these bonds.
Other long-term debt at December 31, 1997 and 1996 consists primarily of
miscellaneous notes payable and obligations under capital leases. Other
long-term debt at December 31, 1996, also includes $83,475,000 paid in January
1997 through additional borrowings under the Company's senior revolving credit
facility to the former owners of a landfill and collection operation acquired by
the Company in December 1996.
50
53
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Chambers incurred nonrecurring interest expense of $10,994,000 in 1995, as
a result of amendments to its credit facility and senior notes in November 1994.
Chambers proratably accrued the extension fees, the expected refinancing
premium, and other charges incurred upon consummation of its merger with the
Company.
Letters of credit and surety bonds have been provided by the Company
supporting tax-exempt bonds, performance of landfill closure and post-closure
requirements, insurance contracts, and other contracts. Total letters of credit
and surety bonds outstanding at December 31, 1997, aggregated $567,729,000 and
$75,271,000, respectively.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, restricted funds held by
trustees, trade accounts receivable, trade accounts payable, and financial
instruments included in notes and other receivables and other assets approximate
their fair values principally because of the short-term maturities of these
instruments.
The fair values of the Company's debt maturing within one year and the
credit facilities approximate the carrying values due to the nature of the
instruments involved. The fair values of the Company's publicly held senior
notes and convertible debt are as follows (in thousands):
DECEMBER 31,
-------------------------------------------------
1997 1996
----------------------- -----------------------
BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE
---------- ---------- ---------- ----------
6 1/2% Senior notes due 2002............. $347,771 $349,963 $ -- $ --
7% Senior notes due 2004................. 297,545 305,024 -- --
7 1/8% Senior notes due 2007............. 297,081 307,575 -- --
7 1/8% Senior notes due 2017............. 148,467 149,282 -- --
4% Convertible subordinated notes due
2002................................... 535,275 592,148 -- --
4 1/2% Convertible subordinated notes due
2001................................... 149,500 214,906 150,000 172,500
5% Convertible subordinated debentures
due 2006............................... 115,000 170,631 115,000 142,025
The fair value of the Company's $125,000,000 interest rate swap
approximates the carrying value due to the instrument's relatively short
remaining maturity and the differential between its fixed rate of 6.2% at
December 31, 1997 and 1996, compared to the related senior revolving credit
facility's variable rate of 5.86% and 5.87% at December 31, 1997 and 1996,
respectively.
The senior notes maturing in varying annual installments through September
2005, that were outstanding at December 31, 1996, have carrying values at the
respective dates that are considered to approximate their respective fair values
based on valuation techniques that consider cash flows discounted at current
market rates.
The fair values of the tax-exempt bonds approximate the carrying values as
the interest rates on a majority of the bonds are reset weekly based on the
credit quality of the letters of credit which collateralize the bonds.
In the normal course of business, the Company has letters of credit,
performance bonds, insurance policies, and other guarantees that are not
reflected in the accompanying consolidated balance sheets. In the past, no
significant claims have been made against these financial instruments.
Management believes that the likelihood of the Company's performance under these
financial instruments is minimal and expects no material losses to occur in
connection with these financial instruments.
51
54
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. PREFERRED STOCK
The Board of Directors is authorized to issue preferred stock in series,
and with respect to each series, to fix its designation, relative rights
(including voting, dividend, conversion, sinking fund, and redemption rights),
preferences (including dividends and liquidation), and limitations. The Company
currently has no issued or outstanding preferred stock.
7. COMMON STOCK OPTIONS AND WARRANTS
In accordance with the Company's 1990 Stock Option Plan (the "1990 Plan"),
options to purchase 900,000 shares of the Company's common stock may be granted
to officers, directors, and key employees. In accordance with the Company's 1993
Stock Option Incentive Plan, as amended (the "1993 Plan"), options to purchase
6,500,000 shares of the Company's common stock may be granted to officers,
directors, and key employees. Options are granted under both the 1990 Plan and
the 1993 Plan at an exercise price which equals or exceeds the fair market value
of the common stock on the date of grant, with various vesting periods, and
expire up to ten years from the date of grant. No options are available for
future grant under the 1990 Plan.
In May 1996, the Company adopted the 1996 Stock Option Plan for
Non-Employee Directors ("1996 Directors Plan") to offer its directors who are
not officers, full-time employees, or consultants of the Company an annual grant
of 10,000 options on each January 1 (subsequently amended to 12,500 options). In
accordance with the 1996 Directors Plan, options to purchase up to 400,000
shares of the Company's common stock may be granted, with five year vesting
periods, and expiration dates ten years from the date of grant. Options may be
granted at an exercise price which equals fair market value of the common stock
on the date of grant.
Western maintained three stock option plans ("Western Plans"): the 1992
Stock Option Plan ("1992 Western Plan"), the Incentive Stock Option Plan, and
the Non-Qualified Stock Option Plan, which allowed key employees and directors
of Western the right to purchase shares of its common stock. Options granted
under the 1992 Western Plan were designated as incentive or non-qualified in
nature, at the discretion of the Compensation Committee of Western's Board of
Directors, though only employees were eligible to receive incentive stock
options. Western had reserved 2,000,000 shares of its common stock under each of
the Western Plans. Options were granted under the Western Plans at an exercise
price which equaled or exceeded the fair market value on the date of grant.
Options were generally exercisable in installments beginning one year after the
grant date. As a result of the Western Merger, all unexpired and unexercised
options under the Western Plans converted to options to purchase shares of the
Company's common stock, as adjusted, subject to the same terms and conditions as
provided under the Western Plans. No additional options may be issued under
these plans.
Sanifill maintained an incentive compensation plan (the "Incentive Plan")
which allowed for the ability to grant non-qualified options, restricted stock,
deferred stock, incentive stock options, stock appreciation rights, and other
long-term incentive awards. Under the Incentive Plan, stock options were
typically granted at fair market value on the date of grant. The number of
shares available for issuance under the Incentive Plan was limited to 14% of the
number of outstanding shares of Sanifill's common stock at that time less shares
outstanding under the Incentive Plan and the Company's previously utilized stock
option plan (the "Stock Option Plan"). The Incentive Plan did not provide for
the granting of options to non-employee directors. The Stock Option Plan
provided for options of up to 382,500 of the authorized shares to be granted to
non-employee directors. In May 1995, Sanifill granted 26,095 shares of
restricted stock to certain key executives under the Incentive Plan, which were
to vest at the end of eight years or upon the achievement of certain financial
objectives, if sooner. During 1996, these financial objectives were met and all
restricted shares were vested. Sanifill incurred compensation expense of
$2,204,000 and $312,000 in 1996 and 1995, respectively, related to restricted
stock. As a result of the Sanifill Merger, all unexpired and unexercised options
under the plans converted to options to purchase shares of the Company's common
stock, as adjusted, subject to the
52
55
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
same terms and conditions as provided under such plans. No additional options
may be issued under these plans.
United granted stock options pursuant to the 1992 Stock Option Plan,
various similar plans, and the 1992 Disinterested Director Stock Option Plan.
Under the 1992 Stock Option Plan, United was authorized to grant up to 5,900,000
incentive and non-statutory stock options. Under the 1992 Disinterested Director
Stock Option Plan, a fixed number of non-statutory stock options were granted
annually to members of United's Board of Directors. At the effective date of the
United Merger, United stock options, whether or not such stock options had
vested or had become exercisable, were cancelled in exchange for shares of the
Company's common stock equal in market value to the fair value of such United
stock options, as determined by an independent third party. No additional
options may be issued under these plans.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123"). SFAS No. 123 prescribes a fair value based method
of determining compensation expense related to stock-based awards granted to
employees. The recognition provisions of SFAS No. 123 are optional; however,
entities electing not to adopt the recognition provisions of SFAS No. 123 are
required, beginning in 1996, to make disclosures of pro forma net income and
earnings per share as if the recognition provisions of SFAS No. 123 had been
applied as of January 1, 1995, as well as disclosures regarding assumptions
utilized in determining the pro forma amounts. The Company did not adopt the
recognition provisions of SFAS No. 123, however, required disclosures are
included below.
Stock options granted by the Company in 1997, 1996, and 1995 have ten year
terms. Stock options granted by Chambers and Western became fully vested upon
consummation of the related mergers. Stock options granted by Sanifill continue
to vest under varying vesting periods ranging from immediate vesting to five
years following the date of grant. As discussed above, at the effective date of
the United Merger, United stock options, whether or not such stock options had
vested or had become exercisable, were cancelled in exchange for shares of the
Company's common stock equal in market value to the fair value of such United
stock options, as determined by an independent third party. The Company has
issued warrants expiring through 2002 for the purchase of shares of its common
stock in connection with private placements of debt and equity securities,
acquisitions of businesses, bank borrowings, reorganizations, and certain
employment agreements. The following table summarizes common stock options and
warrants transactions related to
53
56
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
employees or Company directors under all of the aforementioned plans for 1997,
1996, and 1995 (in thousands):
OPTIONS AND WEIGHTED AVERAGE
WARRANTS EXERCISE PRICE
----------- ----------------
Outstanding at January 1, 1995........................... 15,328 $ 6.62
Granted................................................ 5,507 17.52
Exercised.............................................. (1,731) 8.58
Forfeited.............................................. (118) 29.62
------
Outstanding at December 31, 1995......................... 18,986 11.18
Granted................................................ 8,068 24.71
Exercised.............................................. (5,141) 10.05
Forfeited.............................................. (63) 15.71
------
Outstanding at December 31, 1996......................... 21,850 16.51
Granted................................................ 3,892 34.83
Exercised.............................................. (6,741) 15.61
Forfeited.............................................. (237) 21.97
------
Outstanding at December 31, 1997......................... 18,764 20.98
======
Exercisable at December 31, 1996......................... 10,669 $11.93
Exercisable at December 31, 1997......................... 8,417 13.69
The common stock options and warrants outstanding at December 31, 1997,
include 6,673,000 common stock options and warrants granted by Chambers,
Western, Sanifill, and United, of which 5,517,000 are exercisable. The Company
holds 23,485 shares of its common stock in treasury as of December 31, 1997, for
future distribution upon exercise of options under the plans.
The weighted average fair value of common stock options and warrants
granted to employees or Company directors during 1997 and 1996 were $11.40 and
$7.95, respectively. The fair value of each common stock option or warrant
granted to employees or Company directors by the Company during 1997 and 1996 is
estimated utilizing the Black-Scholes option-pricing model. The following
weighted average assumptions were used: dividend yield of 0%, risk-free interest
rates which vary for each grant and range from 5.61% to 6.31%, expected life of
four years for all grants, and stock price volatility ranging from 29.5% to 31%
for all grants.
Outstanding and exercisable stock options and warrants related to employees
or Company directors at December 31, 1997, were as follows (in thousands):
OUTSTANDING EXERCISABLE
------------------------------------------------- ------------------------------
OPTIONS AND WEIGHTED AVERAGE WEIGHTED AVERAGE OPTIONS AND WEIGHTED AVERAGE
EXERCISE PRICE WARRANTS EXERCISE PRICE REMAINING TERM WARRANTS EXERCISE PRICE
-------------- ----------- ---------------- ---------------- ----------- ----------------
$2.25 to $10.00........... 3,367 $ 6.90 3.6 years 3,308 $ 6.86
$10.01 to $20.00.......... 5,316 14.24 6.9 years 3,137 13.66
$20.01 to $30.00.......... 6,099 25.41 8.4 years 1,836 24.06
$30.01 to $59.10.......... 3,982 35.09 9.5 years 136 40.25
------ -----
$2.25 to $59.10........... 18,764 20.98 7.4 years 8,417 13.69
====== =====
54
57
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes transactions involving common stock warrants
related to nonemployees for 1997, 1996, and 1995 (in thousands):
WEIGHTED AVERAGE
WARRANTS EXERCISE PRICE
-------- ----------------
Outstanding at January 1, 1995............................ 312 $ 9.33
Granted................................................. 230 11.61
Exercised............................................... (415) 9.03
Forfeited............................................... -- --
----
Outstanding at December 31, 1995.......................... 127 10.65
Granted................................................. 528 25.46
Exercised............................................... (81) 9.15
Forfeited............................................... (21) 10.50
----
Outstanding at December 31, 1996.......................... 553 19.52
Granted................................................. 441 38.70
Exercised............................................... (136) 16.69
Forfeited............................................... (97) 13.50
----
Outstanding at December 31, 1997.......................... 761 31.91
====
Exercisable at December 31, 1996.......................... 222 $15.37
Exercisable at December 31, 1997.......................... 320 16.84
The weighted average fair value of common stock warrants granted to
nonemployees during 1997 and 1996 were $12.54 and $10.37, respectively. The fair
value of each common stock warrant granted to nonemployees by the Company during
1997 and 1996 is estimated utilizing the Black-Scholes option-pricing model. The
following weighted average assumptions were used: dividend yield of 0%,
risk-free interest rates which vary for each grant and range from 5.06% to
7.67%, expected life of five years for all grants, and a stock price volatility
of approximately 31% for all grants. No common stock warrants have been granted
by United to nonemployees for purposes other than business combinations.
Compensation expense related to common stock warrants granted to nonemployees in
1997 and 1996 was not material.
If the Company applied the recognition provisions of SFAS No. 123, the
Company's net income and earnings per common share for 1997, 1996, and 1995
would approximate the pro forma amounts shown below (in thousands, except per
share amounts):
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- ------- -------
SFAS No. 123 charge, net of income taxes............. $ 18,059 $13,951 $ 3,192
Income before extraordinary item..................... 255,264 54,388 77,584
Net income........................................... 248,971 54,388 77,584
Basic earnings per common share:
Income before extraordinary item................... 1.23 0.31 0.54
Net income......................................... 1.20 0.31 0.54
Diluted earnings per common share:
Income before extraordinary item................... 1.18 0.30 0.52
Net income......................................... 1.15 0.30 0.52
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
1995.
55
58
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. EMPLOYEE BENEFIT PLAN
Effective July 1, 1995, the Company established the USA Waste Services,
Inc. Employee Savings Plan ("Savings Plan"), a qualified defined contribution
retirement plan, covering employees (except those working subject to a
collective bargaining agreement) 21 years of age or older who have completed one
year of service or were actively employed on the Savings Plan's commencement
date. The Savings Plan allows eligible employees to contribute up to the lesser
of 15% of their annual compensation or the maximum permitted under IRS
regulations to various investment funds. The Company matches 50% of the first 6%
an employee contributes. Both employee and Company contributions vest
immediately. In 1997, 1996, and 1995, the Company contributed approximately
$5,335,000, $1,248,000, and $218,000, respectively, and incurred approximately
$225,000, $148,000, and $25,000, respectively, in administrative fees.
9. INCOME TAXES
The provision for income taxes on continuing operations consists of the
following (in thousands):
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- ------- -------
Current:
Domestic........................................... $108,741 $52,063 $43,689
Foreign............................................ 8,357 5,375 407
-------- ------- -------
117,098 57,438 44,096
-------- ------- -------
Deferred:
Domestic........................................... 44,510 13,399 16,730
Foreign............................................ 28,336 (439) (513)
-------- ------- -------
72,846 12,960 16,217
-------- ------- -------
Provision for income taxes................. $189,944 $70,398 $60,313
======== ======= =======
The difference between income taxes at the federal statutory rate and the
provision for income taxes on continuing operations for the years presented is
as follows (in thousands):
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- ------- -------
Income taxes at federal statutory rate............... $162,143 $48,558 $49,381
Nondeductible merger costs........................... 9,253 10,323 7,189
Nondeductible costs relating to acquired
intangibles........................................ 11,370 2,335 1,606
State and local income taxes, net of federal income
tax benefit........................................ 9,772 7,038 4,050
Foreign income taxes................................. 309 1,977 494
Federal tax credits.................................. (2,542) (305) (456)
Other................................................ (361) 472 (1,951)
-------- ------- -------
Provision for income taxes................. $189,944 $70,398 $60,313
======== ======= =======
Chambers' federal income tax returns for years 1988 through 1992 are
currently under examination by the Internal Revenue Service ("IRS"). The Company
has reached a tentative agreement with the IRS regarding the tax treatment of
certain costs and expenses deducted for financial statement purposes in these
open tax years. That agreement is subject to the approval of the Joint Committee
on Taxation. Western's federal income tax returns for fiscal years 1991 through
1993 are currently under examination by the IRS. The IRS assessed additional tax
for these years, which the Company is vigorously protesting, which neither alone
56
59
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
nor in aggregate would have a material effect on the Company's financial
position, results of operations or cash flows when resolved. USA Waste's federal
income tax returns for the years 1994 through 1996 are currently under
examination by the IRS.
The components of the net deferred tax assets (liabilities) are as follows
(in thousands):
DECEMBER 31,
----------------------
1997 1996
--------- ---------
Deferred tax assets:
Net operating loss carryforwards.......................... $ 93,490 $ 87,496
Closure, post-closure, and other reserves................. 47,127 46,452
Self insurance............................................ 3,274 5,042
Asset impairments, losses from planned asset divestitures,
and other.............................................. 61,937 57,626
Valuation allowance....................................... (24,000) (24,000)
--------- ---------
Deferred tax assets............................... 181,828 172,616
Deferred tax liabilities:
Property, equipment, intangible assets, and other......... (449,675) (169,476)
--------- ---------
Net deferred tax assets (liabilities)............. $(267,847) $ 3,140
========= =========
At December 31, 1997, the Company had approximately $162,000,000 of federal
net operating loss ("NOL") carryforwards, $217,000,000 of state NOL
carryforwards, and $39,000,000 of foreign NOL carryforwards. Most of the federal
NOL carryforwards, which were primarily a result of losses incurred by Chambers
prior to the Company's merger with Chambers, will begin to expire in 2007. The
use of the federal NOL carryforwards is subject to annual limitations of
approximately $39,000,000 due to an ownership change within the meaning of
Internal Revenue Code Section 382. The Company periodically evaluates the
deferred tax assets and adjusts the related valuation allowance on the deferred
tax assets to an amount which is more likely than not to be realized through
future taxable income.
The provision for domestic income taxes on undistributed earnings of
foreign subsidiaries is made only on those amounts in excess of the funds
considered to be permanently reinvested. The Company has no present intention of
remitting undistributed earnings of foreign subsidiaries and therefore, no
deferred tax liability has been established related to these earnings. If the
reinvested earnings were to be remitted, the federal income taxes due under
current tax law would not have a material effect on the Company's financial
position, results of operations or cash flows.
10. DOMESTIC AND FOREIGN OPERATIONS
The Company operates in one line of business: integrated nonhazardous solid
waste management which encompasses the entire waste stream from collection to
transfer station to landfill. The Company conducts its operations in various
locations throughout the United States, Canada, and Puerto Rico. During 1997,
the Company contributed the net book value of its Mexico operations to a
non-public solid waste entity focusing on Mexico's solid waste market in
exchange for a 37.5% interest in that entity. Accordingly, the Company is
57
60
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
accounting for this investment under the entity method of accounting. The
following is a summary of the Company's operations by geographic area (in
thousands):
YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
---------- ---------- ----------
Operating revenues:
United States and Puerto Rico................ $2,265,526 $1,624,742 $1,210,827
Canada....................................... 337,504 15,039 --
Mexico....................................... 10,738 9,350 5,255
---------- ---------- ----------
Total operating revenues............. $2,613,768 $1,649,131 $1,216,082
========== ========== ==========
Income from operations:
United States and Puerto Rico................ $ 429,526 $ 182,265 $ 201,297
Canada....................................... 116,227 5,908 --
Mexico....................................... (72) (2,014) (2,168)
---------- ---------- ----------
Total income from operations......... $ 545,681 $ 186,159 $ 199,129
========== ========== ==========
Identifiable assets at end of year:
United States and Puerto Rico................ $5,352,254 $3,481,060 $2,432,397
Canada....................................... 1,270,591 125,104 --
Mexico....................................... -- 25,383 22,705
---------- ---------- ----------
Total identifiable assets at end of
year............................... $6,622,845 $3,631,547 $2,455,102
========== ========== ==========
11. UNUSUAL ITEMS
A summary of unusual items is as follows (in thousands):
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
Provision for asset impairments, abandoned projects,
and estimated losses related to the disposition of
non-core business assets............................ $24,720 $35,848 $ --
Provisions for losses on contractual commitments...... -- 23,128 1,313
Financing and professional fees....................... -- -- 610
Corporate and regional restructurings................. -- -- 2,810
Western retirement benefits........................... -- 4,824 --
------- ------- -------
Total unusual items......................... $24,720 $63,800 $ 4,733
======= ======= =======
In the third quarter of 1997, the Company charged to expense unusual items
of $10,400,000 related to estimated losses for the closure of two transfer
stations in Minnesota, $8,400,000 related to estimated losses for the closure
and abandonment of two landfills in Massachusetts, and $5,920,000 related to
reserves for various terminated projects.
In the second quarter of 1996, unusual items include approximately
$4,824,000 of retirement benefits associated with Western's pre-merger
retirement plan and approximately $8,128,000 of estimated future losses related
to municipal solid waste contracts in California as a result of the continuing
decline in prices of recyclable materials. In the third quarter of 1996, the
Company also recognized approximately $50,848,000 of unusual items, which
included $28,900,000 of estimated losses related to the disposition of certain
non-core business assets, $15,000,000 of project reserves related to certain
Mexico operations, and $6,948,000 of reserves for various other terminated
projects.
58
61
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. COMMITMENTS AND CONTINGENCIES
Operating leases -- The Company has entered into certain noncancelable
operating leases for vehicles, equipment, offices, and other facilities which
expire through 2017, certain of which contain renewal options. Lease expense
aggregated $29,476,000, $21,260,000, and $15,954,000, during 1997, 1996, and
1995, respectively. Future minimum lease payments under operating leases in
effect at December 31, 1997 are 1998 -- $10,990,000; 1999 -- $8,758,000;
2000 -- $7,223,000; 2001 -- $5,878,000; 2002 -- $5,290,000; and thereafter
$21,314,000.
Environmental matters -- The Company is subject to extensive and evolving
federal, state, and local environmental laws and regulations in the United
States and elsewhere that have been enacted in response to technological
advances and the public's increased concern over environmental issues. As a
result of changing governmental attitudes in this area, management anticipates
that the Company will continually modify or replace facilities and alter methods
of operation. The majority of the expenditures necessary to comply with the
environmental laws and regulations are made in the normal course of business.
Although the Company, to the best of its knowledge, is in compliance in all
material respects with the laws and regulations affecting its operations, there
is no assurance that the Company will not have to expend substantial amounts for
compliance in the future.
Litigation -- As of December 31, 1997, the Company or its subsidiaries has
been notified that they are potentially responsible parties ("PRPs") in
connection with six locations listed on the Superfund National Priorities List
("NPL"). None of the six NPL sites at which claims have been made against the
Company are owned by the Company, and they are at different procedural stages
under Superfund. At four of the NPL sites, the Company's liability is well
defined as a consequence of a governmental decision as to the appropriate
remedy. At the others, where investigations have not been completed, remedies
not selected or responsible parties have been unable to reach agreement, the
Company's liability is less certain. While the Company, based on its status
reviews of its PRP claims, does not currently anticipate that the amount of such
liabilities will have a material adverse effect on the Company's operations,
financial condition or cash flows, the measurement of environmental liabilities
is inherently difficult and the possibility remains that technological,
regulatory or enforcement developments, the results of environmental studies, or
other factors could materially alter this expectation at any time.
The Company has been advised by the U.S. Department of Justice that United
is a target of a federal investigation relating to alleged violations of the
Clean Water Act at the Laurel Ridge Landfill in Kentucky. The investigation
relates to a period prior to the Company's acquisition of United. The Company is
not a target of the investigation and has pledged its full cooperation to the
government.
The Company and certain of its subsidiaries are parties to various other
litigation matters arising in the ordinary course of business. Management
believes that the ultimate resolution of these matters will not have a material
adverse impact on the Company's financial position, results of operations or
cash flows. In the normal course of its business and as a result of the
extensive government regulation of the solid waste industry, the Company
periodically may become subject to various judicial and administrative
proceedings and investigations involving federal, state, or local agencies. To
date, the Company has not been required to pay any material fine or judgment for
violation of an environmental law. From time to time, the Company also may be
subjected to actions brought by citizen's groups in connection with the
permitting of landfills or transfer stations, or alleging violations of the
permits pursuant to which the Company operates. The Company is also subject from
time to time to claims for personal injury or property damage arising out of
accidents involving its vehicles.
Insurance -- The Company carries a broad range of insurance coverages,
which management considers prudent for the protection of the Company's assets
and operations. Some of these coverages are subject to varying retentions of
risk by the Company. The casualty coverages currently include $2,000,000 primary
59
62
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
commercial general liability and $1,000,000 primary automobile liability
supported by $200,000,000 in umbrella insurance protection. The property policy
provides insurance coverage for all of the Company's real and personal property,
including California earthquake perils. The Company also carries $200,000,000 in
aircraft liability protection.
The Company maintains workers' compensation insurance in accordance with
laws of the various states and countries in which it has employees. The Company
also currently has an environmental impairment liability ("EIL") insurance
policy for certain of its landfills, transfer stations, and recycling facilities
that provides coverage for property damages and/or bodily injuries to third
parties caused by off-site pollution emanating from such landfills, transfer
stations, or recycling facilities. This policy provides $5,000,000 of coverage
per loss with a $10,000,000 aggregate limit.
To date, the Company has not experienced any difficulty in obtaining
insurance. However, if the Company in the future is unable to obtain adequate
insurance, or decides to operate without insurance, a partially or completely
uninsured claim against the Company, if successful and of sufficient magnitude,
could have a material adverse effect on the Company's financial condition,
results of operations or cash flows. Additionally, continued availability of
casualty and EIL insurance with sufficient limits at acceptable terms is an
important aspect of obtaining revenue-producing waste service contracts.
13. SELECTED QUARTERLY FINANCIAL DATA, UNAUDITED
The following table summarizes the unaudited consolidated quarterly results
of operations for 1997 and 1996 (in thousands, except per share amounts):
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
Operating revenues:
1997.................................. $460,484 $656,225 $761,751 $735,308
======== ======== ======== ========
1996.................................. $352,105 $410,000 $442,801 $444,225
======== ======== ======== ========
Income (loss) from operations:
1997.................................. $107,315 $165,679 $ 74,355 $198,332
======== ======== ======== ========
1996.................................. $ 66,880 $ 40,047 $(27,298) $106,530
======== ======== ======== ========
Income (loss) before income taxes and
extraordinary item:
1997.................................. $ 96,916 $146,243 $ 48,658 $171,450
======== ======== ======== ========
1996.................................. $ 55,529 $ 25,507 $(38,701) $ 96,402
======== ======== ======== ========
Net income (loss):
1997.................................. $ 57,962 $ 87,296 $ 18,902 $102,870
======== ======== ======== ========
1996.................................. $ 33,430 $ 5,021 $(27,471) $ 57,359
======== ======== ======== ========
Basic earnings (loss) per common share:
1997.................................. $ 0.30 $ 0.43 $ 0.09 $ 0.47
======== ======== ======== ========
1996.................................. $ 0.20 $ 0.03 $ (0.16) $ 0.32
======== ======== ======== ========
Diluted earnings (loss) per common
share:
1997.................................. $ 0.29 $ 0.40 $ 0.09 $ 0.45
======== ======== ======== ========
1996.................................. $ 0.19 $ 0.03 $ (0.16) $ 0.30
======== ======== ======== ========
60
63
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Basic and diluted earnings per common share for each of the quarters
presented above is based on the respective weighted average number of common and
dilutive potential common shares outstanding for each period and the sum of the
quarters may not necessarily be equal to the full year basic and diluted
earnings per common share amounts.
Amounts presented for 1997 and 1996 are restated for the pooling of
interests transactions with United, Sanifill, and Western as discussed in Note
2, and are different from amounts originally reported. The results of operations
for 1997 and 1996 include certain nonrecurring charges for merger costs, unusual
items, and nonrecurring interest, as disclosed elsewhere herein. Nonrecurring
items charged to expense in the first, second, and third quarters of 1997 were
$1,996,000, $3,263,000, and $128,872,000, respectively. In 1996, nonrecurring
charges were $53,248,000, $135,599,000, and $1,579,000 in the second, third, and
fourth quarters, respectively.
14. SUBSEQUENT EVENTS
On January 14, 1998, the Company acquired the solid waste divisions of City
Management Holdings Trust ("City Management") for approximately $735,000,000
consisting primarily of cash and a limited amount of debt assumed. The
businesses acquired include 20 collection operations, ten landfills, and 12
transfer stations primarily in the state of Michigan. This acquisition was
accounted for under the purchase method of accounting.
The unaudited pro forma information set forth below assumes acquisitions in
1996, 1997, and through February 1, 1998, accounted for as purchases had
occurred at the beginning of 1996. The pro forma information is presented for
informational purposes only and is not necessarily indicative of the results of
operations that actually would have been achieved had the acquisitions been
consummated at that time (in thousands, except per share amounts):
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
Operating revenues.......................................... $3,394,513 $3,268,485
Income before extraordinary item............................ 315,307 154,969
Net income.................................................. 309,014 154,969
Basic earnings per common share:
Income before extraordinary item.......................... 1.49 0.85
Net income................................................ 1.46 0.85
Diluted earnings per common share:
Income before extraordinary item.......................... 1.41 0.81
Net income................................................ 1.39 0.81
On January 27, 1998, the Company announced that it had entered into a
definitive agreement to acquire TransAmerican Waste Industries, Inc.
("TransAmerican") for approximately 2,000,000 shares of the Company's common
stock, subject to certain adjustments, and approximately $43,000,000 in
assumption of debt. This acquisition, which is subject to regulatory approval
and approval of TransAmerican shareholders, is expected to close during the
first half of 1998 and is anticipated to be accounted for as a pooling of
interests. The businesses to be acquired include five collection operations,
nine landfills, and two transfer stations located throughout the southern region
of the United States.
The Company entered into a definitive agreement on February 6, 1998, with
American Waste Systems, Inc. ("American"), to acquire American's solid waste
businesses for approximately $150,000,000 in cash. This transaction, which is
subject to regulatory approval and approval of American's shareholders, is also
61
64
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expected to close in the first half of 1998. The businesses to be acquired
include three landfills and one collection operation located in Ohio.
On March 10, 1998, the Company entered into a definitive agreement and plan
of merger pursuant to which a subsidiary of the Company will be merged with and
into WMI and WMI will become a wholly owned subsidiary of the Company. As of the
effective time of the merger, each outstanding share of WMI, other than shares
held in WMI's treasury or owned by WMI, the Company, or any wholly owned
subsidiary of either of them, will be converted into the right to receive 0.725
shares of the Company. This transaction, which is expected to close during 1998,
is subject to regulatory approval and approval of the stockholders of the
Company and WMI. It is anticipated that the Company will issue approximately
345,000,000 shares of its common stock related to this transaction and that this
merger will be accounted for as a pooling of interests.
62
65
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is set forth under the caption
"Election of Directors" in the Company's definitive Proxy Statement for its 1998
Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1998 Proxy Statement"), and is
incorporated herein by reference. Information concerning the executive officers
of the Company is set forth above under "Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth under the caption
"Election of Directors -- Executive Compensation" in the 1998 Proxy Statement
and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth under the caption
"Election of Directors -- Beneficial Ownership of USA Waste Common Stock" in the
1998 Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is set forth under the caption
"Election of Directors -- Certain Relationships and Related Transactions" in the
1998 Proxy Statement and is incorporated herein by reference.
63
66
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Consolidated Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Operations for the years ended December 31,
1997, 1996, and 1995
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996, and 1995
Notes to Consolidated Financial Statements
(a)(2) Consolidated Financial Statement Schedules:
All Consolidated Financial Statement Schedules have been omitted since the
required information is not present or not present in amounts sufficient to
require submission of the schedule, or because the information required is
included in the Consolidated Financial Statements or the notes thereto.
(a)(3) Exhibits:
EXHIBIT NO.* DESCRIPTION
------------ -----------
2.1 -- Amended and Restated Agreement and Plan of Merger, dated
as of November 28, 1994, by and among the Registrant,
Chambers Acquisition Corporation and Chambers Development
Company, Inc. [Incorporated by reference to Appendix A in
the Registrant's Registration Statement on Form S-4, File
No. 33-59259].
2.2 -- Agreement and Plan of Merger, dated as of December 18,
1995, by and among the Registrant, Riviera Acquisition
Corporation and Western Waste Industries [Incorporated by
reference to Appendix A in the Registrant's Registration
Statement on Form S-4, File No. 333-02181].
2.3 -- Agreement and Plan of Merger, dated as of June 22, 1996,
by and among the Registrant, Quatro Acquisition Corp. and
Sanifill, Inc. [Incorporated by reference to Annex A in
the Registrant's Registration Statement on Form S-4, File
No. 333-08161].
2.4 -- Amendment No. 1, dated as of July 18, 1996, to Agreement
and Plan of Merger by and among the Registrant, Quatro
Acquisition Corp. and Sanifill, Inc. [Incorporated by
reference to Annex A in the Registrant's Registration
Statement on Form S-4, File No. 333-08161].
2.5 -- Agreement and Plan of Merger, dated as of April 13, 1997,
by and among the Registrant, Riviera Acquisition
Corporation and United Waste Systems, Inc. [Incorporated
by reference to Appendix A in the Registrant's
Registration Statement on Form S-4, File No. 333-31979].
2.6 -- Agreement and Plan of Merger, dated March 10, 1998, by
and among the Registrant, Dome Merger Subsidiary, Inc.
and Waste Management, Inc. [Incorporated by reference to
Exhibit 99.1 of the Registrant's Current Report on Form
8-K dated March 10, 1998].
3.1 -- Restated Certificate of Incorporation, as amended
[Incorporated by reference to Exhibit 3(b) of the
Registrant's Quarterly Report, as amended, on Form 10-Q
for the three months ended September 30, 1997].
64
67
EXHIBIT NO.* DESCRIPTION
------------ -----------
3.2 -- Bylaws [Incorporated by reference to Exhibit 3.2 to the
Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form S-4, File No. 33-60103].
4.1 -- Specimen Stock Certificate [Incorporated by reference to
Exhibit 4.3 of the Registrant's Registration Statement on
Form S-3, File No. 33-76224].
4.2 -- Supplemental Indenture, dated as of September 3, 1996,
among the Registrant, Sanifill, Inc., and Texas Commerce
Bank National Association relating to Sanifill, Inc.'s 5%
Convertible Subordinated Debentures Due March 1, 2006
[Incorporated by reference to Exhibit 10.3 of the
Registrant's Current Report on Form 8-K dated September
3, 1996].
4.3 -- Indenture for Subordinated Debt Securities dated February
3, 1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated February 7, 1997].
4.4 -- Supplemental Indenture, dated as of August 26, 1997,
among the Registrant, United Waste Systems, Inc. and
Bankers Trust Company relating to United Waste Systems,
Inc.'s 4 1/2% Convertible Subordinated Notes due June 1,
2001 [Incorporated by reference to Exhibit 10.2 of the
Registrant's Current Report on Form 8-K dated August 26,
1997].
4.5 -- Indenture for Senior Debt Securities dated September 10,
1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated September 10, 1997].
10.1 -- 1990 Stock Option Plan [Incorporated by reference to
Exhibit 10.1 of the Registrant's Annual report on Form
10-K for the year ended December 31, 1990].
10.2 -- 1993 Stock Incentive Plan, as amended and restated.
10.3 -- 1996 Stock Option Plan for Non-Employee Directors
[Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-14115].
10.4 -- Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated
by reference to Exhibit 10.3 of the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1994].
10.5 -- Western Waste Industries Amended and Restated 1983 Stock
Option Plan [Incorporated by reference to Exhibit 99.1 of
the Registrant's Registration Statement on Form S-8, File
No. 333-02181].
10.6 -- Western Waste Industries 1983 Non-Qualified Stock Option
Plan [Incorporated by reference to Exhibit 99.2 of the
Registrant's Registration Statement on Form S-8, File No.
333-02181].
10.7 -- Western Waste Industries 1992 Option Plan [Incorporated
by reference to Exhibit 99.3 of the Registrant's
Registration Statement on Form S-8, File No. 333-02181].
10.8 -- Sanifill, Inc. 1994 Long-Term Incentive Plan
[Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-08161].
10.9 -- Sanifill, Inc. 1989 Stock Option Plan [Incorporated by
reference to Exhibit 99.2 of the Registrant's
Registration Statement on Form S-8, File No. 333-08161].
10.10 -- 1997 Employee Stock Purchase Plan.
10.11 -- 401(k) Restoration Plan.
65
68
EXHIBIT NO.* DESCRIPTION
------------ -----------
10.12 -- Amended and Restated Revolving Credit Agreement dated as
of August 7, 1997, among the Registrant, Bank of America
National Trust and Savings Association, Morgan Guaranty
Trust Company of New York and other financial
institutions [Incorporated by reference to Exhibit 10.1
of the Registrant's Current Report on Form 8-K dated
August 26, 1997].
10.13 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and John E. Drury.
10.14 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and John E. Drury.
10.15 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Rodney R. Proto.
10.16 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Rodney R. Proto.
10.17 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Earl E. DeFrates.
10.18 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Earl E. DeFrates.
10.19 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Susan J. Piller.
10.20 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Susan J. Piller.
10.21 -- Employment Agreement dated as of October 7, 1997 between
the Registrant and William A. Rothrock.
10.22 -- Amendment dated as of December 12, 1997 to Employment
Agreement between the Registrant and William A. Rothrock.
10.23 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Gregory T. Sangalis.
10.24 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Gregory T. Sangalis.
10.25 -- Employment Agreement dated as of August 26, 1997 between
the Registrant and Ronald H. Jones.
10.26 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Bruce E. Snyder.
10.27 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Bruce E. Snyder.
10.28 -- Employment Agreement dated as of June 1, 1997 among the
Registrant, Canadian Waste Services, Inc. and David
Sutherland-Yoest.
10.29 -- Consulting and Non-compete Agreement dated June 25, 1995,
between the Registrant and John G. Rangos, Sr.
[Incorporated by reference to Exhibit 10.22 to the
Registrant's Quarterly Report on Form 10-Q/A for the
period ended June 30, 1995].
10.30 -- Employment Agreement dated June 25, 1995, between the
Registrant and Alexander W. Rangos [Incorporated by
reference to Exhibit 10.22 to the Registrant's Quarterly
Report on Form 10-Q/A for the period ended June 30,
1995].
10.31 -- Letter Agreement dated November 10, 1997, between the
Registrant and Kosti Shirvanian.
66
69
EXHIBIT NO.* DESCRIPTION
------------ -----------
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Registrant.
23.1 -- Consent of Coopers & Lybrand L.L.P.
27.1 -- Financial Data Schedule.
27.2 -- Restated Financial Data Schedule.
27.3 -- Restated Financial Data Schedule.
27.4 -- Restated Financial Data Schedule.
- ---------------
* In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the Registrant's file number under that Act
is 1-12154.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the Company
filed a Current Report on Form 8-K dated November 12, 1997 to report the
supplemental financial statements of USA Waste Services, Inc. to reflect its
acquisition of United Waste Systems, Inc., which was accounted for as a pooling
of interests. The financial statements filed included: (i) The supplemental
consolidated balance sheets as of December 31, 1996 and 1995, and the related
supplemental consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996;
(ii) The supplemental interim condensed consolidated balance sheets as of June
30, 1997 and December 31, 1996, the related supplemental interim condensed
consolidated statements of operations for the six months ended June 30, 1997 and
1996, the related supplemental interim condensed consolidated statement of
stockholders' equity for the six months ended June 30, 1997, and the related
supplemental interim condensed consolidated statements of cash flows for the six
months ended June 30, 1997 and 1996.
67
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
USA WASTE SERVICES, INC.
By: /s/ JOHN E. DRURY
------------------------------------
John E. Drury,
Chief Executive Officer
Date: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN E. DRURY Chairman of the Board and Chief March 30, 1998
- ----------------------------------------------------- Executive Officer (Principal
John E. Drury Executive Officer)
/s/ RODNEY R. PROTO President, Chief Operating March 30, 1998
- ----------------------------------------------------- Officer and Director
Rodney R. Proto
/s/ EARL E. DEFRATES Executive Vice President and March 30, 1998
- ----------------------------------------------------- Chief Financial Officer
Earl E. DeFrates (Principal Financial Officer)
/s/ BRUCE E. SNYDER Vice President and Chief March 30, 1998
- ----------------------------------------------------- Accounting Officer (Principal
Bruce E. Snyder Accounting Officer)
/s/ RALPH F. COX Director March 30, 1998
- -----------------------------------------------------
Ralph F. Cox
/s/ RICHARD J. HECKMANN Director March 30, 1998
- -----------------------------------------------------
Richard J. Heckmann
/s/ RICHARD D. KINDER Director March 30, 1998
- -----------------------------------------------------
Richard D. Kinder
/s/ LARRY J. MARTIN Director March 30, 1998
- -----------------------------------------------------
Larry J. Martin
/s/ WILLIAM E. MOFFETT Director March 30, 1998
- -----------------------------------------------------
William E. Moffett
/s/ ALEXANDER W. RANGOS Director March 30, 1998
- -----------------------------------------------------
Alexander W. Rangos
/s/ JOHN G. RANGOS, SR. Director March 30, 1998
- -----------------------------------------------------
John G. Rangos, Sr.
/s/ KOSTI SHIRVANIAN Director March 30, 1998
- -----------------------------------------------------
Kosti Shirvanian
/s/ DAVID SUTHERLAND-YOEST Director March 30, 1998
- -----------------------------------------------------
David Sutherland-Yoest
/s/ JEROME B. YORK Director March 30, 1998
- -----------------------------------------------------
Jerome B. York
68
71
INDEX TO EXHIBITS
EXHIBIT NO.* DESCRIPTION
------------ -----------
2.1 -- Amended and Restated Agreement and Plan of Merger, dated
as of November 28, 1994, by and among the Registrant,
Chambers Acquisition Corporation and Chambers Development
Company, Inc. [Incorporated by reference to Appendix A in
the Registrant's Registration Statement on Form S-4, File
No. 33-59259].
2.2 -- Agreement and Plan of Merger, dated as of December 18,
1995, by and among the Registrant, Riviera Acquisition
Corporation and Western Waste Industries [Incorporated by
reference to Appendix A in the Registrant's Registration
Statement on Form S-4, File No. 333-02181].
2.3 -- Agreement and Plan of Merger, dated as of June 22, 1996,
by and among the Registrant, Quatro Acquisition Corp. and
Sanifill, Inc. [Incorporated by reference to Annex A in
the Registrant's Registration Statement on Form S-4, File
No. 333-08161].
2.4 -- Amendment No. 1, dated as of July 18, 1996, to Agreement
and Plan of Merger by and among the Registrant, Quatro
Acquisition Corp. and Sanifill, Inc. [Incorporated by
reference to Annex A in the Registrant's Registration
Statement on Form S-4, File No. 333-08161].
2.5 -- Agreement and Plan of Merger, dated as of April 13, 1997,
by and among the Registrant, Riviera Acquisition
Corporation and United Waste Systems, Inc. [Incorporated
by reference to Appendix A in the Registrant's
Registration Statement on Form S-4, File No. 333-31979].
2.6 -- Agreement and Plan of Merger, dated March 10, 1998, by
and among the Registrant, Dome Merger Subsidiary, Inc.
and Waste Management, Inc. [Incorporated by reference to
Exhibit 99.1 of the Registrant's Current Report on Form
8-K dated March 10, 1998].
3.1 -- Restated Certificate of Incorporation, as amended
[Incorporated by reference to Exhibit 3(b) of the
Registrant's Quarterly Report, as amended, on Form 10-Q
for the three months ended September 30, 1997].
3.2 -- Bylaws [Incorporated by reference to Exhibit 3.2 to the
Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form S-4, File No. 33-60103].
4.1 -- Specimen Stock Certificate [Incorporated by reference to
Exhibit 4.3 of the Registrant's Registration Statement on
Form S-3, File No. 33-76224].
4.2 -- Supplemental Indenture, dated as of September 3, 1996,
among the Registrant, Sanifill, Inc., and Texas Commerce
Bank National Association relating to Sanifill, Inc.'s 5%
Convertible Subordinated Debentures Due March 1, 2006
[Incorporated by reference to Exhibit 10.3 of the
Registrant's Current Report on Form 8-K dated September
3, 1996].
4.3 -- Indenture for Subordinated Debt Securities dated February
3, 1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated February 7, 1997].
4.4 -- Supplemental Indenture, dated as of August 26, 1997,
among the Registrant, United Waste Systems, Inc. and
Bankers Trust Company relating to United Waste Systems,
Inc.'s 4 1/2% Convertible Subordinated Notes due June 1,
2001 [Incorporated by reference to Exhibit 10.2 of the
Registrant's Current Report on Form 8-K dated August 26,
1997].
72
EXHIBIT NO.* DESCRIPTION
------------ -----------
4.5 -- Indenture for Senior Debt Securities dated September 10,
1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated September 10, 1997].
10.1 -- 1990 Stock Option Plan [Incorporated by reference to
Exhibit 10.1 of the Registrant's Annual report on Form
10-K for the year ended December 31, 1990].
10.2 -- 1993 Stock Incentive Plan, as amended and restated.
10.3 -- 1996 Stock Option Plan for Non-Employee Directors
[Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-14115].
10.4 -- Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated
by reference to Exhibit 10.3 of the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1994].
10.5 -- Western Waste Industries Amended and Restated 1983 Stock
Option Plan [Incorporated by reference to Exhibit 99.1 of
the Registrant's Registration Statement on Form S-8, File
No. 333-02181].
10.6 -- Western Waste Industries 1983 Non-Qualified Stock Option
Plan [Incorporated by reference to Exhibit 99.2 of the
Registrant's Registration Statement on Form S-8, File No.
333-02181].
10.7 -- Western Waste Industries 1992 Option Plan [Incorporated
by reference to Exhibit 99.3 of the Registrant's
Registration Statement on Form S-8, File No. 333-02181].
10.8 -- Sanifill, Inc. 1994 Long-Term Incentive Plan
[Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-08161].
10.9 -- Sanifill, Inc. 1989 Stock Option Plan [Incorporated by
reference to Exhibit 99.2 of the Registrant's
Registration Statement on Form S-8, File No. 333-08161].
10.10 -- 1997 Employee Stock Purchase Plan.
10.11 -- 401(k) Restoration Plan.
10.12 -- Amended and Restated Revolving Credit Agreement dated as
of August 7, 1997, among the Registrant, Bank of America
National Trust and Savings Association, Morgan Guaranty
Trust Company of New York and other financial
institutions [Incorporated by reference to Exhibit 10.1
of the Registrant's Current Report on Form 8-K dated
August 26, 1997].
10.13 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and John E. Drury.
10.14 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and John E. Drury.
10.15 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Rodney R. Proto.
10.16 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Rodney R. Proto.
10.17 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Earl E. DeFrates.
10.18 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Earl E. DeFrates.
73
EXHIBIT NO.* DESCRIPTION
------------ -----------
10.19 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Susan J. Piller.
10.20 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Susan J. Piller.
10.21 -- Employment Agreement dated as of October 7, 1997 between
the Registrant and William A. Rothrock.
10.22 -- Amendment dated as of December 12, 1997 to Employment
Agreement between the Registrant and William A. Rothrock.
10.23 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Gregory T. Sangalis.
10.24 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Gregory T. Sangalis.
10.25 -- Employment Agreement dated as of August 26, 1997 between
the Registrant and Ronald H. Jones.
10.26 -- Employment Agreement dated as of June 1, 1997 between the
Registrant and Bruce E. Snyder.
10.27 -- Amendment dated as of December 1, 1997 to Employment
Agreement between the Registrant and Bruce E. Snyder.
10.28 -- Employment Agreement dated as of June 1, 1997 among the
Registrant, Canadian Waste Services, Inc. and David
Sutherland-Yoest.
10.29 -- Consulting and Non-compete Agreement dated June 25, 1995,
between the Registrant and John G. Rangos, Sr.
[Incorporated by reference to Exhibit 10.22 to the
Registrant's Quarterly Report on Form 10-Q/A for the
period ended June 30, 1995].
10.30 -- Employment Agreement dated June 25, 1995, between the
Registrant and Alexander W. Rangos [Incorporated by
reference to Exhibit 10.22 to the Registrant's Quarterly
Report on Form 10-Q/A for the period ended June 30,
1995].
10.31 -- Letter Agreement dated November 10, 1997, between the
Registrant and Kosti Shirvanian.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Registrant.
23.1 -- Consent of Coopers & Lybrand L.L.P.
27.1 -- Financial Data Schedule.
27.2 -- Restated Financial Data Schedule.
27.3 -- Restated Financial Data Schedule.
27.4 -- Restated Financial Data Schedule.
- ---------------
* In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the Registrant's file number under that Act
is 1-12154.
1
EXHIBIT 10.2
USA WASTE SERVICES, INC.
1993 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED)
APRIL 8, 1997
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.7. Death, Retirement and Termination of Employment of Optionee . . . . . . . . . . . . . . . . . . 5
Section 2.8. Tax Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.9. Effect of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 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 . . . . . . . . . . . . . . . . . . . . . . . . 6
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV. RELOAD OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.1. Authorization of Reload Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V. ALTERNATE APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.1. Award of Alternate Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.2. Alternate Appreciation Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.7. Termination of Employment, Retirement, Death or Disability . . . . . . . . . . . . . . . . . . 9
ARTICLE 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 . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VII. SUBSTITUTION AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII. BONUS STOCK AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.1. Award of Bonus Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.2. Stock Bonus Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.1. General Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.2. Non-Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 9.8. Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9.9. Newly Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9.10. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9.11. Changes in the Company's Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9.12. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.13. Amendment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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USA WASTE SERVICES, INC.
1993 STOCK INCENTIVE PLAN
ARTICLE I. GENERAL
Section 1.1. Purpose. The purposes of this Stock Incentive Plan
(the "Plan") are to: (1) closely associate the interests of the employees and
consultants of USA Waste Services, Inc. and its Subsidiaries and Affiliates
(collectively referred to as the "Company") with the shareholders to generate
an increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of its
stockholders; (2) provide employees and consultants with a proprietary
ownership interest in the Company commensurate with Company performance, as
reflected in increased shareholder value; (3) maintain competitive compensation
levels thereby attracting and retaining highly competent and talented
employees and consultants; and (4) provide an incentive to employees and
consultants for continuous employment with or services to the Company.
Section 1.2. Administration.
(a) The Plan shall be administered by a committee of non-employee
directors appointed by the Board of Directors of USA Waste Services, Inc. (the
"Committee"), as constituted from time to time.
(b) The Committee shall have the authority, in its sole discretion
and from 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.
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(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be final,
conclusive, and binding upon all persons, including the Company, any
participant, any stockholder of USA Waste Services, Inc., and any employee or
consultant. A majority of the members of the Committee may determine its
actions and fix the time and place of its meetings. No member of the Committee
shall be liable for any action taken or decision 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
and consultants to the Company who are responsible for or contribute to the
management, growth, success and, profitability of the Company. In making this
selection and in determining the form and amount of Awards, the Committee shall
consider any factors deemed relevant, including the individual's functions,
responsibilities, value of services to the Company, and past and potential
contributions to the Company's profitability and growth.
Section 1.4. Types of Awards Under Plan. Awards under the Plan
may be in the 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) Alternate Stock 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 the
Company and the recipient of the Award, in form and substance satisfactory to
the Committee, and not inconsistent with this Plan.
Section 1.5. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of Common Stock $.01 par value, of
USA Waste Services, Inc. ("Common Stock"). Subject to the further provisions
of this Section 1.5 and Section 9.10, the maximum number of shares of Common
Stock which may be issued under the Plan shall be 6,500,000.
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(b) For purposes of calculating the maximum number of shares of
Common Stock 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 Stock
that may be issued pursuant to Incentive Stock Options is 6,500,000.
(c) In addition to shares of Common Stock actually issued pursuant
to the exercise of Stock Options, Incentive Stock Options, Reload Options, or
Alternate Appreciation Rights, there shall be deemed to have been issued a
number of shares equal to the number of shares of Common Stock in respect of
which Limited Rights (as described in Article VI) shall have been exercised.
(d) Shares tendered by a Participant or withheld as payment for
shares issued upon exercise of a Stock Option, Incentive Stock Option, or
Reload Option shall be available for issuance under the Plan. Any shares of
Common Stock subject to a Stock Option, Incentive Stock Option, or Reload
Option that for any reason is terminated unexercised or expires shall again be
available for issuance under the Plan, but shares subject to a Stock Option,
Incentive Stock Option, or Reload Option that are not issued as a result of the
exercise of Limited Rights shall not again be available for issuance under the
Plan.
(e) The maximum number of shares of Common Stock with respect to
which any Participant may receive Awards in any calendar year is 1,500,000.
Section 1.6. Effective Date and Term of Plan.
(a) The Plan became effective on the date it was approved by the
holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at the 1993 Annual Meeting of shareholders of USA
Waste Services, Inc.
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(b) No Awards shall be made under the Plan after the tenth
anniversary of the effective date of this Plan; provided, however, that the
Plan and all Awards made under the Plan prior to such date shall remain in
effect until such Awards have been satisfied or terminated in accordance with
the Plan and the terms of such 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 as the Committee may prescribe, grant to any Participant in the
Plan one or more options to purchase the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is
granted shall mean the date selected by the Committee as of which the Committee
allots a specific number of shares to a Participant pursuant to the Plan.
Section 2.2. Stock Option Agreements. The grant of a Stock Option
shall be evidenced by a written Award Agreement, executed by the Company and
the holder of the Stock Option (the "Optionee"), stating the number of shares
of Common Stock subject to the Stock Option evidenced thereby, and in such form
as the Committee may from time to time determine.
Section 2.3. Stock Option Price. The Option Price per share of
Common Stock deliverable upon the exercise of a Stock Option shall be an amount
selected by the Committee and shall not be less than 100% of the Fair Market
Value 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
exercisable prior to six months from the date of its grant unless a shorter
period is provided by the Committee or by another Section of this Plan, and may
be exercised during the period established by the Committee, but not after ten
years from the date of grant thereof (the "Option Term"). No Stock Option
shall be exercisable after the expiration of its Option Term.
Section 2.5. Manner of Payment. Each Award Agreement providing for
Stock Options shall set forth the procedure governing the exercise of the Stock
Option granted thereunder, and shall provide that, upon such exercise in
respect of any shares of Common 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 Committee from time to time, or with previously owned Common
Stock, or at the discretion of the Committee, in whole or in part with, the
surrender of another Award under the Plan, the withholding of shares of Common
Stock issuable upon exercise of such Stock Option, other property, or any
combination thereof (each based on the Fair Market Value of such Common Stock,
Award or other property on the date the Stock Option is exercised as determined
by the Committee).
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Section 2.6. Delivery of Shares. As soon as practicable after
receipt of payment, the Committee shall deliver to the Optionee a certificate
or certificates for such shares of Common Stock. The Optionee shall become a
shareholder of the Company with respect to Common Stock represented by share
certificates 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 the Committee:
(a) Upon the death of the Optionee, any rights to the extent
exercisable by the Optionee on the date of termination of employment or
consulting, as the case may be, may be exercised by the Optionee's estate, or
by a person who acquires the right to exercise such Stock Option by bequest or
inheritance or by reason of the death of the Optionee, provided that such
exercise occurs within both the remaining effective term of the Stock Option
and one year after the Optionee's death. The provisions of this Section shall
apply notwithstanding the fact that the Optionee's employment may have
terminated prior to death.
(b) Upon termination of the Optionee's employment by reason of
retirement or permanent disability (as each is determined by the Committee),
the Optionee may, within 36 months from the date of termination, exercise any
Stock Options to the extent such Stock Options are exercisable on the date of
such termination of employment.
(c) Except as provided in Subsections (a) and (b) of this Section
2.7, or except as otherwise determined by the Committee, all Stock Options
shall terminate three months after the date of the termination of the
Optionee's employment or consulting, as the case may be, and shall be
exercisable during such period only to the extent exercisable on the date of
termination of employment or consulting.
Section 2.8. Tax Election. Recipients of Stock Options who are
directors or executive officers of the Company or who own more than 10% of the
Common Stock of the Company ("Section 16(a) Option Holders") at the time of
exercise of a Stock Option may elect, in lieu of paying to the Company an
amount required to be withheld under applicable tax laws in connection with the
exercise of a Stock Option in whole or in part, to have the Company withhold
shares of Common Stock having a fair market value equal to the amount required
to be withheld. Such election may not be made prior to six months following
the grant of the Stock Option, except in the event of a Section 16(a) Option
Holders's death or disability. The election may be made at the time the Stock
Option is exercised by notifying the Company of the election, specifying the
amount of such withholding and the date on which the number of shares to be
withheld is to be determined ("Tax Date"), which shall be either (i) the date
the Stock Option is exercised or (ii) a date six months after the Stock Option
was granted, if later. The number of shares of Common Stock to be withheld to
satisfy the tax obligation shall be the amount
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of such tax liability divided by the fair market value of the Common Stock on
the Tax Date (or if not a business day, on the next closest business day). If
the Tax Date is not the exercise date, the Company may issue the full number of
shares 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 Tax
Date a number of such shares necessary to satisfy the withholding obligation.
Certificates representing such shares of Common Stock shall bear a legend
describing such Section 16(a) Option Holders obligation hereunder.
Section 2.9. Effect of Exercise. The exercise of any Stock Option
shall cancel that number of related Alternate Appreciation Rights and/or
Limited Rights, if any, that is equal to the number of shares of Common Stock
purchased pursuant to said option unless otherwise agreed by the Committee in
an Award Agreement or otherwise.
ARTICLE III. INCENTIVE STOCK OPTIONS
Section 3.1. Award of Incentive Stock Options. The Committee may,
from time to time and subject to the provisions of the Plan and such other
terms and conditions as the Committee may prescribe, grant to any employee of
USA Waste Services, Inc. or a Subsidiary one or more "incentive stock options"
(intended to qualify as such under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options") to purchase the number of shares of Common Stock allotted by the
Committee. The date an Incentive Stock Option is granted shall mean the date
selected by the Committee as of which the Committee allots a specific number of
shares to a participant pursuant to the Plan.
Section 3.2. Incentive Stock Option Agreements. The grant of an
Incentive Stock Option shall be evidenced by a written Award Agreement,
executed by the Company and the holder of an Incentive Stock Option (the
"Optionee"), stating the number of shares of Common Stock subject to the
Incentive Stock Option evidenced thereby, and in such form as the Committee may
from time to time determine.
Section 3.3. Incentive Stock Option Price. The Option Price per
share of Common Stock deliverable upon the exercise of an Incentive Stock
Option shall be at least 100% of the Fair Market Value of a share of Common
Stock on the date the Incentive Stock Option is granted; provided, however, the
Option Price per share of Common Stock deliverable upon the exercise of an
Incentive Stock Option granted to any owner of 10% or more of the total
combined voting power of all classes of stock of the Company and its
subsidiaries shall be at least 110% of the fair market value of a share of
Common Stock on the date the Incentive Stock Option is granted.
Section 3.4. Term and Exercise. Each Incentive Stock Option shall
not be exercisable prior to six months from the date of its grant unless a
shorter period is provided by the Committee or another Section of this Plan,
and may be exercised during the period established by the Committee, but not
after ten years from the date of grant
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thereof (the "Option Term"). No Incentive Stock Option shall be exercisable
after the expiration of its Option Term.
Section 3.5. Maximum Amount of Incentive Stock Option Grant. To the
extent that the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Common Stock with respect to
which Incentive Stock Options granted are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of
USA Waste Services, Inc. and its parent and subsidiary corporations exceeds
$100,000, such Incentive Stock Options shall be treated as Options which do not
constitute Incentive Stock Options.
Section 3.6. Death of Optionee. Unless otherwise provided in an
Award Agreement:
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable by the Optionee on the date of termination of employment may be
exercised by the Optionee's estate or by a person who acquires the right to
exercise such Incentive Stock Option by bequest or inheritance or by reason of
the death of the Optionee, provided that such exercise occurs within both the
remaining option term of the Incentive Stock Option and one year after the
Optionee's death.
(b) The provisions of this Section shall apply notwithstanding the
fact that the Optionee's employment may have terminated prior to death.
Section 3.7. Retirement or Disability. Unless otherwise provided
in an Award Agreement, upon the termination of the Optionee's employment by
reason of permanent disability or retirement (as each is determined by the
Committee), the Optionee may, within 36 months from the date of such
termination of employment, exercise any Incentive Stock Options to the extent
such Incentive Stock Options were exercisable at the date of such termination
of employment. Notwithstanding the foregoing, the tax treatment available
pursuant to Section 422 of the Code upon the exercise of an Incentive Stock
Option will not be available to an Optionee who exercises any Incentive Stock
Options more than (i) 12 months after the date of termination of employment due
to permanent disability or (ii) three months after the date of termination of
employment due to retirement.
Section 3.8. Termination for Other Reasons. Except as provided in
Sections 3.6 and 3.7 or except as otherwise determined by the Committee, all
Incentive Stock Options shall terminate three months after the date of the
termination of the Optionee's employment and shall be exercisable during such
period only to the extent exercisable on the date of termination of employment.
Section 3.9. Applicability of Stock Options Sections. Sections 2.5,
Manner of Payment; 2.6, Delivery of Shares; 2.8, Tax Elections and 2.9, Effect
of Exercise,
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applicable to Stock Options, shall apply equally to Incentive Stock Options.
Such Sections are incorporated by reference in this Article III as though fully
set forth herein.
ARTICLE IV. RELOAD OPTIONS
Section 4.1. Authorization of Reload Options. Concurrently with or
subsequent to the award of Stock Options to any Participant in the Plan, the
Committee may authorize reload options ("Reload Options") to purchase shares of
Common Stock. The number of Reload Options shall equal (i) the number of
shares of Common Stock used to pay the exercise price of the underlying Stock
Options or 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 the exercise price underlying the Stock Option or Incentive Stock
Option or used to satisfy any tax withholding requirement incident to the
exercise of the underlying Stock Options or Incentive Stock Options. The grant
of a Reload Option will become effective upon the exercise of underlying Stock
Options, Incentive Stock Options, or Reload Options through the use of shares
of Common Stock held by the Optionee or the withholding of shares by the
Company in payment of the exercise price of the underlying Stock Option or
Incentive Stock Option held by the Optionee. Notwithstanding the fact that the
underlying option may be an Incentive Stock Option, a Reload Option is not
intended to qualify as an "incentive stock option" under Section 422 of the
Code.
Section 4.2. Reload Option Amendment. Each Award Agreement shall
state whether the Committee has authorized Reload Options with respect to the
Stock Options and/or Incentive Stock Options covered by such Award Agreement.
Upon the exercise of an underlying Stock Option, Incentive Stock Option, or
other Reload Option, the Reload Option will be evidenced by an amendment to the
underlying Award Agreement in such form as the Committee shall approve.
Section 4.3. Reload Option Price. The Option Price per share of
Common Stock deliverable upon the exercise of a Reload Option shall be the
Fair Market Value of a share of Common Stock on the date the grant of the
Reload Option becomes effective.
Section 4.4. Term and Exercise. Each Reload Option is fully
exercisable six months from the effective date of grant. The term of each
Reload Option shall be equal to the remaining option term of the underlying
Stock Option and/or Incentive Stock Option.
Section 4.5. Termination of Employment. Unless otherwise determined
by the Committee in an Award Agreement or otherwise, no additional Reload
Options shall be granted to Optionees when Stock Options, Incentive Stock
Options, and/or Reload Options are exercised pursuant to the terms of this Plan
following termination of the Optionee's employment.
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Section 4.6. Applicability of Stock Options Sections. Sections 2.5,
Manner of Payment; 2.6 Delivery of Shares; 2.7, Death, Retirement and
Termination of Employment of Optionee; 2.8, Tax Elections; and 2.9, Effect of
Exercise, applicable to Stock Options, shall apply equally to Reload Options.
Such Sections are incorporated by reference in this Article IV as though fully
set forth herein.
ARTICLE V. ALTERNATE APPRECIATION RIGHTS
Section 5.1. Award of Alternate Appreciation Rights. Concurrently
with or subsequent to the award of any Stock Option, Incentive Stock Option, or
Reload Option 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 the Committee may prescribe, award to the Optionee with respect to each
share of Common Stock covered by an Option, a related alternate appreciation
right permitting the Optionee to be paid the appreciation on the Option in lieu
of exercising the Option ("Alternate Appreciation Right").
Section 5.2. Alternate Appreciation Rights Agreement. Alternate
Appreciation Rights shall be evidenced by written Award Agreements in such form
as the Committee may from time to time determine.
Section 5.3. Exercise. An Optionee who has been granted Alternate
Appreciation Rights may, from time to time, in lieu of the exercise of an equal
number of Options, elect to exercise one or more Alternate Appreciation Rights
and thereby become entitled to receive from the Company payment in Common Stock
of the number of shares determined pursuant to Section 5.4 and 5.5. Alternate
Appreciation Rights shall be exercisable only to the same extent and subject to
the same conditions as the Options related thereto are exercisable, as provided
in this Plan. The Committee may, in its discretion, prescribe additional
conditions to the exercise of any Alternate Appreciation Rights.
Section 5.4. Amount of Payment. The amount of payment to which an
Optionee shall be entitled upon the exercise of each Alternate Appreciation
Right shall be equal to 100% of the amount, if any, by which the Fair Market
Value of a share of Common Stock on the exercise date exceeds the Option Price
per share on the Option related to such Alternate Appreciation Right. A
Section 16(a) Option Holder may elect to withhold shares of Common Stock issued
under this Section to pay taxes as described in Section 2.8.
Section 5.5. Form of Payment. The number of shares to be paid shall
be determined by dividing the amount of payment determined pursuant to Section
5.4 by the Fair Market Value of a share of Common Stock on the exercise date
of such Alternate Appreciation Rights. As soon as practicable after exercise,
the Company shall deliver to the Optionee a certificate or certificates for
such shares of Common Stock.
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Section 5.6. Effect of Exercise. Unless otherwise provided in an
Award Agreement or agreed to by the Committee, the exercise of any Alternate
Appreciation Rights shall cancel an equal number of Stock Options, Incentive
Stock Options, Reload Options, and Limited Rights, if any, related to said
Alternate 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 to the award of any Stock Option, Incentive Stock Option, Reload
Option, or Alternate Appreciation Right, the Committee may, subject to the
provisions of the 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 an Option, a related limited right permitting the Optionee, during a
specified limited time period, to be paid the appreciation on the Option in
lieu of exercising the Option ("Limited Right").
Section 6.2. Limited Rights Agreement. Limited Rights granted under
the Plan shall be evidenced by written Award Agreements in such form as the
Committee may from time to time determine.
Section 6.3. Exercise Period. Limited Rights are exercisable in
full for a period of seven months following the date of a Change in Control of
USA Waste Services, Inc. (the "Exercise Period"); provided, however, that
Limited Rights may not be exercised under any circumstances until the
expiration of the six-month period following the date of grant.
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Section 6.4. Amount of Payment. The amount of payment to which an
Optionee shall 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 Price per share of Common Stock covered by the related Option and
the Market Price of a 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 connection with any Change in Control and (ii) the highest price per
share of the Company's Common Stock reflected in the consolidated trading
tables of The Wall Street Journal (presently the New York Stock Exchange -
Composite Transactions) during the 60-day period prior to the Change in
Control.
Section 6.5. Form of Payment. Payment of the amount to which an
Optionee is entitled upon the exercise of Limited Rights, as determined
pursuant to Section 6.4, shall be made solely in cash.
Section 6.6. Effect of Exercise. If Limited Rights are exercised,
the Stock Options, Incentive Stock Options, Reload Options, and Alternate
Appreciation Rights, if any, related to such Limited Rights shall cease to be
exercisable to the extent of the number of shares with respect to which the
Limited Rights were exercised. Upon the exercise or termination of the Stock
Options, Incentive Stock Options, Reload Options, and Alternate Appreciation
Rights, if any, related to such Limited Rights, the Limited Rights granted with
respect thereto terminate to the extent of the number of shares as to which the
related options and Alternate Appreciation Rights were exercised or terminated.
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Section 6.7. Retirement or Disability. 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 Limited Right to the extent such Limited Right is
exercisable during such six-month period.
Section 6.8. Death of Optionee or Termination for Other Reasons.
Except as provided in Sections 6.7 and 6.9, or except as otherwise determined
by the Committee, all Limited Rights granted under the Plan shall terminate
upon the termination of the Optionee's employment, consulting or upon the death
of the Optionee.
Section 6.9. Termination Related to a Change in Control. The
requirement that an Optionee be terminated by reason of retirement or permanent
disability or be employed by the Company at the time of exercise pursuant to
Sections 6.7 and 6.8, respectively, is waived during the Exercise Period as to
an Optionee who (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 who voluntarily terminates if such termination was the result of a
good faith determination by the Optionee that as a result of the Change in
Control he is unable to effectively discharge his present duties or the duties
of the position which he occupied just prior to the Change in Control. As used
herein "just cause" shall mean willful misconduct or dishonesty or conviction
of or failure to contest prosecution for a felony, or excessive absenteeism
unrelated to illness.
ARTICLE VII. SUBSTITUTION AWARDS
Section 7.1. Awards may be granted under the Plan from time to time
in substitution for stock options held by individuals employed by corporations
who become employees of the Company as a result of a merger or consolidation of
the employing corporation with the Company, or the acquisition by the Company
of the assets of the employing corporation, or the acquisition by the Company
of stock of the employing corporation with the result that such employing
corporation becomes 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
conditions as the Committee may prescribe, grant to any Participant in the
Plan shares of Common Stock ("Stock Bonus").
Section 8.2. Stock Bonus Agreements. The grant of a Stock Bonus
shall be evidenced by a written Award Agreement, executed by the Company and
the recipient of a Stock Bonus, in such form as the Committee may from time to
time determine,
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providing for the terms of such grant, including any vesting schedule,
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
be subject to the requirement that, if at any time the Committee shall
determine that (i) the listing, registration, or qualification of the shares of
Common Stock subject to or related thereto upon any securities exchange or
under any state or federal law, or (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the grantee of an Award
with respect to the disposition of shares of Common Stock, is necessary or
desirable as a condition of, or in connection with, the granting of such Award
or the issue or purchase of shares of Common Stock thereunder, such Award may
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
Section 9.2. Non-Assignability. Except as provided below, no Award
under the Plan shall be assignable or transferable by the recipient thereof,
except by will or by the laws of descent and distribution, and during the life
of the recipient, such Award shall be exercisable only by such person or by
such person's guardian or legal representative.
Notwithstanding the foregoing, as provided by the Committee in an
Award Agreement, Awards (other than Incentive Stock Options) may be transferred
(in whole or in part in a form approved by the Company) by a Participant to (i)
the spouse, children or grandchildren of the Participant ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of the Immediate
Family Members and, if applicable, the Participant, or (iii) a partnership in
which such Immediate Family Members and, if applicable, the Participant are the
only partners. Following any such transfer, the Award shall continue to be
subject to the same terms and conditions as were applicable to the Award
immediately prior to the transfer. A transferee of an Award may not transfer
the Award except to an Immediate Family Member or the Participant.
Section 9.3. Withholding Taxes. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the
Company shall have the right to require the grantee to remit to the Company an
amount sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery of any certificates for such shares.
Alternatively, the Company may issue or transfer such shares of the Company net
of the number of shares sufficient to satisfy the withholding tax requirements.
For withholding tax purposes, the shares of Common Stock shall be valued on the
date the withholding obligation is incurred.
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Section 9.4. Right to Terminate Employment. Nothing in the Plan or
in any agreement entered into pursuant to the Plan shall confer upon any
Participant the right to continue in the employment of, or consulting to, the
Company or effect any right which the Company may have to terminate the
employment or consulting relationship of such Participant.
Section 9.5. Non-Uniform Determination. The Committee's
determinations under the Plan (including without limitation determinations of
the persons to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the agreements evidencing same) need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, awards under the Plan, whether or not such persons are
similarly situated.
Section 9.6. Rights as a Shareholder. The recipient of any Award
under the Plan shall have no right as a shareholder with respect thereto unless
and until certificates for shares of Common Stock are issued to him.
Section 9.7. Definitions. In this Plan the following definitions
shall apply:
(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 USA
Waste Services, Inc. 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 USA Waste Services,
Inc.
(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.
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(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;
(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
make such rules, regulations, and determinations as it deems appropriate under
the Plan in respect of any leave of absence taken by the recipient of any Award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute 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 Plan
theretofore made to any recipient who takes such leave of absence.
Section 9.9. Newly Eligible Employees. The Committee shall be
entitled to make such rules, regulations, determinations and awards as it deems
appropriate in respect of any employee who becomes eligible to participate in
the Plan or any portion thereof after the commencement of an award or incentive
period.
Section 9.10. Adjustments. In any event of any change in the
outstanding Common Stock by reason of a stock dividend or distributions,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, the Committee may appropriately adjust the number of shares
of Common Stock that may be issued under the Plan, the number of shares of
Common Stock subject to Options theretofore granted under the Plan, and any and
all other matters deemed appropriate 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, USA Waste
Services, Inc. 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
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outstanding the number of shares then available for Option hereunder
shall be proportionately decreased.
(c) After a merger of one or more corporations into USA
Waste Services, Inc., or after a consolidation of USA Waste Services,
Inc. and one or more corporations in which USA Waste Services, Inc.
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 USA Waste Services, Inc. equal to
the number of shares as to which such Option had been exercisable.
(d) If USA Waste Services, Inc. is merged into or
consolidated with another corporation or other entity under
circumstances where USA Waste Services, Inc. is not the surviving
corporation, or if USA Waste Services, Inc. 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:
(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
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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 USA Waste
Services, Inc. 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 to the date of a Change in Control shall be immediately exercisable in
full on such date, without regard to any times of exercise established under
its Award Agreement; provided, however, in no event shall Stock Options or
Incentive Stock Options be exercisable after the tenth anniversary of their
respective grant dates.
Section 9.13. Amendment of the Plan.
(a) The Committees 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, except that
without shareholder approval the Committee may not (i) increase the
maximum number of shares of Common Stock which may be issued under the
Plan (other than increases pursuant to Section 9.10), (ii) extend the
period during which any Award may be granted or exercised, or (iii)
extend the term of the Plan. 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.
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EXHIBIT 10.10
USA WASTE SERVICES, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
USA Waste Services, Inc. hereby establishes the USA Waste
Services, Inc. 1997 Employee Stock Purchase Plan (the "Plan"), the terms of
which are as set forth below.
1. Definitions.
As used in the Plan the following terms shall have the
meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the committee appointed by the
Board to administer the Plan as described in Section 4 below.
(d) "Common Stock" means the common stock, $0.01 par
value, of the Company.
(e) "Company" means USA Waste Services, Inc., a Delaware
corporation, or any successor.
(f) "Continuous Employment" means the absence of any
interruption or termination of service as an Eligible Employee with
the Company and/or its Participating Subsidiaries. Continuous
Employment shall not be considered interrupted in the case of an
authorized leave of absence, provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(g) "Eligible Compensation" means, with respect to each
Participant for each pay period, the regular base earnings paid to the
Participant by the Company or one or more Participating Subsidiaries
during the Offering Period, plus any elective salary deferral
contributions made therefrom pursuant to Code Section 125 or Section
401(k).
(h) "Eligible Employee" means an employee of the Company
or one of its Participating Subsidiary who is customarily employed for
at least 20 hours per week and more than five months in a calendar
year.
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(i) "Enrollment Date" means the first day of each
Offering Period.
(j) "Exercise Date" means the last day of each Offering
Period.
(k) "Exercise Price" means the price per share of the
shares of Common Stock offered in a given Offering Period determined
as provided in Section 10 below.
(l) "Fair Market Value" means, with respect to a share of
Common Stock as of any Enrollment Date or Exercise Date, the closing
price of such Common Stock on the New York Stock Exchange on such
date, as reported in The Wall Street Journal. In the event that such
a closing price is not available for an Enrollment Date or an Exercise
Date, the Fair Market Value of a share of Common Stock on such date
shall be the closing price of a share of the Common Stock on the New
York Stock Exchange on the last business day prior to such date or
such other amount as may be determined by the Committee by any fair
and reasonable means.
(m) "Offering Period" means each six-month period
commencing on January 1 and terminating on the following June 30 or
commencing on July 1 and terminating on the following December 31;
provided, however, the initial Offering Period shall commence on the
later of (i) April 1, 1997 or (ii) the effective date of the S-8
Registration Statement covering the shares of Common Stock issuable
under the Plan and end on the first June 30 or December 31 to occur
thereafter.
(n) "Participant" means an Eligible Employee who has
elected to participate in the Plan by filing an enrollment agreement
with the Company as provided in Section 7 below.
(o) "Participating Subsidiary" means any Subsidiary not
excluded from participation in the Plan by the Committee, in its sole
discretion.
(p) "Subsidiary" means any corporation, domestic or
foreign, of which the Company owns, directly or indirectly, not less
than 50% of the total combined voting power of all classes of stock or
other equity interests and that otherwise qualifies as a "subsidiary
corporation" within the meaning of Section 424(f) of the Code or any
successor thereto.
2. Purpose of the Plan.
The purpose of the Plan is to provide an incentive for present
and future employees of the Company and its Participating Subsidiaries to
acquire a proprietary interest (or increase an existing proprietary interest)
in the Company through the purchase
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of Common Stock. It is the intention of the Company that the Plan qualify as
an "employee stock purchase plan" under Section 423 of the Code. Accordingly,
the provisions of the Plan shall be administered, interpreted and construed in
a manner consistent with the requirements of that section of the Code.
3. Shares Reserved for the Plan.
There shall be reserved for issuance and purchase by
Participants under the Plan an aggregate of 1,000,000 shares of Common Stock,
subject to adjustment as provided in Section 15 below. Shares of Common Stock
subject to the Plan may be newly issued shares or treasury shares. If and to
the extent that any option to purchase shares of Common Stock shall not be
exercised for any reason or if such right to purchase shares shall terminate as
provided herein, the shares that have not been so purchased hereunder shall
again become available for the purposes of the Plan unless the Plan shall have
been terminated.
4. Administration of the Plan.
(a) The Plan shall be administered by a Committee
appointed by, and which shall serve at the pleasure of, the Board. The
Committee shall have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to correct any defect or
rectify any omission in this Plan or to reconcile any inconsistency in this
Plan or any Option, and to make all other determinations necessary or advisable
for the administration of the Plan, all of which actions and determinations
shall be final, conclusive and binding on all persons. The act or
determination of a majority of the members of the Committee shall be deemed to
be the act or determination of the Committee.
(b) The Committee may request advice or assistance or
employ such other persons as it in its discretion deems necessary or
appropriate for the proper administration of the Plan, including, but not
limited to employing a brokerage firm, bank or other financial institution to
assist in the purchase of shares, delivery of reports or other administrative
aspects of the Plan.
5. Eligibility to Participate in the Plan.
Subject to limitations imposed by Section 423(b) of the Code,
any Eligible Employee who is employed by the Company or a Participating
Subsidiary on an Enrollment Date shall be eligible to participate in the Plan
for the Offering Period beginning on that Enrollment Date.
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6. Offering Periods.
The Plan shall consist of consecutive Offering Periods until
the Plan is terminated.
7. Election to Participate in the Plan.
(a) Each Eligible Employee may elect to participate in
the Plan by completing an enrollment agreement in the form provided by the
Company and filing such enrollment agreement with the Company prior to the
applicable Enrollment Date, unless another time for filing the enrollment form
is set by the Committee for all Eligible Employees with respect to a given
Offering Period.
(b) Payroll deductions for a Participant shall commence
on the first payroll date following the Enrollment Date and shall end on the
last payroll date in the Offering Period to which such authorization is
applicable, unless sooner terminated by the Participant as provided in Section
12.
(c) Unless a Participant elects otherwise prior to the
Enrollment Date of the immediately succeeding Offering Period, an Eligible
Employee who is participating in an Offering Period as of the Exercise Date of
such Offering Period shall be deemed (i) to have elected to participate in the
immediately succeeding Offering Period and (ii) to have authorized the same
payroll deduction for such immediately succeeding Offering Period as was in
effect for such Participant immediately prior to the succeeding Offering
Period.
8. Payroll Deductions.
(a) All Participant contributions to the Plan shall be
made only by payroll deductions. At the time a Participant files the
enrollment agreement with respect to an Offering Period, the Participant shall
authorize payroll deductions to be made on each payroll date during the
Offering Period in an amount of from 1% to 10% of the Eligible Compensation
which the Participant receives on each payroll date during such Offering
Period. The amount of such payroll deductions shall be a whole percentage
(i.e., 1%, 2%, 3%, etc.) of the Participant's Eligible Compensation.
(b) All payroll deductions made for a Participant shall
be deposited in the Company's general corporate account and shall be credited
to the Participant's account under the Plan. No interest shall accrue or be
credited with respect to the payroll deductions of a Participant under the
Plan. A Participant may not make any additional payments into such account.
All payroll deductions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
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(c) Except as provided in Section 12, a Participant may
not change his contribution election during an Offering Period.
(d) Notwithstanding the foregoing, no Participant may
make payroll deductions during any year in excess of $21,250.
9. Grant of Options.
(a) On the Enrollment Date of each Offering Period,
subject to the limitations set forth in Sections 3 and 9(b) hereof, each
Eligible Employee shall be granted an option to purchase on the Exercise Date
for such Offering Period (at the Exercise Price determined as provided in
Section 10 below) up to a number of shares of the Company's Common Stock
determined by dividing such Eligible Employee's payroll deductions accumulated
during the Offering Period ending on such Exercise Date by 85% of the fair
market value of a share of the Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(b) Notwithstanding any provision of the Plan to the
contrary, no Eligible Employee shall be granted an option under the Plan (i)
if, immediately after the grant, such Eligible Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own stock and/or hold outstanding options to purchase stock
possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary of the Company, or (ii)
which permits such Eligible Employee's rights to purchase stock under all
employee stock purchase plans of the Company and its Subsidiaries to accrue at
a rate which exceeds $25,000 of fair market value of such stock (determined at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
10. Exercise Price.
The Exercise Price of each of the shares offered in a given
Offering Period shall be the lower of: (i) 85% of the Fair Market Value of a
share of the Common Stock on the Enrollment Date, or (ii) 85% of the Fair
Market Value of a share of the Common Stock on the applicable Exercise Date.
11. Exercise of Options.
Unless a Participant withdraws from the Plan as provided in
Section 12, the Participant's option for the purchase of shares will be
exercised automatically on each Exercise Date, and the maximum number of full
shares subject to the option will be purchased for the Participant at the
applicable Exercise Price with the accumulated payroll deductions in the
Participant's account. Any amount remaining in the Participant's account after
an Exercise Date shall be refunded to the Participant.
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12. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all but not less than all
of the payroll deductions credited to the Participant's account under the Plan
at any time by giving written notice to the Company. All of the Participant's
payroll deductions credited to the Participant's account will be paid to him
promptly after receipt of the Participant's notice of withdrawal, the
Participant's participation in the Plan will be automatically terminated, and
no further payroll deductions for the purchase of shares will be made. Payroll
deductions will not resume on behalf of a Participant who has withdrawn from
the Plan unless written notice is delivered to the Company within the
enrollment period preceding the commencement of a new Offering Period directing
the Company to resume payroll deductions.
(b) Upon termination of the Participant's Continuous
Employment prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the payroll deductions credited to the
Participant's account will be returned to the Participant or, in the case of
death, to the Participant's estate, and the Participant's options to purchase
shares under the Plan will be automatically terminated.
(c) In the event a Participant ceases to be an Eligible
Employee during an Offering Period, the Participant will be deemed to have
elected to withdraw from the Plan, the payroll deductions credited to the
Participant's account will be returned to the Participant, and the
Participant's options to purchase shares under the Plan will be terminated.
(d) A Participant's withdrawal from an Offering Period
will not affect the Participant's eligibility to participate in a succeeding
Offering Period.
13. Transferability.
Options to purchase Common Stock granted under the Plan are
not transferable by a Participant and are exercisable only by the Participant.
14. Reports.
Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to participating Employees
semi-annually promptly following each Exercise Date, which statements will set
forth the amounts of payroll deductions, the per share purchase price, the
number of shares purchased and the remaining cash balance, if any.
15. Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are
increased or decreased, or are changed into or are exchanged for a different
number or kind of shares,
6
7
as a result of one or more reorganizations, restructurings, recapitalizations,
reclassifications, stock splits, reverse stock splits, stock dividends or the
like, upon authorization of the Committee, appropriate adjustments shall be
made in the number and/or kind of shares, and the per share option price
thereof, which may be issued in the aggregate and to any Participant upon
exercise of options granted under the Plan.
(b) In the event of the proposed dissolution or
liquidation of the Company, each Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Committee. In the event of a proposed sale of all or substantially all of
the assets of the Company, or the merger of the Company with or into another
corporation, each option under the Plan shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Committee determines, in
the exercise of its sole discretion and in lieu of such assumption or
substitution, that the Participant shall have the right to exercise the option
as to all of the optioned stock, including shares as to which the option would
not otherwise be exercisable. If the Committee makes an option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Committee shall notify the Participant that the option
shall be fully exercisable for a stated period, which shall not be less than 10
days from the date of such notice, and the option will terminate upon the
expiration of such period.
(c) In all cases, the Committee shall have full
discretion to exercise any of the powers and authority provided under this
Section 15, and the Committee's actions hereunder shall be final and binding on
all Participants. No fractional shares of stock shall be issued under the Plan
pursuant to any adjustment authorized under the provisions of this Section 15.
16. Amendment of the Plan.
The Board may at any time, or from time to time, amend the
Plan in any respect; provided, however, that the Plan may not be amended in any
way that will cause rights issued under the Plan to fail to meet the
requirements for employee stock purchase plans as defined in Section 423 of the
Code or any successor thereto, including, without limitation, shareholder
approval if required.
17. Termination of the Plan.
The Plan and all rights of Eligible Employees hereunder shall
terminate:
(a) on the Exercise Date that Participants become
entitled to purchase a number of shares greater than the number of
reserved shares remaining available for purchase under the Plan; or
(b) at any time, at the discretion of the Board.
7
8
In the event that the Plan terminates under circumstances
described in Section 17(a) above, reserved shares remaining as of the
termination date shall be sold to Participants on a pro rata basis.
18. Notices.
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
19. Shareholder Approval.
The Plan shall be subject to approval by the shareholders of
the Company within twelve months after the date the Plan is adopted by the
Board of Directors. If such shareholder approval is not obtained prior to the
first Exercise Date, the Plan shall be null and void and all Participants shall
be deemed to have withdrawn on such Exercise Date pursuant to Section 12.
20. Conditions Upon Issuance of Shares.
(a) The Plan, the grant and exercise of options to
purchase shares of Common Stock under the Plan, and the Company's obligation to
sell and deliver shares upon the exercise of options to purchase shares shall
be subject to all applicable federal, state and foreign laws, rules and
regulations, and to such approvals by any regulatory or governmental agency as
may, in the opinion of counsel for the Company, be required.
(b) The Company may make such provisions as it deems
appropriate for withholding by the Company pursuant to all applicable tax laws
of such amounts as the Company determines it is required to withhold in
connection with the purchase or sale by a Participant of any Common Stock
acquired pursuant to the Plan. The Company may require a Participant to
satisfy any relevant tax requirements before authorizing any issuance of Common
Stock to such Participant.
8
1
EXHIBIT 10.11
USA WASTE SERVICES, INC.
401(k) RESTORATION PLAN
Effective February 1, 1998
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I--PURPOSE AND BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II--DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Deferral Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 Earnings Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 Elective Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.13 Financial Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.14 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15 Participation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16 Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.17 Rate of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III--PARTICIPATION AND DEFERRAL COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Form of Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Limitations on Deferral Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Modification of Deferral Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV--DEFERRED COMPENSATION ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Elective Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Allocation of Elective Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Employer Discretionary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Rate of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.6 Determination of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.7 Vesting of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.8 Statement of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i)
3
TABLE OF CONTENTS
PAGE
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ARTICLE V--PLAN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Distributions Prior to Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Distributions Following Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Form of Benefit Payment Following Termination of Employment . . . . . . . . . . . . . . . . . . 6
5.4 Commencement of Deferral Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.6 Accelerated Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7 Withholding for Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.8 Valuation and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.9 Payment to Guardian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI--BENEFICIARY DESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 No Participant Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4 Effect of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII--ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 Committee; Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.3 Binding Effect of Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.4 Indemnity of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VIII--CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1 Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.2 Denial of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.3 Review of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.4 Final Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IX--AMENDMENT AND TERMINATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Employer's Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(ii)
4
TABLE OF CONTENTS
PAGE
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ARTICLE X--MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.1 Unfunded Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.2 Unsecured General Creditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.3 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.4 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.5 Not a Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.6 Protective Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.8 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(iii)
5
USA WASTE SERVICES, INC.
401(k) RESTORATION PLAN
ARTICLE I--PURPOSE AND BACKGROUND
The purpose of this 401(k) Restoration Plan (hereinafter referred to
as the "Plan") is to provide current tax planning opportunities as well as
supplemental funds for the retirement or death of employees of the USA Waste
Services, Inc. It is intended that the Plan will aid in retaining and
attracting employees of exceptional ability by providing them with these
benefits. This Plan shall be effective as of February 1, 1998 ("Effective
Date").
ARTICLE II--DEFINITIONS
For the purposes of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 Account
"Account" means the Account as maintained by the Employer in
accordance with Article IV for any deferral of Compensation pursuant to this
Plan. A Participant's Account shall be used solely as a device for the
determination and measurement of the amounts to be paid to the Participant
pursuant to the Plan. Separate subaccounts shall be maintained to properly
reflect the Participant's balance and earnings thereon. A Participant's Account
shall not constitute or be treated as a trust fund of any kind.
2.2 Beneficiary
"Beneficiary" means the person, persons or entity entitled under
Article VI to receive any Plan benefits payable after a Participant's death.
2.3 Board
"Board" means the Board of Directors of the Company.
2.4 Committee
"Committee" means the 401(k) Restoration Plan Committee appointed to
administer the Plan pursuant to Article VII.
2.5 Company
"Company" means USA Waste Services, Inc., or any successor to the
business thereof.
PAGE 1 - 401(k) RESTORATION PLAN
6
2.6 Compensation
"Compensation" means the salary and bonuses payable to a Participant
during the calendar year and considered to be "wages" for purposes of federal
income tax withholding, before reduction for amounts deferred under this Plan,
salary reduction contributions under IRC Section 401(k), or any other deferral
arrangements. Compensation does not include expense reimbursements, any form of
noncash Compensation or benefits, group life insurance premiums, or any other
payments or benefits other than normal Compensation.
2.7 Deferral Commitment
"Deferral Commitment" means an election to defer Compensation made by
a Participant pursuant to Article III and for which a separate Participation
Agreement has been submitted by the Participant to the Committee.
2.8 Deferral Period
"Deferral Period" means the period over which a Participant has
elected to defer a portion of his Compensation. Each calendar year shall be a
separate Deferral Period, provided that the Deferral Period may be modified
pursuant to Section 3.4.
2.9 Determination Date
"Determination Date" means the last day of each calendar month.
2.10 Earnings Index
"Earnings Index" means a portfolio or fund selected by the Board to be
used as an index in calculating Rate of Return.
2.11 Elective Deferred Compensation
"Elective Deferred Compensation" means the amount of Compensation that
a Participant elects to defer pursuant to a Deferral Commitment.
2.12 Employer
"Employer" means the Company or any successor to the business thereof,
and any affiliated or subsidiary corporations designated by the Board.
2.13 Financial Hardship
"Financial Hardship" means severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that will
constitute an unforeseeable emergency will depend upon the facts of each case,
but in any case, payment may not be made to the extent that such hardship is or
may be relieved:
PAGE 2 - 401(k) RESTORATION PLAN
7
(a) Through reimbursement or compensation by insurance or
otherwise,
(b) By liquidation of the Participant's assets, to the extent
the liquidation of such assets would not itself cause severe financial
hardship, or
(c) By cessation of deferrals under the Plan.
2.14 Participant
"Participant" means any individual who is participating or has
participated in this Plan as provided in Article III.
2.15 Participation Agreement
"Participation Agreement" means the agreement submitted by a
Participant to the Committee prior to the beginning of the Deferral Period,
with respect to a Deferral Commitment made for such Deferral Period.
2.16 Plan Benefit
"Plan Benefit" means the benefit payable to a Participant as
calculated in Article V.
2.17 Rate of Return
"Rate of Return" means the amount credited to a Participant's Account
under Section 4.5 to be determined by the Committee based upon the net
performance of the Earnings Indices selected by the Participant.
ARTICLE III--PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 Eligibility and Participation
(a) Eligibility. Eligibility to participate in the Plan shall
be limited to Corporate Officers, Regional Vice Presidents, Assistant
Regional Vice Presidents, or any other Committee-designated employee.
(b) Participation. Any eligible employee who elects to defer
Compensation under this Plan or who has an Account balance under this
Plan shall be a Participant in this Plan. An employee, eligible to
defer, may elect to participate in the Plan with respect to any
Deferral Period by submitting a Participation Agreement to the
Committee by December 31 of the calendar year immediately preceding
the Deferral Period.
(c) Part-Year Participation. In the event that an employee
first becomes eligible to defer Compensation during a calendar year, a
Participation Agreement must be submitted to the Committee no later
than thirty (30) days following notification to the employee of
eligibility to defer, and such Participation Agreement shall be
effective only with regard to Compensation earned or payable following
the submission of the Participation Agreement to the Committee.
PAGE 3 - 401(k) RESTORATION PLAN
8
3.2 Form of Deferral
A Participant may elect Deferral Commitments in the Participation
Agreement as follows:
(a) Salary Deferral Commitment. A salary Deferral Commitment
shall be related to the salary Compensation payable by Employer to a
Participant during the Deferral Period.
(b) Bonus Deferral Commitment. A bonus Deferral Commitment
shall be related to the bonus Compensation payable to the Participant
during the Deferral Period.
3.3 Limitations on Deferral Commitments
The following limitations shall apply to Deferral Commitments:
(a) Minimum. The minimum deferral amount for either a salary
or bonus Deferral Commitment is one percent (1%).
(b) Maximum. The maximum deferral amount shall be fifteen
percent (15%) of salary and fifteen percent (15%) of bonus (in whole
percentages).
(c) Changes in Minimum or Maximum. The Committee may change
the minimum or maximum deferral amounts from time to time by giving
written notice to all Participants. No such change may affect a
Deferral Commitment made prior to the Committee's action.
3.4 Modification of Deferral Commitment
A Deferral Commitment shall be irrevocable except that the Committee
may permit a Participant to waive the remainder of the Deferral Commitment upon
a finding that the Participant has suffered a Financial Hardship. Participants
who waive their Deferral Commitment will be unable to resume deferrals for one
(1) year following the year in which the waiver occurred.
ARTICLE IV--DEFERRED COMPENSATION ACCOUNTS
4.1 Accounts
For record keeping purposes only, an Account shall be maintained for
each Participant. Separate subaccounts shall be maintained to the extent
necessary to properly reflect the Participant's election of Earnings Indices
and total vested Account balance.
4.2 Elective Deferred Compensation
A Participant's Elective Deferred Compensation shall be credited to
the Participant's Account on the day of the month the corresponding nondeferred
portion of the Compensation becomes or would have become payable. Any
withholding of taxes or other amounts with respect to deferred Compensation
which is required by state, federal or local law shall be withheld from the
Participant's nondeferred Compensation to the maximum extent possible with any
excess being withheld from the Participant's Account.
PAGE 4 - 401(k) RESTORATION PLAN
9
4.3 Allocation of Elective Deferred Compensation
A Participant shall allocate the Account among the Earning Indices
selected by the Committee. Initial allocation shall be made in the Deferral
Account Allocation/Reallocation. If a Participant has not made an allocation
election, the Participant Account shall be allocated to a money market or
equivalent Earnings Index. A change in allocation among Earning Indices will be
made on the first day of each month, provided the Participant gave notice at
least fifteen (15) days before the month of the change to the Committee.
4.4 Employer Discretionary Contributions
Employer may make discretionary contributions to the Participant's
Account. Discretionary contributions shall be credited at such times and in
such amounts as the Committee in its sole discretion shall determine. The
amount of the discretionary contributions shall be evident in a special
Participation Agreement approved by the Committee.
4.5 Rate of Return
The Accounts shall be credited monthly with the Rate of Return
specified in Section 2.17.
4.6 Determination of Accounts
Each Participant's Account as of each Determination Date shall consist
of the balance of the Participant's Account as of the immediately preceding
Determination Date, plus the Participant's Elective Deferred Compensation
credited, and the applicable Rate of Return, minus the amount of any
distributions made since the immediately preceding Determination Date.
4.7 Vesting of Accounts
Each Participant shall be vested in the amounts credited to such
Participant's Account and earnings thereon as follows:
(a) Amounts Deferred. A Participant shall be one hundred
percent (100%) vested at all times in the amount of Compensation
elected to be deferred under this Plan and Rate of Return thereon.
(b) Employer Discretionary Contributions. Employer
discretionary contributions and Rate of Return thereon shall be vested
as set forth in the special Participation Agreement.
4.8 Statement of Accounts
The Committee shall submit to each Participant, within one hundred
twenty (120) days after the close of each calendar year, or at such other time
as determined by the Committee, a statement setting forth the balance to the
credit of the Account maintained for a Participant.
PAGE 5 - 401(k) RESTORATION PLAN
10
ARTICLE V--PLAN BENEFITS
5.1 Distributions Prior to Termination of Employment
A Participant's Account may be distributed to the Participant prior to
termination of employment as follows:
(a) Early Withdrawals. A Participant may elect in a
Participation Agreement to withdraw all or any portion of the amount
deferred (and earning thereon) by that Participation Agreement as of a
date specified in the election. Such date shall not be sooner than
five (5) years after the date the Deferral Period commences. Such
election shall be made at the time the Deferral Commitment is made.
(b) Hardship Withdrawals. Upon a finding that a Participant
has suffered a Financial Hardship, the Committee may, in its sole
discretion, make distributions from the Participant's Account. The
amount of such a withdrawal shall be limited to the amount reasonably
necessary to meet the Participant's needs resulting from the Financial
Hardship. If payment is made due to Financial Hardship under this
Plan, the Participant's deferrals under this Plan shall cease. Any
resumption of the Participant's deferrals under the Plan after such
twelve (12) month period shall be made only at the election of the
Participant in accordance with Article III herein.
(c) Form of Payment and Time. Any distribution pursuant to
Section 5.1(a) or 5.1(b) shall be payable in a lump sum. The
distribution shall be paid in the case of a partial withdrawal, as
provided in the Participation Agreement, and in case of a Financial
Hardship, within thirty (30) days after the Committee approves the
Financial Hardship.
5.2 Distributions Following Termination of Employment
Upon a Participant's termination of employment with Employer as a
result of severance, disability, death, or change in control, the Employer
shall pay the Participant or, in the case of death, the Participant's
Beneficiary, benefits equal to the vested balance in the Participant's Account.
5.3 Form of Benefit Payment Following Termination of Employment
Benefits shall be paid in a lump sum payment within sixty (60) days
after termination of employment.
5.4 Commencement of Deferral Payment
Benefits that are payable upon termination of employment shall
commence as soon as practical after termination but in no case more than sixty
(60) days after termination.
5.5 Death Benefit
Upon the death of a Participant, the Employer shall pay to the
Participant's Beneficiary an amount equal to the remaining unpaid balance of
the Participant's Account in a lump sum.
PAGE 6 - 401(k) RESTORATION PLAN
11
5.6 Accelerated Distribution
Notwithstanding any other provision of the Plan, at any time a
Participant shall be entitled to receive, upon written request to the
Committee, a lump sum distribution equal to ninety percent (90%) of the vested
Account balance as of the Determination Date immediately preceding the date on
which the Committee receives the written request. The remaining balance shall
be forfeited by the Participant. The amount payable under this section shall be
paid in a lump sum within thirty (30) days following the receipt of the notice
by the Committee from the Participant. Such Participant shall not be eligible
to participate for a period of one (1) year from the date of distribution.
5.7 Withholding for Taxes
To the extent required by the law in effect at the time payments are
made, the Employer shall withhold from the payments made hereunder any taxes
required to be withheld by the federal or any state or local government,
including any amounts which the Employer determines is reasonably necessary to
pay any generation-skipping transfer tax which is or may become due. A
beneficiary, however, may elect not to have withholding of federal income tax
pursuant to Section 3405 of the Internal Revenue Code, or any successor
provision thereto.
5.8 Valuation and Settlement
The amount of a lump sum payment and the initial amount of
installments shall be based on the value of the Participant's Account on the
Determination Date immediately preceding the payment or commencement of
installment payments.
5.9 Payment to Guardian
The Committee may direct payment to the duly appointed guardian,
conservator, or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal
representative, the Committee may, in it sole and absolute discretion, make
payment to a person having the care and custody of a minor, incompetent or
person incapable of handling the disposition of property upon proof
satisfactory to the Committee of incompetency, minority, or incapacity. Such
distribution shall completely discharge the Committee from all liability with
respect to such benefit.
ARTICLE VI--BENEFICIARY DESIGNATION
6.1 Beneficiary Designation
Each Participant shall have the right, at any time, to designate any
person or persons as his Beneficiary or Beneficiaries (both primary as well as
secondary) to whom benefits under this Plan shall be paid in the event of his
death prior to complete distribution to Participant of the benefits due under
the Plan. Each Beneficiary designation shall be in a written form prescribed by
the Committee, and will be effective only when filed with the Committee during
the Participant's lifetime.
PAGE 7 - 401(k) RESTORATION PLAN
12
6.2 Amendments
Any Beneficiary designation may be changed by a Participant without
the consent of any designated Beneficiary by the filing of a new Beneficiary
designation with the Committee. The filing of a new Beneficiary designation
form will cancel all Beneficiary designations previously filed. If a
Participant's Compensation is community property, any Beneficiary Designation
shall be valid or effective only as permitted under applicable law.
6.3 No Participant Beneficiary Designation
In the absence of an effective Beneficiary Designation, or if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's benefits, then Participant's designated
Beneficiary shall be deemed to be the person or persons surviving him in the
first of the following classes in which there is a survivor, share and share
alike:
(a) The surviving spouse;
(b) The Participant's children, except that if any of the
children predecease the Participant but leave issue surviving, then
such issue shall take by right of representation the share their
parent would have taken if living;
(c) The Participant's estate.
6.4 Effect of Payment
The payment to the deemed Beneficiary shall completely discharge
Employer's obligations under this Plan.
ARTICLE VII--ADMINISTRATION
7.1 Committee; Duties
This Plan shall be administered by the Committee. The Committee shall
consist of the Company's Chief Financial Officer, Corporate Secretary, and the
Director of Human Resources, or such other individuals as designated by the
Board of Directors of the Company. The Committee shall have the authority to
interpret and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including interpretations of the Plan, as may arise in such administration. A
majority vote of the Committee members shall control any decision. Members of
the Committee may be Participants under this Plan.
7.2 Agents
The Committee may, from time to time, employ agents and delegate to
them such administrative duties as it sees fit, and may from time to time
consult with counsel who may be counsel to the Company.
PAGE 8 - 401(k) RESTORATION PLAN
13
7.3 Binding Effect of Decisions
The decision or action of the Committee with respect to any question
arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon all persons having any interest in
the Plan.
7.4 Indemnity of Committee
The Company shall indemnify and hold harmless the members of the
Committee against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to this Plan on account
of such person's service on the Committee, except in the case of gross
negligence or willful misconduct.
ARTICLE VIII--CLAIMS PROCEDURE
8.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the
request in writing to the Committee which shall respond in writing within
thirty (30) days.
8.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall
state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice given in writing
to the Committee. The claim or request shall be reviewed by the Committee who
may, but shall not be required to, grant the claimant a hearing. On review, the
claimant may have representation, examine pertinent documents, and submit
issues and comments in writing.
8.4 Final Decision
The decision on review shall normally be made within sixty (60) days.
If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing and shall state the
reason and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.
PAGE 9 - 401(k) RESTORATION PLAN
14
ARTICLE IX--AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment
The Board may at any time amend the Plan by written instrument, notice
of which is given to all Participants and to any Beneficiaries to whom a
benefit is due, subject to the following:
(a) Preservation of Account Balance. No amendment shall reduce
the amount accrued in any Account to the date such notice of the
amendment is given.
(b) Changes in Earnings Rate. No amendment shall reduce the
Rate of Return to be credited after the date of the amendment to the
amount already accrued in any Account and any Deferred Compensation
credited to the Account under Deferral Commitments already in effect
on that date.
9.2 Employer's Right to Terminate
The Board may at any time partially or completely terminate the Plan
if, in its judgment, the tax, accounting or other effects of the continuance of
the Plan, or potential payments thereunder would not be in the best interests
of Employer.
(a) Partial Termination. The Board may partially terminate the
Plan by instructing the Board not to accept any additional Deferral
Commitments. If such a partial termination occurs, the Plan shall
continue to operate and be effective with regard to Deferral
Commitments entered into prior to the effective date of such partial
termination.
(b) Complete Termination. The Board may completely terminate
the Plan by instructing the Committee not to accept any additional
Deferral Commitments, and by terminating all ongoing Deferral
Commitments. If such a complete termination occurs, the Plan shall
cease to operate and Employer shall pay out each Account. Payment
shall be made in substantially equal annual installments over the
following period, based on the Account balance:
ACCOUNT BALANCE PAYOUT PERIOD
-----------------------------------------------------------------
Less than $100,000 Lump Sum
$100,000 but less than $500,000 3 Years
More than $500,000 5 Years
=================================================================
Payments shall commence within sixty (60) days after the Board
terminates the Plan and earnings shall continue to be credited on the unpaid
Account balance.
PAGE 10 - 401(k) RESTORATION PLAN
15
ARTICLE X--MISCELLANEOUS
10.1 Unfunded Plan
This plan is an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of "management or highly-compensated
employees" within the meaning of Sections 201, 301 and 401 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore is
exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
10.2 Unsecured General Creditor
Participants and Beneficiaries shall be unsecured general creditors,
with no secured or preferential right to any assets of Employer or any other
party for payment of benefits under this Plan. Any life insurance policies,
annuity contracts or other property purchased by Employer in connection with
this Plan shall remain its general, unpledged and unrestricted assets.
Employer's obligation under the Plan shall be an unfunded and unsecured promise
to pay money in the future.
10.3 Trust Fund
At its discretion, the Employer may establish one (1) or more trusts,
with such trustees as the Board may approve, for the purpose of providing for
the payment of benefits owed under the Plan. Although such a trust shall be
irrevocable, its assets shall be held for payment of all the Company's general
creditors in the event of insolvency or bankruptcy. To the extent any benefits
provided under the Plan are paid from any such trust, Employer shall have no
further obligation to pay them. If not paid from the trust, such benefits shall
remain the obligation of Employer.
10.4 Nonassignability
Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and nontransferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.
10.5 Not a Contract of Employment
This Plan shall not constitute a contract of employment between
Employer and the Participant. Nothing in this Plan shall give a Participant the
right to be retained in the service of Employer or to interfere with the right
of Employer to discipline or discharge a Participant at any time.
10.6 Protective Provisions
A Participant will cooperate with Employer by furnishing any and all
information requested by Employer in order to facilitate the payment of
benefits hereunder, and by taking such physical examinations as Employer may
deem necessary and taking such other action as may be requested by Employer.
PAGE 11 - 401(k) RESTORATION PLAN
16
10.7 Governing Law
The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Texas, except as preempted by federal
law.
10.8 Validity
In case any provision of this Plan shall be held illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
and invalid provision had never been inserted herein.
10.9 Notice
Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such
notice shall be deemed as given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Mailed notice to the Committee shall be directed
to the Company's address. Mailed notice to a Participant or Beneficiary shall
be directed to the individual's last known address in Employer's records.
10.10 Successors
The provisions of this Plan shall bind and inure to the benefit of
Employer and its successors and assigns. The term successors as used herein
shall include any corporate or other business entity which shall, whether by
merger, consolidation, purchase or otherwise acquire all or substantially all
of the business and assets of Employer, and successors of any such corporation
or other business entity.
PAGE 12 - 401(k) RESTORATION PLAN
1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company"), and JOHN E. DRURY (the "Executive")
hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as of June 1,
1997, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement be for continuously
renewing five (5) year terms (the "Employment Term"), without any further action
by either the Company or Executive, unless Executive's employment is terminated
in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as Chief Executive Officer. In such capacity,
Executive shall perform such duties, and have such power, authority and
functions as may be assigned to Executive from time to time by the
Board of Directors of the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive a base salary at the annual rate of six hundred thousand
($600,000) 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 principal executive officer. The phrases "principal
executive officer" or "senior executive" as used in this Agreement
shall mean the chief executive officer of the Company and other senior
corporate officers of the Company who are from time to time designated
as principal executive officers by the Compensation Committee.
2
(b) OTHER COMPENSATION. Executive shall be entitled to participate in any
incentive or supplemental compensation plan or arrangement instituted
by the Company, and covering its principal executive officers, and to
receive additional compensation from the Company in such form, and to
such extent, if any, as the Compensation Committee may in its sole
discretion from time to time specify and determine with respect to the
Company's principal executive officers, generally.
(c) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to principal executive
officers, provided that such expenses are incurred and accounted for in
accordance with the Company's policy.
(d) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to principal executive officers.
(e) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement, Executive shall be "Totally Disabled" if Executive is
physically or mentally
Page 2 of 18
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incapacitated so as to render Executive incapable of performing
Executive's usual and customary duties under this Agreement.
Executive'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
Executive's receipt of such long-term disability benefits or Social
Security benefits, the Company's Board of Directors may, in its
reasonable discretion (but based upon appropriate medical evidence),
determine that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
(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's Board of Directors,
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
resolution of the Company's Board of Directors adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called and
held for that purpose and at which Executive is given an
opportunity to be heard.
Page 3 of 18
4
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive. Unless the provisions of Section
7 apply, a change in Executive's position as Chief Executive Officer,
or a reduction in his annual base pay shall be deemed a termination
without cause and Executive shall have sixty (60) days from notice of
said change to notify Company of his intent to terminate his employment
and receive the compensation described in Section 6(e) below.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive'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; a pro-rata "bonus" or incentive
compensation payment to the extent payments are awarded senior
executives and paid at the same time as senior executives are
paid; and any vacation accrued to the date of death.
(ii) Any benefits to which Executive 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 Executive's death) which would have been payable to
Executive if Executive had continued in employment until the end
of the current Employment Term (i.e., five [5] years). Said
payments will be paid to Executive's estate or beneficiary at
the same time and in the same manner as such compensation would
have been paid if Executive had remained in active employment
for the five (5) year term.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested and
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
Page 4 of 18
5
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(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. Executive shall also be eligible for a
pro-rata bonus or incentive compensation payment to the extent
such awards are made to senior executives for the year in which
Executive is terminated.
(ii) Any benefits to which Executive 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 the Base Salary (at the rate in effect as of
the date of Executive's Total Disability) which would have been
payable to Executive if Executive had continued in active
employment until the end of the current Employment Term (five
[5] years from the date of termination by reason of total
disability). Payment shall be made at the same time and in the
same manner as such compensation would have been paid if
Executive had remained in active employment until the end of
such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards and Executive shall have up to one (1) year from the date
of termination by reason of total disability to exercise all
such options.
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant
Page 5 of 18
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to Section 7 of this Agreement, or other than for a resignation
tendered following a change of Executive's position or base pay, as
described in Section 5(e) above, the Company shall pay the following
amounts to Executive:
(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 Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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 annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the five (5) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, and also including deferred
Page 6 of 18
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compensation, disability, automobile, stock option and other
benefit plans, in which Executive was entitled to participate at
any time during the twelve-month period prior to the date of
termination, until the earliest to occur of (A) five years after
the date of termination; (B) Executive's death (provided that
benefits payable to Executive's beneficiaries shall not
terminate upon Executive's death); or (C) with respect to any
particular plan, program or arrangement, the date Executive
becomes covered by a comparable benefit by a subsequent
employer. In the event that Executive's continued participation
in any such plan, program, or arrangement of the Company is
prohibited, the Company will arrange to provide Executive with
benefits substantially similar to those which Executive would
have been entitled to receive under such plan, program, or
arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans
in which Executive was a participant as of the date of
termination. Executive shall also be eligible for a bonus or
incentive compensation payment, at the same time, on the same
basis, and to the same extent payments are made to senior
executives, pro-rated for the fiscal year in which the Executive
is terminated.
(vi) As of the effective date of Executive's termination from active
employment, Executive shall be 100% vested in all stock option
awards. Executive shall have five (5) years to exercise all
options, unless by virtue of the particular stock option award,
the option grant expires on an earlier date.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
(g) 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, Executive 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
Page 7 of 18
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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 Executive's employment hereunder or during
any of the twelve calendar months preceding or following the
termination of Executive'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 Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if (1) Executive resigns by giving notice
to the Secretary of the Company that he intends to elect to exercise
his rights under this Section 7 ("Notice of Intention"), or (2) is
terminated from employment with the Company at any time prior to the
six (6) month anniversary of the date of the Change in Control
following the occurrence of any of the following events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
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(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits under
any of such plans or deprive Executive of any material fringe
benefit enjoyed by Executive immediately before a Change in
Control, unless such reduction or termination is required by
law;
(iv) the failure of the Company to pay Executive with an appropriate
adjustment to compensation, such as a lump sum relocation bonus,
salary adjustment and/or housing allowance so that Executive can
purchase comparable primary housing if required to relocate (it
being the intention of this Section 7[a][iv] to keep the
Executive "whole" if required to relocate). In this regard,
comparable housing shall be determined by comparing factors such
as location (taking into account, by way of example, items such
as the value of the surrounding neighborhood, reputation of the
public school district, if applicable, security and proximity to
Executive's place of work), quality of construction, design,
age, size of the housing and the ratio of the monthly payments
including principle, interest, taxes and insurance, to the
Executive's take-home-pay, to housing most recently owned by
Executive prior to, or as of the effective date of the change of
control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive 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.
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(iii) An amount equal to $1.00 less than three (3) times Executive's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Executive in
a single lump sum cash payment within five (5) business days
after the effective date of Executive's resignation.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock option grants) accrued but unpaid as of
the date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
The Executive will have until the expiration date shown on the
Stock Option Award in which to exercise all options which have
vested pursuant to the terms of this Section 7(b)(iv). Executive
shall also be eligible for a bonus or incentive compensation
payment (the "bonus payment"), payable at 100% of the maximum
bonus available to Executive, pro-rated as of the effective date
of the termination. The bonus payment shall be payable within
five (5) days after the effective date of Employee's
termination. Except as may be provided under this Section 7 or
under the terms of any incentive compensation, employee benefit,
or fringe benefit plan applicable to Executive at the time of
Executive's resignation from employment, Executive 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 resignation or termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including the
Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by Section
4999. For purposes of this calculation, it shall be assumed that the
Executive's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm
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from among those regularly consulted (during the twelve-month period
immediately prior to a Change-in-Control) by the Company regarding
federal income tax matters and such law firm or accounting firm shall
determine the amount of Gross-up Payment and such determination shall
be final and binding upon the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately before
the transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, 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 or any of its affiliated
companies, without the Company's specific written consent to do so.
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(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive 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 or through any person,
firm, association or corporation with which he 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 prior written
consent of the Company.
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive will
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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.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 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
Executive, Executive 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 Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent
jurisdiction; and (ii) recovery of all reasonable sums 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 8 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 8 exceed the
time, geographic, or occupational limitations permitted by applicable
laws, Executive 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.
Executive and the Company further agree that the covenants in Section 8 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 Executive
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 8.
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10. EMPLOYEE CONDUCT.
(a) The Executive represents and agrees with the Company that he will make
no disbursement or other payment of any kind or character out of the
compensation paid, or expenses reimbursed to him pursuant hereto, or
with any other fund, with contravene, in any material respect, any
policy of the Company or, in any material respect, any applicable
statute or rule, regulation or order of any jurisdiction, foreign or
domestic. The Executive further agrees to indemnify and save harmless
the Company for any liabilities, obligations, claims, penalties, fines
or losses resulting from any unauthorized or unlawful acts of the
Employee which contravene, in any material respect, any policy of the
Company or any statute, rule, regulation or order of any jurisdiction,
foreign or domestic, applicable to the Executive or the Company. The
provisions of this Section 8 shall survive the dissolution or
termination of Executive's employment under this Agreement.
(b) Executive acknowledges that he has been furnished with a current copy
of the policy and procedures manual of the Company, that he has read
and understands such policies and procedures set forth in such manual,
that he understands such policies and procedures (and will read and
become familiar with any revisions or supplements to this manual) are
applicable to Executive in the performance of his duties and job
performance for the Company, and that he agrees to observe in all
material respects the Company's policies and procedures in the conduct
of Executive of his employment duties for the Company.
(c) Executive agrees to disclose, honestly and fully, all information and
documentation in his possession concerning all transactions or events
relating to, or affecting, the Company or any entity owned, controlled
(or otherwise affiliated) by the Company, as and to the extent such
information or documentation is requested by the Company or the
authorized representatives thereof; provides that if Executive
indicates to the Company that the information or documentation
requested is privileged, confidential or personally sensitive,
appropriate steps will be taken to attempt to protect such privilege,
confidentiality or privacy to the extent possible consistent with the
ethical or legal obligations applicable to the Company, but neither
such assertions by Executive not the undertakings attempted by the
Company with respect thereto shall qualify the unconditional disclosure
obligation of Executive, set forth above.
11. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the
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Company agrees, upon written demand by Executive (and Executive shall be
entitled upon application to any court of competent jurisdiction, to the entry
of a mandatory injunction, without the necessity of posting any bond with
respect thereto, compelling the Company) to promptly provide sums sufficient to
pay on a current basis (either directly or by reimbursing Executive) Executive's
costs and reasonable attorney's fees (including expenses of investigation and
disbursements for the fees and expenses of experts, etc.) incurred by Executive
in connection with any such dispute or any litigation, (a) provided that
Executive shall repay any such amounts paid or advanced if Executive is not the
prevailing party with respect to any dispute or litigation arising under
Sections 5c or 8 of this Agreement, or (b) regardless of whether Executive is
the prevailing party in a dispute or in litigation involving any other provision
of this Agreement, provided that the court in which such litigation is first
initiated determines with respect to this obligation, upon application of either
party hereto, Executive did not initiate frivolously such litigation. Under no
circumstances shall Executive be obligated to pay or reimburse the Company for
any attorneys' fees, costs or expenses incurred by the Company. The provisions
of this Section 10 shall survive the expiration or termination of this Agreement
and of Executive's employment hereunder.
12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
13. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority. The Company agrees with Executive that, except to the
extent required by law, it will not make or publish, without the express written
consent of Executive, any written or oral statement concerning the terms of
Executive's employment relationship with the Company and will not, if Executive
is terminated for any reason or severs his employment with the Company, make or
publish any written or oral statement concerning Executive, including, without
limitation, his work-related performance or the reasons or basis for Executive's
termination or otherwise severing Executive's employment relationship with the
Company.
14. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To
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the extent that any person acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of an unsecured
creditor of the Company.
15. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
16. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
18. REQUIREMENT OF TIMELY PAYMENTS.
If any amounts which are required, or determined to be paid or payable, or
reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at the annual percentage rate which is three (3)
percentage points above the interest rate which is announced by the First
National Bank of Boston, Boston, Massachusetts, from time to time, as its Base
Rate (or prime lending rate), from the date such amounts were required or
determined to have been paid or payable, reimbursed or reimbursable to
Executive, until such amounts and any interest accrued thereon are finally and
fully paid, provided, however, that in no event shall the amount of interest
contracted for, charged or received hereunder, exceed the maximum non-usurious
amount of interest allowed by applicable law.
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19. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company: USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below
20. 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 9 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.
(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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ Greg Sangalis
-------------------------------------------------
Title: Vice President / General Counsel /Secretary
----------------------------------------------
Date: June 1, 1997
----------------------------------------------
EXECUTIVE
/s/ John E. Drury
- -----------------------------------------------------
Date: June 1, 1997
------------------------------------------------
Address: 1001 Fannin, Suite 4000
---------------------------------------------
Houston, TX 77002
- -----------------------------------------------------
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EXHIBIT 10.14
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of the
Employment Agreement executed between USA Waste Services, Inc. (the "Company"),
and JOHN E. DRURY ("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will
be replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT
TO A LOCATION MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL
PLACE OF EMPLOYMENT, EXCEPT FOR REQUIRED TRAVEL ON THE
COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY CONSISTENT WITH
EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE A
CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force and
effect.
AGREED:
/s/ JOHN E. DRURY Date: December 1, 1997
- ------------------------------------ ------------------------
JOHN E. DRURY
USA WASTE SERVICES, INC.
By: Greg Sangalis Date: December 1, 1997
- ------------------------------------ ------------------------
Its: Vice President / Secretary
--------------------------------
1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company"), and RODNEY R. PROTO (the
"Executive") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement")
dated as of June 1, 1997, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by
the Company upon the terms and subject to the conditions set forth in
this Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall be for
continuously renewing five (5) year terms (the "Employment Term"),
without any further action required by either the Company or
Executive, unless Executive's employment is terminated in accordance
with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as President and Chief Operating Officer, and
report to the Chief Executive Officer. In such capacity, Executive
shall perform such duties as may be assigned to Executive from time to
time by the Board of Directors of the Company or the Chief Executive
Officer of the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive a base salary at the annual rate of four hundred thousand
($400,000) 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 principal executive officers. The phrase "principal
executive officer" as
2
used in this Agreement, shall mean the chief executive office of the
Company and other senior corporate officers of the Company who are from
time to time designated as principal executive officers by the
Compensation Committee.
(b) OTHER COMPENSATION. Executive shall be entitled to participate in any
incentive or supplemental compensation plan or arrangement instituted
by the Company and covering its principal executive officers, and to
receive additional compensation from the Company in such form and to
such extent, if any, as the Compensation Committee may in its sole
discretion from time to time specify and determine with respect to the
Company's principal executive officers, generally.
(c) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to senior executives, provided
that such expenses are incurred and accounted for in accordance with
the Company's policy.
(d) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to senior executives.
(e) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement,
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Executive shall be "Totally Disabled" if Executive is physically or
mentally incapacitated so as to render Executive incapable of
performing Executive's usual and customary duties under this Agreement.
Executive'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
Executive's receipt of such long-term disability benefits or Social
Security benefits, the Company's Board of Directors may, in its
reasonable discretion (but based upon appropriate medical evidence),
determine that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
(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's Board of Directors,
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
resolution of the Company's Board of Directors adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called and
held for that purpose and at which Executive is given an
opportunity to be heard.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
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(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive. A change in (i) Executive?s
position as Chief Operating Officer, (ii) Executive's reporting
relationship to the Chief Executive Officer, and/or (iii) a reduction
in Executive's base pay, shall be deemed a termination without cause.
Unless the provisions of Section 7 apply, Executive shall have sixty
(60) days from notice of said change to notify the Company of his
intent to terminate his employment and receive the compensation
described in Section 6(e) below.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated,
Executive shall be entitled to the following compensation and benefits
upon such termination:
(e) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive'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; a pro-rata "bonus" or incentive
compensation payment to the extent payments are awarded
similarly situated executives and paid at the same time as
similarly situated executives are paid; and any vacation accrued
to the date of death.
(ii) Any benefits to which Executive 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) The Base Salary (at the rate in effect as of the date of
Executive's death) which would have been payable to Executive if
Executive had continued in employment until the end of the
current Employment Term (five [5] years). Said payments will be
paid to Executive's estate or beneficiary at the same time and
in the same manner as such compensation would have been paid if
Executive had remained in active employment for the five (5)
year term.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested and
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to the
date of
Page 4 of 17
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termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the
date of termination. Executive shall also be eligible for a
pro-rata bonus or incentive compensation payment to the extent
such awards are made to similarly situated executives for the
year in which Executive is terminated.
(ii) Any benefits to which Executive 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
Executive's Total Disability) which would have been payable to
Executive if Executive had continued in active employment until
the end of the current Employment Term. Payment shall be made at
the same time and in the same manner as such compensation would
have been paid if Executive had remained in active employment
until the end of such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards and Executive shall have up to one (1) year from the date
of termination by reason of total disability to exercise all
such options.
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, or other
than for a resignation tendered following a change in Executive's
position, reporting relationship to the Chief Executive Officer or a
reduction in his base pay as described in Section 5(e) of this
Agreement, the Company shall pay the following amounts to Executive:
(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.
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(ii) Any benefits to which Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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 annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the five (5) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, and also including deferred compensation,
disability, automobile, stock options and other benefit plans in
which Executive was entitled to participate at any time during
the twelve-month period prior to the date of termination, until
the earliest to occur of (A) five years after the date of
termination; (B) Executive's death (provided that benefits
payable to Executive's beneficiaries shall not terminate upon
Executive's death); or (C) with respect to any particular plan,
program or arrangement, the date Executive becomes covered by a
comparable benefit by a subsequent employer. In the event that
Executive's continued participation in any such plan, program,
or arrangement of the Company is prohibited, the Company will
arrange to provide Executive with benefits substantially similar
to those which Executive would have been entitled to receive
under such plan, program, or arrangement, for such period.
Page 6 of 17
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(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans
in which Executive was a participant as of the date of
termination. Executive shall also be eligible for a bonus or
incentive compensation payment, at the same time, on the same
basis, and to the extent payments are made to similarly situated
executives, pro-rated for the year in which the Executive is
terminated.
(vi) As of the effective date of Executive's termination from active
employment, Executive shall be 100% vested in all stock option
awards. Executive shall have five (5) years to exercise all
options, unless by virtue of the particular stock option award,
the option grant expires on an earlier date.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
(g) 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, Executive 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 Executive's employment hereunder or during
any of the twelve calendar months preceding or following the
termination of Executive'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;
Page 7 of 17
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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 Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE
FOLLOWING CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated from
employment with the Company at any time prior to the six (6) month
anniversary of the date of the Change in Control following the
occurrence of any of the following events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits under
any of such plans or deprive Executive of any material fringe
benefit enjoyed by Executive immediately before a Change in
Control, unless such reduction or termination is required by
law;
(iv) the failure of the Company to pay Executive with an appropriate
adjustment to compensation, such as a lump sum relocation bonus,
salary adjustment and/or housing allowance so that Executive can
purchase comparable primary housing if required to relocate (it
being the intention of this Section 7[a][iv] to keep the
Executive "whole" if required to relocate). In this regard,
comparable housing shall be determined by comparing factors such
as location (taking into account, by way of example, items such
as the value of the surrounding neighborhood,
Page 8 of 17
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reputation of the public school district, if applicable,
security and proximity to Executive's place of work), quality of
construction, design, age, size of the housing and the ratio of
the monthly payments including principle, interest, taxes and
insurance, to the Executive's take-home-pay, to housing most
recently owned by Executive prior to, or as of the effective
date of the change of control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive 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 $1.00 less than three (3) times Executive's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Executive in
a single lump sum cash payment within five (5) business days
after the effective date of Executive's resignation.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock option grants) accrued but unpaid as of
the date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
The Executive will have until the expiration date shown on the
stock option award in which to exercise all options which have
vested pursuant to this Section 7(b)(iv). Executive shall also
be eligible for a bonus or incentive compensation payment (the
"bonus payment"), payable at 100% of the maximum bonus available
to Executive, pro-rated as of the effective date of the
termination. The bonus payment shall be payable within five (5)
days after the effective date of Employee's termination.
Page 9 of 17
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Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive 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 resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including the
Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by Section
4999. For purposes of this calculation, it shall be assumed that the
Executive's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm from among those regularly consulted
(during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax matters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding upon
the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested
Page 10 of 17
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election, or any combination of such transactions, the persons
who were directors immediately before the transaction shall
cease to constitute a majority of the Board of Directors of the
Company or any successor to the Company.
8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, 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 or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive 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 or through any person,
firm, association or corporation with which he is now, or may hereafter
become associated, cause, solicit, entice or induce any present or
future
Page 11 of 17
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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 prior written
consent of the Company.
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive 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.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 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
Executive, Executive 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
Page 12 of 17
13
equity; (i) injunctions, both preliminary and permanent, enjoining or
retraining such breach or anticipatory breach and Executive hereby
consents to the issuance thereof forthwith and without bond by any
court of competent jurisdiction; and (ii) recovery of all reasonable
sums 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 8 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 8 exceed the
time, geographic, or occupational limitations permitted by applicable
laws, Executive 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. Executive and the
Company further agree that the covenants in Section 8 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
Executive 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 8.
10. EMPLOYEE CONDUCT.
(a) The Executive represents and agrees with the Company that he will make
no disbursement or other payment of any kind or character out of the
compensation paid, or expenses reimbursed to him pursuant hereto, or
with any other fund, with contravene, in any material respect, any
policy of the Company or, in any material respect, any applicable
statute or rule, regulation or order of any jurisdiction, foreign or
domestic. The Executive further agrees to indemnify and save harmless
the Company for any liabilities, obligations, claims, penalties, fines
or losses resulting from any unauthorized or unlawful acts of the
Employee which contravene, in any material respect, any policy of the
Company or any statute, rule, regulation or order of any jurisdiction,
foreign or domestic, applicable to the Executive or the Company. The
provisions of this Section 8 shall survive the dissolution or
termination of Executive's employment under this Agreement.
(b) Executive acknowledges that he has been furnished with a current copy
of the policy and procedures manual of the Company, that he has read
and understands such policies and procedures set forth in such manual,
that he understands such policies and procedures (and will read and
become familiar with any revisions or supplements to this manual) are
applicable to Executive in the performance of his duties and job
Page 13 of 17
14
performance for the Company, and that he agrees to observe in all
material respects the Company's policies and procedures in the conduct
of Executive of his employment duties for the Company.
(c) Executive agrees to disclose, honestly and fully, all information and
documentation in his possession concerning all transactions or events
relating to, or affecting, the Company or any entity owned, controlled
(or otherwise affiliated) by the Company, as and to the extent such
information or documentation is requested by the Company or the
authorized representatives thereof; provides that if Executive
indicates to the Company that the information or documentation
requested is privileged, confidential or personally sensitive,
appropriate steps will be taken to attempt to protect such privilege,
confidentiality or privacy to the extent possible consistent with the
ethical or legal obligations applicable to the Company, but neither
such assertions by Executive not the undertakings attempted by the
Company with respect thereto shall qualify the unconditional disclosure
obligation of Executive, set forth above.
11. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, (a) provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to any dispute or
litigation arising under Sections 5c or 8 of this Agreement, or (b) regardless
of whether Executive is the prevailing party in a dispute or in litigation
involving any other provision of this Agreement, provided that the court in
which such litigation is first initiated determines with respect to this
obligation, upon application of either party hereto, Executive did not initiate
frivolously such litigation. Under no circumstances shall Executive be obligated
to pay or reimburse the Company for any attorneys' fees, costs or expenses
incurred by the Company. The provisions of this Section 10 shall survive the
expiration or termination of this Agreement and of Executive's employment
hereunder.
12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
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13. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority. The Company agrees with Executive that, except to the
extent required by law, it will not make or publish, without the express written
consent of Executive, any written or oral statement concerning the terms of
Executive's employment relationship with the Company and will not, if Executive
is terminated for any reason or severs his employment with the Company, make or
publish any written or oral statement concerning Executive, including, without
limitation, his work-related performance or the reasons or basis for Executive's
termination or otherwise severing Executive's employment relationship with the
Company.
14. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
15. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
16. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
Page 15 of 17
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17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made in that State, without regard
to its conflict of laws provisions.
18. REQUIREMENT OF TIMELY PAYMENTS.
If any amounts which are required, or determined to be paid or payable, or
reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at the annual percentage rate which is three (3)
percentage points above the interest rate which is announced by the First
National Bank of Boston, Boston, Massachusetts, from time to time, as its Base
Rate (or prime lending rate), from the date such amounts were required or
determined to have been paid or payable, reimbursed or reimbursable to
Executive, until such amounts and any interest accrued thereon are finally and
fully paid, provided, however, that in no event shall the amount of interest
contracted for, charged or received hereunder, exceed the maximum non-usurious
amount of interest allowed by applicable law.
19. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company: USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below.
20. 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 9 hereof, if any term or provision of
this Agreement
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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.
(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 of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ Greg Sangalis
-------------------------------------------
Title: V.P. / General Counsel / Secretary
----------------------------------------
Date: June 1, 1997
----------------------------------------
EXECUTIVE
/s/ Rodney R. Proto
- ----------------------------------------------
Date: June 1, 1997
-----------------------------------------
Address: 1001 Fannin, Suite 4000
--------------------------------------
Houston, TX 77002
- ----------------------------------------------
Page 17 of 17
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EXHIBIT 10.16
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of the
Employment Agreement executed between USA Waste Services, Inc. (the "Company"),
and RODNEY R. PROTO ("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will
be replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT
TO A LOCATION MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL
PLACE OF EMPLOYMENT, EXCEPT FOR REQUIRED TRAVEL ON THE
COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY CONSISTENT WITH
EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE A
CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force and
effect.
AGREED:
/s/ RODNEY R. PROTO Date: December 1, 1997
- ------------------------------------ ------------------------
RODNEY R. PROTO
USA WASTE SERVICES, INC.
By: Greg Sangalis Date: December 1, 1997
---------------------------------- ------------------------
Its: Vice President / Secretary
- -------------------------------------
1
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company"), and EARL E. DeFRATES (the "Executive")
hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as of June 1,
1997, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall be for
continuously renewing five (5) year terms (the "Employment Term"), without any
further action required by either the Company or Executive, unless Executive's
employment is terminated in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as Executive Vice President and Chief Financial
Officer, and report to the Chief Executive Officer. In such capacity,
Executive shall perform such duties as may be assigned to Executive
from time to time by the Board of Directors of the Company or the Chief
Executive Officer of the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive a base salary at the annual rate of two hundred seventy-five
thousand ($275,000) 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 principal executive officers. The phrase "principal
2
executive officer" as used in this Agreement, shall mean the chief
executive office of the Company and other senior corporate officers of
the Company who are from time to time designated as principal executive
officers by the Compensation Committee.
(b) OTHER COMPENSATION. Executive shall be entitled to participate in any
incentive or supplemental compensation plan or arrangement instituted
by the Company and covering its principal executive officers, and to
receive additional compensation from the Company in such form and to
such extent, if any, as the Compensation Committee may in its sole
discretion from time to time specify and determine with respect to the
Company's principal executive officers, generally.
(c) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to senior executives, provided
that such expenses are incurred and accounted for in accordance with
the Company's policy.
(d) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to senior executives.
(e) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement,
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Executive shall be "Totally Disabled" if Executive is physically or
mentally incapacitated so as to render Executive incapable of
performing Executive's usual and customary duties under this Agreement.
Executive'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
Executive's receipt of such long-term disability benefits or Social
Security benefits, the Company's Board of Directors may, in its
reasonable discretion (but based upon appropriate medical evidence),
determine that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate Executive's
employment hereunder for "Cause" at any time after providing written notice
to Executive.
(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's Board of Directors,
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
resolution of the Company's Board of Directors adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called and
held for that purpose and at which Executive is given an
opportunity to be heard.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
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(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive. A change in (i) Executive?s
position as Chief Financial Officer, (ii) Executive's reporting
relationship to the Chief Executive Officer, and/or (iii) a reduction
in Executive's base pay, shall be deemed a termination without cause.
Unless the provisions of Section 7 apply, Executive shall have sixty
(60) days from notice of said change to notify the Company of his
intent to terminate his employment and receive the compensation
described in Section 6(e) below.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive'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; a pro-rata "bonus" or incentive
compensation payment to the extent payments are awarded
similarly situated executives and paid at the same time as
similarly situated executives are paid; and any vacation accrued
to the date of death.
(ii) Any benefits to which Executive 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) The Base Salary (at the rate in effect as of the date of
Executive's death) which would have been payable to Executive if
Executive had continued in employment until the end of the
current Employment Term (five [5] years). Said payments will be
paid to Executive's estate or beneficiary at the same time and
in the same manner as such compensation would have been paid if
Executive had remained in active employment for the five (5)
year term.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested and
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
Page 4 of 17
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(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. Executive shall also be eligible for a
pro-rata bonus or incentive compensation payment to the extent
such awards are made to similarly situated executives for the
year in which Executive is terminated.
(ii) Any benefits to which Executive 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
Executive's Total Disability) which would have been payable to
Executive if Executive had continued in active employment until
the end of the current Employment Term. Payment shall be made at
the same time and in the same manner as such compensation would
have been paid if Executive had remained in active employment
until the end of such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards and Executive shall have up to one (1) year from the date
of termination by reason of total disability to exercise all
such options.
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, or other
than for a resignation tendered following a change in Executive's
position, reporting relationship to the Chief Executive Officer or a
reduction in his base pay as described in Section 5(e) of this
Agreement, the Company shall pay the following amounts to Executive:
(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.
Page 5 of 17
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(ii) Any benefits to which Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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 annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the five (5) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, and also including deferred compensation,
disability, automobile, stock options and other benefit plans in
which Executive was entitled to participate at any time during
the twelve-month period prior to the date of termination, until
the earliest to occur of (A) five years after the date of
termination; (B) Executive's death (provided that benefits
payable to Executive's beneficiaries shall not terminate upon
Executive's death); or (C) with respect to any particular plan,
program or arrangement, the date Executive becomes covered by a
comparable benefit by a subsequent employer. In the event that
Executive's continued participation in any such plan, program,
or arrangement of the Company is prohibited, the Company will
arrange to provide
Page 6 of 17
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Executive with benefits substantially similar to those which
Executive would have been entitled to receive under such plan,
program, or arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans
in which Executive was a participant as of the date of
termination. Executive shall also be eligible for a bonus or
incentive compensation payment, at the same time, on the same
basis, and to the extent payments are made to similarly situated
executives, pro-rated for the year in which the Executive is
terminated.
(vi) As of the effective date of Executive's termination from active
employment, Executive shall be 100% vested in all stock option
awards. Executive shall have five (5) years to exercise all
options, unless by virtue of the particular stock option award,
the option grant expires on an earlier date.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
(g) 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, Executive 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 Executive's employment hereunder or during
any of the twelve calendar months preceding or following the
termination of Executive'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,
Page 7 of 17
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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 Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated from
employment with the Company at any time prior to the six (6) month
anniversary of the date of the Change in Control following the
occurrence of any of the following events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits under
any of such plans or deprive Executive of any material fringe
benefit enjoyed by Executive immediately before a Change in
Control, unless such reduction or termination is required by
law;
(iv) the failure of the Company to pay Executive with an appropriate
adjustment to compensation, such as a lump sum relocation bonus,
salary adjustment and/or housing allowance so that Executive can
purchase comparable primary housing if required to relocate (it
being the intention of this Section 7[a][iv] to keep the
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Executive "whole" if required to relocate). In this regard,
comparable housing shall be determined by comparing factors such
as location (taking into account, by way of example, items such
as the value of the surrounding neighborhood, reputation of the
public school district, if applicable, security and proximity to
Executive's place of work), quality of construction, design,
age, size of the housing and the ratio of the monthly payments
including principle, interest, taxes and insurance, to the
Executive's take-home-pay, to housing most recently owned by
Executive prior to, or as of the effective date of the change of
control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive 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 $1.00 less than three (3) times Executive's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Executive in
a single lump sum cash payment within five (5) business days
after the effective date of Executive's resignation.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock option grants) accrued but unpaid as of
the date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
The Executive will have until the expiration date shown on the
stock option award in which to exercise all options which have
vested pursuant to this Section 7(b)(iv). Executive shall also
be eligible for a bonus or incentive compensation payment (the
"bonus payment"), payable at 100% of the maximum bonus available
to Executive, pro-rated as of the effective date of the
termination.
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The bonus payment shall be payable within five (5) days after
the effective date of Employee's termination.
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive 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 resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including the
Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by Section
4999. For purposes of this calculation, it shall be assumed that the
Executive's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm from among those regularly consulted
(during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax matters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding upon
the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or
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indirectly, of securities of the Company representing 25 percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately before
the transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, 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 or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive 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
Page 11 of 17
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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 or through any person, firm, association
or corporation with which he 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 prior written
consent of the Company.
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive 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.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 hereof will cause irreparable damage
to the Company with respect to which
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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 Executive, Executive 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 Executive hereby
consents to the issuance thereof forthwith and without bond by any
court of competent jurisdiction; and (ii) recovery of all reasonable
sums 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 8 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 8 exceed the
time, geographic, or occupational limitations permitted by applicable
laws, Executive 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. Executive and the
Company further agree that the covenants in Section 8 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
Executive 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 8.
10. EMPLOYEE CONDUCT.
(a) The Executive represents and agrees with the Company that he will make
no disbursement or other payment of any kind or character out of the
compensation paid, or expenses reimbursed to him pursuant hereto, or
with any other fund, with contravene, in any material respect, any
policy of the Company or, in any material respect, any applicable
statute or rule, regulation or order of any jurisdiction, foreign or
domestic. The Executive further agrees to indemnify and save harmless
the Company for any liabilities, obligations, claims, penalties, fines
or losses resulting from any unauthorized or unlawful acts of the
Employee which contravene, in any material respect, any policy of the
Company or any statute, rule, regulation or order of any jurisdiction,
foreign or domestic, applicable to the Executive or the Company. The
provisions of this Section 8 shall survive the dissolution or
termination of Executive's employment under this Agreement.
(b) Executive acknowledges that he has been furnished with a current copy
of the policy
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and procedures manual of the Company, that he has read and understands
such policies and procedures set forth in such manual, that he
understands such policies and procedures (and will read and become
familiar with any revisions or supplements to this manual) are
applicable to Executive in the performance of his duties and job
performance for the Company, and that he agrees to observe in all
material respects the Company's policies and procedures in the conduct
of Executive of his employment duties for the Company.
(c) Executive agrees to disclose, honestly and fully, all information and
documentation in his possession concerning all transactions or events
relating to, or affecting, the Company or any entity owned, controlled
(or otherwise affiliated) by the Company, as and to the extent such
information or documentation is requested by the Company or the
authorized representatives thereof; provides that if Executive
indicates to the Company that the information or documentation
requested is privileged, confidential or personally sensitive,
appropriate steps will be taken to attempt to protect such privilege,
confidentiality or privacy to the extent possible consistent with the
ethical or legal obligations applicable to the Company, but neither
such assertions by Executive not the undertakings attempted by the
Company with respect thereto shall qualify the unconditional disclosure
obligation of Executive, set forth above.
11. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, (a) provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to any dispute or
litigation arising under Sections 5c or 8 of this Agreement, or (b) regardless
of whether Executive is the prevailing party in a dispute or in litigation
involving any other provision of this Agreement, provided that the court in
which such litigation is first initiated determines with respect to this
obligation, upon application of either party hereto, Executive did not initiate
frivolously such litigation. Under no circumstances shall Executive be obligated
to pay or reimburse the Company for any attorneys' fees, costs or expenses
incurred by the Company. The provisions of this Section 10 shall survive the
expiration or termination of this Agreement and of Executive's employment
hereunder.
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12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
13. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority. The Company agrees with Executive that, except to the
extent required by law, it will not make or publish, without the express written
consent of Executive, any written or oral statement concerning the terms of
Executive's employment relationship with the Company and will not, if Executive
is terminated for any reason or severs his employment with the Company, make or
publish any written or oral statement concerning Executive, including, without
limitation, his work-related performance or the reasons or basis for Executive's
termination or otherwise severing Executive's employment relationship with the
Company.
14. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
15. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
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16. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made in that State, without regard
to its conflict of laws provisions.
18. REQUIREMENT OF TIMELY PAYMENTS.
If any amounts which are required, or determined to be paid or payable, or
reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at the annual percentage rate which is three (3)
percentage points above the interest rate which is announced by the First
National Bank of Boston, Boston, Massachusetts, from time to time, as its Base
Rate (or prime lending rate), from the date such amounts were required or
determined to have been paid or payable, reimbursed or reimbursable to
Executive, until such amounts and any interest accrued thereon are finally and
fully paid, provided, however, that in no event shall the amount of interest
contracted for, charged or received hereunder, exceed the maximum non-usurious
amount of interest allowed by applicable law.
19. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company: USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below.
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20. 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 9 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.
(b) 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 of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ John E. Drury
----------------------------------
Title: Chairman / CEO
-------------------------------
Date: June 1, 1997
-------------------------------
EXECUTIVE
/s/ Earl E. DeFrates
- -------------------------------------
Date: June 1, 1997
- -------------------------------------
Address: 1001 Fannin, Suite 4000
- -------------------------------------
Houston, TX 77002
- -------------------------------------
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EXHIBIT 10.18
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of the
Employment Agreement executed between USA Waste Services, Inc. (the "Company"),
and EARL E. De FRATES ("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will
be replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT
TO A LOCATION MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL
PLACE OF EMPLOYMENT, EXCEPT FOR REQUIRED TRAVEL ON THE
COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY CONSISTENT WITH
EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE A
CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force and
effect.
AGREED:
/s/ EARL E. DEFRATES Date: December 1, 1997
- ------------------------------------ ------------------------
EARL E. DeFRATES
USA WASTE SERVICES, INC.
By: /s/ GREG SANGALIS Date: December 1, 1997
- ------------------------------------ ------------------------
Its: Vice President / Secretary
--------------------------------
1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company"), and SUSAN J. PILLER (the "Executive")
hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as of June 1,
1997, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall begin as of
January 1, 1996, and shall be for continuously renewing three (3) year terms,
unless Executive's employment is terminated in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as Senior Vice President, Employee Relations, and
report to the Chief Executive Officer. In such capacity, Executive
shall perform such duties as may be assigned to Executive from time to
time by the Board of Directors of the Company or the Chief Executive
Officer of the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive 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 executives.
2
(b) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to executives, provided that
such expenses are incurred and accounted for in accordance with the
Company's policy.
(c) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to executives working pursuant to this form of Agreement (hereinafter
referred to as "similarly situated executives."
(d) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement, Executive shall be "Totally Disabled" if Executive is
physically or mentally incapacitated so as to render Executive
incapable of performing Executive's usual and customary duties under
this Agreement. Executive'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 Executive's receipt of such long-term disability
benefits or Social Security benefits, the Company's Board of Directors
may, in its reasonable discretion (but based upon appropriate medical
evidence), determine that Executive is Totally Disabled.
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(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
(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's Board of Directors,
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
resolution of the Company's Board of Directors adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called and
held for that purpose and at which Executive is given an
opportunity to be heard.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive's beneficiary or estate:
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4
(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; a pro-rata "bonus" or incentive
compensation payment to the extent payments are awarded to
similarly situated executives and paid at the same time as
similarly situated executives are paid; and any vacation accrued
to the date of death.
(ii) Any benefits to which Executive 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 Executive's death) which would have been payable to
Executive if Executive had continued in employment until the end
of the current Employment Term (three [3] years). Such amount
shall be paid in a single lump sum cash payment within thirty
(30) days after Executive's death.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested.
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(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. Executive shall also be eligible for 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 Executive 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
Executive's Total Disability) which would have been payable to
Executive if Executive had continued in active employment until
the end of the current Employment Term (three [3] years).
Payment shall be made at the same time and in the same manner as
such compensation would have been paid if Executive had remained
in active employment until the end of such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards. Executive shall have up to one (1)
Page 4 of 15
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year from the date of termination by reason of total disability
to exercise all such options.
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, the
Company shall pay the following amounts to Executive:
(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 Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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 annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the three (3) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
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6
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, in which Executive was entitled to participate at
any time during the twelve-month period prior to the date of
termination, until the earliest to occur of (A) three (3) years
after the date of termination; (B) Executive's death (provided
that benefits payable to Executive's beneficiaries shall not
terminate upon Executive's death); or (C) with respect to any
particular plan, program or arrangement, the date Executive
becomes covered by a comparable benefit by a subsequent
employer. In the event that Executive's continued participation
in any such plan, program, or arrangement of the Company is
prohibited, the Company will arrange to provide Executive with
benefits substantially similar to those which Executive would
have been entitled to receive under such plan, program, or
arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans,
and stock option plans in which Executive was a participant as
of the date of termination. Executive shall have one (1) year
from the date of termination to exercise stock options.
Executive shall also be eligible for a bonus or incentive
compensation payment, to the extent payments are made to
similarly situated executives, pro-rated for the year in which
the Executive is terminated, paid at the same time as similarly
situated executives are paid.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
(g) 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, Executive 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),
Page 6 of 15
7
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 Executive's employment hereunder or during
any of the twelve calendar months preceding or following the
termination of Executive'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 Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated (both
a "resignation" and "termination" being referred to as "termination"
for the purposes of this Section 7) from employment with the Company at
any time prior to the six (6) month anniversary of the date of the
Change in Control following the occurrence of any of the following
events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those
Page 7 of 15
8
plans or improvements that have expired thereafter in accordance
with their original terms), or the taking of any action which
would materially reduce Executive's benefits under any of such
plans or deprive Executive of any material fringe benefit
enjoyed by Executive immediately before a Change in Control,
unless such reduction or termination is required by law;
(iv) the failure of the Company to provide Executive with an
appropriate adjustment to compensation such as a lump sum
relocation bonus, salary adjustment and/or housing allowance so
that Executive can purchase comparable primary housing if
required to relocate (it being the intention of this Section
7[a][iv] to keep the Executive "whole" if required to relocate).
In this regard, comparable housing shall be determined by
comparing factors such as location (taking into account, by way
of example, items such as the value of the surrounding
neighborhood, reputation of the public school district, if
applicable, security and proximity to Executive's place of
work), quality of construction, design, age, size of the housing
and the ratio of the monthly payments including principle,
interest, taxes and insurance to the Executive's take home pay,
to housing most recently owned by Executive prior to, or as of
the effective date of the change of control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive may be entitled pursuant to the
plans, policies and arrangements referred to in Section 4c
hereof, shall be determined and paid in accordance with the
terms of such plans, policies and arrangements.
(iii) An amount equal to $1.00 less than three (3) times Executive's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Executive in
a single lump sum cash payment within five (5) business days
after the effective date of Executive's termination.
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9
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock options) accrued but unpaid as of the
date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
Executive shall also be eligible for a bonus or incentive
compensation payment (the "bonus payment"), payable at 100% of
the maximum bonus available to Executive, pro-rated as of the
effective date of the termination. The bonus payment shall be
payable within five (5) days after the effective date of
Employee's termination. Employee shall have until the expiration
date shown on the stock option award in which to exercise the
options which have vested pursuant to this section.
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive 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 resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including the
Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by Section
4999. For purposes of this calculation, it shall be assumed that the
Executive's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm from among those regularly consulted
(during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax matters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding upon
the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Page 9 of 15
10
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately before
the transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
8. RESTRICTIVE COVENANTS.
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, 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 or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive 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; or (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.
Page 10 of 15
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(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive 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.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 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
Executive, Executive 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 Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent
jurisdiction; and (ii) recovery of all reasonable sums 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 8 hereof
constitute a series of separate covenants, one for each applicable
State in the United States and the District of
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12
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 8 exceed the time, geographic, or occupational
limitations permitted by applicable laws, Executive 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. Executive and the Company further agree that the
covenants in Section 8 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 Executive 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 8.
10. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, (a) provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to any dispute or
litigation arising under Sections 5c or 8 of this Agreement, or (b) regardless
of whether Executive is the prevailing party in a dispute or in litigation
involving any other provision of this Agreement, provided that the court in
which such litigation is first initiated determines with respect to this
obligation, upon application of either party hereto, Executive did not initiate
frivolously such litigation. Under no circumstances shall Executive be obligated
to pay or reimburse the Company for any attorneys' fees, costs or expenses
incurred by the Company. The provisions of this Section 10 shall survive the
expiration or termination of this Agreement and of Executive's employment
hereunder.
11. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
Page 12 of 15
13
12. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
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14
17. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company:
USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive:
At the address for Executive set forth below.
18. 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 9 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.
(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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ John E. Drury
----------------------------------
Title: Chairman / CEO
-------------------------------
Date: June 1, 1997
-------------------------------
EXECUTIVE
/s/ Susan J. Piller
- -------------------------------------
Address: 1001 Fannin, Suite 4000
----------------------------
Houston, TX 77002
- -------------------------------------
Date: June 1, 1997
-------------------------------
Page 15 of 15
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EXHIBIT 10.20
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of the
Employment Agreement executed between USA Waste Services, Inc. (the "Company"),
and SUSAN J. PILLER ("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will
be replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT
TO A LOCATION MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL
PLACE OF EMPLOYMENT, EXCEPT FOR REQUIRED TRAVEL ON THE
COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY CONSISTENT WITH
EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE A
CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force and
effect.
AGREED:
/s/ SUSAN J. PILLER Date: December 1, 1997
- ------------------------------------- ------------------------
SUSAN J. PILLER
USA WASTE SERVICES, INC.
By: /s/ Greg Sangalis Date: December 1, 1997
---------------------------------- ------------------------
Its: Vice President / Secretary
---------------------------------
1
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company"), and WILLIAM A. ROTHROCK (the
"Executive") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as
of October 7, 1997, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall begin as of
January 1, 1997, and shall be for continuously renewing three (3) year terms,
unless Executive's employment is terminated in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as Senior Vice President, Business Development,
and report to the President/Chief Operating Officer. In such capacity,
Executive shall perform such duties as may be assigned to Executive
from time to time by the Board of Directors of the Company, or the
Chief Executive Officer of the Company, or Chief Operating Officer of
the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive a base salary at the annual rate of two hundred thousand
($200,000.00) 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 executives.
2
(b) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to executives, provided that
such expenses are incurred and accounted for in accordance with the
Company's policy.
(c) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to executives working pursuant to this form of Agreement (hereinafter
referred to as "similarly situated executives."
(d) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement, Executive shall be "Totally Disabled" if Executive is
physically or mentally incapacitated so as to render Executive
incapable of performing Executive's usual and customary duties under
this Agreement. Executive'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 Executive's receipt of such long-term disability
benefits or Social Security benefits, the Company's Board of Directors
may, in its reasonable discretion (but based upon appropriate medical
evidence), determine that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
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(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's Board of Directors,
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
resolution of the Company's Board of Directors adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called and
held for that purpose and at which Executive is given an
opportunity to be heard.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive'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; a pro-rata "bonus" or incentive compensation payment to the extent
payments are awarded to similarly situated executives
Page 3 of 14
4
and paid at the same time as similarly situated executives are paid; and any
vacation accrued to the date of death.
(ii) Any benefits to which Executive 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 Executive's death) which would have been payable to
Executive if Executive had continued in employment until the end
of the current Employment Term (three [3] years). Such amount
shall be paid in a single lump sum cash payment within thirty
(30) days after Executive's death.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested.
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(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. Executive shall also be eligible for a
pro-rata bonus or incentive compensation payment to the extent
such awards are made to similarly situated executives 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 Executive 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
Executive's Total Disability) which would have been payable to
Executive if Executive had continued in active employment until
the end of the current Employment Term (three [3] years).
Payment shall be made at the same time and in the same manner as
such compensation would have been paid if Executive had remained
in active employment until the end of such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards. Executive shall have up to one (1) year from the date of
termination by reason of total disability to exercise all such
options.
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
Page 4 of 14
5
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, the
Company shall pay the following amounts to Executive:
(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 Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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 annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the three (3) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
Page 5 of 14
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(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, in which Executive was entitled to participate at
any time during the twelve-month period prior to the date of
termination, until the earliest to occur of (A) three (3) years
after the date of termination; (B) Executive's death (provided
that benefits payable to Executive's beneficiaries shall not
terminate upon Executive's death); or (C) with respect to any
particular plan, program or arrangement, the date Executive
becomes covered by a comparable benefit by a subsequent
employer. In the event that Executive's continued participation
in any such plan, program, or arrangement of the Company is
prohibited, the Company will arrange to provide Executive with
benefits substantially similar to those which Executive would
have been entitled to receive under such plan, program, or
arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans,
and stock option plans in which Executive was a participant as
of the date of termination. Executive shall have one (1) year
from the date of termination to exercise stock options.
Executive shall also be eligible for a bonus or incentive
compensation payment, to the extent payments are made to
similarly situated executives, pro-rated for the year in which
the Executive is terminated, paid at the same time as similarly
situated executives are paid.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
(g) 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, Executive 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 Executive's employment hereunder or during
any of the
Page 6 of 14
7
twelve calendar months preceding or following the termination of
Executive'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 Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated (both
a "resignation" and "termination" being referred to as "termination"
for the purposes of this Section 7) from employment with the Company at
any time prior to the six (6) month anniversary of the date of the
Change in Control following the occurrence of any of the following
events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits under
any of such plans or deprive Executive of any material fringe
benefit enjoyed by Executive immediately before a Change in
Control, unless such reduction or termination is required by
law;
(iv) the failure of the Company to provide Executive with an
appropriate adjustment to compensation such as a lump sum
relocation bonus, salary adjustment and/or housing allowance so
that Executive can purchase comparable primary housing if
required to
Page 7 of 14
8
relocate (it being the intention of this Section 7[a][iv] to
keep the Executive "whole" if required to relocate). In this
regard, comparable housing shall be determined by comparing
factors such as location (taking into account, by way of
example, items such as the value of the surrounding
neighborhood, reputation of the public school district, if
applicable, security and proximity to Executive's place of
work), quality of construction, design, age, size of the housing
and the ratio of the monthly payments including principle,
interest, taxes and insurance to the Executive's take home pay,
to housing most recently owned by Executive prior to, or as of
the effective date of the change of control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive may be entitled pursuant to the
plans, policies and arrangements referred to in Section 4c
hereof, shall be determined and paid in accordance with the
terms of such plans, policies and arrangements.
(iii) An amount equal to $1.00 less than three (3) times Executive's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Executive in
a single lump sum cash payment within five (5) business days
after the effective date of Executive's termination.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock options) accrued but unpaid as of the
date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
Executive shall also be eligible for a bonus or incentive
compensation payment (the "bonus payment"), payable at 100% of
the maximum bonus available to Executive, pro-rated as of the
effective date of the termination. The bonus payment shall be
payable within five (5) days after the effective date of
Employee's termination. Employee shall have until the expiration
date shown on the stock option award in which to exercise the
options which have vested pursuant to this section.
Page 8 of 14
9
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive 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 resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including the
Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by Section
4999. For purposes of this calculation, it shall be assumed that the
Executive's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm from among those regularly consulted
(during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax maters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding upon
the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately before
the transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
Page 9 of 14
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8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, 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 that
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 or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive 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; or (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.
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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.
Page 10 of 14
11
(d) PROTECTED INFORMATION. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive 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.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 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
Executive, Executive 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 Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent
jurisdiction; and (ii) recovery of all reasonable sums 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 8 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 8 exceed the
time, geographic, or occupational limitations permitted by applicable
laws, Executive 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
Page 11 of 14
12
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. Executive and the Company further agree that the
covenants in Section 8 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 Executive 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 8.
10. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, (a) provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to any dispute or
litigation arising under Sections 5c or 8 of this Agreement, or (b) regardless
of whether Executive is the prevailing party in a dispute or in litigation
involving any other provision of this Agreement, provided that the court in
which such litigation is first initiated determines with respect to this
obligation, upon application of either party hereto, Executive did not initiate
frivolously such litigation. Under no circumstances shall Executive be obligated
to pay or reimburse the Company for any attorneys' fees, costs or expenses
incurred by the Company. The provisions of this Section 10 shall survive the
expiration or termination of this Agreement and of Executive's employment
hereunder.
11. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
12. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires
Page 12 of 14
13
a right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.
14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
17. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company:
USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below
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18. 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 9 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.
(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 of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ Rodney R. Proto Date: October 7, 1997
---------------------------------- ------------------
Title: President / COO
------------------------------
EXECUTIVE
/s/ William A. Rothrock Date: October 7, 1997
- ------------------------------------- ------------------
Address: 1001 Fannin, Suite 4000
----------------------------
Houston, TX 77002
- -------------------------------------
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The Company agrees to indemnify the Executive for any actions taken by Executive
as an official of the Company and in the course and scope of his employment.
Indemnification will include the cost of attorneys retained on behalf of the
Executive and the reimbursement or payment of any settlement or judgment entered
in connection with any threatened, pending or actual litigation. The duty to
indemnify will not apply to any action taken by Executive which actions are
outside of his authority. Further, the Executive and/or his attorney agrees to
keep the Company advised of any and all developments which arise during the
course of threatened, pending or actual litigation.
This Agreement is and shall be a part of the Employment Agreement entered into
between the Company and Bill Rothrock (attached).
AGREED:
/s/ William A. Rothrock Date: October 7, 1997
- ------------------------------------- ------------------------
William A. Rothrock
/s/ Rodney R. Proto Date: October 7, 1997
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USA Waste Services, Inc.
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EXHIBIT 10.22
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of the
Employment Agreement executed between USA Waste Services, Inc. (the "Company"),
and WILLIAM A. ROTHROCK("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will
be replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT
TO A LOCATION MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL
PLACE OF EMPLOYMENT, EXCEPT FOR REQUIRED TRAVEL ON THE
COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY CONSISTENT WITH
EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE A
CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force and
effect.
AGREED:
/s/ WILLIAM A ROTHROCK Date: December 12, 1997
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WILLIAM A. ROTHROCK
USA WASTE SERVICES, INC.
By: Greg Sangalis Date: December 12, 1997
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Its: Vice President / Secretary
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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company"), and GREGORY T. SANGALIS (the
"Executive") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as
of June 1, 1997, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall begin as of
January 1, 1997, and shall be for continuously renewing three (3) year terms,
unless Executive's employment is terminated in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as Vice President, General Counsel/Corporate
Secretary, and report to the Chief Executive Officer. In such capacity,
Executive shall perform such duties as may be assigned to Executive
from time to time by the Board of Directors of the Company or the Chief
Executive Officer of the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive a base salary at the annual rate of two hundred twenty-five
thousand ($225,000) 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 executives.
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(b) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to executives, provided that
such expenses are incurred and accounted for in accordance with the
Company's policy.
(c) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to executives working pursuant to this form of Agreement (hereinafter
referred to as "similarly situated executives."
(d) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement, Executive shall be "Totally Disabled" if Executive is
physically or mentally incapacitated so as to render Executive
incapable of performing Executive's usual and customary duties under
this Agreement. Executive'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 Executive's receipt of such long-term disability
benefits or Social Security benefits, the Company's Board of Directors
may, in its reasonable discretion (but based upon appropriate medical
evidence), determine that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
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(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's Board of Directors,
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
resolution of the Company's Board of Directors adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called and
held for that purpose and at which Executive is given an
opportunity to be heard.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days" written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive'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; a pro-rata "bonus" or incentive
compensation payment to the extent payments are
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awarded to similarly situated executives and paid at the same
time as similarly situated executives are paid; and any vacation
accrued to the date of death.
(ii) Any benefits to which Executive 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 Executive's death) which would have been payable to
Executive if Executive had continued in employment until the end
of the current Employment Term (three [3] years). Such amount
shall be paid in a single lump sum cash payment within thirty
(30) days after Executive's death.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested.
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(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. Executive shall also be eligible for 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 Executive 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
Executive's Total Disability) which would have been payable to
Executive if Executive had continued in active employment until
the end of the current Employment Term (three [3] years).
Payment shall be made at the same time and in the same manner as
such compensation would have been paid if Executive had remained
in active employment until the end of such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards. Executive shall have up to one (1) year from the date of
termination by reason of total disability to exercise all such
options.
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(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, the
Company shall pay the following amounts to Executive:
(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 Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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 annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the three (3) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
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payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, in which Executive was entitled to participate at
any time during the twelve-month period prior to the date of
termination, until the earliest to occur of (A) three (3) years
after the date of termination; (B) Executive's death (provided
that benefits payable to Executive's beneficiaries shall not
terminate upon Executive's death); or (C) with respect to any
particular plan, program or arrangement, the date Executive
becomes covered by a comparable benefit by a subsequent
employer. In the event that Executive's continued participation
in any such plan, program, or arrangement of the Company is
prohibited, the Company will arrange to provide Executive with
benefits substantially similar to those which Executive would
have been entitled to receive under such plan, program, or
arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans,
and stock option plans in which Executive was a participant as
of the date of termination. Executive shall have one (1) year
from the date of termination to exercise stock options.
Executive shall also be eligible for a bonus or incentive
compensation payment, to the extent payments are made to
similarly situated executives, pro-rated for the year in which
the Executive is terminated, paid at the same time as similarly
situated executives are paid.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
(g) 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, Executive 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
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(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 Executive's employment hereunder or during
any of the twelve calendar months preceding or following the
termination of Executive'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 Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated (both
a "resignation" and "termination" being referred to as "termination"
for the purposes of this Section 7) from employment with the Company at
any time prior to the six (6) month anniversary of the date of the
Change in Control following the occurrence of any of the following
events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits under
any of such plans or deprive Executive of any material fringe
benefit enjoyed by Executive immediately before a Change in
Control, unless such reduction or termination is required by
law;
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(iv) the failure of the Company to provide Executive with an
appropriate adjustment to compensation such as a lump sum
relocation bonus, salary adjustment and/or housing allowance so
that Executive can purchase comparable primary housing if
required to relocate (it being the intention of this Section
7[a][iv] to keep the Executive "whole" if required to relocate).
In this regard, comparable housing shall be determined by
comparing factors such as location (taking into account, by way
of example, items such as the value of the surrounding
neighborhood, reputation of the public school district, if
applicable, security and proximity to Executive's place of
work), quality of construction, design, age, size of the housing
and the ratio of the monthly payments including principle,
interest, taxes and insurance to the Executive's take home pay,
to housing most recently owned by Executive prior to, or as of
the effective date of the change of control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive may be entitled pursuant to the
plans, policies and arrangements referred to in Section 4c
hereof, shall be determined and paid in accordance with the
terms of such plans, policies and arrangements.
(iii) An amount equal to $1.00 less than three (3) times Executive's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Executive in
a single lump sum cash payment within five (5) business days
after the effective date of Executive's termination.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock options) accrued but unpaid as of the
date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
Executive shall also be eligible for a bonus or incentive
compensation payment (the "bonus payment"), payable at 100% of
the maximum bonus available to Executive, pro-rated as of the
effective date of the termination. The bonus payment shall be
payable within five (5) days after the effective date of
Employee's termination. Employee shall have
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until the expiration date shown on the stock option award in
which to exercise the options which have vested pursuant to this
section.
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive 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 resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including the
Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by Section
4999. For purposes of this calculation, it shall be assumed that the
Executive's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm from among those regularly consulted
(during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax matters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding upon
the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors
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immediately before the transaction shall cease to constitute a
majority of the Board of Directors of the Company or any
successor to the Company.
8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, 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 or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive 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; or (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.
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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.
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(d) PROTECTED INFORMATION. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive 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.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 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
Executive, Executive 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 Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent
jurisdiction; and (ii) recovery of all reasonable sums 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 8 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 8 exceed the
time, geographic, or occupational limitations permitted by applicable
laws, Executive 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
Page 11 of 14
12
Agreement for the purpose of such proceeding to the extent necessary to
permit the remaining separate covenants to be enforced in such
proceeding. Executive and the Company further agree that the covenants
in Section 8 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 Executive 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 8.
10. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, (a) provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to any dispute or
litigation arising under Sections 5c or 8 of this Agreement, or (b) regardless
of whether Executive is the prevailing party in a dispute or in litigation
involving any other provision of this Agreement, provided that the court in
which such litigation is first initiated determines with respect to this
obligation, upon application of either party hereto, Executive did not initiate
frivolously such litigation. Under no circumstances shall Executive be obligated
to pay or reimburse the Company for any attorneys' fees, costs or expenses
incurred by the Company. The provisions of this Section 10 shall survive the
expiration or termination of this Agreement and of Executive's employment
hereunder.
11. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
12. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that
Page 12 of 14
13
any person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
17. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company: USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below.
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18. 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 9 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.
(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 of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ John E. Drury
----------------------------------
Title: Chairman / CEO
-------------------------------
Date: June 1, 1997
-------------------------------
EXECUTIVE
/s/ Gregory T. Sangalis
- --------------------------------------
Address: 1001 Fannin, Suite 4000
------------------------------
Houston, TX 77002
- --------------------------------------
Date: June 1, 1997
--------------------------------
Page 14 of 14
1
EXHIBIT 10.24
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of the
Employment Agreement executed between USA Waste Services, Inc. (the "Company"),
and GREGORY T. SANGALIS("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will
be replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT
TO A LOCATION MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL
PLACE OF EMPLOYMENT, EXCEPT FOR REQUIRED TRAVEL ON THE
COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY CONSISTENT WITH
EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE A
CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force and
effect.
AGREED:
/s/ Gregory T. Sangalis December 1, 1997
- ------------------------------------- --------------------
GREGORY T. SANGALIS Date
USA WASTE SERVICES, INC.
By: /s/ Susan J. Piller December 1, 1997
---------------------------------- ---------------------
Its: Sr. Vice President Date
--------------------------------
1
EXHIBIT 10.25
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company") and RONALD H. JONES (the "Employee")
hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as of August 26,
1997, as follows:
1. EMPLOYMENT.
The Company shall employ Employee, and Employee shall be employed by the Company
upon 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 of June
1, 1997, 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 in accordance
with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Employee shall serve as Vice President, Treasurer. 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 one hundred forty-five thousand
($145,000) 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.
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(b) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Employee
for the ordinary and necessary business expenses incurred by Employee
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").
5. TERMINATION OF EMPLOYMENT.
Employee's employment hereunder may be terminated under the following
circumstances:
(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.
(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;
Page 2 of 11
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(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 shall
be 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.
(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.
Page 3 of 11
4
(iv) As of the date of termination by reason of Employee's death,
stock options awarded to Employee shall be fully vested.
Employee's estate or beneficiary shall have up to one (1) year
from date of termination/death to exercise all such options.
(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.
(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.
(iv) As of the date of Employee's termination by reason of Employee's
total disability, Employee shall be fully vested in all stock
option awards. Employee shall have up to one (1) year from date
of termination due to total disability to exercise all such
options.
(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:
Page 4 of 11
5
(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 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.
Page 5 of 11
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(v) As of the date of Employee's termination, Employee shall be
fully vested in all stock option awards. Employee shall have one
(1) year from the date of termination to exercise all such
options.
(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, directly or indirectly, engage
Page 6 of 11
7
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, 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. Notwithstanding the above, it is understood
that the Employee's background and skills are in the treasury area, and
that after the expiration of six (6) months from the date of
termination, the Employee shall not be restricted from associating or
affiliating himself with other financial institutions or companies, so
long as such association or affiliation is strictly of a treasury
related manner or position.
(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; or (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.
Page 7 of 11
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(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 expended and
costs, including reasonable attorney's fees, incurred by the Company to
enforce the covenants set forth in this section.
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(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 this
Agreement 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 to
any third party other than Employee's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority.
11. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Employee shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
12. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Employee.
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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 its
subsidiaries or affiliated entities relating to the terms of Employee's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
14. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
15. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company: USA Waste Services, 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.
(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.
Page 10 of 11
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(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 of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ Earl E. DeFrates
------------------------------------
Title: Executive Vice President / CFO
---------------------------------
Date: August 26, 1997
---------------------------------
EMPLOYEE
/s/ Ronald H. Jones
- ---------------------------------------
Date: August 26, 1997
----------------------------------
Address: 1001 Fannin, Suite 4000
--------------------------------
Houston, TX 77002
- ---------------------------------------
Page 11 of 11
1
EXHIBIT 10.26
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. (the "Company") and BRUCE E. SNYDER (the "Employee")
hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as of
June 1, 1997, as follows:
1. EMPLOYMENT.
The Company shall employ Employee, and Employee shall be employed by the Company
upon 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 of May
1, 1997, 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 in accordance
with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Employee shall serve as Vice President and Chief Accounting Officer. 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 one hundred sixty thousand
($160,000) 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
in the performance of Employee's duties hereunder in accordance with
the Company's customary practices applicable
2
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) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Employee's employment hereunder may be terminated under the following
circumstances:
(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.
(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
Page 2 of 14
3
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, or pursuant to Section 7 of this Agreement.
(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 shall
be 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.
(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.
Page 3 of 14
4
(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.
(iv) As of the date of termination by reason of Employee's death,
stock options awarded to Employee shall be fully vested.
Employee's estate or beneficiary shall have up to one (1) year
from date of termination by reason of death to exercise all such
options.
(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.
(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.
(iv) As of the date of Employee's termination by reason of Employee's
total disability, Employee shall be fully vested in all stock
option awards. Employee shall have up to one (1) year from date
of termination by reason of total disability to exercise all
such options.
Page 4 of 14
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 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,
Page 5 of 14
6
the date Employee becomes covered by a comparable benefit
provided by a subsequent employer.
(v) As of the date of Employee's termination, Employee shall be
fully vested in all stock option awards. Employee shall have one
(1) year from the date of termination to exercise all such
options.
(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.
Page 6 of 14
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7. RESIGNATION BY EMPLOYEE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Employee will be paid the compensation
described in this Section 7 if Employee resigns or is terminated (both
a "resignation" and "termination" being referred to as "termination"
for the purposes of this Section 7) from employment with the Company at
any time prior to the six (6) month anniversary of the date of the
Change in Control following the occurrence of any of the following
events:
(i) without Employee's express written consent, the assignment to
Employee of any duties inconsistent with Employee's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Employee's reporting,
responsibilities, titles or offices as in effect immediately
before a Change in Control, or any removal of Employee from, or
any failure to re-elect Employee to, any of such positions,
except in connection with the termination of Employee's
employment as a result of death, or by the Company for
Disability or Cause, or by Employee other than for the reasons
described in this Section 7(a);
(ii) a reduction by the Company in Employee's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Employee's participation in the Company's benefit plans
as in effect immediately before a Change in Control and with all
improvements therein subsequent thereto (other than those plans
or improvements that have expired thereafter in accordance with
their original terms), or the taking of any action which would
materially reduce Employee's benefits under any of such plans or
deprive Employee of any material fringe benefit enjoyed by
Employee immediately before a Change in Control, unless such
reduction or termination is required by law;
(iv) the failure of the Company to provide Employee with an
appropriate adjustment to compensation such as a lump sum
relocation bonus, salary adjustment and/or housing allowance so
that Employee can purchase comparable primary housing if
required to relocate (it being the intention of this Section
7[a][iv] to keep the Employee "whole" if required to relocate).
In this regard, comparable housing shall be determined by
comparing factors such as location (taking into account, by way
of example, items such as the value of the surrounding
neighborhood, reputation of the public school district, if
applicable, security and proximity to Employee's place of work),
quality of construction, design, age, size of the housing and
the ratio of the monthly payments including principle, interest,
taxes and insurance to the
Page 7 of 14
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Employee's take home pay, to housing most recently owned by
Employee prior to, or as of the effective date of the change of
control;
(v) the failure by the Company to pay Employee any portion of
Employee's current compensation, or any portion of Employee's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Employee terminates employment
pursuant to Section 7(a), 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 4c
hereof, shall be determined and paid in accordance with the
terms of such plans, policies and arrangements.
(iii) An amount equal to $1.00 less than three (3) times Employee's
"base amount" within the full meaning of Section 280G of the
Internal Revenue Code. Such amount shall be paid to Employee in
a single lump sum cash payment within five (5) business days
after the effective date of Employee's termination.
(iv) Employee will be 100% vested in all benefits, awards, and grants
(including stock options) accrued but unpaid as of the date of
termination under any non-qualified pension plan, supplemental
and/or incentive compensation or bonus plans, in which Employee
was a participant as of the date of termination. Employee shall
also be eligible for a bonus or incentive compensation payment
(the "bonus payment"), payable at 100% of the maximum bonus
available to Employee, pro-rated as of the effective date of the
termination. The bonus payment shall be payable within five (5)
days after the effective date of Employee's termination.
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Employee at the time of Employee's resignation from
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 resignation or
termination.
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(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Employee (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Employee as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Employee on an after-tax
basis for any excise tax imposed on such payments under Section 4999 of
the Code. The Gross-up Payment shall equal the amount, if any, needed
to ensure that the net parachute payments (including the Gross-up
Payment) actually received by the Employee after the imposition of
federal and state income, employment and excise taxes (including any
interest or penalties imposed by the Internal Revenue Service), are
equal to the amount that the Employee would have netted after the
imposition of federal and state income and employment taxes, had the
Total Payments not been subject to the taxes imposed by Section 4999.
For purposes of this calculation, it shall be assumed that the
Employee's tax rate will be the maximum federal rate to be computed
with regard to Section 1(g) of the Code.
In the event that the Employee and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall select
a law firm or accounting firm from among those regularly consulted
(during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax maters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding upon
the Employee and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately before
the transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
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8. 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, 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 that 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, 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 that
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; or (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.
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(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.
9. 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 8 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 8 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
Page 11 of 14
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sums 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 8 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 8 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 8 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 8.
10. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
11. NON-DISCLOSURE OF AGREEMENT TERMS.
Employee agrees that Employee will not disclose the terms of this Agreement to
any third party other than Employee's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority.
12. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Employee shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
Page 12 of 14
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13. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Employee.
14. 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 its
subsidiaries or affiliated entities relating to the terms of Employee's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
15. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas, applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
16. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company:
USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Employee:
At the address for Employee set forth below
16. MISCELLANEOUS.
Page 13 of 14
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(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.
(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 of
the day and year first above written.
USA WASTE SERVICES, INC.
By: /s/ GREGORY T. SANGALIS Date: June 1, 1997
---------------------------------- --------------------
Name: Gregory T. Sangalis
--------------------------------
Title: Vice President and Secretary
-------------------------------
EMPLOYEE
/s/ BRUCE E. SNYDER Date: June 1, 1997
- ------------------------------------- -------------------
Address: 1001 Fannin, Suite 4000
-----------------------------
Houston, Texas 77002
- -------------------------------------
Page 14 of 14
1
EXHIBIT 10.27
AMENDMENT TO EMPLOYMENT AGREEMENT
Section 7(a) ("Resignation for Good Reason Following Change of Control") of
the Employment Agreement executed between USA Waste Services, Inc. (the
"Company"), and Bruce E. Snyder ("Executive") is hereby amended to as follows:
Subsection 7(a)(iv) contained in the current Employment Agreement will be
replaced with the following new subsection:
(iv) THE CHANGE OF EXECUTIVE'S PRINCIPAL PLACE OF EMPLOYMENT TO A LOCATION
MORE THAN FIFTY (50) MILES FROM SUCH PRINCIPAL PLACE OF EMPLOYMENT, EXCEPT
FOR REQUIRED TRAVEL ON THE COMPANY'S BUSINESS TO AN EXTENT SUBSTANTIALLY
CONSISTENT WITH EXECUTIVE'S BUSINESS TRAVEL OBLIGATIONS IMMEDIATELY BEFORE
A CHANGE IN CONTROL;
All remaining terms of the Employment Agreement shall continue in full force
and effect.
AGREED:
/s/ BRUCE E. SNYDER 12/1/97
- ----------------------------------- -----------------------------------
BRUCE E. SNYDER Date
USA WASTE SERVICES, INC.
By: /s/ SUSAN J. PILLAR 12/1/97
------------------------------- -----------------------------------
Date
Its: Vice President
------------------------------
1
EXHIBIT 10.28
EMPLOYMENT AGREEMENT
USA WASTE SERVICES, INC. and CANADIAN WASTE SERVICES, INC. (the
"Company"), and DAVID SUTHERLAND-YOEST (the "Executive") hereby enter
into this EMPLOYMENT AGREEMENT ("Agreement") dated as of June 1, 1997,
as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by
the Company upon the terms and subject to the conditions set forth in
this Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall be for
continuously renewing five (5) year terms, without any further action
required by either the Company or Executive, unless Executive's
employment is terminated in accordance with Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as President, Canadian Waste Services, Inc. and
Regional Vice President for the Company. In such capacity, Executive
shall perform such duties as may be assigned to Executive from time to
time by the Board of Directors of the Company, the Chief Executive
Officer, or the Chief Operating Officer of the Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive'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 Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive 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
Executive a base salary at the annual rate of three hundred thirty
thousand ($330,000) dollars per year (or the equivalent in Canadian
dollars), 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 similarly
situated senior executives. The
2
phrase "senior executives" as used in this Agreement, shall include the
Regional Vice Presidents of the Company.
(b) OTHER COMPENSATION. Executive shall be entitled to participate in any
incentive or supplemental compensation plan or arrangement instituted
by the Company and covering its principal executive officers, and to
receive additional compensation from the Company in such form and to
such extent, if any, as the Compensation Committee may in its sole
discretion from time to time specify and determine with respect to the
Company's senior executives, or Regional Vice Presidents generally.
(c) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to senior executives, provided
that such expenses are incurred and accounted for in accordance with
the Company's policy.
(d) BENEFIT PLANS. Executive 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 fringe benefit plan, generally made available by the Company
to senior executives.
(e) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive to
(i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are, upon
written demand by the Executive, to be promptly advanced or reimbursed
to the Executive, or paid directly, on a current basis, by the Company
or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement, Executive shall be "Totally Disabled" if Executive is
physically or mentally incapacitated so as to render Executive
incapable of performing Executive's usual and customary duties under
this
Page 2 of 16
3
Agreement. Executive's receipt of disability benefits under the
Company's long-term disability plan or receipt of other disability
benefits, such as Social Security or an equivalent benefit, shall be
deemed conclusive evidence of Total Disability for purpose of this
Agreement; provided, however, that in the absence of Executive's
receipt of such long-term disability benefits or government disability
benefits, the Company's Board of Directors may, in its reasonable
discretion (but based upon appropriate medical evidence), determine
that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
(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's Board of Directors,
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.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated,
Executive shall be entitled to the following compensation and benefits
upon such termination:
Page 3 of 16
4
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive'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; a pro-rata "bonus" or incentive
compensation payment to the extent payments are awarded
similarly situated executives and paid at the same time as
similarly situated executives are paid; and any vacation accrued
to the date of death.
(ii) Any benefits to which Executive 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 Executive's death) which would have been payable to
Executive if Executive had continued in employment until the end
of the current Employment Term (five [5] years). Such amount
shall be paid to Executive's estate or beneficiary at the same
time, and in the same manner as such compensation would have
been paid if Executive had remained in active employment until
the end of such period.
(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested and
Executive's estate or beneficiary shall have up to one (1) year
from the date of death to exercise all such options.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(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. Executive shall also be eligible for a
pro-rata bonus or incentive compensation payment to the extent
such awards are made to similarly situated executives for the
year in which Executive is terminated.
(ii) Any benefits to which Executive 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
Executive's Total Disability) which would have been payable to
Executive if Executive had continued in active employment until
the end of the current Employment Term. Payment shall be made at
the same time and in the same manner as such compensation would
have
Page 4 of 16
5
been paid if Executive had remained in active employment until
the end of such period.
(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock option
awards and Executive shall have up to one (1) year from the date
of termination by reason of total disability to exercise all
such options.
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(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 Executive 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) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, the
Company shall pay the following amounts to Executive:
(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 Executive 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.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Executive'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 Executive:
(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 Executive 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.
Page 5 of 16
6
(iii) An annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid during
the five (5) year period beginning on the date of Executive's
termination and shall be paid at the same time and in the same
manner as the Base Salary would have been paid if Executive had
remained in active employment until the end of such period. For
purposes of this Agreement, the term "Total Annual Direct
Compensation" means the total of the Base Salary and other cash
compensation payable to Executive attributable to a calendar
year (A) including any cash compensation which would have been
payable for such year but for Executive's election to defer
payment of such compensation and (B) excluding any amounts
recognized as compensation as a result of Executive's exercise
of a stock option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, in which Executive was entitled to participate at
any time during the twelve-month period prior to the date of
termination, until the earliest to occur of (A) five years after
the date of termination; (B) Executive's death (provided that
benefits payable to Executive's beneficiaries shall not
terminate upon Executive's death); or (C) with respect to any
particular plan, program or arrangement, the date Executive
becomes covered by a comparable benefit by a subsequent
employer. In the event that Executive's continued participation
in any such plan, program, or arrangement of the Company is
prohibited, the Company will arrange to provide Executive with
benefits substantially similar to those which Executive would
have been entitled to receive under such plan, program, or
arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be 100%
vested in all benefits, awards, and grants accrued but unpaid as
of the date of termination under any pension plan, profit
sharing plan, supplemental and/or incentive compensation plans
in which Executive was a participant as of the date of
termination. Executive shall also be eligible for a bonus or
incentive compensation payment, to the extent payments are made
to similarly situated executives, pro-rated for the year in
which the Executive is terminated. As of the effective date of
Executive's termination, all stock options issued to Executive
shall vest, and Executive shall have five (5) years from the
date of termination to exercise all such newly vested stock
options. All options which have already vested as of the date of
termination shall be exercised according to the established
vesting schedule.
(f) 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 Executive at the time of
Executive's termination or resignation of employment, Executive 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.
Page 6 of 16
7
(g) 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, Executive 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 Executive's employment hereunder or during
any of the twelve calendar months preceding or following the
termination of Executive'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
Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE
FOLLOWING CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
"Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated from
employment with the Company at any time prior to the six (6) month
anniversary of the date of the Change in Control following the
occurrence of any of the following events:
(i) without Executive's express written consent, the assignment to
Executive of any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Company immediately
before a Change in Control, or a change in Executive's
reporting, responsibilities, titles or offices as in effect
immediately before a Change in Control, or any removal of
Executive from, or any failure to re-elect Executive to, any of
such positions, except in connection with the termination of
Executive's employment as a result of death, or by the Company
for Disability or Cause, or by Executive other than for the
reasons described in this Section 7(a);
Page 7 of 16
8
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all increases
therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits under
any of such plans or deprive Executive of any material fringe
benefit enjoyed by Executive immediately before a Change in
Control, unless such reduction or termination is required by
law;
(iv) the failure of the Company to provide Executive with an
appropriate adjustment to compensation, such as a lump sum
relocation bonus, salary adjustment and/or housing allowance so
that Executive can purchase comparable primary housing if
required to relocate (it being the intention of this Section
7[a][iv] to keep the Executive "whole" if required to relocate).
In this regard, comparable housing shall be determined by
comparing factors such as location (taking into account, by way
of example, items such as the value of the surrounding
neighborhood, reputation of the public school district, if
applicable, security and proximity to Executive's place of
work), quality of construction, design, age, size of the housing
and the ratio of the monthly payments including principle,
interest, taxes and insurance, to the Executive's take-home-pay,
to housing most recently owned by Executive prior to, or as of
the effective date of the change of control;
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of Executive's
compensation deferred under any plan, agreement or arrangement
of or with the Company, within seven (7) days of the date such
compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under this
Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates employment
pursuant to Section 7(a), the Company shall pay the following amounts
to Executive:
(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 Executive 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.
Page 8 of 16
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(iii) An amount equal to $1.00 less than three (3) times
Executive's "base amount" within the full meaning of Section
280G of the Internal Revenue Code. Such amount shall be paid to
Executive in a single lump sum cash payment within five (5)
business days after the effective date of Executive's
resignation.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock option grants) accrued but unpaid as of
the date of termination under any non-qualified pension plan,
supplemental and/or incentive compensation or bonus plans, in
which Executive was a participant as of the date of termination.
Executive will have until the expiration date shown on the stock
option award in which to exercise all options which have vested
pursuant to this Section 7(b)(iv). Executive shall also be
eligible for a bonus or incentive compensation payment (the
"bonus payment"), payable at 100% of the maximum bonus available
to Executive, pro-rated as of the effective date of the
termination. The bonus payment shall be payable within five (5)
days after the effective date of Employee's termination.
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive 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 resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code") (if
applicable), then the Company shall pay the Executive as promptly as
practicable following such determination an additional amount (the
"Gross-up Payment") calculated as described below to reimburse the
Executive on an after-tax basis for any excise tax imposed on such
payments under Section 4999 of the Code. The Gross-up Payment shall
equal the amount, if any, needed to ensure that the net parachute
payments (including the Gross-up Payment) actually received by the
Executive after the imposition of federal and state income, employment
and excise taxes (including any interest or penalties imposed by the
Internal Revenue Service), are equal to the amount that the Executive
would have netted after the imposition of federal and state income and
employment taxes, had the Total Payments not been subject to the taxes
imposed by Section 4999. For purposes of this calculation, it shall be
assumed that the Executive's tax rate will be the maximum federal rate
to be computed with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to
agree as to the amount of the Gross-up Payment, if any, the
Company shall select a law firm or accounting firm from among
those regularly consulted (during the twelve-month period
immediately prior to a Change-in-Control) by the Company
regarding federal income tax matters and such law
Page 9 of 16
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firm or accounting firm shall determine the amount of Gross-up Payment
and such determination shall be final and binding upon the Executive
and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming the
beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately before
the transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6 of
this Agreement, Executive will not 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. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever date is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company over which Executive has had any overall
responsibilities for the performance of said operating location as
Regional Vice President, 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 or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2)
Page 10 of 16
11
years after the date of termination of the Executive's employment,
whichever date is later, whether such termination is voluntary or
involuntary by wrongful discharge, or otherwise, Executive 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 or through any person,
firm, association or corporation with which he 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 prior written
consent of the Company.
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive 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. Executive recognizes and acknowledges that
Executive 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 customer lists, route sheets, business
opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial
data and the like (collectively, the "Protected Information").
Executive therefore covenants and agrees that Executive 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.
Page 11 of 16
12
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company, shall
be grounds for immediate dismissal of Executive and forfeiture of any
accrued and unpaid salary, bonus, commissions or other compensation of
such Executive 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 Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 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
Executive, Executive 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 Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent
jurisdiction; and (ii) recovery of all reasonable sums 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 8 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 province in Canada. If in any judicial proceeding, a court shall
hold that any of the covenants set forth in Section 8 exceed the time,
geographic, or occupational limitations permitted by applicable laws,
Executive 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. Executive and the
Company further agree that the covenants in Section 8 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
Executive 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 8.
10. EMPLOYEE CONDUCT.
(a) The Executive represents and agrees with the Company that he will make
no disbursement or other payment of any kind or character out of the
compensation paid, or expenses reimbursed to him pursuant hereto, or
with any other fund, with contravene, in any material respect, any
policy of the Company or, in any material respect, any applicable
Page 12 of 16
13
statute or rule, regulation or order of any jurisdiction, foreign or
domestic. The Executive further agrees to indemnify and save harmless
the Company for any liabilities, obligations, claims, penalties, fines
or losses resulting from any unauthorized or unlawful acts of the
Employee which contravene, in any material respect, any policy of the
Company or any statute, rule, regulation or order of any jurisdiction,
foreign or domestic, applicable to the Executive or the Company. The
provisions of this Section 8 shall survive the dissolution or
termination of Executive's employment under this Agreement.
(b) Executive acknowledges that he has been furnished with a current copy
of the policy and procedures manual of the Company, that he has read
and understands such policies and procedures set forth in such manual,
that he understands such policies and procedures (and will read and
become familiar with any revisions or supplements to this manual) are
applicable to Executive in the performance of his duties and job
performance for the Company, and that he agrees to observe in all
material respects the Company's policies and procedures in the conduct
of Executive of his employment duties for the Company.
(c) Executive agrees to disclose, honestly and fully, all information and
documentation in his possession concerning all transactions or events
relating to, or affecting, the Company or any entity owned, controlled
(or otherwise affiliated) by the Company, as and to the extent such
information or documentation is requested by the Company or the
authorized representatives thereof; provides that if Executive
indicates to the Company that the information or documentation
requested is privileged, confidential or personally sensitive,
appropriate steps will be taken to attempt to protect such privilege,
confidentiality or privacy to the extent possible consistent withe the
ethical or legal obligations applicable to the Company, but neither
such assertions by Executive not the undertakings attempted by the
Company with respect thereto shall qualify the unconditional disclosure
obligation of Executive, set forth above.
11. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, (a) provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to any dispute or
litigation arising under Sections 5c or 8 of this Agreement, or (b) regardless
of whether Executive is the prevailing party in a dispute or in litigation
involving any other provision of this Agreement, provided that the court in
which such litigation is first initiated determines with respect to this
obligation, upon application of either party hereto, Executive did not initiate
frivolously such litigation. Under no circumstances shall Executive be obligated
to pay or reimburse the Company for any attorneys'
Page 13 of 16
14
fees, costs or expenses incurred by the Company. The provisions of this Section
10 shall survive the expiration or termination of this Agreement and of
Executive's employment hereunder.
12. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable taxes.
13. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement to
any third party other than Executive's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority. The Company agrees with Executive that, except to the
extent required by law, it will not make or publish, without the express written
consent of Executive, any written or oral statement concerning the terms of
Executive's employment relationship with the Company and will not, if Executive
is terminated for any reason or severs his employment with the Company, make or
publish any written or oral statement concerning Executive, including, without
limitation, his work-related performance or the reasons or basis for Executive's
termination or otherwise severing Executive's employment relationship with the
Company.
14. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
15. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
Page 14 of 16
15
16. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario.
18. NO PUBLICATION.
The Company agrees with Executive that, except to the extent required by law, it
will not make or publish, without the express prior written consent of the
Employee, any written or oral statement concerning the terms of the Employee's
employment relationship with the Company and will not, if Executive goes on
part-time status for any reason, or severs his employment with the Company, make
or publish any written or oral statement concerning Executive including, without
limitation, his work-related performance or the reasons or basis for Executive
going on part-time status, or otherwise severing his employment relationship
with the Company.
19. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company: USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive: At the address for Executive set forth below.
20. 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.
Page 15 of 16
16
(b) SEPARABILITY. Subject to Section 9 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.
(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 of
the day and year first above written.
USA WASTE SERVICES, INC.
CANADIAN WASTE SERVICES, INC.
By: /s/ Greg Sangalis
----------------------------------
Title: Vice President / Secretary
-------------------------------
Date: June 1, 1997
-------------------------------
EXECUTIVE
/s/ David Sutherland-Yoest
- -------------------------------------
Date: June 1, 1997
--------------------------------
Address: 1001 Fannin, Suite 4000
----------------------------
Houston, TX 77002
- -------------------------------------
Page 16 of 16
1
EXHIBIT 10.31
[USA WASTE LETTERHEAD]
November 10, 1997
Mr. Kosti Shirvanian
23 Corporate Plaza #427
Newport Beach, CA 92660
Dear Kosti:
This letter is written to follow up on our previous conversations
regarding your resignation as an employee in connection with the change of
control provision of your Employment Agreement (as hereinafter defined). In an
effort to bring these discussions to a resolution, I offer the following terms.
These terms are fair to USA Waste Services, Inc. ("USA Waste") and properly
recognize the contributions you have made to this organization over the past
several years.
Termination of Employment and Employment Agreement:
- You will resign as an employee effective as of the close of business on
November 11, 1997 (the "Termination Date").
- Your employment agreement dated as of December 18, 1995 as amended as of
June 30, 1997 (the "Employment Agreement") and all rights thereunder
including, without limitation, any rights to salary, bonuses, stock
options, secretarial assistance, office space, etc. will be terminated
as of the Termination Date.
Cash:
- $200,000 upon signing
Non-Competition Agreement:
- Term commencing on Termination Date through 12/31/2002.
- No involvement with any USA Waste competitors in the solid waste business
during the term
Stock:
- Stock grants as of Termination Date of 230,000 unregistered shares of USA
Waste.
2
Mr. Kosti Shirvanian
November 10, 1997
Page Two
Stock Options:
- Stock option grant of 290,625 shares of USA Waste at closing price on
Termination Date.
- Savey Tufenkian will receive a stock option grant of 100,000 shares of USA
Waste at the closing price as of May 7, 1998.
Miscellaneous:
- Automobile - BMW currently being used by you will be titled to you.
- The receivable owed to Western Waste Industries relating to the Stagg
Inventory will be forgiven.
Kosti, I believe this is the proposal to which you agreed. We need to
finalize this before our announcement of earnings tonight. Accordingly, if you
agree to these terms, please sign the enclosed copy of this letter and return
it to me via facsimile (713/512-6323).
Very truly yours,
/s/ JOHN E. DRURY
John E. Drury
Chairman and Chief Executive Officer
Agreed and Accepted by Kosti Shirvanian
/s/ KOSTI SHIRVANIAN
Kosti Shirvanian
November 11, 1997.
1
EXHIBIT 12.1
USA WASTE SERVICES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
Years Ended December 31,
----------------------------------
1997(1) 1996(2) 1995(3)
-------- -------- --------
Income before taxes and extraordinary item $463,267 $138,737 $141,089
-------- -------- --------
Fixed charges deducted from income:
Interest expense 104,261 60,497 69,613
Implicit interest in rents 11,790 7,345 6,252
-------- -------- --------
116,051 67,842 75,865
-------- -------- --------
Earnings available for fixed charges $579,318 $206,579 $216,954
======== ======== ========
Interest expense $104,261 $ 60,497 $ 69,613
Capitalized interest 25,198 21,189 13,808
Implicit interest in rents 11,790 7,345 6,252
-------- -------- --------
Total fixed charges $141,249 $ 89,031 $ 89,673
======== ======== ========
Ratio of earnings to fixed charges 4.1 x 2.3 x 2.4 x
======== ======== ========
- -------------------------------------------------------------------------------
(1) Income before taxes and extraordinary item for the year ended December
31, 1997, includes merger costs and unusual items of $109,411,000, and
$24,720,000, respectively. Excluding the effect of these nonrecurring
charges, the ratio of earnings to fixed charges would have been 5.1x
for the year then ended.
(2) Income before taxes and extraordinary item for the year ended December
31, 1996, includes merger costs and unusual items of $126,626,000 and
$63,800,000, respectively. Excluding the effect of these nonrecurring
charges, the ratio of earnings to fixed charges would have been 4.5x
for the year then ended.
(3) Income before taxes and extraordinary item for the year ended December
31, 1995, includes merger costs and unusual items of $26,539,000 and
$15,727,000, respectively. Excluding the effect of these nonrecurring
charges, the ratio of earnings to fixed charges would have been 3.2x
for the year then ended.
1
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT
(3/18/98)
709292 Alberta Ltd. (AB)
730810 Alberta Ltd. (AB)
740922 Alberta Ltd. (AB)
762570 Alberta Ltd. (AB)
A-1 Compaction, Inc. (NY)
dba United Waste Systems of West Michigan
A-1 Transfer, Incorporated (CO)
Adam J. Deitrich & Sons Disposal & Coal Hauling, Inc. (PA)
Alamo Waste, Inc. (TX)
Alliance Sanitary Landfill, Inc. (PA)
Allied Waste of Wyoming, Inc. (WY)
American Rubbish, Inc. (CA)
dba USA Waste of California
American Sheds, Inc. (CA)
Anchorage Refuse, Inc. (AK)
Anderson-Cottonwood Disposal Service, Inc. (CA)
Angus Services, Inc. (FL)
dba City Environmental Services of North Florida
Arden Landfill, Inc. (PA)
Art-Jo Co. (NJ)
Automated Recycling Technologies, Inc. (NJ)
Azusa Land Reclamation Company, Inc. (CA)
B & E Cartage, Inc. (WV)
Baker's Rural Sanitation, Inc. (CO)
Barry Waste Services and Recycling Co., Inc. (MA)
Big Valley Transport, Inc. (WV)
BioSolids Refuse Management (JV) (CA)
Blackstone Valley Disposal Service, Inc. (MA)
Bolton Road Landfill, Inc. (DE)
Boone Waste Industries, Inc. (FL)
Bosarge & Edmonds Contractors, Inc. (MS)
dba Robo
Brazoria County Recycling Center, Inc. (TX)
dba BCRC
dba Brazoria County Recycling Center
dba USA Brazoria County Landfill
dba WRS Transfer Station
Brem-Air Disposal, Inc. (WA)
dba Brem-Air Disposal
1
2
Brevard County Landfill Co., L.L.C. (DE)
Burbridge Trash Service, Inc. (CO)
Burnsville Sanitary Landfill, Inc. (MN)
C&L Disposal Company, Inc. (CA)
Caire's CKC Enterprises, Inc. (CA)
Cal Sanitation Services, Inc. (CA)
dba A-1 Sanitation
California Asbestos Monofill, Inc. (CA)
dba CAM
California Waste Recycling Systems, Inc. (CA)
California Waste Systems, Inc. (CA)
Cal-Sierra Disposal, Inc. (CA)
Cal-Sierra Transfer, Inc. (CA)
Campbell Wells Norm Corporation (LA)
CANADIAN WASTE SERVICES HOLDINGS INC. (ON)
Canadian Waste Services, Inc. (ON)
dba Canadian Disposal Services
dba Cougar Waste Management
dba Philip Enterprises
dba Quebec Waste Services
dba St. Nicephore Landfill
dba Canadian Waste Services of:
Alberta
Barrie
Brantford
Calgary
Camrose
Dawson Creek
Drayton Valley
Edmonton
Ft. McMurray
Grande Prairie
Halton
Hamilton
Hamilton MRF
Hull
Kingston
Lachute Hauling
Lachute Landfill
Lakeland
Napanee
Niagara Falls
Ottawa-Commercial
Ottawa-MRF
2
3
Peace River
Regina
Region du Nord
Richmond
Ryley Landfill
Saskatoon
Sault Ste. Marie
South West Ontario
South West Ottawa
Strathcona Transfer/MRF
St. Catherine
St. John
Sudbury
Vancouver
West Carleton Landfill
Winnipeg
635952 Ontario Inc. (ON)
126403 Ontario Inc. (ON)
126404 Ontario Inc. (ON)
3368084 Canada Inc. (CDN)
Services Sanitaires Robert Richer Ltee (CDN)
Arthur Richer & Fils Inc. (PQ)
Bestan Inc. (PQ)
Intersan Inc. (CDN)
Location Sanico Ltee (CDN)
Dechex Ltee (CDN)
Centre de Tri Transit (1) Inc. (CDN)
Transit Sorting Center (1) Inc. (CDN)
Cardinal Ridge Development, Inc. (OH)
Carmel Marina Corporation (CA)
CDC Services, Inc. (DE)
CDF Consolidated Corporation (IL)
dba Rolling Kleen Disposal
dba Southern Illinois Transfer Station
Cedar Ridge Landfill, Inc. (DE)
Central Disposal Systems, Inc. (IA)
Central Missouri Landfill, Inc. (MO)
Chadwick Road Landfill, Inc. (GA)
dba Chadwick Road Landfill
Chambers Development Company, Inc. (DE)
dba Monroeville Landfill
dba North Huntington Hauling
Chambers Development of Ohio, Inc. (OH)
Chambers Enterprises, Inc. (PA)
Chambers International, Inc. (DE)
Chambers Development Europe B.V. (FOR)
Chambers Europe B.V. (FOR)
3
4
Chambers Medical Technologies of South Carolina, Inc. (SC)
dba MedTec
dba Medical Technologies
Chambers of Delaware, Inc. (DE)
Chambers of Massachusetts, Inc. (MA)
Chambers of New Jersey, Inc. (NJ)
Chambers Services, Inc. (NY)
Chambers Waste Systems of California, Inc. (CA)
Chambers Waste Systems of New York, Inc. (NY)
Charleston Landfill, Inc. (WV)
Cheshire Sanitation, Inc. (NH)
dba Harris Trucking
dba Tri-State Rubbish
Chiquitta Canyon Landfill, Inc. (CA)
City Environmental Services, Inc. of Alabama (AL)
dba City Environmental Services of Dothan
dba City Environmental Services of Huntsville
dba USA Waste Services of Alabama
City Environmental Services, Inc. of Arecibo (MI)
City Environmental Services, Inc. of Metro Chicago (MI)
City Environmental Services, Inc. of Mid-Michigan (MI)
dba CES-Saginaw
dba CES-West Branch
dba City Express
City Environmental Services, Inc. of Northern Michigan (MI)
dba City Express
City Environmental Services, Inc. of Romulus (MI)
dba City Express
dba Seagate Recycling (Ohio)
dba Seagate Sanitation Service, (Ohio)
City Environmental Services, Inc. of Waters (MI)
City Environmental Services, Inc. S.E. (MI)
City Environmental Services Landfill, Inc. of Florida (FL)
City Environmental Services Landfill, Inc. of Hastings (MI)
dba City Environmental Services of West Michigan
dba City Express
dba Hastings Sanitary Service
dba Lubbers Resource Systems
City Environmental Services, Landfill, Inc. of Lapeer (MI)
dba Pioneer Rock Landfill
City Environmental Services Landfill, Inc. of Panama City (MI)
City Environmental Services Landfill, Inc. of Saginaw (MI)
dba Saginaw Valley Landfill
4
5
City Management Corporation (MI)
dba Adam Refuse
dba Brent Run
dba CES - Montrose
dba City Disposal Systems
dba City Environmental
dba City Environmental Contracting
dba City Environmental
dba City Environmental Services East
dba City Environmental Services of Montrose
dba City Environmental Services of Joliet
dba City Equipment Company
dba City Express
dba City Liquid Treatment and Processing
dba City Municipal Services
dba City Recycling Center
dba City Sand & Landfill
dba City Waste Systems
dba D & J Refuse Company
dba G & G Disposal
dba Gary's Disposal
dba J.L. Smith Refuse Service
dba M & M Contracting of Michigan
dba M & M Holding Company
dba Metro Waste Systems
dba Michigan City Management Corporation
dba Moore's Disposal
dba People's Garbage
dba People's Garbage Disposal
dba People's Garbage Disposal of Midland/Gladwin
dba Pollard Disposal
dba Premier Steel
dba Raska Disposal
dba Seymour Road Demolition
dba Seymour Road Landfill
dba Soave-Volpe Hauling
dba Trashbusters Transfer Station, Ltd.
dba United Machinery Movers and Erectors
dba Universal Waste & Transit
dba Whitefeather Development Company
Clayton Ward Company, Inc. (CA)
Cleansoils Fairless Hills, Inc. (MN)
Clearview Environmental Landfill, Inc. (MS)
Cleburne Landfill Company Corp. (AL)
Cleburne Landfill Corporation (MI)
5
6
Coast Waste Management, Inc. (CA)
Cocopah Landfill, Inc. (CA)
Colorado Waste Services, Inc. (CO)
Columbia County Drop off Box, Inc. (OR)
Colusa Solid Waste & Recycling, Inc. (CA)
Commercial Disposal Co., Inc. (MA)
Commercial Sanitation Service, Inc. (KY)
Conejo Enterprises (CA)
Connecticut Valley Sanitary Waste Disposal, Inc. (MA)
Conservation Services, Inc. (CO)
Consolidated Waste Systems, Incorporated (TX)
Copper Mountain Landfill, Inc. (AZ)
Corning Disposal Service, Inc. (CA)
Coshocton Landfill, Inc. (OH)
Cougar Landfill, Inc. (TX)
Countryside Landfill, Inc. (IL)
County- Wide Disposal, Inc. (CA)
Creston Sanitation, Inc. (IA)
Custom Disposal Services, Inc. (AZ)
Cuyahoga Landfill, Inc. (DE)
D & D Container Services Company (UT)
Dafter Sanitary Landfill, Inc. (MI)
Dakota Landfill, Inc. (ND)
Dakota Resource Recovery, Inc. (MN)
dba United Waste Transfer
Darrel D. Dickey, Inc. (TX)
Dauphin Meadows Landfill, Inc. (PA)
Deep Valley Landfill, Inc. (DE)
Deer Track Park Landfill, Inc. (DE)
dba Advance Service Corp.
Delaware Recyclable Products, Inc. (DE)
Desert Waste Systems, Inc. (CA)
Dickinson Landfill, Inc. (DE)
Dietrich Sanitary Service, Inc. (ND)
dba Bison Waste
dba Fraedrich Garbage Service
dba Mandan Garbage Service
dba Missouri River Sanitation
Disposal Service, Inc. (WV)
Dome Merger Subsidiary, Inc. (DE)
Don's Disposal, Inc. (NE)
6
7
Duluth Waste Marketing, Inc. (MN)
Eager Beaver Sanitary Service, Inc. (OR)
Earthcorp, Inc. (IN)
Earthmovers Landfill, Inc. (IN)
El Coqui Waste Disposal, Inc. (PR)
EC Waste, Inc. (PR)
Elk River Landfill, Inc. (MN)
Englewood Disposal Company, Inc. (FL)
Envirofil of Illinois, Inc. (DE)
Envirofil, Inc. (DE)
Environmental Alternative Concepts, Inc. (DE)
Environmental Control, Inc. (NM)
Environmental Management Systems, Inc. (MI)
dba Sumpter II Corp.
Equipment Credit Corporation (DE)
ERC Landfill, Inc. (OH)
Estes Park Investments, Inc. (CO)
Evergreen Landfill, Inc. (CA)
Ever Ready Drop Box (CA)
Farmer's Landfill, Inc. (MO)
Feather River Disposal, Inc. (CA)
FFF, Inc. (MN)
Front Range Landfill, Inc. (DE)
dba Best Trash
dba City Disposal
dba ERD Landfill
dba Franklin Street Transfer
Frontier Environmental, Inc. (FL)
G & F Waste Disposal, Inc. (UT)
G. I. Industries, Inc. (UT)
GA Landfills, Inc. (DE)
Gainesville Waste, Inc. (FL)
Gallia Landfill, Inc. (OH)
Garnet of Maryland, Inc. (MD)
Glenn County Disposal Services, Inc. (CA)
Glen's Sanitary Landfill, Inc. (MI)
Graham Road Landfill, Inc. (WA)
Grand Blanc Landfill, Inc. (MI)
Grand Central Sanitary Landfill, Inc. (PA)
Grand Central Sanitation, Inc. (PA)
Guyan Transfer & Sanitation Service, Inc. (WV)
7
8
H.B.J.J., Incorporated (CA)
H&I Sand & Clay Enterprises, Inc. (FL)
Harper Employment Services, Inc. (MI)
Harwood Landfill, Inc. (MD)
HCS Sanitation, Inc. (ND)
Hillsboro Landfill, Inc. (OR)
Hollister Disposal, Inc. (CA)
Holyoke Sanitary Landfill, Inc. (MA)
IN Landfills, Inc. (DE)
Independent Services, Inc. (CA)
J Bar J Land, Inc. (NE)
Jahner Sanitation, Inc. (ND)
Jay County Landfill, Inc. (IN)
John Smith Landfill, Inc. (CA)
Johnson Canyon Road Disposal Site, Inc. (CA)
Jolon Road Landfill Corporation (CA)
Jones Sanitation, Inc. (KY)
dba River City Refuse
Junker Sanitation Services, Inc. (MN)
dba United Waste Systems of Minnesota
K and W Landfill, Inc. (MI)
Kekaha Landfill, Inc. (DE)
Kelly Run Sanitation, Inc. (PA)
dba KRS United Waste Systems
Ken's Pickup Service, Inc. (MI)
dba United Waste Systems of Northern
King George Landfill, Inc. (VA)
Klamath Disposal, Inc. (OR)
Klamath Re-Ci, Inc. (OR)
Knutson Material Recovery Facility, Inc. (MN)
Knutson Services, Inc. (MN)
dba Knutson Klean Sweep
LG - Garnet of Maryland JV (DC)
dba DC Uline Transfer
L & K Debris Box Service (CA)
dba L & K Disposal
Laidlaw Waste Systems (Valley View), Inc. (KY)
Land Reclamation Company, Inc. (DE)
dba Kestrel Hawk Park Landfill
8
9
Landfill Hauling Systems, Inc. (NM)
dba Landfill Hauling Systems
Landfill Systems, Inc. (NM)
dba Landfill Systems
Lassen Waste Lines, Inc. (CA)
Lassen Waste Systems, Inc. (CA)
Laurel Highlands Landfill, Inc. (PA)
Laurel Ridge Landfill, Inc. (KY)
LCS Services, Inc. (WV)
dba LCS Landfill
dba North Mountain Landfill
Lee County Landfill, Inc. (DE)
dba Lee County Regional Recycling
and Disposal Facility
Leroy Brown Landfill, Inc. (IL)
Lewis Road Disposal Site, Inc. (CA)
Liberty Landfill, Inc. (IN)
Liquid Waste Management, Inc. (CA)
Local Sanitation of Rowan County, Inc. (DE)
Lodi Sanitary City Disposal Co., Inc. (CA)
Loma Linda Disposal Company, Inc. (CA)
Longview Development, Inc. (DE)
Longview Group, Inc. (DE)
Longview of Buchanan County, Inc. (MO)
Longview of Grady County, Inc. (OK)
Longview of Iowa, Inc. (IA)
Longview of Kansas City, Inc. (MO)
Longview of Livingston County, Inc. (MO)
Longview of Mercer County I, Inc. (NJ)
Longview of Mercer County II, Inc. (NJ)
Longview of Mercer County, Inc. (NJ)
Longview of Mid-Missouri, Inc. (MO)
Longview of Missouri, Inc. (MO)
Longview of New Jersey, Inc. (NJ)
Longview of North Central Iowa, Inc. (IA)
Longview of Ocean County I, Inc. (NJ)
Longview of Ocean County II, Inc. (NJ)
Longview of Ocean County, Inc. (NJ)
Longview of Oklahoma City, Inc. (OK)
Longview of Oklahoma, Inc. (OK)
Longview of Pennsylvania, Inc. (PA)
Longview of Pettis County, Inc. (MO)
9
10
Longview of Southern Oklahoma, Inc. (OK)
Longview of St. Joseph, Inc. (MO)
Longview of Western Oklahoma, Inc. (OK)
M & S Investments (CO)
Madison Lane Properties, Inc. (CA)
Maplewood Landfill, Inc. (VA)
McDaniel Landfill, Inc. (ND)
Meadowfill Landfill, Inc. (WV)
MGM Disposal, Inc. (TX)
Michigan Environs, Inc. (MI)
dba United Waste Systems of Menominee
Mid-Valley Portable Storage, Inc. (CA)
Mid-South Landfill, Inc. (MS)
Midwest Disposal, Inc. (NE)
Midwest Sanitation Services, Inc. (ND)
M-L Commercial Garbage Service, Inc. (WV)
Modern Sanitation, Inc. (TX)
Modesto Garbage Co., Inc. (CA)
dba Cal State Rental & Sales
dba Modesto Disposal Services
Mohave Disposal, Inc. (WA)
Morris County Transfer Station, Inc. (NJ)
Mountainview Landfill, Inc. (MD)
Mulberry Sanitation Co., Inc. (AR)
Municipal Refuse Service, Inc. (IA)
Neal Road Landfill Corporation (CA)
Nevada City Garbage Service, Inc. (CA)
Nevada County Transfer, Inc. (CA)
North Hennepin Recycling and Transfer Corporation (MN)
North Valley Disposal Service, Inc. (CA)
Northeast Waste Control, Inc. (GA)
Northern A-1 Sanitation Services, Inc. (MI)
Northern Michigan Waste Marketing, Inc. (MI)
Northwestern Landfill, Inc. (DE)
Nu-Way Live Oak Landfill, Inc. (DE)
Oak Grove Landfill, Inc. (DE)
Oakridge Landfill, Inc. (SC)
Oakwood Landfill, Inc. (SC)
Okeechobee Landfill, Inc. (FL)
Olympic View Sanitary Landfill, Inc. (WA)
10
11
Omega One Waste, Inc. (AZ)
Orange County Landfill, Inc. (FL)
P & T Container Service Co., Inc. (MA)
P & T Financial Services, Inc. (MA)
Pacific Garbage Service, Inc. (OR)
Paducah Waste Marketing, Inc. (KY)
Pak'M Roll-off Services, Inc. (CO)
Paradise Solid Waste Systems (CA)
Peninsula Sanitation, Inc. (MI)
Pen-Rob, Inc. (AZ)
Penuelas Valley Landfill, Inc. (PR)
Peterson Demolition, Inc. (MN)
Phoenix Resources, Inc. (PA)
Pine Bluff Landfill, Inc. (GA)
Pine Grove Landfill, Inc. (OH)
Pine Tree Acres, Inc. (MI)
dba S & V Disposal
Portable Site Services, Inc. (CA)
PRTR, Inc. (MA)
Public Sanitary Service, Inc. (OR)
Quail Hollow Landfill, Inc. (DE)
R & B Landfill, Inc. (GA)
R.M. Cash & Sons, Inc. (GA)
Rail-It Corporation (IL)
R.A.M. Environmental of Arkansas, Inc. and Affiliates (AR)
Razorback Disposal, Inc. (AR)
RCI Clinton, Inc. (MA)
RCI Hudson, Inc. (MA)
dba United Waste Systems of Hudso
Recycle & Recover, Inc. (GA)
Re-Cy-Co, Inc. (MN)
dba United Waste Transfer
Red Bluff Disposal, Inc. (CA)
Redwood Landfill, Inc. (CA)
Reliable Landfill, Inc. (DE)
Remote Landfill Services, Inc. (TN)
Remote Landfill, Inc. (DE)
Residuals Processing, Inc. (CA)
Resource Control Composting, Inc. (MA)
Resource Control, Inc. (MA)
Rhinelander Disposal Service, Inc. (WI)
dba United Waste Systems of Northern Michigan
11
12
Richland County Landfill, Inc. (SC)
Riverbend Landfill Co., Inc. (OR)
Rolling Meadows Landfill, Inc. (DE)
Roska Route, Inc. (MI)
Ross County Landfill, Inc. (OH)
Rozel Corporation (MT)
RPN, Inc. (ND)
RTS Landfill, Inc. (DE)
dba Del Mar Virginia District
dba Plant Atkinson Transfer Station
dba South Side Sanitation
dba Starr Transfer Station
Rural Dispos-All Service, Inc. (CA)
S & J Landfill, Limited Partnership (TX)
S & L Total Waste Systems, Inc. (NV)
Sacramento Valley Environmental Waste Company (CA)
Salinas Disposal Service, Inc. (CA)
Saline County Landfill, Inc. (IL)
San-Co Disposal Service, Inc. (CA)
Sanco, Inc. (NM)
Sanifill Canada, Inc. (CDN)
Sanifill De Mexico (US), Inc. (DE)
Sanifill de Mexico, S.A. de C.V. (MX)
AceVerde S.A. de C.V. (MX)
AceVerde Servicios, S.A. de C.V. (MX)
Sanifill Falcon Disposal Service, Inc. (CA)
Sanifill Forest Products, Inc. (CA)
Sanifill of Florida, Inc. (FL)
Sanifill of San Juan, Inc. (PR)
El Coqui de San Juan (JV Partnership) (PR)
Sanifill of Tennessee Hauling, Inc. (DE)
Sanifill of Tennessee, Inc. (DE)
Sanifill Power Corporation (DE)
Sanifill, Inc. (DE)
dba Frontier Recycling
dba Orange Soil Cement
dba Orange Transportation
dba Orange Trucking
dba Orange Waste Landfill
12
13
dba Orange Waste Transfer Station
dba Pine Ridge Landfill
Santa Clara Valley Refuse Removal (CA)
Schroeder Disposal, Inc. (WI)
SF, Inc. (DE)
Shade Landfill, Inc. (DE)
Sierra Estrella Landfill, Inc. (AZ)
Smyrna Landfill, Inc. (GA)
SNS Recycling, Inc. (MI)
Southern Alleghenies Landfill, Inc. (PA)
dba Altoona Transfer Station
dba American Recycling
Southern Plains Landfill, Inc. (OK)
Southern Services of Tennessee, LLC (TN)
Southern Services of Tennessee, L.P. (TN)
Southern Waste Services, Inc. (KY)
Spruce Ridge, Inc. (MN)
Standard Methods, Inc. (MA)
Stockton Scavengers Association (CA)
Suburban Sanitation Company (KY)
dba Cardinal Sanitation
dba Cardinal Sanitation Services
Sunset Sanitation Service (CA)
Taylor Land Resources, Inc. (MD)
The H. Sienknecht Co. (TN)
Tonitown Landfill, Inc. (AR)
Trash Hunters, Inc. (MS)
Trash Hunters of Tunica, Inc. (MS)
Tri-County Land Corp. (KY)
Tri-County Sanitary Landfill, Inc. (KY)
Twin City Sanitation, Inc. (MN)
U.S. Services Corporation (PA)
United Landfill, Inc. (WV)
United Waste Hauling of Utah, Inc. (UT)
United Waste Landfill of Utah, Inc. (UT)
United Waste Systems (Israel), Inc. (DE)
United Waste Systems Leasing, Inc. (MI)
13
14
United Waste Systems New Mexico, Inc. (NM)
dba Environmental Waste Equipment Company
dba Landfill Systems
dba Landfill Hauling Systems
dba R&B Rubbish Removal
dba Seay Brothers Rolloff
dba Tijeras Disposal
dba United Waste Systems
United Waste Systems of California, Inc. (CA)
United Waste Systems of Central Wisconsin, Inc. (WI)
dba DSI of Shawano County
dba Parkway Container Services
United Waste Systems of Corbin, Inc. (KY)
United Waste Systems of Gardner, Inc. (MA)
United Waste Systems of Iowa, Inc. (IA)
dba Waste Systems Corp.
United Waste Systems of Kentucky, Inc. (KY)
dba B&M Sanitation Service
dba Borders Sanitation
dba Poff Brothers Sanitation
United Waste Systems of Maine, Inc. (DE)
United Waste Systems of Massachusetts, Inc. (MA)
United Waste Systems of Michigan, Inc. (MI)
United Waste Systems of Minneapolis, Inc. (MN)
United Waste Systems of Minnesota, Inc. (MN)
dba Bellaire Sanitation
dba Gallagher's Service
dba J.J. Young Rubbish
dba Lake Sanitation
dba Mike's Disposal and Recycling Service
dba UWS
dba UWT
United Waste Systems of Mississippi, Inc. (MS)
United Waste Systems of Northern Arizona, Inc. (AZ)
United Waste Systems of Onaway, Inc. (MI)
United Waste Systems of the Eastern UP, Inc. (MI)
United Waste Systems of Trinity County, Inc. (CA)
United Waste Systems of Virginia, Inc. (VA)
United Waste Systems of West Virginia, Inc. (WV)
United Waste Systems, Inc. (DE)
dba Jacobs Environmental
dba United Waste Systems of Marquette
dba UWS
dba UWS of California
14
15
dba UWS of Colorado
dba UWS of Minnesota
United Waste Systems, Inc. (Arizona) (AZ)
dba Triple G Sanitation
United Waste Systems, Inc. (MN) (MN)
dba Mike's Disposal & Recycling Service
United Waste Transfer, Inc. (MN)
Universal Assurance Corporation (VT)
Universal Transit Property Company (FL)
USA Newco of Arkansas, Inc. (DE)
USA South Hills Landfill, Inc. (PA)
USA Valley Facility, Inc. (DE)
USA Waste Arizona Landfills, Inc. (DE)
USA Waste of Fairless Hills, Inc. (DE)
dba USA Fairless Works
dba Thermal Absorption
USA Waste Geneva Landfill, Inc. (OH)
dba USA Waste of Ashtabula
USA Waste Hauling of Philadelphia, Inc. (DE)
USA Waste Industrial Service, Inc. (DE)
USA Waste Landfill Operations and Transfer, Inc. (TX)
USA Waste - Management Resources, L.L.C. (NY)
USA Waste of Alaska, Inc. (DE)
USA Waste of Arizona, Inc. (AZ)
dba Lone Butte Transfer Facility
dba Lone Cactus Landfill
dba Prescott Hauling
dba Seventh Avenue Landfill
dba Terra Quest Transfer Station
USA Waste of Arkansas, Inc. (DE)
dba Arkansas Recyclable Waste
dba Harrison Hauling
dba Springdale Hauling
USA Waste of California, Inc. (DE)
USA Waste of Colorado, Inc. (DE)
USA Waste of Connecticut, Inc. (DE)
USA Waste of DC, Inc. (DC)
USA Waste of Delaware, Inc. (DE)
USA Waste of Florida, Inc. (FL)
USA Waste of Georgia, Inc. (GA)
dba Atlanta Hauling
dba Bolton Road Landfill
dba Cedartown Hauling
15
16
USA Waste of Illinois, Inc. (IL)
USA Waste of Indiana, Inc. (IN)
dba Acme Waste Systems
dba Milby Disposal
USA Waste of Iowa, Inc. (IA)
USA Waste of Kansas, Inc. (DE)
dba USA/Kansas Hauling
USA Waste of Kentucky, Inc. (KY)
USA Waste of Louisiana, Inc. (DE)
USA Waste of Maryland, Inc. (MD)
dba Lowery's Trash Removal & Services
USA Waste of Massachusetts, Inc. (MA)
USA Waste of Michigan, Inc. (MI)
USA Waste of Minnesota, Inc. (MN)
dba Kato Sanitation/Northwest Valley
dba Meeker County Transfer Station
dba West Side Hauling
USA Waste of Mississippi, Inc. (MS)
USA Waste of New Jersey, Inc. (NJ)
dba Atlantic City Hauling
dba Bergen County Transfer Station
dba Burlington County Landfill
USA Waste of New York City, Inc. (DE)
dba North Hempstead Transfer
USA Waste of New York, Inc. (NY)
USA Waste of Ohio, Inc. (OH)
dba Johnson Disposal
dba Johnson Disposal Transfer & Recycling Facility
dba Mound Transfer Station
dba Northern Ohio Waste Systems
dba Sanitary Commercial Services
USA Waste of Oklahoma, Inc. (OK)
dba Moore Transfer Station
dba Norman Transfer Station
dba Pinecrest Landfill
USA Waste of Oregon, Inc. (OR)
dba Metropolitan Disposal & Recycling
USA Waste of Pennsylvania, Inc. (PA)
dba Kittinning Transfer Station
dba LeHigh Hauling
dba Mainline Sanitation
dba Tri-Valley Recycling
dba Tri-Valley Waste Systems
dba USA Waste of Harrisburg
USA Waste of Rhode Island, Inc. (DE)
16
17
USA Waste of San Antonio, Inc. (TX)
dba Mission Disposal
USA Waste of San Antonio Landfills, Inc. (DE)
USA Waste of South Carolina, Inc. (SC)
USA Waste of Tennessee, Inc. (TN)
dba Nashville Hauling
dba Nashville Transfer
USA Waste of Texas Landfills, Inc. (DE)
dba A-F Landfill (aka Martini Landfill)
dba B & D Landfill
dba Bio-Site #1
dba Crawford Road Landfill
dba East Belt Landfill
dba Fairbanks Allweather
dba Fairbanks Development
dba Greenbelt Landfill
dba Greenshadow Development
dba Hardy Landfill
dba Hawthorne Park Landfill
dba Houston Area Landfill
dba Houston Greenshadow
dba Indian Paintbrush Landfill
dba Ralston Road Landfill
dba South Belt Landfill
dba Taub Road Landfill
dba Texas Landfill District Office
dba USA Waste of Baytown
dba West Belt Landfill
USA Waste of Texas, Inc. (TX)
dba ECD Waste
dba USA Waste Services of Ft. Worth
USA Waste of Virginia Landfills, Inc. (DE)
dba Bethel Landfill
dba Bushrod Disposal Service
dba James City County Transfer
dba Qualla Road Landfill
USA Waste of Virginia, Inc. (VA)
USA Waste of Washington, Inc. (DE)
dba Graham Road Recycling & Disposal
USA Waste of Webster Parish Landfill, Inc. (DE)
USA Waste of West Virginia, Inc. (WV)
USA Waste of Wisconsin, Inc. (WI)
El Coqui Landfill Company, Inc. (PR)
dba Waukesha Disposal
dba Waukesha Transfer Station
17
18
USA Waste of Wyoming, Inc. (WY)
USA Waste Recycling of New Jersey, Inc. (NJ)
dba Safety Recycling
USA Waste Services - Hickory Hills, Inc. (DE)
USA Waste Services North Carolina Landfills, Inc. (DE)
dba Anson Road Landfill
dba Coble Road Landfill
USA Waste Services of Alabama, Inc. (AL)
USA Waste Services of Eastern PA, Inc. (PA)
dba Wilkes-Barre Area, PA
USA Waste Services of Florida, Inc. (FL)
USA Waste Services of Houston, Inc. (TX)
USA Waste Services of Nevada, Inc. (NV)
USA Waste Services of NYC, Inc. (DE)
USA Waste Services of Western Illinois, Inc. (IL)
USA Waste Transfer of Philadelphia, Inc. (PA)
UWS Acquisition, Inc. (MA)
UWS Barre, Inc. (MA)
UWS of Rhode Island, Inc. (RI)
dba Truk-Away of R.I.
UWS Transport, Inc. (DE)
dba Container Service
dba Waste Control
dba Wasteco
V. Canelas Co., Inc. (MA)
V.M. Crow & Sons, Inc. (TX)
dba Ft. Worth Landfill
Valley Sanitation, Inc. (NE)
Vern's Refuse Service (ND)
Vinland Enterprises, Inc. (PA)
dba Vinland Landfill
Vinton County Landfill, Inc. (DE)
dba Vinton County Sanitary Facility
Warren Waste Transfer, Inc. (MI)
Wasco Landfill, Inc. (DE)
Waste Control Systems, Inc. (MN)
18
19
Waste Recovery Corporation (OH)
Waste Resource Technologies, Inc. (CA)
Wastech, Inc. (NV)
Water Investment, Inc. (DE)
Wayne County Landfill Inc. (DE)
West Michigan Disposal, Inc. (MI)
dba United Waste Systems of Northern Michigan
West Virginia Waste Services, Inc. (WV)
Western Land Acquisition, Inc. (RI)
Western U.P. Landfill, Inc. (MI)
Western Waste Industries of Arizona (AZ)
Western Waste Industries, Inc. (CA)
dba Conroe Industrial Transportation
dba Conroe Landfill #7
dba Conroe Landfill Administration
dba Fresno Transfer Station
dba Inland Empire
dba Redondo Beach Recycling
dba Sunnydale Transfer Station
dba Western Beaumont Landfill
dba Western Longmont Landfill
dba WW/Chino Transfer Station
dba WW/Conroe Processing Plant
dba WW/El Sobrante Landfill
dba WW/Nassau Landfill
dba WW/Southern California Processing
Western Waste Louisiana Merger Corp. (DE)
Western Waste Newco (Arkansas), Inc. (DE)
White Lake Landfill, Inc. (MI)
Williams Landfill, Inc. (KY)
Yell County Landfill, Inc. (AR)
Zenith/Kremer Material Recovery, Inc. (MN)
dba Suburban Recycling Service
Zenith/Kremer Waste Systems, Inc. (MN)
dba Cecil Shykes Sanitary Service
dba Home Town Garbage Service
dba Kremer Disposal
dba Kremer Recycling
dba Suburban Sanitation Service
dba Zenith Recycling
19
1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
USA Waste Services, Inc. on Form S-3 (File Nos. 333-00097, 333-08573, 333-32471,
and 333-33889), on Form S-4 (File Nos. 333-31979 and 333-32805), and on Form S-8
(File Nos. 33-43619, 33-72436, 33-84988, 33-84990, 33-59807, 33-61621, 33-61625,
33-61627, 333-02181, 333-08161, 333-14115, 333-14613, and 333-34819), of our
report dated March 16, 1998, on our audits of the consolidated financial
statements of USA Waste Services, Inc. as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996, and 1995, which report is included in
this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Houston, Texas
March 30, 1998
5
12-MOS
DEC-31-1997
JAN-01-1997
DEC-31-1997
51,241,000
0
477,270,000
(34,923,000)
0
655,386,000
4,844,017,000
(889,009,000)
6,622,845,000
568,650,000
2,724,443,000
0
0
2,178,000
2,626,798,000
6,622,845,000
2,613,768,000
2,613,768,000
1,345,769,000
2,068,087,000
(21,847,000)
0
104,261,000
463,267,000
189,944,000
273,323,000
0
(6,293,000)
0
267,030,000
1.28
1.23
5
9-MOS 6-MOS 3-MOS
DEC-31-1997 DEC-31-1997 DEC-31-1997
JAN-01-1997 JAN-01-1997 JAN-01-1997
SEP-30-1997 JUN-30-1997 MAR-31-1997
63,240,000 69,760,000 99,392,000
0 0 0
460,366,000 416,354,000 341,165,000
(24,729,000) (19,823,000) (18,104,000)
0 0 0
706,653,000 645,276,000 552,492,000
4,482,417,000 4,154,547,000 3,388,716,000
886,549,000 (798,878,000) (723,472,000)
6,044,619,000 5,559,109,000 4,591,544,000
545,759,000 482,009,000 403,495,000
2,440,879,000 2,270,852,000 1,696,216,000
0 0 0
0 0 0
2,160,000 2,086,000 2,004,000
2,498,195,000 2,334,144,000 2,116,694,000
6,044,619,000 5,559,109,000 4,591,544,000
1,878,460,000 1,116,709,000 460,484,000
1,878,460,000 1,116,709,000 460,484,000
970,373,000 581,465,000 241,318,000
1,531,111,000 843,715,000 353,169,000
(14,213,000) (7,689,000) (3,646,000)
0 0 0
71,040,000 41,272,000 16,098,000
291,817,000 243,159,000 96,916,000
121,364,000 97,901,000 38,954,000
170,453,000 145,258,000 57,962,000
0 0 0
(6,293,000) 0 0
0 0 0
164,160,000 145,258,000 57,962,000
.80 .73 .30
.78 .69 .29
5
12-MOS 9-MOS 6-MOS 3-MOS
DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996
DEC-31-1996 SEP-30-1996 JUN-30-1996 MAR-31-1996
26,079,000 46,838,000 96,936,000 35,776,000
0 0 0 0
282,504,000 272,328,000 233,496,000 195,160,000
(17,502,000) (10,992,000) (10,548,000) (10,415,000)
0 0 0 0
427,502,000 423,325,000 428,095,000 311,983,000
2,865,525,000 2,646,643,000 2,503,680,000 2,326,811,000
(667,294,000) (638,586,000) (587,242,000) (540,820,000)
3,631,547,000 3,325,155,000 3,071,473,000 2,721,131,000
395,660,000 384,214,000 278,712,000 260,994,000
1,470,282,000 1,272,880,000 1,207,356,000 990,254,000
0 0 0 0
0 0 0 0
1,816,000 1,784,000 1,742,000 1,490,000
1,472,174,000 1,365,176,000 1,326,783,000 1,257,813,000
3,631,547,000 3,325,155,000 3,071,473,000 2,721,131,000
1,649,131,000 1,204,906,000 762,105,000 352,105,000
1,649,131,000 1,204,906,000 762,105,000 352,105,000
881,401,000 649,829,000 418,320,000 197,642,000
1,462,972,000 1,125,277,000 655,178,000 285,225,000
(6,376,000) (2,903,000) (512,000) (1,339,000)
0 0 0 0
60,497,000 45,080,000 29,663,000 14,635,000
138,737,000 42,335,000 81,036,000 55,529,000
70,398,000 31,355,000 42,585,000 22,099,000
68,339,000 10,980,000 38,457,000 33,430,000
0 0 0 0
0 0 0 0
0 0 0 0
68,339,000 10,980,000 38,457,000 33,430,000
.39 .06 .23 .20
.37 .06 .22 .19
5
12-MOS
DEC-31-1995
JAN-01-1995
DEC-31-1995
27,780,000
0
184,748,000
(9,979,000)
0
285,579,000
2,108,292,000
(499,715,000)
2,455,102,000
259,445,000
848,506,000
0
0
1,429,000
1,148,456,000
2,455,102,000
1,216,082,000
1,216,082,000
672,117,000
1,016,953,000
(4,891,000)
0
69,613,000
141,089,000
60,313,000
80,776,000
0
0
0
80,776,000
.56
.54
