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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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SUPERIOR SERVICES, INC.
(Name of Subject Company)
SUPERIOR SERVICES, INC.
(Names of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
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868316 10 0
(CUSIP Number of Class of Securities)
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PETER J. RUUD
SENIOR VICE PRESIDENT AND SECRETARY
SUPERIOR SERVICES, INC.
125 SOUTH 84(TH) STREET, SUITE 200
MILWAUKEE, WISCONSIN 53214
(414) 479-7800
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
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WITH COPIES TO:
STEVEN R. BARTH
RUSSELL E. RYBA
FOLEY & LARDNER
777 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202-5367
(414) 271-2400
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Superior Services, Inc., a Wisconsin
corporation (the "Company"). The address of the principal executive offices of
the Company is 125 South 84(th) Street, Suite 200, Milwaukee, Wisconsin 53214.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended or
supplemented, this "Schedule 14D-9") relates is the common stock, $.01 par value
per share, of the Company (the "Common Stock"), including the associated Common
Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of February 21, 1997, as amended (the "Rights Agreement"), between the
Company and LaSalle Bank National Association (f/k/a LaSalle National Bank), as
Rights Agent. Reference herein to the "Shares" means shares of the Common Stock
and shall, unless the context requires otherwise, include the associated Rights.
ITEM 2. TENDER OFFER OF PURCHASER.
This Statement relates to the cash tender offer by Onyx Solid Waste
Acquisition Corp., a Wisconsin corporation ("Purchaser") and an indirect
wholly-owned subsidiary of Vivendi, a SOCIETE ANONYME organized under the laws
of France ("Parent"), as disclosed in the Tender Offer Statement on Schedule
14D-1, dated June 18, 1999 (as amended or supplemented, the "Schedule 14D-1"),
to purchase all outstanding Shares at $27.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase, dated June 18, 1999 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
June 11, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and the
Company. Pursuant to the Merger Agreement, as soon as practicable after
completion of the Offer and satisfaction or waiver of all conditions to the
Merger (as defined below), Purchaser will be merged with and into the Company
(the "Merger"), and the Company will continue as the surviving corporation (the
"Surviving Corporation") and become an indirect wholly-owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each Share
outstanding immediately prior to such time (other than Shares owned by Parent,
Purchaser or any other subsidiary of Parent, held in the treasury of the
Company, owned by any wholly-owned subsidiary of the Company and held by
shareholders who perfect their appraisal rights under Wisconsin law) will be
converted into the right to receive $27.00 in cash or any higher price per Share
paid in the Offer (the "Offer Price") without interest thereon. The Merger
Agreement is summarized in Item 3 of this Schedule 14D-9.
Based on information in the Schedule 14D-1, the principal executive offices
of Parent and Purchaser are located at 42, Avenue de Friedland, 75380 Paris
Cedex 08, France.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of its directors and executive
officers are described in the Company's Proxy Statement, dated April 2, 1999,
relating to its 1999 Annual Meeting of Shareholders held on May 11, 1999 (the
"Proxy Statement") under the headings "Stock Ownership of Certain Beneficial
Owners and Management," "Executive Compensation" and "Certain Transactions." A
copy of such portions of the Proxy Statement is filed as Exhibit (c)(11) to this
Schedule 14D-9 and is incorporated herein by reference. Certain of such
contracts, agreements, arrangements and understandings will be modified or
terminated in
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accordance with and pursuant to the Merger Agreement, as described below. Except
as described below or in the attached Schedule I hereto or incorporated herein
by reference, to the knowledge of the Company, as of the date hereof, there are
no material contracts, agreements, arrangements or understandings or any actual
or potential conflicts of interest between the Company or its affiliates and (i)
its executive officers, directors or affiliates or (ii) Parent, Purchaser, their
executive officers, directors or affiliates.
COMPANY STOCK PLANS
The Merger Agreement provides that the Company will take all appropriate
actions so that, with respect to certain holders of outstanding options to
purchase Shares (individually, an "Option" and collectively, "Options"), on the
date Purchaser irrevocably accepts for payment Shares tendered pursuant to the
Offer (the "Acceptance Date"), and with respect to all other holders of Options,
at the Effective Time, (a) each outstanding Option granted under the Company's
1993 Incentive Stock Option Plan, the 1996 Equity Incentive Plan, the 1998
Broad-Based Stock Option Plan, certain individual nonqualified stock option and
employment agreements, the Geowaste 1992 Stock Option Plan and the Geowaste 1996
Stock Option Plan (collectively, the "Stock Plans"), whether or not then
exercisable, will be canceled and (b) in consideration of such cancellation, the
Company or the Surviving Corporation, as the case may be, will pay to such
holders of Options an amount in respect thereof equal to the product of (i) the
excess of the Offer Price over the exercise price thereof and (ii) the number of
Shares previously subject thereto.
CERTAIN AGREEMENTS AND PLANS
Parent required, as a material precondition and inducement for Parent and
Purchaser to enter into the Merger Agreement, that the Company modify or
terminate certain existing agreements with affiliates of the Company, as well as
enter into several new arrangements. These arrangements are described below.
EMPLOYMENT AGREEMENTS. The Company, together with Parent, has entered into
new employment agreements (individually, an "Employment Agreement" and
collectively, the "Employment Agreements") with each of G. William Dietrich
(President and Chief Executive Officer of the Company), George K. Farr (Chief
Financial Officer and Treasurer of the Company) and Peter J. Ruud (Senior Vice
President and Secretary of the Company) (individually, an "Employee" and
collectively, the "Employees"). Each Employment Agreement is effective on the
Acceptance Date and terminates on December 31, 2003, unless mutually extended.
Pursuant to the terms of the Employment Agreements, each Employee will have the
same position, duties and responsibilities as he had immediately prior to the
Acceptance Date. Each Employee will be paid an initial base salary equal to the
annual salary payable to the Employee immediately prior to the Acceptance Date.
Each Employee's base salary will be reviewed at least annually and may, in the
discretion of the Board of Directors of the Company, be increased but not
decreased, taking into account any change in the Employee's responsibilities,
increases in the cost of living, performance by the Employee and other pertinent
factors. In addition to the Employees' base salaries, the Employees will
participate in an annual bonus plan no less favorable to the Employees than
their participation in the Company's historic Management Incentive Plan (but
substituting pre-tax earnings in the formula for earnings per share and
increasing the amount of cash bonus payable to take into account the fact that
Options will not be granted thereunder). The Employees will also be designated
as participants in the Company's Long-Term Performance Award Plan and will be
entitled to participate in the Company's employee benefit plans, as in effect on
June 11, 1999 or as modified or added to by the Company thereafter, provided
that such benefits shall be no less favorable than those provided to the
Employees prior to the Acceptance Date and provided further that the Company
will provide for the specific continuation of certain insurance benefits for
each Employee. Finally, to the extent practicable, Parent will endeavor to
include the Employees in Parent's equity-based compensation plans to the extent
comparable participation is available to other similarly situated employees of
Parent's non-French subsidiaries.
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In addition to the foregoing, Parent and the Company agreed (pursuant to the
Employment Agreements) to pay all amounts payable to the Employees under the
KEESAs (as hereinafter defined) on the Acceptance Date as if their employment
had been terminated, as well as the present value of certain consulting payments
that the Employees would otherwise be entitled to as a result of a change in
control.
Under the terms of the Employment Agreements, in the event any Employee's
employment is terminated by the Company without cause or if any Employee
terminates his employment as a result of (a) the relocation of the Company's
principal offices more than 25 miles from its location immediately prior to the
Acceptance Date or the Company requiring the Employee to be based at any
location other than such principal offices, (b) a breach by the Company of any
material provision of the Employment Agreements which is not cured within five
business days following written notification of such breach or (c) a change in
control or sale of the Company or Parent, the Company is required to pay such
Employee an amount equal to (i) the unpaid base salary due the Employee, the
approximate amount of the Employee's annual bonus accrued through the
termination date, the amount of any previously vested benefits and any deferred
compensation, any accrued vacation pay and any reimbursement for expenses
incurred but not yet paid; (ii) a lump sum cash payment equal to the number of
years (including fractions thereof) remaining in the term of the Employee's
employment multiplied by the sum of (x) his then current base salary plus (y)
his annual bonus received for the year prior to the date of his termination; and
(iii) a payment under the Long-Term Performance Award Plan equal to the amount
the Employee would have received if his Retirement Date (as defined therein) was
the date of his termination of employment.
The Employment Agreements also provide that if an Employee terminates his
employment for any reason other than as specified in clauses (a), (b) or (c) of
the immediately preceding paragraph, the Company terminates an Employee's
employment for cause or employment is terminated as a result of death or
disability, the Employee will be entitled to be paid (a) his current base salary
and accrued annual bonus through the end of the month in which such termination
occurs and (b) if termination is a result of the Employee's death or disability,
an immediate lump sum cash payment equal to the sum of 150% of his prior year's
annual bonus and 150% of his then current base salary.
As part of the Employment Agreements, each Employee has agreed to a two-year
noncompete following the termination of his employment with the Company and a
one-year restriction from hiring or seeking to hire any employee of the Company.
The foregoing is a summary of certain provisions of the Employment
Agreements. This summary is not a complete description of the terms and
conditions of the Employment Agreements and is qualified in its entirety by
reference to the full text of the Employment Agreements, which are incorporated
herein by reference and copies of which have been filed with the Securities and
Exchange Commission (the "SEC") as exhibits to this Schedule 14D-9.
It is also anticipated that, prior to the Acceptance Date, the Company will
enter into new employment agreements with certain other members of the Company's
management team, including John H. King, Scott S. Cramer, Philip J. Auld, James
M. Dancy, Jr., Paul R. Jenks and Larry E. Goswick, on terms and conditions
substantially similar to the terms and conditions of the Employment Agreements.
AMENDMENT TO 1999 MANAGEMENT INCENTIVE PLAN. The Company has amended its
1999 Management Incentive Plan (the "MIP") to provide that all eligible
participants in the MIP who remain employed by the Company (or a subsidiary of
the Company) as of December 31, 1999 ("Eligible Participants") will receive a
bonus amount in cash equal to (a) the amount of cash and (b) the fair market
value of stock options, in each case, which such person otherwise would have
been entitled to receive under the MIP for the year ending December 31, 1999
(the "Bonus Amount"). The first component of the Bonus Amount will be (i)
calculated based on the financial results of the Company and its subsidiaries
for the six-month period ending June 30, 1999, as compared to the financial
results of the Company and its subsidiaries for the six-month period ended June
30, 1998, (ii) divided by two and (iii) paid no later than February 14, 2000.
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The second component of the Bonus Amount shall be (i) calculated based on the
percentage increase in the "pre-tax earnings" (as defined in the Company's
Long-Term Performance Award Plan) of the Company and its subsidiaries for the
six-month period ending December 31, 1999, as compared to the pre-tax earnings
of the Company and its subsidiaries for the six-month period ended December,
1998, (ii) divided by two and (iii) paid no later than February 14, 2000. The
fair market value of stock options referred to in the calculation of the Bonus
Amount will be deemed to be one-half of the excess of (x) the Offer Price over
(y) $23.375 per Share (the closing sales price of the Shares on June 10, 1999,
the last business day preceding the date of the Merger Agreement as reported by
the Nasdaq National Market).
LONG-TERM PERFORMANCE AWARD PLAN. The Company has established a new
Long-Term Performance Award Plan to provide additional incentives and rewards to
certain key employees of the Company after consummation of the Offer and the
Merger. The plan will be administered by a committee designated by Parent and
the Chief Executive Officer of the Company (the "Committee") and will be
effective as of the Acceptance Date.
If the Company meets its earnings goal, eligible key employees will receive
awards pursuant to the Long-Term Performance Award Plan. The earnings goal is
based on the sum of the Adjusted Pre-Tax Earnings (as defined in the Long-Term
Incentive Award Plan) from June 30, 1999 to December 31, 2003. If the earnings
goal is met, $10 million in the aggregate will be distributed to the eligible
key employees; PROVIDED, HOWEVER, that if the Company exceeds its earnings goal,
the amount distributed to the eligible key employees will be increased, but in
no case will be greater than $20 million in the aggregate.
The foregoing is a summary of certain provisions of the Long-Term
Performance Award Plan. This summary is not a complete description of the terms
and conditions of the Long-Term Performance Award Plan and is qualified in its
entirety by reference to the full text of the Long-Term Performance Award Plan,
which is incorporated herein by reference and a copy of which has been filed
with the SEC as an exhibit to this Schedule 14D-9.
SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS. The Company has Key Executive
Employment and Severance Agreements, as amended (the "KEESAs"), with Joseph P.
Tate (the Chairman of the Board of the Company) and with Messrs. Dietrich, Farr
and Ruud. Under the terms of the KEESAs, following a change in control (which
will occur on the Acceptance Date) such officers will be entitled to receive
compensation during the officer's employment period following the change in
control at the same rate in effect as of the date such change in control occurs
(subject to increase by the Compensation Committee of the Company's Board of
Directors) and will be included in the Company's benefit plans available to
employees of comparable status. If during such employment period the officer's
employment is terminated by the Company, other than for "cause" (as defined in
the KEESAs), or if the officer's duties are changed substantially without his
written consent and the officer terminates his employment as a result thereof,
or the officer terminates his employment at any time within 12 months after the
change in control, either voluntarily or as a result of his death or disability,
the officer is entitled to receive a lump sum payment equal to three times the
officer's average annual total compensation for the five years prior to the
change in control. In addition to the foregoing, immediately upon a change in
control all Options held by such officers automatically vest and are cashed out.
In the event the officers are required to pay an excise tax on "excess parachute
payments" received from the Company upon a change in control, the KEESA's
provide that the officers are entitled to receive from the Company an amount
necessary to place the officer in the same after-tax financial position as the
officer would have been in had the officer not incurred such tax. The Acceptance
Date will constitute a change in control for purposes of the KEESAs, and Parent
and the Company have agreed (pursuant to the Employment Agreements for Messrs.
Dietrich, Farr and Ruud) to pay all amounts payable to these officers under the
KEESAs, on the Acceptance Date, as if their employment had been terminated.
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Under the terms of the current employment agreements the Company has with
each of Messrs. King, Cramer, Auld, Dancy, Jenks and Goswick, which are
anticipated to be replaced with new agreements as discussed under "Employment
Agreements" above, if any of those officers are terminated due to a "change in
control" (as defined in their employment agreements) (which will occur on the
Acceptance Date) the terminated officer is entitled to receive a lump sum
severance payment equal to two times his base salary in effect on the effective
date of the change in control. In addition to the foregoing, the employment
agreements with Messrs. King and Cramer provide for automatic vesting and cash
out of all Options held by such officers immediately upon a change of control.
The Acceptance Date will constitute a change in control for purposes of these
employment agreements, and Parent and the Company have agreed to accelerate all
payments due such officers under their existing employment agreements as if
their employment had been terminated. As a result thereof, Messrs. King and
Cramer will receive a lump sum payment on the Acceptance Date equal to all
amounts payable to them under their employment agreements and Messrs. Auld,
Dancy, Jenks and Goswick will be entitled to receive, in four equal annual
installments commencing on December 31, 2000, the severance payments provided
for under their employment agreements (provided that no current or future
installment is required to be paid if the intended recipient is not employed by
the Company on the date the annual severance installment is to be made).
Based on the current compensation paid to the foregoing executives, the
total amounts payable to each of Messrs. Tate, Dietrich, Farr, Ruud, King,
Cramer, Auld, Dancy, Jenks and Goswick under their KEESAs or employment
agreements (excluding the value of the Options to be cashed out and the amount
required to be paid under the KEESAs to satisfy any excise tax on excess
parachute payments) will be $898,347, $3,320,115, $1,615,818, $2,254,517,
$299,200, $282,000, $352,000, $316,000, $326,000 and $302,000, respectively.
MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated herein by reference and a copy of
which has been filed with the SEC as an exhibit to this Schedule 14D-9.
Capitalized terms used but not defined in this summary of the Merger Agreement
have the meanings given to such terms in the Merger Agreement.
THE OFFER. The Merger Agreement provides that Purchaser will, and Parent
will cause Purchaser to, commence (within the meaning of Rule 14d-2(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), within five
business days, the Offer at the Offer Price, in cash net to the seller. The
initial expiration date for the Offer is the twentieth business day from and
including the date the Offer Documents are first filed with the SEC (the
"Expiration Date", unless and until Purchaser shall have extended the period for
which the Offer is open, in which event "Expiration Date" shall mean the latest
time and date on which the Offer, as so extended, shall expire). The obligation
of Purchaser to accept for payment or pay for any Shares tendered pursuant to
the Offer is subject only to (a) there being validly tendered and not withdrawn
prior to the expiration of the Offer, that number of Shares which, together with
any Shares owned by Parent or Purchaser, constitutes 75% or more of the Shares
then outstanding as of the Expiration Date (determined on a fully diluted basis,
but excluding Shares subject to the option granted under the Stock Option
Agreement (as hereinafter defined)) (the "Minimum Condition") and (b) the
satisfaction or waiver of the other conditions set forth in the conditions of
the Offer contained in Annex A to the Merger Agreement (together with the
Minimum Condition, the "Offer Conditions"). Without the prior written consent of
the Company, Parent and Purchaser will not (i) decrease the Offer Price, (ii)
change the form of consideration payable in the Offer (other than by adding
consideration), (iii) reduce the maximum number of Shares sought to be purchased
in the Offer, (iv) impose conditions to
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the Offer in addition to the Offer Conditions or (v) amend or modify any term or
condition of the Offer in a manner adverse to the holders of Shares.
Notwithstanding the foregoing, Parent shall cause Purchaser to, and Purchaser
shall, extend the Offer for at least an additional five business days if, on the
initially scheduled Expiration Date, the Shares validly tendered and not
withdrawn pursuant to the Offer constitute at least 50%, but less than 61%, of
the then outstanding Shares (determined on a fully diluted basis, but excluding
Shares subject to the option granted under the Stock Option Agreement) and all
other Offer Conditions are satisfied or waived. In addition, and without
limiting the foregoing, if, on the initially scheduled Expiration Date, the
Shares validly tendered and not withdrawn pursuant to the Offer constitute at
least 61% of the then outstanding Shares (determined on a fully diluted basis,
but excluding Shares subject to the option granted under the Stock Option
Agreement) but are not sufficient to satisfy the Minimum Condition (the
"Tendered Amount") and all other Offer Conditions are satisfied or waived,
Parent shall cause Purchaser to, and Purchaser shall, reduce the Minimum
Condition to the Tendered Amount, and shall extend the Offer for an additional
ten business days. In addition, and without limiting the foregoing, Parent shall
cause Purchaser to, and Purchaser shall, extend the Offer up to 20 business days
in the aggregate, in one or more periods of not more than ten business days, if,
at the initially scheduled Expiration Date, or any extension thereof, any one or
more Offer Conditions set forth in paragraphs (a), (c) or (d) of Annex A to the
Merger Agreement (and the same paragraphs under "Conditions to the Offer" below)
is not then satisfied or waived; PROVIDED, HOWEVER, that Purchaser shall not be
required to extend the Offer as provided in this sentence unless, in Parent's
reasonable and objective judgment, (i) each such Offer Condition is reasonably
capable of being satisfied and (ii) the Company is in material compliance with
all of its covenants under the Merger Agreement.
Subject to the terms of the Offer and the Merger Agreement and the
satisfaction or waiver of the Offer Conditions as of the Expiration Date,
Purchaser will accept for payment and pay for all Shares validly tendered and
not withdrawn pursuant to the Offer as soon as practicable after the Expiration
Date.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the applicable provisions of the
Wisconsin Business Corporation Law (the "WBCL"), at the Effective Time,
Purchaser will be merged with and into the Company, the separate corporate
existence of Purchaser will thereupon cease and the Company will continue as the
Surviving Corporation. The Merger will be effected by the filing at the time of
Closing of appropriate articles of merger relating to the Merger with the
Department of Financial Institutions of the State of Wisconsin.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares owned by Parent, Purchaser or any other subsidiary of Parent, held in the
treasury of the Company or owned by any wholly-owned subsidiary of the Company,
which Shares, by virtue of the Merger and without any action on the part of the
holder thereof, shall be canceled and retired and shall cease to exist with no
payment being made with respect thereto, and other than Shares which are held by
Dissenting Shareholders) will be converted into the right to receive the Offer
Price in cash, without interest thereon, promptly upon surrender of the
certificate formerly representing such Shares. At the Effective Time, each share
of common stock, par value $.01 per share, of Purchaser issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of Purchaser or the holders thereof, be converted
into and become one validly issued, fully paid and nonassessable (except as
provided in Section 180.0622(2)(b) of the WBCL) share of common stock of the
Surviving Corporation.
The Merger Agreement provides that the Restated Articles of Incorporation of
the Company in effect immediately prior to the Effective Time will be the
Restated Articles of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and the WBCL,
except that Article II of the Company's Restated Articles of Incorporation will
be amended to reduce the classes and number of authorized shares to 1,000 shares
of Common Stock. The By-Laws of Purchaser in effect at
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the Effective Time will be the By-Laws of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and the WBCL.
VOTE REQUIRED TO APPROVE THE MERGER. The Merger Agreement provides that if
required following termination of the Offer, the Company will take, consistent
with applicable law and its Restated Articles of Incorporation and By-Laws, all
action necessary to convene a meeting of holders of Shares as promptly as
practicable to consider and vote upon the approval of the Merger Agreement and
the Merger. Subject to fiduciary requirements of applicable law, the Company's
Board of Directors will recommend such approval and the Company shall take all
lawful actions to solicit such approval. At any such meeting of the Company, all
of the Shares then owned by Parent, Purchaser and any other subsidiary of Parent
will be voted in favor of the Merger Agreement. Pursuant to the Stock Option
Agreement, if Purchaser has accepted for payment Shares pursuant to the terms of
the Offer and Parent and Purchaser own at least 61% but less than 75% of the
then outstanding Shares (determined on a fully diluted basis, but excluding
Shares subject to the option under the Stock Option Agreement), Parent shall
exercise its option to purchase from the Company at $23.75 per Share (the
closing sales price of the Shares on June 11, 1999, the last full trading day
prior to the public announcement of the execution of the Merger Agreement) newly
issued Shares in an amount equal to the number of Shares that, when added to the
number of Shares then owned by Parent and Purchaser, would result in Parent and
Purchaser owning that number of Shares that provides them with at least 50.1% of
the votes represented by outstanding Shares (determined on a fully diluted
basis). Consequently, if the Minimum Condition is satisfied or if the foregoing
option under the Stock Option Agreement is exercised, approval of the Merger
will be assured without the affirmative vote of any other shareholder of the
Company.
CONDITIONS TO THE MERGER. The respective obligations of Parent, Purchaser
and the Company to consummate the Merger and the transactions contemplated
thereby, if the Offer shall have been consummated, are subject to the
fulfillment or waiver in whole or in part of certain conditions, including: (a)
the shareholders of the Company must approve the transactions contemplated by
the Merger Agreement (provided that Parent and Purchaser shall have voted their
Shares at such meeting in favor of the Merger); (b) the waiting period
applicable to the consummation of the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or been terminated and, with certain exceptions, all filings required to
be made prior to the Effective Time by the Company, together with all necessary
consents, approvals and authorizations required to be obtained prior to the
Effective Time by the Company from any Governmental Entity, shall have been made
or obtained (as the case may be), except where the failure to so make or obtain
is not reasonably likely to have Material Adverse Effect on the Company; (c) no
United States or state court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order which is
in effect and prohibits consummation of the transactions contemplated by the
Merger Agreement or imposes material restrictions on Parent or the Company in
connection with consummation of the Merger or with respect to their business
operations which is reasonably likely to have a Material Adverse Effect; and (d)
Purchaser shall have purchased Shares pursuant to the Offer.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to, among other things, (a) corporate
organization and qualification, (b) authorized capital, (c) corporate authority,
(d) government filings; no violations, (e) Company reports; financial
statements, (f) absence of certain changes, (g) litigation and liabilities, (h)
employee benefits, (i) brokers and finders, (j) Rights Agreement, (k) takeover
statutes, (l) environmental matters, (m) tax matters, (n) intellectual property,
(o) compliance with applicable laws, (p) opinion of financial advisor, (q) labor
relations, (r) material contracts and (s) Year 2000.
Parent and Purchaser have made certain representations and warranties with
respect to, among other things, (a) corporate organization and qualification,
(b) corporate authority, (c) governmental filings; no violations, (d) funds, (e)
Purchaser's activities and (f) share ownership.
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DIRECTORS. The Merger Agreement provides that if requested by Parent in
writing, promptly following the purchase by Purchaser of Shares pursuant to the
Offer, Parent will be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company as is equal
to the product of the total number of directors on the Board of Directors of the
Company multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or its affiliates bears to the total number of
Shares then outstanding, and the Company will, subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
promptly take all actions necessary to cause Parent's designees to be so elected
or appointed, including increasing the size of the Board of Directors of the
Company or using its reasonable best efforts to secure the resignations of one
or more existing directors, or both; PROVIDED, HOWEVER, that prior to the
Effective Time, the Board of Directors of the Company shall always have at least
two members who are neither officers, directors, shareholders or designees of
Parent or any of its affiliates ("Parent Insiders"). If, prior to the Effective
Time, the number of directors who are not Parent Insiders is reduced below two
for any reason, then the remaining director who is not a Parent Insider will be
entitled to designate a person (or persons) who is not a Parent Insider or any
affiliate of such Parent Insider to fill such vacancy (or vacancies) and such
designee will be deemed to not be a Parent Insider for all purposes of the
Merger Agreement. At such time, the Company will, if requested by Parent in
writing, use its reasonable best efforts to also cause persons designated by
Parent to constitute the same proportionate representation (as it exists on the
Board of Directors of the Company after giving effect to the foregoing) of each
committee of the Board of Directors of the Company, each board of directors of
each subsidiary of the Company and each committee of each such board (in each
case to the extent of the Company's ability to elect such persons); PROVIDED,
HOWEVER, that prior to the Effective Time, each committee of the Board of
Directors of the Company, each board of directors of each subsidiary of the
Company and each committee of each such board shall have at least one member who
is not a Parent Insider. The Company's obligation to appoint Parent's designees
to the Board of Directors of the Company will be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The Company will promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations. From and after the election or appointment of Parent's designees
and prior to the Effective Time, any amendment or termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights under the Merger Agreement, will require
the affirmative vote of at least a majority of the directors of the Company then
in office who are not Parent Insiders.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides as follows:
(a) From and after the Effective Time, Parent agrees that it will cause
the Surviving Corporation and its subsidiaries (as appropriate) to indemnify
and hold harmless each present and former director and officer of the
Company and its subsidiaries, determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees and disbursements), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing
or occurring at or prior to the Effective Time, whether asserted or claimed
prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted or required under the WBCL and its
Restated Articles of Incorporation or By-Laws in effect on June 11, 1999 to
indemnify such Person (as hereinafter defined) (and Parent shall also
advance expenses as incurred to the fullest extent permitted or required
under the WBCL, provided the Person to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that
such Person is not entitled to indemnification under the WBCL, the Company's
Restated Articles of Incorporation or By-Laws in effect on June 11, 1999);
PROVIDED that any determination required to be made with respect to whether
an officer's or director's conduct complies with the standards set forth
under the WBCL and its Restated Articles of Incorporation and By-Laws as in
effect on June 11, 1999 shall be made by independent counsel mutually
selected by the
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Surviving Corporation and the Person seeking indemnification and otherwise
in accordance with the provisions and procedures currently set forth in the
Company's By-Laws in effect as of June 11, 1999.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) above, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent or the Surviving
Corporation thereof, but the failure to so notify shall not relieve Parent
or the Surviving Corporation of any liability it may have to such
Indemnified Party if such failure does not materially prejudice the
indemnifying party and then only to the extent so materially prejudiced. In
the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Parent or the
Surviving Corporation shall have the right to assume and control the defense
thereof (PROVIDED, that if either does so, then the standards of conduct set
forth under the WBCL shall be irrevocably deemed to be satisfied by the
Indemnified Parties) and Parent shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if Parent or the Surviving Corporation elects
not to assume such defense or counsel for the Indemnified Parties advises
that, in such counsel's reasonable judgment, there are material issues that
constitute conflicts of interest between Parent or the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; PROVIDED, HOWEVER, that Parent
shall be obligated to pay for only one firm of counsel (licensed in such
jurisdiction) chosen by them for all Indemnified Parties in any jurisdiction
unless the use of one such counsel for such Indemnified Parties would
present such counsel with a conflict of interest, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) Parent
shall not be liable for any settlement effected without its prior written
consent; and PROVIDED FURTHER that, in the event Parent or the Surviving
Corporation shall not have assumed such defense, Parent shall not have any
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law.
(c) In addition to the foregoing, the Parent and the Surviving
Corporation agree to maintain in full effect, without lapse or modification,
the Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of six years after the Effective Time, so long as
the annual premium therefor is not in excess of 200% of the last annual
premium paid by the Company prior to June 11, 1999 (the "Current Premium");
PROVIDED, HOWEVER, if the existing D&O Insurance expires, is terminated or
canceled during such six-year period, the Parent and the Surviving
Corporation will use its reasonable best efforts to obtain as much D&O
Insurance as can be obtained for the remainder of such period for a premium
not in excess (on an annualized basis) of 200% of the Current Premium.
(d) Finally, any rights of an Indemnified Party set forth above are not
exclusive of any other rights an Indemnified Party may have under applicable
law.
CONDITIONS TO THE OFFER. Pursuant to the Merger Agreement and
notwithstanding any other provision of the Offer, Purchaser shall not be
obligated to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, or may delay the acceptance
for payment of or payment for, any tendered Shares, or may, in its sole
discretion, terminate or amend the Offer as to any Shares not then paid for if,
(i) prior to the expiration of the Offer, (x) the Minimum Condition has not been
satisfied or (y) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer or the Merger shall not have expired or
been terminated, or any Regulatory Approvals (other than certain Regulatory
Approvals set forth on Schedule A of Annex A of the Merger Agreement) applicable
to the Offer and the Merger shall not have been obtained on terms satisfactory
to Parent in its sole judgment or (ii) on or after the date of the Merger
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Agreement, and at or before the time of payment for any of such Shares (whether
or not any Shares have theretofore been accepted for payment), any of the
following events shall occur:
(a) there shall have occurred and be continuing as of the scheduled
Expiration Date of the Offer (i) any general suspension of, or limitation on
prices for, trading in securities on the New York Stock Exchange, Inc. or
the Nasdaq National Market (excluding any coordinated trading halt triggered
as a result of any decrease in any market indices and any general suspension
or limitation caused by physical damage, computer or system malfunction, in
each case not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any material limitation (whether or not mandatory) by any
Governmental Entity, on the extension of credit by banks or other lending
institutions in the United States, (iv) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof that is continuing as of the scheduled
termination date of the Offer or (v) any material adverse change in the
business or regulatory environment specific to the solid waste industry in
the United States;
(b) the Company shall have breached or failed to perform in any respect
any of its obligations, covenants or agreements under the Merger Agreement
or the Stock Option Agreement and which breach or failure to perform,
individually or in the aggregate with all other breaches, is reasonably
likely to have a Material Adverse Effect on the Company or any
representation or warranty of the Company set forth in the Merger Agreement
or the Stock Option Agreement shall have been inaccurate or incomplete in
any respect when made or thereafter shall become inaccurate or incomplete in
any respect, if such inaccuracy or incompleteness, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect (excluding
for purposes of this paragraph (b) only, any Material Adverse Effect
qualifier contained in any such representation or warranty); PROVIDED,
HOWEVER, that any breach or failure that is capable of being cured without a
Material Adverse Effect, shall not be deemed a breach or failure if, such
breach or failure is reasonably cured by the Company within the later of (A)
ten business days after written notice thereof by Parent is provided
(provided that Parent and Purchaser shall be required to extend only the
initially scheduled Expiration Date of the Offer pursuant to this clause)
and (B) two business days prior to the date on which the Offer is then
scheduled to expire;
(c) there shall be instituted, pending and continuing as of the
scheduled Expiration Date of the Offer, any action, litigation, proceeding,
investigation or other application (hereinafter, an "Action") before any
United States court or other Governmental Entity by any Governmental Entity
or by any other person, domestic or foreign (other than an Action brought by
a shareholder of the Company): (i) challenging the acquisition by Parent or
Purchaser of Shares pursuant to the Offer, seeking to restrain or prohibit
the consummation of the transactions contemplated by the Offer, the Merger
or the Stock Option Agreement or seeking to obtain, from the Company, Parent
or Purchaser, any damages that are reasonably likely to have a Material
Adverse Effect on the Company or Parent or to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by the Merger Agreement or the Stock Option Agreement; (ii)
seeking to prohibit, or impose any material limitations on, Parent's or
Purchaser's ownership or operation of all or any material portion of
Parent's or the Company's business or assets (including the business or
assets of their respective affiliates and subsidiaries taken as a whole), or
to compel Parent or Purchaser to dispose of or hold separate all or any
material portion of Parent's or the Company's business or assets (including
the business or assets of their respective affiliates and subsidiaries taken
as a whole) as a result of the transactions contemplated by the Offer, the
Merger or the Stock Option Agreement, (iii) seeking to make the acceptance
for payment, purchase of, or payment for, some or all of the Shares illegal
or render Purchaser unable to, or result in a delay of more than ten
business days in, or materially restrict, the ability of Purchaser to accept
for payment, purchase or pay for some or all of the Shares pursuant to the
Offer or the Merger (exclusive of actions under Sections 180.1301 to
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180.1331 of the WBCL); or (iv) seeking to impose material limitations on the
ability of Parent or Purchaser effectively to acquire, hold or exercise full
rights of ownership of the Shares (to the extent allowed under Section
180.1150 of the WBCL) including, without limitation, the right to vote the
Shares purchased by them on an equal basis with all other Shares on all
matters properly presented to the Company's shareholders;
(d) any statute, rule, regulation, order or injunction shall be enacted,
promulgated, entered, enforced or deemed to become applicable to the Offer
or the Merger, or any other action shall have been taken, and in each case
be in existence as of the scheduled Expiration Date of the Offer, by any
court or other Governmental Entity (other than the application to the Offer
or the Merger of waiting periods under the HSR Act), that is reasonably
likely to result in any of the effects of, or have any of the consequences
sought to be obtained or achieved in, any Action referred to in clauses (i)
through (iv) of paragraph (c) above;
(e) a tender or exchange offer for at least 15% of the Shares shall have
been commenced or publicly proposed to be made by another Person (including
the Company or its subsidiaries), or it shall have been publicly disclosed
that (i) any Person (including the Company or its subsidiaries) shall have
become the beneficial owner (as defined in Section 13(d) of the Exchange Act
and the rules promulgated thereunder) of 15% or more of any class or series
of capital stock of the Company (including the Shares) (other than for bona
fide arbitrage purposes); or (ii) any Person, entity or group shall have
entered into (with the Company or any agent or representative of the
Company) a definitive agreement or a written agreement in principle with
respect to an Acquisition Proposal (excluding a confidentiality agreement
described in "No Solicitation" below);
(f) any change shall have occurred or be threatened and be continuing as
of the scheduled Expiration Date of the Offer, in the financial condition,
properties, businesses or results of operations of the Company or any of its
subsidiaries that is or is reasonably likely to have a Material Adverse
Effect on the Company;
(g) the Company's Board of Directors (or a special committee thereof)
shall have amended, withdrawn or modified, in a manner adverse to Parent or
Purchaser, its approval or recommendation of the Offer, the Merger Agreement
or the Merger, or shall fail to reaffirm such approval or recommendation
within two business days of the written request by Parent or Purchaser to do
so, or shall have endorsed, approved or recommended any other Acquisition
Proposal, or shall have publicly announced it has resolved to do any of the
foregoing; or
(h) the Merger Agreement shall have been terminated by the Company or
Parent or Purchaser in accordance with its terms or Parent or Purchaser
shall have reached an agreement or understanding in writing with the Company
providing for termination or amendment of the Offer or delay in payment for
the Shares;
which, in the reasonable judgment of Parent and Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser, provided Parent and Purchaser are not in violation of the Merger
Agreement) giving rise to any such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for Shares.
The foregoing Offer Conditions are for the sole benefit of Parent and
Purchaser and, subject to the terms of the Merger Agreement, may be asserted by
Parent or Purchaser regardless of the circumstances (including any action or
inaction by Parent or Purchaser, provided Parent and Purchaser are not in
violation of the Merger Agreement) giving rise to any such condition or may be
waived by Parent or Purchaser, by express and specific action to that effect, in
whole or in part at any time and from time to time in its sole discretion in
compliance with the Merger Agreement. The failure of Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with
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respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
COVENANTS. The Merger Agreement contains various covenants of the parties
thereto, including covenants as to, among other things, the conduct of the
business of the Company, as described in further detail below, during the period
from the date of the Merger Agreement to the Closing Date or termination of the
Merger Agreement.
CONDUCT OF BUSINESS OF THE COMPANY. Pursuant to the Merger Agreement, the
Company covenanted and agreed, as to itself and its subsidiaries, that, prior to
the Effective Time (unless Parent shall otherwise agree in writing and except as
otherwise contemplated by the Merger Agreement): (a) the business of the Company
and its subsidiaries shall be conducted only in the ordinary and usual course
and, to the extent consistent therewith, each of the Company and its
subsidiaries will use its reasonable best efforts to preserve its business
organization intact and maintain its existing relations with customers,
suppliers, employees and business associates; (b) the Company will not (i) amend
its Restated Articles of Incorporation or By-Laws or amend, modify or terminate
the Rights Agreement, (ii) split, combine or reclassify the outstanding Shares
or Preferred Shares, or (iii) declare, set aside or pay any dividend payable in
cash, stock or property with respect to the capital stock of the Company; (c)
neither the Company nor any of its subsidiaries will (i) issue, sell, pledge,
dispose of, agree to sell or pledge or encumber any additional shares, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its subsidiaries or any other property or assets other
than, in the case of the Company, Shares issuable pursuant to Options
outstanding on June 11, 1999 under the Stock Plans, the terms of the Completed
Acquisitions, the terms of the pending acquisitions set forth in Schedule 6.1(b)
of the Merger Agreement or the Stock Option Agreement, (ii) transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets or
incur any other liability other than in the ordinary and usual course of
business, (iii) acquire directly or indirectly by redemption or otherwise any
shares of the capital stock of the Company other than pursuant to the terms of
existing acquisition agreements or escrow agreements or (iv) authorize capital
expenditures in excess of $15 million in the aggregate, or make any acquisition
of, or investment in, assets or stock of any other Person or entity with
estimated annualized revenues in excess of $50 million. Notwithstanding any
limitations in (c)(i) through (c)(iv) above, the Company may enter into or
consummate an acquisition proposed by it (a "Proposed Acquisition") if such
acquisition has been approved in writing by Parent, which approval may be
denied, withheld or conditioned in its sole and absolute discretion. Parent
agreed to advise the Company in writing whether it has approved the Proposed
Acquisition within five business days after receipt of information regarding the
Proposed Acquisition that is the same in all material respects as the
information that was provided (whether orally, in writing or otherwise) to the
executive officers of the Company or the Company's Board of Directors in
connection with its approval of the Proposed Acquisition, including, without
limitation, all material economic and other terms (the "Proposed Terms"). If
Parent approves the Proposed Acquisition, the Company may consummate the
Proposed Acquisition on the Proposed Terms and other customary terms; (d)
neither the Company nor any of its subsidiaries shall grant any severance or
termination pay to, or enter into any employment or severance agreement with any
director, officer or other employee of the Company or such subsidiaries (other
than (A) normal scheduled increases in compensation and (B) entering into
customary employment arrangements in the ordinary and usual course of business
with newly hired employees), and neither the Company nor any of its subsidiaries
shall establish, adopt, terminate, enter into, make any new grants or awards
under or amend, any Compensation and Benefit Plans (other than the MIP and
normal scheduled increases in compensation); (e) neither the Company nor any of
its subsidiaries shall settle, negotiate to settle or compromise any material
claims or litigation except for such settlements or negotiations that are not
reasonably likely to have a Material Adverse Effect; (f) neither the Company nor
any of its subsidiaries shall make any tax election or permit any insurance
policy naming it as a beneficiary or a loss payable payee to be canceled or
terminated without notice to Parent, except in the ordinary and usual course of
business; (g) neither the Company nor any of its subsidiaries shall (i) incur,
assume or prepay any long-term debt or incur or assume
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any short-term debt, except that the Company and its subsidiaries may incur or
prepay debt in the ordinary and usual course of business in amounts and for
purposes consistent with past practice under existing lines of credit and may
incur debt in connection with the Completed Acquisitions, but in any event, such
incurrences, assumptions or prepayments may not exceed $75 million in the
aggregate, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any third-party except in the ordinary and usual course of business, (iii)
accelerate or delay collection of notes or accounts receivable in advance of or
beyond their regular due dates or the dates consistent with past practice or
(iv) change any accounting principle, practice or method in a manner that is
inconsistent with past practice, except to the extent required by generally
accepted accounting principles as advised by the Company's regular independent
accountants; (h) neither the Company nor any of its subsidiaries shall, other
than in the ordinary and usual course of business or except as is not reasonably
likely to have a Material Adverse Effect, (i) modify, amend or terminate any
contract, (ii) waive, release, relinquish or assign any contract (or any of the
rights of the Company or any of its subsidiaries thereunder), right or claim or
(iii) cancel or forgive any indebtedness owed to the Company or any of its
subsidiaries; PROVIDED, HOWEVER, that neither the Company nor any of its
subsidiaries may under any circumstances waive or release any of its rights
under any confidentiality agreement to which it is a party; (i) neither the
Company nor any of its subsidiaries shall enter into any material contract or
agreement other than in the ordinary and usual course of business; (j) neither
the Company nor any of its subsidiaries shall, except as specifically permitted
in connection with an Acquisition Proposal (as hereinafter defined), take or
fail to take any action that is reasonably likely to result in any failure of
the conditions to the Offer or any of the conditions to the Merger set forth in
"Conditions to the Merger" above, not being satisfied, or is reasonably likely
to make any representation or warranty of the Company contained in the Merger
Agreement inaccurate in any material respect at, or as of any time prior to, the
Effective Time, or that is reasonably likely to have a Material Adverse Effect;
(k) neither the Company nor any of its subsidiaries shall adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization; and (l) neither the
Company nor any of its subsidiaries will authorize or enter into an agreement to
do any of the foregoing.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company covenanted
and agreed with Parent and Purchaser that neither the Company nor any of its
subsidiaries shall, and that the Company will direct and use its reasonable best
efforts to cause its and its subsidiaries' officers, directors, employees,
agents and representatives (including, without limitation, any investment
banker, attorney or accountant retained by the Company or any of its
subsidiaries ("Representatives")) not to knowingly (a) initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to shareholders
of the Company) from any Person with respect to a merger, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or (b) engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
Person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; PROVIDED, HOWEVER, that
nothing shall prevent the Company or the Company's Board of Directors from
complying with Rules 14d-9 and 14e-2 under the Exchange Act, and that prior to
the purchase of Shares pursuant to the Offer, the Company and its
Representatives may engage in the actions set forth in clause (b) above if (i)
any Person delivers a bona fide written Acquisition Proposal for which all
necessary financing is then in the judgment of the Board of Directors of the
Company readily obtainable, (ii) the Company enters into a customary
confidentiality agreement with such Person that is no more favorable to such
Person than the Confidentiality Agreement, dated as of March 3, 1999, as amended
as of June 11, 1999, between Parent and the Company (the "Confidentiality
Agreement") (as determined by the Company after consultation with its outside
counsel), (iii) the Board of Directors of the Company determines in good faith
by a vote of a majority of the members of the full Board after receipt of advice
from outside legal counsel that such action is necessary in order for its
directors to comply with their
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respective fiduciary duties under applicable law and (iv) the Board of Directors
of the Company determines in good faith (after consultation with its financial
advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated (taking into account all legal, financial and regulatory aspects of
the proposal, the Person making the proposal and all other relevant factors) and
would, if consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated by
the Merger Agreement (any such more favorable Acquisition Proposal being
referred to as a "Superior Proposal").
The Merger Agreement also provides that the Company will: (a) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Person conducted heretofore with respect to any
Acquisition Proposal; (b) take the necessary steps to inform the Persons
referred to in the first sentence of the immediately preceding paragraph of the
obligations undertaken in such paragraph and in this paragraph; (c) notify
Parent promptly if any such Acquisition Proposal is received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Company; (d) further identify the
offeror and furnish to Parent a copy of any such inquiry or proposal, if it is
in writing, or shall inform Parent of the details of any such inquiry or
proposal, if it is oral, and shall promptly advise Parent of any material
development relating to such inquiry or proposal; and (e) promptly request each
Person that has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring the Company to return all confidential
information heretofore furnished to such Person by or on behalf of the Company.
TERMINATION. The Merger Agreement provides that the Merger Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of the Shares:
(a) by the mutual consent of Parent and the Company, by action of their
respective Boards of Directors;
(b) by action of the Board of Directors of either Parent or the Company
(in accordance with the Merger Agreement) if (i) Purchaser shall have
terminated the Offer without purchasing any Shares pursuant thereto in
accordance with the Merger Agreement; (ii) the approval of shareholders
required under the terms of the Merger Agreement shall not have been
obtained at a meeting duly convened therefore (provided Purchaser complied
with the requirements regarding such meeting set forth under the terms of
the Merger Agreement); or (iii) any court of competent jurisdiction or other
Governmental Entity located or having jurisdiction within the United States
or the Republic of France, shall have issued a final order, decree or ruling
or taken any other final action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or other
action is or shall have become final and nonappealable and which is
reasonably likely to have a Material Adverse Effect (PROVIDED, HOWEVER, that
before invoking its ability to terminate under this clause (iii), the party
invoking this clause (iii) shall use its reasonable best efforts to prevent,
vacate, overturn, repeal or limit any such order, decree, ruling or other
action so that it is not reasonably likely to have a Material Adverse
Effect);
(c) by action of the Board of Directors of Parent, if (i) prior to the
purchase of Shares pursuant to the Offer in accordance with the Merger
Agreement, the Company shall have failed to perform in any respect any of
the covenants or agreements contained in the Merger Agreement to be complied
with or performed by the Company at or prior to such date of termination,
which failure is reasonably likely to have a Material Adverse Effect on the
Company and which failure shall not have been reasonably cured prior to the
later of (A) ten business days following the giving of written notice to the
Company of such failure (provided that Parent and Purchaser shall be
required to extend only the initially scheduled Expiration Date of the Offer
pursuant to this clause) and (B) two business days prior to the date on
which the Offer is then scheduled to expire, (ii) the Board of Directors of
the Company (or a special committee thereof) shall have amended, withdrawn
or modified in a manner
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adverse to Parent or Purchaser its approval or recommendation of the Offer,
the Merger Agreement or the Merger or the Board of Directors of the Company
shall have failed to reaffirm such approval or recommendation within two
business days of the written request by Parent or Purchaser to do so, shall
have publicly endorsed, approved or recommended any other Acquisition
Proposal or shall have publicly announced it has resolved to do any of the
foregoing or (iii) if the Company or certain other Persons or entities take
any actions that would be prohibited under the terms of the Merger Agreement
(see "No Solicitation" below) but for an exception therein allowing such
actions to be taken if required by fiduciary obligations under applicable
law as advised by outside counsel; or
(d) by action of the Board of Directors of the Company, (i) if Parent or
Purchaser (or another Parent Company) (A) shall have failed to perform in
any respect any of the covenants or agreements contained in the Merger
Agreement to be complied with or performed by Parent or Purchaser at or
prior to such date of termination, and which failure shall not have been
reasonably cured prior to the later of (x) five business days following the
giving of written notice to Parent of such failure and (y) two business days
prior to the date on which the Offer is then scheduled to expire or (B)
shall have failed to commence the Offer within the time required under the
terms of the Merger Agreement or (ii) if (A) the Company is not in material
breach of any of the terms of the Merger Agreement, (B) the Board of
Directors of the Company authorizes the Company, subject to complying with
the terms of the Merger Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the
Company notifies Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement (which shall
include all of the material terms, including the price proposed to be paid
for Shares pursuant thereto) to such notice, (C) Parent does not make,
within three business days of receipt of the Company's written notification
of its intention to enter into a binding agreement for a Superior Proposal,
an offer that the Board of Directors of the Company determines, in good
faith after consultation with its financial advisors, is at least as
favorable, from a financial point of view, to the stockholders of the
Company as the Superior Proposal and (D) the Company, prior to such
termination, pays to Parent in immediately available funds the fees required
to be paid as described in "Fees and Expenses" below.
FEES AND EXPENSES. The Merger Agreement provides that, except as described
below, whether or not the Merger is consummated, all costs and expenses incurred
in connection with the Offer, the Merger Agreement, the Stock Option Agreement
and the transactions contemplated by the Merger Agreement and the Stock Option
Agreement will be paid by the party incurring such expenses. The Merger
Agreement also provides that:
(a) In the event of termination of the Merger Agreement and abandonment
of the Merger in a manner described under "Termination" above, no party to
the Merger Agreement (or any of its directors or officers) shall have any
liability or further obligation to any other party to the Merger Agreement,
except as provided in paragraph (b) below and as otherwise provided in the
Merger Agreement and except that nothing in the Merger Agreement will
relieve any party thereto from liability for any willful breach of the
Merger Agreement, PROVIDED, HOWEVER, that if the Merger Agreement is
terminated by Parent pursuant to subsection (c)(i) under "Termination" above
or the Company pursuant to subsection (d)(i)(A) under "Termination" above,
the terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
(b) If (i)(A) the Offer shall have remained open for a minimum of at
least 20 business days, (B) after June 11, 1999 any corporation,
partnership, person, other entity or group (as defined in Section 13(d)(3)
of the Exchange Act and the rules promulgated thereunder) other than Parent
or Purchaser or any of their respective subsidiaries or affiliates
(collectively, a "Person") shall have become the beneficial owner (as
defined in Section 13(d) of the Exchange Act and the rules promulgated
thereunder) of 15% or more of the outstanding Shares (other than for bona
fide arbitrage purposes), shall have publicly announced an Acquisition
Proposal or any Person shall have commenced, or shall have publicly
announced an intention to commence, a tender offer or exchange
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offer for 15% or more of the outstanding Shares and (C) the Minimum
Condition shall not have been satisfied as of the expiration date of the
Offer and the Offer is terminated without the purchase of any Shares
thereunder, (ii) Parent shall have terminated the Merger Agreement pursuant
to subsection (c)(ii) or (c)(iii) under "Termination" above or (iii) the
Company shall have terminated the Merger Agreement pursuant to subsection
(d)(ii) under "Termination" above, then the Company shall promptly, but in
no event later than two business days after the date of such termination,
pay Parent a fee of $26 million (the "Termination Fee"), and shall reimburse
Parent and Purchaser (not later than two business days after written request
by Parent or Purchaser to do so) for all of the out-of-pocket charges and
expenses, including financing fees (which out-of-pocket charges and expenses
shall be set forth with reasonable specificity in written documentation
provided to the Company), actually incurred by Parent or Purchaser through
the date of termination in connection with the Merger Agreement and the
transactions contemplated by the Merger Agreement, up to a maximum amount of
$4 million (the "Reimbursement Fee"), in each case payable by wire transfer
in same day funds; PROVIDED, THAT, in the event the Company shall have
terminated the Merger Agreement pursuant to subsection (d)(ii) under
"Termination" above, the Company shall pay the amount due pursuant to this
subsection (b) prior to any such termination. The Company acknowledges that
the agreements contained in this paragraph are an integral part of the
transactions contemplated in the Merger Agreement, and that, without these
agreements, Parent and Purchaser would not enter into the Merger Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
this paragraph, and, in order to obtain such payment, Parent or Purchaser
commences a suit which results in a judgment against the Company for the
fees set forth in this paragraph (b), the Company shall pay to Parent or
Purchaser its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the fees at the
prime rate of Citibank, N.A. on the date such payment was required to be
made. If Parent or Purchaser, or the Company, as the case may be, commences
a suit against any other party hereto which suit does not result in a
judgment against the other party, the party commencing such suit shall pay
to the other the other party's costs and expenses (including attorneys'
fees) incurred in connection with such suit.
EMPLOYEE BENEFIT ARRANGEMENTS. Pursuant to the Merger Agreement, Parent
agreed that, during the period commencing at the Effective Time and ending on
the first anniversary thereof, the employees of the Company and its subsidiaries
will continue to be provided with benefits under employee benefits plans (other
than plans involving the issuance of securities of the Company) which in the
aggregate are substantially comparable to those currently provided by the
Company and its subsidiaries to such employees; PROVIDED, HOWEVER, that
employees covered by collective bargaining agreements need not be provided such
benefits. Parent also agreed to cause each employee benefit plan of Parent in
which employees of the Company and its subsidiaries are eligible to participate
to take into account for purposes of eligibility and vesting thereunder the
service of such employees with the Company and its subsidiaries as if such
service were with Parent. Such employees will also be given credit for any
deductible or co-payment amounts paid in respect of the plan year in which the
Effective Time occurs, to the extent that, in the plan year following the
Effective Time, they participate in any medical, health or dental plan of Parent
for which deductibles or co-payments are required. In addition, Parent will
cause each medical, health or dental plan of Parent, in which such employees are
eligible to participate after the Effective Time, to waive (i) any pre-existing
condition restriction, eligibility waiting period and evidence of insurability
requirements which was waived under the terms of any analogous employee benefit
plan of the Company immediately prior the Effective Time or (ii) waiting period
limitation which would otherwise be applicable to an employee on or after the
Effective Time to the extent such employee had satisfied any similar waiting
period limitation under an analogous employee benefit plan of the Company prior
to the Effective Time. Finally, Parent will, and will cause the Surviving
Corporation to, timely and fully honor (without modification) all employee
benefit plan obligations to current and former employees of the Company and its
subsidiaries accrued as of the Effective Time and, to the extent set forth in
the Company Reports and Schedule 6.1(b)
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to the Merger Agreement, all employee severance plans (or policies), employment
agreements and severance agreements in existence on June 11, 1999.
STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement, dated as of June 11, 1999, by and among Parent and the Company (the
"Stock Option Agreement"). This summary is not a complete description of the
terms and conditions of the Stock Option Agreement and is qualified in its
entirety by reference to the full text of the Stock Option Agreement, which is
incorporated herein by reference and a copy of which has been filed with the SEC
as an exhibit to this Schedule 14D-9.
GRANT OF STOCK OPTION. Subject to the terms and conditions set forth in the
Stock Option Agreement, the Company granted to Parent an irrevocable option (the
"Stock Option") to purchase up to 6,440,653 newly issued Shares (the "Option
Shares") at a purchase price equal to $23.75 per Share (the closing sales price
of the Shares on June 11, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement). The Stock Option will
expire upon the earliest of (a) the Effective Time, (b) 12 months after the
first occurrence of a Purchase Event (as hereinafter defined) or (c) termination
of the Merger Agreement in accordance with its terms prior to the occurrence of
a Purchase Event. The Option Shares represent approximately 19.9% of the
outstanding Shares (before giving effect to the issuance of the Option Shares).
EXERCISE OF STOCK OPTION. The Stock Option becomes exercisable by Parent
after the occurrence of any event as a result of which Parent is entitled to
receive the Termination Fee pursuant to the terms of the Merger Agreement (a
"Purchase Event"). See "Merger Agreement--Termination". In addition, pursuant to
the Stock Option Agreement, if Purchaser has accepted for payment Shares
pursuant to the terms of the Offer and owns at least 61% but less than 75% of
the then outstanding Shares (determined on a fully diluted basis, but excluding
Shares subject to the Stock Option), Parent shall exercise the Stock Option with
respect to that number of Shares that, when added to the number of Shares then
owned by Parent and Purchaser, would result in Parent and Purchaser owning that
number of Shares that provides them with at least 50.1% of the votes represented
by outstanding Shares (determined on a fully diluted basis). Any purchase of
Option Shares upon exercise of the Stock Option is subject to compliance with
the HSR Act and any other necessary Regulatory Approvals.
CASH-OUT RIGHT. The Stock Option Agreement provides that at any time that
the Stock Option is exercisable, Parent may require the Company to pay to
Parent, in exchange for the cancellation of the Stock Option with respect to
such number of Option Shares subject to the Stock Option as Parent specifies, an
amount in cash equal to such number of Option Shares multiplied by the
difference between (a) an average closing price (as determined in the Stock
Option Agreement) and (b) $23.75 per Share.
LIMITATION ON PROFIT. The Stock Option Agreement provides that Parent's
total profit arising under the Stock Option Agreement, the Termination Fee and
the Reimbursement Fee will in no event exceed $31.5 million.
REGISTRATION RIGHTS. The Stock Option Agreement provides that for a period
of two years following the first exercise of the Stock Option by Parent, Parent
will have certain registration rights in respect of the Option Shares received
upon the exercise of the Stock Option.
CERTAIN REPRESENTATIONS AND WARRANTIES. In connection with the Stock Option
Agreement, the Company made certain customary representations and warranties to
Parent, including, among others, those with respect to (a) the Company's
authorized capital, (b) required filings, (c) the Rights Agreement and (d)
authority. Parent represented and warranted to the Company with respect to its
investment intent.
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SHAREHOLDER TENDER AGREEMENT
The following is a summary of certain terms of the Shareholder Tender
Agreement, dated as of June 11, 1999 (the "Shareholder Tender Agreement"), by
and among Parent, Purchaser and Joseph P. Tate (the "Selling Shareholder"). This
summary is not a complete description of the Shareholder Tender Agreement and is
qualified in its entirety by reference to the full text of the Shareholder
Tender Agreement, which is incorporated herein by reference and a copy of which
has been filed with the SEC as an exhibit to this Schedule 14D-9.
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into the Shareholder Tender Agreement with the Selling
Shareholder with respect to 2,539,931 Shares currently beneficially owned by
such Selling Shareholder, representing approximately 8% of the Shares
outstanding on June 11, 1999. Pursuant to the terms and subject to the
conditions of the Shareholder Tender Agreement, the Selling Shareholder agreed
to validly tender in the Offer and not withdraw all Shares currently
beneficially owned by him and any additional Shares with respect to which the
Selling Shareholder becomes the beneficial owner (whether by purchase,
including, without limitation, by the exercise of options, or otherwise) after
June 11, 1999 (collectively, the "Selling Shareholder's Shares"). The Selling
Shareholder granted Purchaser an irrevocable option to purchase the Selling
Shareholder's Shares at the Offer Price. The option is exercisable within five
business days following the occurrence of a Triggering Event (defined in the
Shareholder Tender Agreement to include, among other things, the termination of
the Merger Agreement as a result of an Acquisition Proposal or the acquisition
by a Person of 15% or more of the Shares). In the event the option becomes
exercisable and Purchaser acquires the Selling Shareholder's Shares thereunder
and subsequently tenders, exchanges, converts, sells or otherwise transfers the
Selling Shareholder's Shares to a third party in connection with a tender offer,
exchange offer, merger or other business combination involving the Company or
the Shares, the Selling Shareholder will be entitled to receive an amount equal
to 50% of the difference between the aggregate value of the consideration
received by Parent or Purchaser in such sale and the aggregate amount paid to
the Selling Shareholder upon the purchase of the Selling Shareholder's Shares
pursuant to the exercise of the option.
Pursuant to the Shareholder Tender Agreement, the Selling Shareholder has
agreed that, during the time the Shareholder Tender Agreement is in effect, he
will vote (or cause to be voted) all of the Selling Shareholder's Shares in
favor of the Merger, against any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the Merger or the Offer
(including, without limitation, any Acquisition Proposal) and against any action
or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of the Company
under the Merger Agreement at any meeting of the shareholders of the Company.
The Selling Shareholder has also granted Parent an irrevocable proxy to vote the
Selling Shareholder Shares in the above manner.
Subject to Purchaser's performance in full of each of its obligations in the
Shareholder Tender Agreement, the Selling Shareholder agreed that, until the
Effective Time or the termination of the Merger Agreement, he will not, nor will
he permit any of his investment bankers, financial advisors, attorneys,
accountants or other representatives or agents, to directly or indirectly, (a)
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any Acquisition Proposal or (b) engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to, an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal.
The Selling Shareholder also agreed to not, except as contemplated by the
terms of the Shareholder Tender Agreement, (a) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, assignment or other
disposition of, the Selling Shareholder's Shares to any person other than
Purchaser or Purchaser's designee, (b) enter into, or otherwise subject the
Selling Shareholder's Shares to, any voting arrangement,
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whether by proxy, voting agreement, voting trust, power-of-attorney or otherwise
or (c) take any other action that would in any way restrict, limit or interfere
with the performance of his obligations under the Shareholder Tender Agreement
or the transactions contemplated thereby.
The Selling Shareholder also agreed to not (a) take, agree or commit to take
any action that would make any representation and warranty of the Selling
Shareholder inaccurate in any respect as of any time prior to the termination of
the Shareholder Tender Agreement or (b) omit, or agree or commit to omit, to
take any action necessary to prevent any such representation or warranty from
being inaccurate in any respect at any such time.
The Shareholder Tender Agreement provides that the Selling Shareholder's
obligations to tender the Selling Shareholder's Shares in the Offer, Parent's
right to vote the Selling Shareholder's Shares and the option thereunder will
terminate upon the earliest to occur of (a) the Effective Time, (b) the
termination of the Shareholder Tender Agreement by written notice by Parent to
the Selling Shareholder, (c) the termination of the Merger Agreement in certain
circumstances and (d) 12 months after the occurrence of a Triggering Event.
INDEMNIFICATION
Pursuant to the WBCL and the Company's By-Laws, directors and officers of
the Company are entitled to mandatory indemnification from the Company against
certain liabilities and expenses (a) to the extent such officers or directors
are successful in the defense of a proceeding and (b) in proceedings in which
the director or officer is not successful in defense thereof, unless (in the
latter case only) it is determined that the director or officer breached or
failed to perform his or her duties to the Company and such breach or failure
constituted: (i) a willful failure to deal fairly with the Company or its
shareholders in connection with a matter in which the director or officer had a
material conflict of interest; (ii) a violation of the criminal law unless the
director or officer had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(iii) a transaction from which the director or officer derived an improper
personal profit; or (iv) willful misconduct. The WBCL specifically states that
it is the public policy of Wisconsin to require or permit indemnification,
allowance of expenses and insurance in connection with a proceeding involving
securities regulation, as described therein, to the extent required or permitted
as described above. Additionally, under the WBCL, directors of the Company are
not subject to personal liability to the Company, its shareholders or any person
asserting rights on behalf thereof for certain breaches or failures to perform
any duty resulting solely from their status as directors, except in
circumstances paralleling those in subparagraphs (i) through (iv) outlined
above.
In addition to the indemnification provisions under the WBCL and the
Company's By-Laws, the Merger Agreement also provides for certain
indemnification rights as well as the provision of directors' and officers'
insurance. See "Merger Agreement--Indemnification and Insurance" above.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors of the Company has unanimously approved the Merger
Agreement, the Stock Option Agreement, the Offer and the Merger and determined
that the terms of the Offer and the Merger are in the best interests of the
Company and its shareholders. Accordingly, the Board of Directors of the Company
unanimously recommends that the shareholders of the Company accept the Offer and
tender their Shares pursuant thereto.
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(B) BACKGROUND OF THE OFFER; REASONS FOR THE RECOMMENDATION.
BACKGROUND. During the Summer of 1998, the Company actively pursued a
merger-of-equals business combination with another similarly-sized domestic
solid waste services company and explored other strategic alternatives to
maximize shareholder value. Shortly after such other company announced that it
had agreed to be acquired by another solid waste services company, the Company
engaged Deutsche Banc Alex. Brown ("Alex. Brown") to begin exploring the level
of interest that other domestic solid waste companies might have in acquiring or
merging with the Company. Thereafter, through the fall of 1998, preliminary
discussions were held with a number of potentially interested parties; however,
adverse conditions and stock market valuations for companies in the United
States solid waste industry resulted in those discussions being terminated.
In late January 1999, Alex. Brown, on behalf of the Company, again began
exploring the potential renewed interest of other domestic solid waste companies
in acquiring or merging with the Company. Alex. Brown also began exploring
whether several foreign companies, one of which included Parent, might have an
interest in acquiring the Company.
In mid-February 1999, after being contacted by Alex. Brown, Parent expressed
an interest in exploring a potential acquisition of the Company and entered into
a confidentiality agreement with the Company on March 3, 1999.
On March 5, 1999, the Company's Chief Executive Officer, G. William
Dietrich, and Chief Financial Officer, George K. Farr, together with
representatives from Alex. Brown, met in New York, New York with Parent's
Executive Vice President of its Water and Wastewater Management Division, Henri
Proglio, and other senior officers of Parent, together with Parent's financial
advisor, Lazard Freres, to discuss the Company's business and prospects, as well
as the two companies' respective business philosophies and cultures, as well as
the parties' potential interest in exploring a business combination between the
two companies.
From March 9, 1999 through March 11, 1999, Messrs. Dietrich and Farr visited
several of Parent's facilities and operations in France and, together with a
representative of Alex. Brown, met in Paris, France with Mr. Proglio and other
senior officers of Parent, together with representatives of Lazard Freres, to
further discuss the two companies' businesses, philosophies and cultures, as
well as the potential benefits of Parent acquiring the Company and facilitating
the Company's business strategy.
On March 18, 1999, Mr. Proglio expressed to Mr. Dietrich Parent's interest
in further pursuing the potential acquisition of the Company. Based on an
indicated price range, Mr. Proglio and Mr. Dietrich agreed to a limited
exclusivity period to permit Parent to conduct a due diligence investigation of
the Company to further determine its level of price interest.
On March 23, 1999, a special meeting of the Company's Board of Directors was
held to discuss Parent's level of interest in pursuing an acquisition of the
Company. At that meeting, the Board discussed the background of Parent and other
potential strategic alternatives that might maximize shareholder value,
including remaining independent and executing its long-term strategic plan,
taking the Company private through a self-tender offer, effecting a substantial
share repurchase program or being acquired by another domestic solid waste
services company. Mr. Dietrich reported on the Company's discussions with other
potential acquirers and the circumstances that appeared to be limiting the
ability of such other potential acquirors from actively pursuing an acquisition
of the Company at a price to the Company's shareholders that would reflect the
Company's intrinsic value. At the meeting, the Company's legal counsel, Foley &
Lardner, advised the Company's Board of Directors with respect to its fiduciary
duties in exploring a potential sale of the Company and evaluating other
strategic alternatives and discussed the terms and conditions of other business
combinations in the solid waste industry.
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From late March 1999 through mid-April 1999, representatives of Parent and
its financial advisor, legal counsel and various consultants conducted a due
diligence investigation of the Company. During this period, further discussions
were held on a regular basis between representatives of the Company, Alex. Brown
and Foley & Lardner, on the one hand, and representatives of Parent and its
financial advisor and legal counsel, on the other hand. Additionally, during
this period, Parent's legal counsel and Foley & Lardner negotiated various
non-financial terms and conditions of the proposed form of Merger Agreement
between the Company and Parent.
On April 6, 1999 and April 15, 1999, the Company's Board of Directors held
special meetings at which it was apprised of the progress of the ongoing
investigation of, and discussions and negotiations with, Parent and its
representatives and the proposed non-financial terms and conditions of the
proposed form of Merger Agreement. At each of these meetings, the Company's
Board of Directors received advice from Alex. Brown and Foley & Lardner and
reviewed drafts and summaries of the proposed form of Merger Agreement.
Based on the recommendation of Foley & Lardner, on April 7, 1999, the
Company engaged Robert W. Baird & Co. Incorporated ("Baird") to provide the
Company's Board of Directors with an opinion, independent from Alex. Brown, the
Company's financial advisor, on the fairness, from a financial point of view, of
the consideration to be paid to the holders of Shares (other than Parent and its
affiliates) in the Offer and the Merger.
In late April 1999, representatives of Lazard Freres indicated to
representatives of Alex. Brown that Parent would be willing to acquire the
Company for a specified price per Share in cash if the Company's senior
management team agreed to continue to manage the Company after the acquisition.
The Company rejected this indication of interest as being inadequate due to the
price offered and thereafter further discussions ceased between the parties.
On April 30, 1999, the Company's Board of Directors met to discuss the
status of discussions with Parent. After advising the Board that such
discussions had terminated based on the indicated level of price interest from
Parent, the Company's management directed Alex. Brown to re-explore the level of
interest that other potential domestic solid waste service companies may have in
acquiring the Company.
During the first week of May 1999, Messrs. Proglio and Dietrich held several
telephone discussions in which Mr. Proglio reaffirmed Parent's interest in
continuing to pursue an acquisition of the Company. Mr. Proglio indicated that
Parent might be willing to pay a higher price than indicated in late April, if
the Company's senior management team continued to remain with the Company after
any such acquisition and continued to pursue its business strategy.
On May 11, 1999, the Company's Board of Directors held its regularly
scheduled annual Board of Directors meeting and was provided with a status
report from Mr. Dietrich on his discussions with Parent and Alex. Brown's
discussions with other potential acquirers. The Board also discussed and
considered other potential strategic alternatives and received additional advice
from Foley & Lardner.
During May 1999, Alex. Brown and Mr. Dietrich held further discussions with
several other potential acquirers of the Company. All parties contacted
indicated that they were either not at that time interested in, or in a position
to consider, acquiring the Company or indicated a level of price interest that
was below $27 per Share.
On June 2, 1999, Mr. Proglio telephoned Mr. Dietrich to arrange for a
meeting in New York, New York on June 7, 1999 and on June 4, 1999 Mr. Proglio
telephoned Mr. Dietrich to indicate that Parent's final indication of interest
with respect to acquiring the Company's shares was $27.00 per Share. Mr.
Dietrich indicated that he believed the two parties should meet in New York on
June 7 to hold further discussions on the other material terms and conditions of
the transaction.
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On June 7, 1999, Messrs. Dietrich and Farr, as well as Peter J. Ruud, the
Company's Senior Vice President, together with representatives of Alex. Brown
and Foley & Lardner, met with Mr. Proglio and other senior officers of Parent
and their financial advisor and legal counsel in New York to discuss the other
material terms and conditions of the transaction, including the proposed terms
of employment after the acquisition for Messrs. Dietrich, Farr, Ruud and the
other members of the Company's management team. Immediately after that meeting,
the Company's and Parent's legal counsel continued to negotiate the remaining
terms and conditions of the Merger Agreement and the ancillary agreements.
On June 8, 1999, Messrs. Dietrich, Farr and Ruud, together with
representatives of Alex. Brown, met in New York with senior officers of Parent
and its financial advisor to allow Parent to conduct an updated financial due
diligence inquiry of the Company and, separately, Foley & Lardner and Parent's
legal counsel continued to negotiate the remaining terms and conditions of the
Merger Agreement, the Stock Option Agreement and the ancillary agreements.
On June 9 and 10, 1999, further discussions and negotiations were held
between the Company, Alex. Brown and Foley & Lardner, on the one hand, and
Parent, its financial advisor and legal counsel, on the other hand, on the final
terms and conditions of the Merger Agreement, the Stock Option Agreement and the
ancillary agreements.
On June 11, 1999, the Company's Board of Directors held a special meeting at
which it considered the proposed final terms and conditions of the Offer and the
Merger. At that meeting, Foley & Lardner again reviewed the directors' fiduciary
duties in considering the proposed transaction and the principal terms and
conditions of the proposed transaction, including the principal terms and
conditions of the proposed Merger Agreement, the Stock Option Agreement, the
Shareholder Tender Agreement, the Employment Agreements and the matters
described under Item 3(b) of this Schedule 14D-9. Alex. Brown further updated
and advised the Board of Directors on the results of its discussions with other
potential acquirers and the history and scope of the negotiations with Parent.
Baird provided the Company's Board of Directors with its opinion that the $27.00
per share price to be paid to shareholders in the Offer and the Merger was fair,
from a financial point of view, to the holders of Shares (other than Parent and
its affiliates). The Board then discussed the presentations it had received at
this and other Board meetings, the drafts and summaries of the various documents
received in advance of the meeting and further discussed thereat, other
strategic alternatives, the terms and conditions of other business combinations
in the solid waste industry deemed relevant, the scope and history of
negotiations and the other matters described below under "Factors Considered by
the Board." The Board then unanimously approved the Merger Agreement, the Stock
Option Agreement and the Employment Agreements and unanimously recommended that
the Company's shareholders tender their Shares in the Offer.
On June 11, 1999, the Merger Agreement, the Stock Option Agreement, the
Shareholder Tender Agreement and the Employment Agreements were executed.
On June 14, 1999, the Company and Parent jointly announced the acquisition.
FACTORS CONSIDERED BY THE BOARD. In reaching its conclusions and
recommendations described above, the Company's Board of Directors considered the
following factors:
(1) the terms and conditions of the Offer, the Merger Agreement, the Stock
Option Agreement, the Shareholder Tender Agreement and the Employment
Agreements;
(2) the financial condition, results of operations, business and prospects
of the Company;
(3) the oral opinion of Baird, which was later confirmed in a written
opinion, dated as of June 11, 1999, to the effect that, as of the date of
the opinion, the Offer Price to be paid to the Company's shareholders in
the Offer and the Merger was fair, from a financial point of view, to
holders of
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Shares (other than Parent and its affiliates). The full text of Baird's
written opinion which sets forth the procedures followed, the factors
considered and the assumptions made by Baird is attached hereto and is
filed as Annex A hereto and incorporated herein by reference.
SHAREHOLDERS ARE URGED TO READ THE OPINION OF BAIRD CAREFULLY AND IN ITS
ENTIRETY;
(4) the trading history of the Shares since the Company's initial public
stock offering in March 1996, a comparison of that trading history with
the stock trading histories of other companies in the solid waste
industry and stock market indices that were deemed relevant;
(5) the general composition and estimated average purchase costs of various
groups of the Company's shareholders and the perceived market "overhang"
that the Company believed existed within a price range that might make it
more difficult for the Shares to trade at a price comparable to the Offer
Price;
(6) a comparison of the historical financial results and present financial
condition of the Company with those of other companies in the solid waste
industry that were deemed relevant;
(7) a comparison of the financial terms of the Offer and the Merger with the
financial terms of certain other transactions in the solid waste industry
that were deemed relevant;
(8) the current and prospective conditions and trends in the stock market
valuations and ongoing consolidation activity in the solid waste industry
and the anticipated effects of those conditions and trends on the Company
and its shareholders;
(9) the fact that, in the view of Alex. Brown and the Company's management,
an extensive search for other potential acquirors of the Company had
taken place and the nature of the responses from, and expressed levels of
interest of, such other third parties who were contacted by or on behalf
of the Company regarding a possible acquisition of, or other business
combination with, the Company;
(10) the fact that the Company's Chairman of the Board, co-founder and
largest shareholder was willing to enter into the Shareholder Tender
Agreement with Parent pursuant to which such shareholder agreed, among
other things, to tender and not withdraw all Shares owned by him pursuant
to the Offer;
(11) the representation of Parent and Purchaser that they will have and will
make available sufficient funds to consummate the Offer and the Merger
and the fact that the Offer is not subject to a financing condition;
(12) the extensive scope and detail of the negotiating process with Parent
and its advisors that led to the finalization of the Merger Agreement and
the related agreements and the significant progress made in those
negotiations for the benefit of the Company and its shareholders;
(13) the likelihood of consummation of the Offer and the Merger and the
limited conditions to consummation of the Offer;
(14) the tax impact on the Company's shareholders from their sale of Shares
in the Offer or exchange of Shares pursuant to the Merger;
(15) the availability of, and the comparative risks and benefits to the
Company's shareholders from pursuing, other strategic alternatives to
maximize shareholder value, including remaining independent and executing
the Company's long-term strategic plan, going private through a self
tender offer transaction or effecting a substantial share repurchase
program;
24
<PAGE>
(16) the favorable impact of the acquisition on the Company's
non-shareholder constituencies, including employees, customers and the
various communities in which it operates;
(17) the severance payments, employment agreements, treatment of stock
options, benefit plans, rights to indemnification and insurance and other
matters discussed under Item 3(b) of this Schedule 14D-9, including a
cost comparison thereof to other similar costs in certain other business
combinations in the solid waste industry that were deemed relevant;
(18) the expected timing of the Merger based on prior receipt of all
necessary state solid waste regulatory approvals;
(19) the fact that the Merger Agreement, while prohibiting the Company from
knowingly soliciting or engaging in any negotiations concerning any
Acquisition Proposal, does permit the Company to furnish information
concerning its business, properties or assets to, and enter into
discussions or negotiations with, any third party in response to a
written Superior Proposal;
(20) the provisions in the Merger Agreement that require the Company to pay
to Parent a termination fee of $26 million and reimburse Parent for its
documented out-of-pocket expenses not to exceed $4 million if the Merger
Agreement is terminated under certain circumstances, which (together with
the Stock Option Agreement and the related total profit cap described
below) the Company's Board of Directors recognized would potentially
foreclose competing offers at approximately the same price level as, or
at slightly higher levels than, the Offer, but, based in significant part
on the advice of both Alex. Brown and Baird, was within the range of
termination fees and profit caps payable in comparable transactions in
the solid waste industry and in other transactions of similar size and
should not be a significant deterrent to competing offers at price levels
somewhat higher than the Offer; and
(21) in exchange for Parent agreeing to substantially narrow the conditions
to the Offer, the insistence of Parent on the Company executing the Stock
Option Agreement pursuant to which, among other things, the Company
agreed to grant Parent an irrevocable option to purchase up to 6,440,653
shares at $23.75 per Share, exercisable in certain circumstances, and
subject to a total profit cap (together with the termination fee and
expense reimbursement) of $31.5 million, which the Company's Board of
Directors recognized would potentially foreclose any subsequent bidder
from being able to effect an acquisition of the Company accounted for as
a pooling-of-interests.
The Company's Board of Directors did not assign relative weights to the
foregoing factors or determine that any factor was of particular importance.
Rather, the Company's Board of Directors viewed its position and recommendations
as being based on the totality of the information presented to and considered by
it. In addition, individual members of the Board of Directors may have given
different weight to different factors.
The Company's Board of Directors recognized that, while the consummation of
the Offer gives the Company's shareholders the opportunity to realize a premium
over the prices at which the Shares were traded prior to the public announcement
of the Merger and Offer, tendering in the Offer would eliminate the opportunity
for shareholders to participate in the potential future growth and profits of
the Company.
25
<PAGE>
It is expected that, if the Shares are not purchased by Purchaser in
accordance with the terms of the Offer or if the Merger is not consummated, the
Company's current management, under the general direction of the Company's Board
of Directors, will continue to manage the Company as an ongoing business in
accordance with the Company's current long-term strategic plan.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement, dated as of April 7, 1999 (the "Baird
Engagement Letter"), between the Company and Baird, the Company engaged Baird to
act as its financial advisor to evaluate the Offer and to render an opinion as
to the fairness, from a financial point of view, to the Company's shareholders
(other than Parent and its affiliates) of the consideration to be paid in the
Offer and the Merger. Pursuant to the Baird Engagement Letter, the Company will
pay Baird for its services in connection with the Offer and the Merger a fee of
$500,000. In addition, the Company agreed to reimburse Baird up to a maximum of
$25,000 (unless approved by the Company) for its reasonable out-of-pocket
expenses, including reasonable fees and expenses of its legal counsel, incurred
by Baird in connection with providing its services pursuant to the Baird
Engagement Letter and to indemnify Baird against certain liabilities, including
liabilities arising under federal securities laws.
The Company retained Baird based on its experience and expertise. Baird, as
part of its investment banking business, is engaged in the evaluation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. In the ordinary course of its business, Baird and
its affiliates may from time to time trade the securities of the Company or
Parent for its own account or the accounts of its customers and, accordingly,
may at any time hold long or short positions in such securities.
Pursuant to a letter agreement, dated as of September 2, 1998 (the "Alex.
Brown Engagement Letter"), between the Company and Alex. Brown, the Company
engaged Alex. Brown to act as its exclusive financial advisor to assist in the
negotiation of the Merger Agreement, solicit and review strategic alternatives
to maximize the Company's value and, if requested, to render an opinion
regarding the fairness from a financial point of view of the terms of any
Transaction (as defined in the Alex. Brown Engagement Letter). Pursuant to the
Alex. Brown Engagement Letter, the Company paid Alex. Brown a retainer advisory
fee of $50,000 upon execution of the Alex. Brown Engagement Letter (to be
credited against any transaction fee payment to Alex. Brown) and a transaction
fee, payable upon consummation of a Transaction, equal to 0.70% of the Aggregate
Consideration (as defined in the Alex. Brown Engagement Letter), which will be
approximately $7.1 million in connection with the Offer and the Merger. In
addition, the Company agreed to reimburse Alex. Brown up to a maximum of $35,000
(unless approved by the Company) for its reasonable out-of-pocket expenses,
including reasonable fees and expenses of its legal counsel, incurred by Alex.
Brown in connection with providing its services pursuant to the Alex. Brown
Engagement Letter and to indemnify Alex. Brown against certain liabilities,
including liabilities arising under federal securities laws.
The Company retained Alex. Brown based on its experience and expertise.
Alex. Brown is an internationally recognized investment banking and advisory
firm. Alex. Brown, as part of its investment banking business, is continuously
engaged in the evaluation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. In the ordinary course of its
business, Alex. Brown and its affiliates may actively trade the debt and equity
securities of both the Company and Parent for its and its affiliates' own
accounts and for accounts of customers and, accordingly, may at any time hold a
long or short position in such securities.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of the Company on its
behalf with respect to the Offer.
26
<PAGE>
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past 60 days, no transactions in the Shares have been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company, except as
follows: (i) on May 11, 1999, the Company granted, as part of its mandatory
annual options grants under the Company's 1996 Equity Incentive Plan, 2,500
incentive stock options at an exercise price of $23.625 per Share to each of
Francis J. Podvin, Warner C. Frazier, Walter G. Winding and Donald Taylor, the
Company's independent directors; (ii) on May 21, 1999, Philip J. Auld, Regional
Vice President for the Company, purchased 800 Shares at $21.9375 per Share;
(iii) on May 28, 1999, a trust controlled by Joseph P. Tate, Chairman and
director of the Company, sold 12,500 Shares at $21.75 per Share; and (iv) on
April 27, 1999 and May 3, 1999, Mr. Tate and entities controlled by Mr. Tate
transferred, for tax and estate planning purposes, 303,000 and 150,000 Shares,
respectively, to other entities controlled by Mr. Tate (Mr. Tate maintains
beneficial ownership of all Shares so transferred).
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, all of the Company's executive
officers, directors and affiliates who own Shares presently intend to tender all
of their Shares to Purchaser pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction such as a merger or reorganization,
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there are no transactions, Board of
Directors resolutions, agreements in principle or signed contracts in response
to the Offer that relate to or would result in one or more of the events
referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
RIGHTS AGREEMENT. Each Right issued pursuant to the Rights Agreement
initially entitles the registered holder thereof to purchase one share of Common
Stock at a price of $90.00 per Share, subject to adjustment. The Rights become
exercisable if a person or group has acquired, or announced an intention to
acquire, 15% or more of the outstanding Shares (such person or group hereinafter
referred to as an "Acquiring Person"). Under certain circumstances, including
the existence of an Acquiring Person, each holder of a Right, other than the
Acquiring Person, will thereafter have the right to receive, upon exercise of a
Right, Common Stock having a market value of two times the exercise price of the
Right. For a complete description of the Rights Agreement, see the Company's
Form 8-A Registration Statement, dated February 28, 1997, as filed with the SEC
and incorporated herein by reference.
On June 11, 1999, the Company entered into an amendment to the Rights
Agreement to make it inapplicable to the (i) Offer and the Merger and (ii) the
Merger Agreement, the Stock Option Agreement and the transactions contemplated
thereby. A copy of such amendment to the Rights Agreement has been filed with
the SEC as an exhibit to this Schedule 14D-9 and is incorporated herein by
reference.
WISCONSIN BUSINESS CORPORATION LAW. Sections 180.1140 through 180.1144 of
the WBCL (the "Wisconsin Business Combination Statute") prohibit certain
business combinations between a resident domestic corporation (such as the
Company) and an "interested stockholder" (defined generally as any person who
beneficially owns, directly or indirectly, 10% or more of the outstanding voting
stock of a domestic corporation or who is an affiliate or associate of the
corporation and beneficially owned 10% or more of the voting stock within the
last three years) for a period of three years after the date on which the person
became an interested stockholder unless, among other exceptions, the acquisition
of the shares or the
27
<PAGE>
business combination has been approved by the board of directors of the resident
domestic corporation prior to the date on which the interested stockholder
became an interested stockholder. Although the acquisition of the Shares
pursuant to the Merger after the purchase of Shares in the Offer would involve a
business combination between a resident domestic corporation and an interested
stockholder, the Company's execution of the Merger Agreement (which provides for
the Offer and the Merger) and the Stock Option Agreement were unanimously
approved by the Board of Directors of the Company prior to the date on which
Purchaser and/or Parent will become an interested stockholder. Accordingly, the
Wisconsin Business Combination Statute is inapplicable to the Offer, the Merger
and the exercise of the option under the Stock Option Agreement.
Section 180.1150 of the WBCL contains "Control Share" provisions limiting,
under certain circumstances, the voting power of a shareholder that holds in
excess of 20% of the voting power of certain corporations. As a result, Shares
purchased by Purchaser and Parent from shareholders that constitute in excess of
20% of the voting power in the election of directors of the Company will be
limited to 10% of the full voting power of such Shares (Shares acquired directly
from the Company are not so limited). However, since the Minimum Condition is
75% of the Shares outstanding on a fully diluted basis, if the Minimum Condition
is met, the Control Share provision of the WBCL will not affect Purchaser's and
Parent's ability to approve the Merger. In addition, pursuant to the Stock
Option Agreement, if Purchaser has accepted for payment Shares pursuant to the
terms of the Offer and owns at least 61% but less than 75% of the then
outstanding Shares (determined on a fully diluted basis, but excluding Shares
subject to the option under the Stock Option Agreement), Parent shall exercise
its option to purchase from the Company at $23.75 per Share newly issued Shares
in an amount equal to the number of Shares that, when added to the number of
Shares then owned by Parent and Purchaser, would result in Parent and Purchaser
owning that number of Shares that provides them with at least 50.1% of the votes
represented by outstanding Shares (determined on a fully diluted basis). As a
result of Parent's exercise of the option under the Stock Option Agreement, the
Control Share provision of the WBCL will not effect Purchaser's and Parent's
ability to approve the Merger.
Sections 180.1130 through 180.1134 of the WBCL (the "Wisconsin Fair Price
Law") generally provide, with certain exceptions, that "business combinations"
involving a resident domestic corporation that has a class of voting stock
registered or traded on a national securities exchange or that is registered
under Section 12(g) of the Exchange Act (such as the Company) and a "significant
shareholder" (defined generally as any person that is the beneficial owner,
either directly or indirectly, of 10% or more of the voting power of the
outstanding voting shares of the resident domestic corporation) be approved by
the affirmative vote of at least 80% of the voting power of the resident
domestic corporation's stock and at least 66 2/3% of the voting power of the
corporation's stock not beneficially owned by the significant shareholder, in
each case voting together as a group, unless certain "fair price" conditions set
forth in Section 180.1132 of the WBCL are satisfied. The amount to be paid for
each Share in both the Offer and pursuant to the Merger currently satisfies each
of the conditions of Section 180.1132 of the WBCL. Accordingly, the restrictions
contained in the Wisconsin Fair Price Law are not currently applicable to the
Merger.
COMPANY'S RESTATED ARTICLES OF INCORPORATION. The Company's Restated
Articles of Incorporation incorporate the provisions of the Wisconsin Business
Combination Statute and require that, for the Wisconsin Business Combination
Statute provisions not to apply, the Board of Directors must approve a business
combination with an "interested stockholder" before the stock acquisition date.
As discussed above, the Merger Agreement (which provides for the Offer and the
Merger) and the Stock Option Agreement were unanimously approved by the Board of
Directors of the Company prior to the date on which Purchaser and/or Parent will
become an interested stockholder and, therefore, such provisions of the
Company's Restated Articles of Incorporation are inapplicable to the Offer, the
Merger and the exercise of the option under the Stock Option Agreement.
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<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1)* Letter to Shareholders of Superior Services, Inc. dated June 18, 1999.
(a)(2) Joint Press Release issued on June 14, 1999. [Incorporated by reference to Exhibit 99.5 to Superior
Services, Inc.'s Current Report on Form 8-K dated June 11, 1999 and filed June 14, 1999]
(a)(3)* Fairness opinion of Robert W. Baird & Co. Incorporated, dated June 11, 1999.
(b) Text of script for Superior Services, Inc.'s June 14, 1999 analyst call.
(c)(1) Agreement and Plan of Merger, dated as of June 11, 1999, by and among Vivendi, Onyx Solid Waste
Acquisition Corp. and Superior Services, Inc. [Incorporated by reference to Exhibit 2.1 to Superior
Services, Inc.'s Current Report on Form 8-K dated June 11, 1999 and filed June 14, 1999]
(c)(2) Stock Option Agreement, dated as of June 11, 1999, by and between Vivendi and Superior Services, Inc.
[Incorporated by reference to Exhibit 2.2 to Superior Services, Inc.'s Current Report on Form 8-K dated
June 11, 1999 and filed June 14, 1999]
(c)(3) Shareholder Tender Agreement, dated as of June 11, 1999, by and among Vivendi, Onyx Solid Waste
Acquisition Corp. and Joseph P. Tate. [Incorporated by reference to Exhibit 99.1 to Superior Services,
Inc.'s Current Report on Form 8-K dated June 11, 1999 and filed June 14, 1999]
(c)(4) Employment Agreement dated as of June 11, 1999 by and between Superior Services, Inc. and G. William
Dietrich. [Incorporated by reference to Exhibit 99.2 to Superior Services, Inc.'s Current Report on Form
8-K dated June 11, 1999 and filed June 14, 1999]
(c)(5) Employment Agreement dated as of June 11, 1999 by and between Superior Services, Inc. and George K.
Farr. [Incorporated by reference to Exhibit 99.3 to Superior Services, Inc.'s Current Report on Form 8-K
dated June 11, 1999 and filed June 14, 1999]
(c)(6) Employment Agreement dated as of June 11, 1999 by and between Superior Services, Inc. and Peter J. Ruud.
[Incorporated by reference to Exhibit 99.4 to Superior Services, Inc.'s Current Report on Form 8-K dated
June 11, 1999 and filed June 14, 1999]
(c)(7) Confidentiality Agreement, dated as of March 3, 1999, by and between Superior Services, Inc. and
Vivendi.
(c)(8) Amendment No. 1, dated as of June 11, 1999, to the Confidentiality Agreement, dated as of March 3, 1999,
by and between Superior Services, Inc. and Vivendi.
(c)(9) Rights Agreement, dated as of February 21, 1997, between Superior Services, Inc. and LaSalle Bank
National Association (f/k/a LaSalle National Bank). [Incorporated by reference to Exhibit 4.1 to
Superior Services, Inc.'s Current Report on Form 8-K dated February 28, 1997]
(c)(10) Amendment to Rights Agreement, dated as of June 11, 1999, between Superior Services, Inc. LaSalle Bank
National Association (f/k/a LaSalle National Bank). [Incorporated by reference to Exhibit 4 to Superior
Services, Inc.'s Current Report on Form 8-K dated June 11, 1999 and filed June 14, 1999]
(c)(11) Portions of Superior Services, Inc.'s Proxy Statement for the 1999 Annual Meeting of Shareholders that
are incorporated by reference herein.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(c)(12) Key Executive Employment and Severance Agreement, dated August 15, 1995, between G. William Dietrich and
Superior Services, Inc. [Incorporated by reference to Exhibit 10.5 filed with Superior Service, Inc.'s
Form S-1 Registration Statement No. 333-240, dated January 9, 1996, as amended]
(c)(13) Key Executive Employment and Severance Agreement, dated August 15, 1995, between George K. Farr and
Superior Services, Inc. [Incorporated by reference to Exhibit 10.6 filed with Superior Services, Inc.'s
Form S-1 Registration Statement No. 333-240, dated January 9, 1996, as amended]
(c)(14) Key Executive Employment and Severance Agreement, dated August 15, 1995, between Peter J. Ruud and
Superior Services, Inc. [Incorporated by reference to Exhibit 10.7 filed with Superior Services, Inc.'s
Form S-1 Registration Statement No. 333-240, dated January 9, 1996, as amended]
(c)(15) Form of Amendment of Key Executive Employment and Severance Agreements entered into by each of G.
William Dietrich, George K. Farr and Peter J. Ruud. [Incorporated by reference to Exhibit 10.17 to
Superior Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(16) Amendment to Key Executive Employment and Severance Agreement between Superior Services, Inc. and George
K. Farr, dated February 24, 1998. [Incorporated by reference to Exhibit 10.17 to Superior Services,
Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 1998]
(c)(17) Amendment No. 2 to Key Executive Employment and Severance Agreement between Superior Services, Inc. and
G. William Dietrich, dated August 18, 1998, supplementing and amending the Key Employment and Severance
Agreement, dated as of August 15, 1995, as previously amended. [Incorporated by reference to Exhibit
10.20 to Superior Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(18) Amendment No. 2 to Key Executive Employment and Severance Agreement between Superior Services, Inc. and
George K. Farr, dated August 18, 1998, supplementing and amending the Key Employment and Severance
Agreement, dated as of August 15, 1995, as previously amended. [Incorporated by reference to Exhibit
10.21 to Superior Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(19) Amendment No. 2 to Key Executive Employment and Severance Agreement between Superior Services, Inc. and
Peter J. Ruud, dated August 18, 1998, supplementing and amending the Key Employment and Severance
Agreement, dated as of August 15, 1995, as previously amended. [Incorporated by reference to Exhibit
10.22 to Superior Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(20) Key Executive Employment and Severance Agreement between Superior Services, Inc. and Joseph P. Tate,
dated August 18, 1998. [Incorporated by reference to Exhibit 10.19 to Superior Services, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998]
(c)(21) Employment Agreement between Superior Services, Inc. and Scott S. Cramer dated as of July 1, 1997.
[Incorporated by reference to Exhibit 10.14 to Superior Services, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998]
(c)(22) Amendment and Amendment No. 2 to Employment Agreement between Superior Services, Inc. and Scott Cramer
dated August 18, 1998 and November 24, 1998, respectively, supplementing and amending the Employment
Agreement dated July 1, 1997. [Incorporated by reference to Exhibit 10.30 to Superior Services, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998]
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(c)(23) Amendment and Amendment No. 2 to Employment Agreement between Superior Services, Inc. and John King
dated August 18, 1998 and November 24, 1998, respectively, supplementing and amending the Employment
Agreement dated January 1, 1997. [Incorporated by reference to Exhibit 10.31 to Superior Services,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(24) Employment Agreement between Superior Services, Inc. and James M. Dancy, Jr. dated September 14, 1998,
as amended October 2, 1998. [Incorporated by reference to Exhibit 10.32 to Superior Services, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(25) Employment Agreement between Superior Services, Inc. and Paul Jenks dated September 21, 1998.
[Incorporated by reference to Exhibit 10.33 to Superior Services, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998]
(c)(26) Employment Agreement between Superior Services, Inc. and Philip J. Auld dated October 5, 1998.
[Incorporated by reference to Exhibit 10.34 to Superior Services, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998]
(c)(27) Employment Agreement between Superior Services, Inc. and Larry E. Goswick dated December 7, 1998.
[Incorporated by reference to Exhibit 10.35 to Superior Services, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998]
(c)(28) Superior Services, Inc. 1999 Management Incentive Plan. [Incorporated by reference to Exhibit 10.36 to
Superior Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998]
(c)(29) Superior Services, Inc. Long-Term Performance Award Plan.
(c)(30) Stock Option Agreement, dated as of February 25, 1993, and as amended on May 5, 1995, August 15, 1995
and November 29, 1995, between George K. Farr and Superior Services, Inc. [Incorporated by reference to
Exhibit 10.1 filed with Superior Services, Inc.'s Form S-1 Registration Statement No. 333-240, dated
January 9, 1996, as amended]
(c)(31) Stock Option Agreement, dated as of February 14, 1995, and as amended on May 16, 1995, August 15, 1995
and November 29, 1995, between G. William Dietrich and Superior Services, Inc. [Incorporated by
reference to Exhibit 10.2 filed with Superior Services, Inc.'s Form S-1 Registration Statement No.
333-240, dated January 9, 1996, as amended]
(c)(32) Amendment to Restated Option Agreement dated November 26, 1996 between G. William Dietrich and Superior
Services, Inc. [Incorporated by reference to Exhibit 10.2 to Superior Services, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1997]
(c)(33) 1993 Incentive Stock Option Plan. [Incorporated by reference to Exhibit 10.8 filed with Superior
Services, Inc.'s Form S-1 Registration Statement No. 333-240, dated January 9, 1996, as amended]
(c)(34) 1996 Equity Incentive Plan. [Incorporated by reference to Exhibit 10.10 filed with Superior Services,
Inc.'s Form S-1 Registration Statement No. 333-240, dated January 9, 1996, as amended]
(c)(35) Amendment to the Superior Services, Inc. 1996 Equity Incentive Plan, dated November 24, 1998.
[Incorporated by reference to Exhibit 10.11 to Superior Services, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998]
</TABLE>
- ------------------------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
31
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
SUPERIOR SERVICES, INC.
By: /s/ G. WILLIAM DIETRICH
-----------------------------------------
G. William Dietrich
President and Chief Executive Officer
</TABLE>
Dated: June 18, 1999
32
<PAGE>
SCHEDULE I
SUPERIOR SERVICES, INC.
125 SOUTH 84(TH) STREET, SUITE 200
MILWAUKEE, WISCONSIN 53214
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement (the "Information Statement") is being mailed on
or about June 18, 1999 as part of the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") to the holders of the common stock of
Superior Services, Inc. (the "Company"). Capitalized terms used and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-9.
You are receiving this Information Statement in connection with the possible
election of persons designated by Parent to a majority of the seats on the Board
of Directors of the Company (the "Board"). The Merger Agreement requires, if the
Parent requests in writing, the Company to cause the Parent's designees to be
elected to the Board under the circumstances described therein. This Information
Statement is required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on June 18,
1999. The Offer is scheduled to expire at 12:00 midnight, New York City time, on
Friday, July 16, 1999, unless the Offer is extended.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent, Purchaser and the
Parent Designees (as defined below) has been furnished to the Company by either
Parent or Purchaser and the Company assumes no responsibility for the accuracy
or completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of June 7, 1999, there were 32,365,094
Shares issued and outstanding, 3,456,763 Shares reserved for issuance upon the
exercise of certain outstanding options (and 1,431,056 Shares reserved for
future option grants), 544,991 Shares reserved for issuance pursuant to the
terms of certain completed acquisition agreements, 1,296,297 Shares reserved for
issuance pursuant to the terms of certain pending acquisitions and 39,094,201
Shares reserved for issuance pursuant to the Rights Agreement. The Board
currently consists of six members, divided into three classes. Each director
holds office for a three-year term and until such director's successor is duly
elected and qualified or until such director's earlier resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; PARENT DESIGNEES
Pursuant to the Merger Agreement, if requested by Parent in writing,
promptly following the purchase by Purchaser of Shares pursuant to the Offer,
Parent will be entitled to designate such number of directors, rounded up to the
next whole number, on the Board (the "Parent Designees"), equal to the product
of the total number of directors on the Board multiplied by the percentage that
the aggregate number of Shares beneficially owned by Purchaser or its affiliates
bears to the total number of Shares then outstanding. In furtherance thereof,
the Company has agreed either to increase the size of the Board or use its
reasonable
I-1
<PAGE>
best efforts to secure the resignations of such number of incumbent directors,
or both, as is necessary to enable the Parent Designees to be so elected or
appointed to the Board. At such time, the Company has also agreed, upon the
written request of Parent, to use its reasonable best efforts to cause persons
designated by Parent to constitute the same proportionate representation (as it
exists on the Board after giving effect to the foregoing) of each committee of
the Board, each board of directors of each subsidiary of the Company and each
committee of each such board (in each case to the extent of the Company's
ability to elect such persons). The Company's obligation to appoint the Parent
Designees is subject to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company is required to take all action
necessary to effect any such election and to include in this Information
Statement the information required by Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The foregoing notwithstanding, the Merger
Agreement further provides that at least two directors who are neither officers,
directors, shareholders or designees of Parent or any of its affiliates ("Parent
Insiders") shall continue to serve on the Board until the effectiveness of the
Merger and each committee of the Board, each board of directors of each
subsidiary of the Company and each committee of each such board shall have at
least one member who is not a Parent Insider.
Parent has informed the Company that it will choose the Parent Designees
from the list of persons set forth in the following table. The following table
sets forth the name, citizenship, present principal occupation or employment and
five-year employment history for each of the persons who may be designated by
Parent as the Parent Designees. The business address of each such person is
Vivendi, 42, Avenue de Friedland, 75380 Paris Cedex 08, France.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY; DIRECTORSHIPS
- ------------------------------------ ------------------------------------------------------------
<S> <C> <C>
Henri Proglio....................... Senior Executive Vice President of Parent
Citizenship: France
Denis Gasquet....................... President and CEO of Purchaser and CEO of CGEA
Citizenship: France
Michel Gourvennec................... Vice President of Purchaser and President and CEO of Montenay
Citizenship: France International Corp.
</TABLE>
Parent has advised the Company that to the best knowledge of Parent, none of
the Parent Designees currently is a director of, or holds any position with the
Company, and except as disclosed in the Offer to Purchase, none of the Parent
Designees beneficially owns any securities (or rights to acquire any securities)
of the Company or has been involved in any transactions with the Company or any
of its directors, executive officers or affiliates that are required to be
disclosed pursuant to the rules of the Securities and Exchange Commission (the
"SEC"), except as may be disclosed in the Offer to Purchase. Parent has also
informed the Company that certain Parent Designees and/or their respective
associates may also be directors or officers of other companies and
organizations that have engaged in transactions with the Company or its
subsidiaries in the ordinary course of business since January 1, 1998, and that
Parent believes that the interest of such persons in such transactions is not of
material significance. None of the Parent Designees has any family relationship
with any director or executive officer of the Company.
Parent has advised the Company that each of the persons listed in the table
above has consented to act as a director, and that none of such persons has
during the last five years been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was, or is, subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws or is
involved in any other legal proceeding which is required to be disclosed under
Item 401(f) of Regulation S-K promulgated by the SEC.
I-2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
CURRENT MEMBERS OF THE BOARD OF DIRECTORS
The names of the Company's current directors, their ages as of April 2, 1999
and certain other information about them are set forth below. As indicated
above, some of the current directors may resign promptly following the purchase
of Shares by Purchaser pursuant to the Offer.
<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE DIRECTOR SINCE POSITION WITH THE COMPANY
- ------------------------------------------- --- ------------------ -------------------------------------------
<S> <C> <C> <C>
Joseph P. Tate............................. 55 July 1992 Chairman and Director (Class III)
G. William Dietrich........................ 53 September 1994 President, Chief Executive Officer and
Director (Class II)
Francis J. Podvin(1)....................... 57 July 1992 Director (Class II)
Donald Taylor(1)(2)........................ 71 March 1996 Director (Class II)
Walter G. Winding(1)(2).................... 57 March 1996 Director (Class III)
Warner C Frazier (1)(2).................... 66 May 1997 Director (Class I)
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Joseph P. Tate is a co-founder of the Company. Mr. Tate has more than 30
years of experience in the solid waste services industry. In 1967, Mr. Tate
founded the "Valley Group" of companies that was part of the original
consolidation which created the Company in 1993 (the "Consolidation") and, prior
to the Consolidation, was a shareholder, officer and director of each of these
companies. Since the Consolidation he has continued to serve in various
executive capacities with certain of the Company's subsidiaries. From January
1993 until August 1994, Mr. Tate served as Chief Executive Officer of the
Company. Mr. Tate has been a member of the Board since the Company's original
incorporation in July 1992, serves as a member of Class III of the Board, with a
term through the Company's 2002 annual shareholders meeting, and has been
Chairman of the Board of the Company since January 1993.
G. William Dietrich joined the Company in February 1994 as Vice
President-Solid Waste and was promoted to President and Chief Operating Officer
in September 1994, with management responsibility for all of the Company's
operations. Mr. Dietrich was promoted to President and Chief Executive Officer
in November 1995. Prior to his employment by the Company, Mr. Dietrich was
employed for over two and one-half years by Browning-Ferris Industries, Inc.
("BFI") (a national solid waste company), as a divisional vice president
responsible for BFI's solid waste collection, transportation and disposal
operations in Eastern and Northern Ontario. Prior thereto Mr. Dietrich was a
district manager for Laidlaw Waste Systems, Inc. (a national solid waste
company) for three years with principal responsibility for Laidlaw's solid waste
operations in a substantial portion of the Northeastern United States. Mr.
Dietrich has been a director of the Company since September 1994 and serves as a
member of Class II of the Board, with a term through the Company's 2001 annual
shareholders meeting.
Francis J. Podvin has been a principal in the law firm of Nash, Podvin,
Tuchscherer, Huttenburg, Weymouth & Kryshak, S.C., Wisconsin Rapids, Wisconsin
since 1965, currently serving as its President, and specializes in business
combinations, banking and corporate finance. Mr. Podvin has been a director of
the Company since the Company's original incorporation in July 1992 and serves
as a member of Class II of the Board, with a term through the Company's 2001
annual shareholders meeting.
Donald Taylor has been a principal in Sullivan Associates (specialists in
board of directors searches), Milwaukee, Wisconsin, since 1992. Mr. Taylor,
served as Managing Director of U.S.A. Anatar Investments, Ltd. (a venture
capital firm) from 1989 to 1992, and prior thereto as Chairman and Chief
Executive Officer of Rexnord, Inc. (a manufacturer of power transmissions
equipment), Milwaukee, Wisconsin. Mr. Taylor has been a director of the Company
since March, 1996 and serves as a member of Class II of the Board, with a term
through the Company's 2001 annual shareholders meeting.
I-3
<PAGE>
Walter G. Winding has been the owner and Chief Executive Officer of Winding
and Company (business consultants for closely-held companies), Hartland,
Wisconsin, since 1995. From January 1994 to January 1996, Mr. Winding was Senior
Vice President of HM Graphics Inc. (commercial printing company), West Allis,
Wisconsin. For six years prior thereto, Mr. Winding served as President and
Chief Executive Officer of Schweiger Industries, Inc. (furniture manufacturer),
Jefferson, Wisconsin, and prior thereto was Schweiger's Vice
President-Administration for four years. Prior thereto, Mr. Winding served in
various management positions with Jos. Schlitz Brewing Company (brewery and beer
distributor), Milwaukee, Wisconsin. Mr. Winding has been a director of the
Company since March 1996 and serves as a member of Class III of the Board, with
a term through the Company's 2002 annual shareholders meeting
Warner C. Frazier has been the Chairman and Chief Executive Officer of
Simplicity Manufacturing, Inc. (a manufacturer of lawn and garden power
equipment), Port Washington, Wisconsin, since 1983, and also served as President
of that firm from 1980 to 1996 and as Vice President of Marketing from 1976 to
1980. Prior thereto, Mr. Frazier served in various management positions with
Allis-Chalmers in Milwaukee, Wisconsin, Los Angeles, California, and Seattle,
Washington. Mr. Frazier serves as a member of Class I of the Board, with a term
through the Company's 2000 annual shareholders meeting.
There are no family relationships among any of the directors or executive
officers of the Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board has established two standing committees, the Audit Committee and
the Compensation Committee, to exercise certain of the Board's functions and to
assist the Board in the discharge of its responsibilities. The Board as a whole
nominates directors for election and will consider nominees recommended in
writing by shareholders, together with appropriate background data, if such
recommendations are made in accordance with the Company's By-Laws.
During 1998, 12 meetings of the Board were held.
The Audit Committee's principal functions are to recommend annually a firm
of independent certified public accountants to serve as the Company's auditor,
to meet with and review reports of the Company's auditor, approve the audit fees
payable to the auditors, to recommend to the Board such actions within the scope
of its authority as it deems appropriate, and to approve related party
transactions. The Audit Committee currently consists entirely of independent
directors, including Donald Taylor (Chairman), Walter G. Winding and Warner C.
Frazier. The Audit Committee met twice in 1998.
The Compensation Committee, which met four times in 1998, is responsible for
reviewing and approving the compensation, bonuses, and benefits of officers and
other key employees of the Company and its subsidiaries and the administration
of the Company's 1993 Incentive Stock Option Plan, 1996 Equity Incentive Plan
and 1998 Broad-Based Stock Option Plan. The Compensation Committee currently
consists entirely of independent directors, including Francis J. Podvin
(Chairman), Donald Taylor, Walter G. Winding, and Warner C. Frazier.
Under the Company's director compensation policy, each independent director
receives an annual retainer fee of $16,000, plus $500 for attending each
committee meeting or Board meeting, in addition to reimbursement of
out-of-pocket expenses. The Chairman of the Compensation Committee of the Board
receives an additional annual retainer fee of $1,000.
I-4
<PAGE>
In addition, under the Company's 1996 Equity Incentive Plan (the "1996
Plan"), on the effective date of the Company's initial public offering (March 7,
1996), each then serving independent director was automatically granted
non-qualified stock options under the 1996 Plan to purchase 10,000 shares of
Common Stock at a per share exercise price equal to the initial public offering
price of $11.50 per share. Each new independent director joining the Board will
automatically receive an initial non-qualified stock option to purchase 10,000
shares of Common Stock exercisable at the closing sale price of the Common Stock
on the date of grant. Each independent director's initial option grant will vest
ratably over an approximate three-year period, provided that the independent
director continues to serve as a member of the Board at the end of each vesting
period with respect to the increment then vesting. The 1996 Plan also provides
that, at the time of each annual meeting, each then serving and continuing
independent director will receive automatically an additional non-qualified
stock option to purchase 2,500 shares of Common Stock at an exercise price equal
to the closing sale price of the Common Stock on the date of grant. These annual
option grants will vest in full within six months form the date of grant. The
1996 Plan also authorizes the Board to make special option grants to independent
directors. A special grant of options to purchase 15,000 shares at an exercise
price equal to the closing sale price of the Common Stock on the date of grant
was made to independent directors in November 1998. Under the terms of the
special option grant, the options were 50% vested immediately upon grant with
the balance vesting at the rate of 6.25% per quarter thereafter. Notwithstanding
the aforementioned vesting provisions, all outstanding options granted to
independent directors under the 1996 Plan will vest immediately upon a change in
control, or the director's death or disability. All options granted to
independent directors under the 1996 Plan will expire upon the earlier to occur
of ten years from the grant or one year from the independent director ceasing to
hold such position.
To further support the Company's philosophy of maintaining a strong link
between shareholder and management interests, the Company has amended its
By-Laws to expand the stock ownership requirements for independent directors.
Each independent director is required to purchase (over a five-year period of
time) and hold directly or through one or more affiliates, investments in
Company Common Stock valued at three times their annual retainer. In addition,
the Board has directed the Compensation Committee to establish ownership
guidelines for the Company's executive officers.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information concerning the executive officers of
the Company as of April 2, 1998:
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
G. William Dietrich.................................. 53 President and Chief Executive Officer
George K. Farr....................................... 40 Chief Financial Officer and Treasurer
Peter J. Ruud........................................ 45 Senior Vice President and Corporate Secretary
Scott S. Cramer...................................... 46 Vice President-General Counsel
Paul Jenks........................................... 52 Vice President--Special Projects
Philip J. Auld....................................... 46 Regional Vice President
James M. Dancy, Jr................................... 54 Regional Vice President
Larry E. Goswick..................................... 51 Regional Vice President
John H. King......................................... 42 Regional Vice President
</TABLE>
See "Current Members of the Board of Directors" above for background
information on Mr. Dietrich.
George K. Farr joined the Company in February 1993 as Corporate Controller,
with financial reporting responsibility for all of Superior's operating
locations. In December 1994, he was promoted to Chief Financial Officer of the
Company, with responsibility for the oversight of all of the Company's financial
matters (including investor relations). In October 1998, he also assumed
responsibility for the
I-5
<PAGE>
Company's public relations activities. Prior to joining the Company, he served
as the Market Development Controller for Sanifill, Inc. (a solid waste service
company), Houston, Texas, from February 1991 to July 1992, where he was
responsible for supervising the financial due diligence process and subsequent
integration of Sanifill's major acquisitions. Prior thereto, he held various
financial management positions, including Executive Vice President-Finance and
Administration, at BancPlus Savings Association (a savings and loan
institution), Houston, Texas, for five years.
Peter J. Ruud joined the Company in September 1993 as Vice President-General
Counsel and Corporate Secretary, with responsibility for all of the Company's
legal matters. In November 1995, Mr. Ruud also assumed oversight responsibility
for the Company's human resources and health and safety functions. In August
1997, Mr. Ruud was promoted to Vice President-Administration and Corporate
Secretary with responsibilities for the Company's human resources and health and
safety functions, public relations, governmental affairs and corporate
governance. In October 1998, he was promoted to Senior Vice-President and
Corporate Secretary. Prior to joining the Company, Mr. Ruud was in private
practice with the law firm of Davis & Kuelthau, S.C., Milwaukee, Wisconsin,
since 1978, specializing in environmental and corporate law and regulatory
compliance. Mr. Ruud also served as a member of the firm's managing Board of
Directors. While a shareholder of Davis & Kuelthau, S.C., Mr. Ruud was actively
involved in the formation of the Company and the Consolidation.
Scott S. Cramer joined the Company in July 1997 as Vice President-General
Counsel, with responsibility for all of the Company's legal matters. Prior to
joining the Company, Mr. Cramer served in various legal capacities for more that
13 years with BFI. Most recently Mr. Cramer was Senior Corporate Counsel to BFI.
Mr. Cramer also was European Regional Counsel, Vice President and Director of
Legal Affairs as well as Corporate Secretary for Browning Ferris Industries
Europe, Inc. in Utrecht, The Netherlands from July 1989 to January 1993. Prior
to joining BFI, Mr. Cramer was counsel to Pennzoil Company which followed his
tenure in private practice.
Paul Jenks joined the Company in October 1998 as Vice President-Special
Projects responsible for a variety of special assignments including the
development and supervision of a transition team which assists in the
integration of the Company's acquisitions. Prior to joining the Company, Mr.
Jenks was employed by Waste Management, Inc. (a national solid waste company)
("WMI") for 16 years in a number of operating management roles. From 1997 to
1998 he was Vice President and General Manager of WMI's East Ohio Region; from
1996 to 1997 he was Region President of WMI's Central Ohio Region; from 1994 to
1996 he was Vice President of Operations for WMI's Mideast Region, and from 1987
to 1994 he was Division President and General Manager of WMI's Columbus, Ohio
Division.
Philip J. Auld joined the Company as Regional Vice President-Eastern Region
in October 1998, with management responsibility for all solid waste operations
in the Company's eastern region. Prior to his employment by the Company, Mr.
Auld was employed for over 10 years by WMI, most recently as a Region Vice
President responsible for WMI's solid waste operations in New York City. Prior
to becoming Region Vice President for New York City, Mr. Auld was a Division
President responsible for WMI's solid waste operations in several areas
including Philadelphia, Baltimore and Washington, D.C.
James M. Dancy, Jr. joined the Company in September 1998 as Regional Vice
President-Southern Region, with management responsibility for all solid waste
operations in the Company's southern region. Mr. Dancy has more than 30 years of
experience in the solid waste services industry. Prior to his employment by the
Company, Mr. Dancy was employed by WMI in several operating management
positions. From 1995 to 1998, he was Regional Vice President for a number of
WMI's Regions, including Eastern Pennsylvania and New Jersey, New York City,
Long Island and Northern New Jersey and Eastern Pennsylvania and Southern New
Jersey. From 1992 to 1995, Mr. Dancy served as WMI's Managing Director,
International Solid Waste, Western Europe; from 1990 to 1992 he was Regional
Operations Vice President for WMI's New England and Ontario Region, and from
1988 to 1990 he was General Manager of WMI's solid waste operations in Portland,
Oregon. Before he joined WMI, Mr. Dancy held a number of
I-6
<PAGE>
senior management positions for other companies in the solid waste services
industry, including Regional Vice President for Laidlaw Waste Systems, Inc. (a
national solid waste company) from 1985 to 1988, Executive Vice President and
COO for Western Waste Industries, Inc. Los Angeles, California (a regional solid
waste company) from 1983 to 1985 and Vice President of Waste Resources Corp.,
Philadelphia, Pennsylvania (a regional solid waste company) from 1967 to 1981.
Larry E. Goswick joined the Company in December 1998 as Regional Vice
President-Midwest Region, with management responsibility for all solid waste
operations in the Company's midwest region. Prior to joining the Company, Mr.
Goswick was employed by Loomis, Fargo & Company (a national security services
company) from 1995 to 1998 as Division President/Chief Operating Officer
responsible for Loomis' operations in its eight state South Central Region. From
1981 to 1995, Mr. Goswick was employed in management roles in several companies
in the solid waste services industry. Specifically, from 1989 to 1995 he was
employed as District General Manager for BFI, responsible for BFI's La Porte,
Texas and Beaumont, Texas operations; from 1987 to 1989 he served as Division
General Manager for the Denver, Colorado division of Laidlaw Waste Systems, Inc;
from 1985 to 1987 he was President of Yellow Rose, Inc., Alvarado Texas (a
regional solid waste company); and from 1981 to 1985 he was Regional Operations
Manager and District General Manager for BFI's Houston, Texas operations.
John H. King joined the Company in June 1994 as Vice President-Operations
and was promoted to the position of Operating Vice President-Special Services in
September 1994, with responsibility for managing the Company's other integrated
waste services group. In April 1997, Mr. King's area of responsibility was
expanded to include solid waste operations in the Company's central region. In
October 1998, Mr. King resumed responsibility for the Company's other integrated
waste services operations when he was appointed as Regional Vice
President-Special Services. Prior to his employment by the company, Mr. King was
employed for five years by Laidlaw Waste Systems, Inc. as Director of Operations
for its Ohio and Michigan region, with responsibility for the management of
Laidlaw's collection operations throughout that territory. For six years prior
thereto, Mr. King served in various capacities with BFI.
The officers of the Company are elected annually by the Board following the
Company's annual shareholders meeting and each officer holds office until his
successor has been duly elected and qualified or until his prior death,
resignation or removal.
I-7
<PAGE>
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for reviewing and
approving the compensation program for the Company's executive officers,
including the Chairman of the Board and the President/ Chief Executive Officer.
The philosophy underlying the Company's executive compensation program is that
executive compensation should be designed and implemented in a manner which
attracts, motivates, and retains qualified senior managers, including its
executive officers, who are committed to achieving sustainable growth in
shareholder value.
The Company's executive compensation program includes base salary, cash
bonus and stock option bonus elements. The base salary paid to each executive
officer is based upon the Committee's evaluation of various factors including
the scope of the executive's role and responsibilities, the past performance of
the individual and the Company, the executive's present and future value to the
Company, market compensation data for executives of other companies in the solid
waste industry (including most of those included in the Company's peer group for
measuring shareholder total return) and non-solid waste industry companies with
similar revenues and growth rates, and other relevant factors. Consistent with
the Company's compensation philosophy, the executive compensation program, which
includes elements of both cash bonus and stock options, is weighted towards
incentive compensation directly tied to performance goals which contribute
significantly to long-term growth in shareholder value. By including stock
options in the incentive compensation program, the Company intends to align the
interests of the participating executives with those of shareholders by
providing value to the executive through appreciation in share value.
The Company's management incentive compensation plan for 1998 included
qualifying criteria and measurement targets based upon year over year
improvement in the Company's earnings per share. These financial performance
criteria were designed and intended to directly link executive compensation to
the shareholders' interest in the creation of shareholder value through growth
of the Company's earnings. In addition, the incentive compensation plan for each
individual executive officer included non-financial criteria tied to the
executive's expected contribution to the Company's continuous improvement
programs. The Committee retained the discretion to modify or deviate from
financial performance measures where consistent with the primary objective of
long-term growth in shareholder value.
Cash bonuses and stock option grants are usually awarded by the Committee to
the named Executive Officers subsequent to the end of the Company's fiscal year.
Bonus awards are based upon the Committee's review with Mr. Dietrich of the
Company's achievement of financial performance criteria and each named Executive
Officer's achievement of his individual non-financial criteria. In some
circumstances, special stock option grants may also be awarded by the Committee
during the Company's fiscal year, for example to adjust the compensation package
of an executive officer who has been assigned additional responsibilities, to
recognize extraordinary performance related to a specific event or activity or
to otherwise promote the Company's compensation philosophy.
In November 1998, the Compensation Committee also authorized a special grant
of stock options to a broad based group of management employees. In the
Committee's judgment, stock options are critical to the Company's compensation
program's underlying philosophy of motivating managers to realize higher stock
prices for the Company's shareholders. In the Committee's view, the decline in
the Company's share price in the second half of 1998, to the extent it was
attributable to general stock market conditions rather than operating
performance, had reduced the effectiveness of outstanding stock options to
motivate and retain employees and respond to competitive pressures.
In determining the 1998 base salary of Mr. Dietrich, the Compensation
Committee considered (i) Mr. Dietrich's contribution to the Company's financial
performance in 1997 which included significant growth in both revenues and
profitability, (ii) Mr. Dietrich's critical role in the successful "follow-on"
public offering which was completed in 1997, (iii) the compensation practices of
other companies
I-8
<PAGE>
(including most of those included in the Company's peer group for measuring
shareholder total return) for executives with similar levels of responsibility,
(iv) the effort required to continue to generate significant growth in earnings
per share in light of the significant increase in the number of shares
outstanding and (v) his commitment to implementation of the Company's long-term
strategic plan. In addition, the Compensation Committee engaged the services of
an outside compensation consultant for the purpose of reviewing executive
compensation survey data.
The CEO's compensation plan for 1998 was heavily weighted to
pay-for-performance compensation. Mr. Dietrich's base salary was increased from
$236,600 for 1997 to $324,000 for 1998. The increase was intended to reflect Mr.
Dietrich's role in the Company's 1997 financial performance (specifically, the
substantial increase in earnings and significant increase in profitability
during a time of accelerating growth) and to keep the CEO's salary comparable
with compensation of executives of other companies in the solid waste industry,
including most of those in the Company's Self-Determined Peer Group Index, as
well as executives of other companies with comparable revenues and growth rates
who have similar responsibilities. The annual cash bonus incentive awarded to
Mr. Dietrich for 1998 was $276,670, based upon the earnings per share growth
qualifying criteria and measurement targets under the Company's 1998 management
incentive plan. In February 1999, Mr. Dietrich also was granted stock options
exercisable for 85,392 shares at the fair market value of the stock on the grant
date, based upon the 1998 earnings per share measurement targets under the
Company's 1998 management incentive plan. The incentive compensation awarded to
Mr. Dietrich for 1998 represented 71.2% of the maximum possible payout under his
1998 compensation plan. In addition to the stock options granted to Mr. Dietrich
under the Company's 1998 compensation plan, the Compensation Committee also
authorized a special award to Mr. Dietrich in November 1998 of stock options for
250,000 shares at the stock's fair market value on the grant date, as part of a
broad-based stock option grant to the Company's operating management intended to
provide additional incentives to successfully implement the Company's long-term
growth strategies.
Since the Company believes its stock option plans have been adopted and are
being administered in accordance with Internal Revenue Code Section 162(m), it
is the Committee's position that no further action is necessary to conform its
compensation plans to comply with the regulations proposed under Internal
Revenue Code Section 162(m) relating to the $1 million cap on executive
compensation deductibility.
BY THE COMPENSATION COMMITTEE:
Francis J. Podvin, Chairman
Donald Taylor
Walter G. Winding
Warner C. Frazier
SUMMARY COMPENSATION INFORMATION
The following table sets forth certain information concerning compensation
paid by the Company for the last three fiscal years to (i) the Company's Chief
Executive Officer, (ii) the four most highly compensated executive officers
other than the CEO who were servicing as such as of December 31, 1998 (or for
any part of the fiscal year ended December 31, 1998), and (iii) individuals who
would have been included in the group described in (ii) above, but for the fact
that the individual was not serving as an executive officer as of December 31,
1998. The persons named in this table are sometimes referred to herein as the
Named Executive Officers.
I-9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SHARES
UNDERLYING
FISCAL ANNUAL ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) GRANTED (2) COMPENSATION (3)
- -------------------------------------------------- ----------- ---------- ---------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Joseph P. Tate.................................... 1998 $ 170,000 $ 120,000 45,000 $ 5,110
Chairman 1997 $ 155,000 $ 155,000 24,495 $ 3,873
1996 $ 155,000 $ 134,816 8,300 $ 3,873
G. William Dietrich............................... 1998 $ 324,000 $ 276,670 350,000 $ 9,795
President and CEO 1997 $ 236,000 $ 307,580 180,000 $ 9,794
1996 $ 182,000 $ 285,000 10,435 $ 4,184
George K. Farr.................................... 1998 $ 180,000 $ 115,279 250,000 $ 3,112
Chief Financial Officer and Treasurer 1997 $ 150,000 $ 150,000 146,530 $ 2,705
1996 $ 135,000 $ 101,000 5,739 $ 2,665
Gary Blacktopp.................................... 1998 $ 170,000 $ 108,875 34,449 $ 6,780
Senior Vice President--Operations(4) 1997 $ 153,482 $ 128,426 101,558 $ 4,193
John H. King...................................... 1998 $ 135,200 $ 69,270 32,613 $ 2,951
Regional Vice President--Special Services
Scott S. Cramer................................... 1998 $ 125,000 $ 64,044 30,687 $ 696
Vice President--General Counsel
</TABLE>
- ------------------------
(1) The value of perquisites and other personal benefits received by any Named
Executive Officer did not exceed the lesser of $50,000 or 10% of the Named
Executive Officer's salary and bonus. Annual bonus is reflected in the year
earned, even though it may have been paid in the subsequent year.
(2) Options are reflected in the year of grant, even though they may have been
based upon performance in the year preceding grant. See "Stock Options"
below.
(3) The majority of other compensation is Company contributions to the Company's
401(k) Plan. Also includes life insurance premiums paid by the Company on
executive group policy insurance in excess of $50,000 payable to the Named
Executive Officers or their respective families. 1998 and 1997 includes
$3,851 and $1,790 respectively of club dues for G. William Dietrich. 1997
also includes $3,187 imputed interest for G. William Dietrich, see "Certain
Transactions." 1998 includes $2,552 of personal airfare reimbursed to Gary
Blacktopp.
(4) Mr. Blacktopp's title was Senior Vice President-Operations until October
1998 when he became Vice President-Maintenance.
I-10
<PAGE>
STOCK OPTIONS
OPTION GRANTS. The following table sets forth certain information with
respect to stock options granted during 1998 to each of the Named Executive
Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SHARES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM (3)
OPTIONS EMPLOYEES PRICE PER EXPIRATION ----------------------------
NAME GRANTED (1) IN 1998 SHARE (2) DATE (7) 5% 10%
- -------------------------------- ----------- ----------- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tate.................. 30,000 1.85% $ 28.4625 2/24/03(4) $ 136,839 $ 396,283
15,000 .92% $ 18.375 11/24/08(5) $ 173,339 $ 439,283
G. William Dietrich............. 100,000 6.16% $ 25.875 2/24/08(4) $ 1,627,265 $ 4,123,809
250,000 15.40% $ 18.375 11/24/08(5) $ 2,888,985 $ 7,321,254
George K. Farr.................. 50,000 3.08% $ 25.875 2/24/08(4) $ 813,632 $ 2,061,904
200,000 12.32% $ 18.375 11/24/08(5) $ 2,311,188 $ 5,857,004
Gary Blacktopp.................. 4,449 .27% $ 25.875 2/24/08(4) $ 72,397 $ 183,468
30,000 1.85% $ 18.375 11/24/08(6) $ 346,678 $ 878,551
John King....................... 2,613 .16% $ 25.875 2/24/08(4) $ 42,250 $ 107,755
30,000 1.85% $ 18.375 11/24/08(6) $ 346,678 $ 878,551
Scott S. Cramer................. 687 .04% $ 25.875 2/24/08(4) $ 11,179 $ 28,331
30,000 1.85% $ 18.375 11/24/08(6) $ 346,678 $ 878,551
All Named Executive Officers as
a group (8)................... 742,749 45.75% $ 20.586 Various $ 9,117,108 $ 23,154,744
All Shareholders................ 30,138,156(9) N/A N/A N/A $ 348,274,685(9) $ 882,596,432(9)
</TABLE>
- --------------------------
(1) Includes nonqualified stock options and incentive stock options granted
under the Company's 1996 Equity Incentive Plan.
(2) Exercise price is equal to the market value of the Common Stock on the date
of grant (except for the 30,000 share option grant to Mr. Tate which expires
2/24/03 for which the exercise price is 110% of market value on the date of
grant).
(3) The potential realizable values set forth under the columns represent the
difference between the stated option exercise price and the market value of
the Common Stock based on certain assumed rates of stock price appreciation
from the grant price and assuming that the options are exercised on their
stated expiration date; the potential realizable values set forth do not
take into account applicable tax and expense payments which may be
associated with such option exercises. Actual realizable value, if any, will
be dependent on the future stock price of the Common Stock on the actual
date of exercise, which may be earlier than the stated expiration date. The
5% and 10% assumed rates of stock price appreciation over the ten-year
exercise period of the options used in the table above are mandated by rules
of the SEC and do not represent the Company's estimate or projection of the
future price of the Common Stock on any date. There can be no assurance that
the stock price appreciation rates for the Common Stock assumed for purposes
of this table will actually be achieved.
(4) The stock options vest at the rate of 25% after the first 12 months after
grant and 6.25% per quarter thereafter.
(5) 50% of the options vested immediately upon grant, the balance vest at the
rate of 6.25% per quarter.
(6) 25% of the options vested immediately upon grant, the balance vest at the
rate of 6.25% per quarter.
(7) Although not a provision of the 1996 Plan, all option agreements evidencing
option grants made under the 1996 Plan have historically included, and are
expected to continue to include, a provision allowing the Board to
accelerate the vesting of all outstanding options represented thereby upon
the occurrence of a change in control of the Company. Under the terms of
their respective employment agreement or KEESA, the vesting of options
grated to Messrs. Tate, Dietrich, Farr, Blacktopp, King and Cramer is
automatically accelerated upon the
I-11
<PAGE>
occurrence of a change in control of the Company (as defined in the
applicable employment agreement or KEESA).
(8) This row represents the total number of shares granted in 1998 to all Named
Executive Officers and the potential realizable value of all such options at
assumed annual rates of stock price appreciation as described in footnote
(3) to the table.
(9) These dollar values represent the potential realizable value to all
shareholders as a group with respect to all 30,138,156 shares outstanding as
of November 24, 1998, the last grant date of options to Named Executive
Officers during 1998, based on the difference between the fair market value
of all shares outstanding on November 24, 1998 and the market value of the
Common Stock based on certain assumed rates of stock price appreciation as
described in footnote (3) to the table.
OPTION VALUES; OPTION EXERCISES. The following table sets forth the
aggregate value of unexercised options at December 31, 1998, held by each of the
Named Executive Officers and information regarding option exercises during 1998
by each of the Named Executive Officers.
1998 OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END (2) AT FISCAL YEAR END (3)
-------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ --------------- ----------- ----------- ------------- ------------ -------------
Joseph P. Tate...................... 0 $ 0 23,922 53,873 $ 54,952 $ 31,884
G. William Dietrich................. 15,149 $ 280,976 402,024 348,262 $ 2,486,646 $ 238,861
George K. Farr...................... 0 $ 0 233,051 252,968 $ 1,138,138 $ 184,111
Gary Blacktopp...................... 0 $ 0 65,300 112,881 $ 136,480 $ 93,010
John King........................... 0 $ 0 42,411 44,275 $ 262,560 $ 94,125
Scott Cramer........................ 0 $ 0 23,125 57,562 $ 12,656 $ 37,969
</TABLE>
- ------------------------
(1) The value realized is the difference between the gross proceeds from sale of
the acquired shares less the exercise price paid to acquire the shares.
(2) Includes nonqualified stock options and incentive stock options granted
under the Company's 1993 Incentive Stock Option Plan (the "1993 Plan") and
the 1996 Plan with prices equal to the market value of the Common Stock on
the date of grant (except for options granted to Mr. Tate for which the
exercise price is 110% of market value on the date of grants). The stock
options have varying vesting schedules with some options partially vesting
immediately upon grant, but generally vest at the rate of 25% after the
first 12 months after grant and 6.25% per quarter thereafter. As provided in
the 1993 Plan and as historically provided in option agreements evidencing
options under the 1996 Plan, the Board may accelerate the vesting of all
outstanding options under the 1993 Plan and 1996 Plan upon the occurrence of
a change in control of the Company. Under the terms of their respective
employment agreements or KEESAs, the vesting of options granted to Messrs.
Tate, Dietrich, Farr, Blacktopp, King and Cramer is automatically
accelerated upon the occurrence of a change in control of the Company (as
defined in the applicable employment agreement or KEESA).
(3) The dollar values were calculated by determining the difference between the
fair market value of the underlying Common Stock and the various applicable
exercise prices of the Named Executive Officers' outstanding options at the
end of 1998. The last reported sale price of the Company's Common Stock on
The Nasdaq Stock Market on December 31, 1998 was $20.0625 per share.
I-12
<PAGE>
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
The Company has entered into new employment agreements with Messrs.
Dietrich, Farr and Ruud and anticipates entering into new employment agreements
with certain other members of the Company's senior management team, including
Messrs. King and Cramer, prior to the Acceptance Date. These agreements are
described in Item 3(b) of the Schedule 14D-9 accompanying this Information
Statement and are incorporated herein by reference.
The Company has existing employment agreements with Messrs. Blacktopp, King
and Cramer, which, in the case of Messrs. King and Cramer, will be replaced with
the new agreements discussed above. These existing employment agreements provide
for two-year terms, which are extended automatically on each anniversary date
for one additional year, unless either party gives notice of nonrenewal. The
Company may also terminate the employment agreements at any time for "cause" as
defined in the employment agreements. If the Company elects to terminate Messrs.
Blacktopp's, King's or Cramer's employment, other than for cause or his death or
disability, such individual is entitled to receive a severance payment equal to
the unpaid balance of the employee's base salary through the expiration of the
initial term or the renewal term within which termination takes place, subject
to the change of control provisions described below.
If the employment of any of Messrs. Blacktopp, King or Cramer is terminated
as a result of his death, his estate or representative is entitled to receive an
amount equal to the officer's base salary for the month in which he dies. If the
employment of Messrs. Blacktopp, King or Cramer is terminated as a result of his
disability, such officer is entitled to receive his base salary through the date
of termination.
Mr. Dietrich is subject to a noncompetition agreement which prohibits him
during the term of his employment and for one year thereafter from competing
with the Company within 50 miles of any Company facility or from using or
disclosing confidential information of the Company. Messrs. Farr, Cramer, King
and Blacktopp are also subject to noncompetition agreements substantially
identical to Mr. Dietrich's, except that the noncompetition term extends for two
years following the termination of their respective employment with the Company.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
The Company has KEESAs with Messrs. Tate, Dietrich and Farr, as well as
employment agreements with Messrs. Blacktopp, King and Cramer that contain
change in control provisions. Each of these agreements is described in Item 3(b)
of the Schedule 14D-9 accompanying this Information Statement and is
incorporated herein by reference.
AMENDMENT TO 1999 MANAGEMENT INCENTIVE PLAN
Pursuant to the Merger Agreement, the Company has agreed to amend its 1999
Management Incentive Plan. This amendment is described in Item 3(b) of the
Schedule 14D-9 accompanying this Information Statement and is incorporated
herein by reference.
LONG-TERM PERFORMANCE AWARD PLAN
In connection with the transactions contemplated by the Merger Agreement,
the Company established the Long-Term Performance Award Plan. This plan is
described in Item 3(b) of the Schedule 14D-9 accompanying this Information
Statement and is incorporated herein by reference.
CERTAIN TRANSACTIONS
The Company loaned G. William Dietrich $75,000 in June 1994. The loan is
represented by an unsecured promissory note, with interest accruing from June
29, 1997, and payable annually at the Company's average annual borrowing rate as
adjusted from time to time and principal payable in one lump
I-13
<PAGE>
sum payment 90 days after Mr. Dietrich terminates employment with the Company
for any reason. The principal amount outstanding at December 31, 1998 was
$75,000. All accrued interest as of December 31, 1998 had been paid in full. The
Company loaned G. William Dietrich $150,000 in March 1999. The loan is
represented by an unsecured promissory note, with principal and interest, at the
Company's average borrowing rate, payable in one lump sum on April 30, 1999.
In 1998, the Company purchased public relations, employee communications and
graphics arts services from Whole Hog Productions, Inc. Ms. Jenifer Ortwein, a
principal shareholder of Whole Hog Productions, Inc., married Joseph P. Tate,
the Chairman and a director of the Company, in February 1999. The Company paid
Whole Hog Productions, Inc., a total of $25,603 for services purchased by the
Company in 1998. The Company believes that the purchase of service form Whole
Hog Productions, Inc. was on terms no less favorable to the Company than could
be obtained from an unaffiliated third party.
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
with respect to the beneficial ownership of Common Stock by (a) all persons or
entities known to the Company to be the beneficial owner of more than five
percent or more of the Common Stock; (b) each Named Executive Officer; (c) each
of the current directors and nominees; and (d) all executive officers and
directors as a group. Unless otherwise noted, each person has sole investment
and voting power with respect to the shares indicated (subject to applicable
marital property laws).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
<S> <C> <C>
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------------------------------------------ ---------- -----------
Joseph P. Tate(1)(2)(4)................................................. 2,591,184 8.0%
G. William Dietrich(3)(4)............................................... 488,876 1.5
George K. Farr(4)....................................................... 292,452 *
Francis J. Podvin(4).................................................... 45,306 *
Donald Taylor(4)........................................................ 24,875 *
Walter G. Winding(4).................................................... 24,875 *
Warner C. Frazier(4).................................................... 19,142 *
Gary Blacktopp(4)....................................................... 83,652 *
John King(4)............................................................ 47,983 *
Scott Cramer(4)......................................................... 33,538 *
Paul M. Burke(5)........................................................ 1,915,658 5.9
All executive officers and directors as a group (10 persons)(4)......... 3,651,883 10.9
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Address is c/o 125 South 84(th) Street, Suite 200, Milwaukee, WI 53214.
(2) The listed shares include 2,397,431 shares owned by two trusts established
by Mr. Tate, in which Mr. Tate acts as trustee.
(3) The listed shares include 1,000 shares owned by Mr. Dietrich's spouse.
(4) The shares listed for Messrs. Tate, Dietrich, Farr, Blacktopp, Cramer and
King include 38,753, 487,676, 292,352, 81,152, 33,338 and 47,983 shares,
respectively, subject to acquisition upon the exercise of stock options
currently exercisable or exercisable within 60 days of the Record Date. The
shares listed for Messrs. Podvin, Taylor, Winding and Frazier include
24,375, 24,375, 24,375, and 18,542 shares, respectively, subject to
acquisition upon the exercise of stock options currently exercisable or
exercisable within 60 days of the Record Date. The shares listed for all
executive
I-14
<PAGE>
officers and directors as a group include 1,067,921 shares subject to
acquisition upon exercise of stock options currently exercisable or
exercisable within 60 days of the Record Date.
(5) Address is 2806 Juniper Hill Court, Louisville, Kentucky 40206. The
information with respect to Mr. Burke is as of February 12, 1999, as
reported by Mr. Burke in his Schedule 13G/A dated February 10, 1999 except
to the extent otherwise known to the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports concerning their ownership and
changes of ownership of Company stock and furnish copies of such forms to the
Company. Based solely upon information provided to the Company by individual
directors and executive officers, the Company believes that during the fiscal
year ended December 31, 1998 all of its directors and executive officers
complied with the Section 16(a) filing requirements, except that Form 3s to
report initial beneficial ownership of securities by Dale O. Nolder and Gary D.
Blacktopp were inadvertently filed one day late and a Form 5 to report an option
grant in November 1998 was inadvertently not filed by Joseph P. Tate.
STOCK PERFORMANCE INFORMATION
The following performance graph compares the cumulative total return of the
Company's Common Stock to the cumulative total return of (i) the Standard and
Poor's 500 Composite Index and (ii) an index of peer group issuers selected in
good faith (the "Self-Determined Peer Group Index"). The Self-Determined Peer
Group Index includes Allied Waste Industries, Inc., Browning-Ferris Industries,
Inc., Waste Management, Inc., Casella Waste Systems, Inc., Waste Industries and
Republic Services, Inc. American Waste Services, Inc. and USA Waste Services,
Inc. have been omitted from this year's Peer Group because they have merged with
USA Waste Services, Inc. and Waste Management, Inc., respectively. The
comparison in the graph assumes the investment of $100 in the Company's Common
Stock, and Standard and Poor's 500 Composite Index, and the Self-Determined Peer
Group Index on March 8, 1996 (first trading day following the Company's initial
public offering), and the reinvestment of all dividends. The source of the
performance graph is the Center for Research in Security Prices at the
University of Chicago Graduate School of Business.
I-15
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SUPERIOR SERVICES,
INC. S&P 500 COMPOSITE INDEX COMPOSITE PEER GROUP INDEX
<S> <C> <C> <C>
12/31/94 - $70 $84
12/31/95 - $97 $94
3/8/96 $100 $100 $100
12/31/96 $154 $119 $100
12/31/97 $218 $159 $141
12/31/98 $151 $205 $142
</TABLE>
<TABLE>
<CAPTION>
12/31/94 12/31/95 3/8/96 12/31/96 12/31/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Superior Services, Inc........................................... $ 100 $ 154 $ 218
--- ---
S&P 500 Composite Index.......................................... $ 70 $ 97 $ 100 $ 119 $ 159
Self-Determined Peer Group Index................................. $ 84 $ 94 $ 100 $ 100 $ 141
<CAPTION>
12/31/98
-----------
<S> <C>
Superior Services, Inc........................................... $ 151
S&P 500 Composite Index.......................................... $ 205
Self-Determined Peer Group Index................................. $ 142
</TABLE>
I-16
<PAGE>
[See Annex A to the Attached Schedule 14D-9]
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
Superior Services, Inc.
One Honey Creek Corporate Center
125 South 84th Street, Suite 200
Milwaukee, WI 53214
(414) 479-7800
FAX (414) 479-7400
June 18, 1999
Dear Shareholders:
On behalf of the Board of Directors of Superior Services, Inc. (the
"Company"), I am pleased to inform you that on June 11, 1999 the Company entered
into a definitive Agreement and Plan of Merger (the "Merger Agreement") with
Vivendi ("Parent") and Onyx Solid Waste Acquisition Corp., an indirect
wholly-owned subsidiary of Parent ("Purchaser"), pursuant to which Purchaser has
today commenced a tender offer to purchase all of the outstanding shares (the
"Shares") of the common stock of the Company at $27.00 per share in cash (the
"Offer").
Following the successful completion of the Offer, upon approval by a
shareholder vote and receipt of all necessary state solid waste regulatory
approvals, Purchaser will be merged into the Company (the "Merger"), and all
Shares not purchased pursuant to the Offer will be converted into the right to
receive $27.00 per Share in cash without interest (except any Shares as to which
the holder has properly exercised appraisal rights).
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being filed with the Securities and Exchange Commission, including,
among other things, the opinion, dated June 11, 1999, of Robert W. Baird & Co.
Incorporated, one of the Company's financial advisors, that as of such date, the
$27.00 per Share cash consideration to be received by the holders of Shares in
the Offer and the Merger (other than Parent and its affiliates) is fair to such
holders from a financial point of view.
IN ADDITION TO THE ATTACHED SCHEDULE 14D-9, ALSO ENCLOSED IS THE OFFER TO
PURCHASE, DATED JUNE 18, 1999, TOGETHER WITH RELATED MATERIALS, INCLUDING A
LETTER OF TRANSMITTAL, TO BE USED FOR TENDERING YOUR SHARES IN THE OFFER. THESE
DOCUMENTS STATE THE TERMS AND CONDITIONS OF THE OFFER AND THE MERGER AND PROVIDE
INSTRUCTIONS AS TO HOW TO TENDER YOUR SHARES. I URGE YOU TO READ THESE DOCUMENTS
CAREFULLY IN MAKING YOUR DECISION WITH RESPECT TO TENDERING YOUR SHARES PURSUANT
TO THE OFFER.
Sincerely,
/s/ G. W. Dietrich
G. William Dietrich
President and Chief Executive Officer
<PAGE>
[See Annex A to the Attached Schedule 14D-9]
<PAGE>
Exhibit (b)
SCRIPT FOR SUPERIOR SERVICES, INC.'S
JUNE 14, 1999
ANALYST CALL
Good morning, everyone. I'm George Farr. I'm the Chief Financial Officer
for Superior Services, Inc. Joining me this morning are Bill Dietrich our
President and CEO and Peter Ruud, our Senior Vice President. Also joining us
this morning is Janet Ward, our director of investor relations.
I would like to turn it over to Bill Dietrich our president.
Thank you, George. Ladies and Gentlemen. The Company announced this
morning that we have agreed to be acquired by Vivendi, one of the world's
largest environmental services provider. The transaction will be completed in
a two-step tender offer/merger with Superior's shareholders receiving $27.00
per share in cash resulting in a transaction worth approximately $1 billion.
As a wholly-owned subsidiary of Vivendi, Superior will remain an active
participant in the solid waste industry in the United States. We plan to
continue, if not accelerate, our aggressive acquisition program with the
added support of Vivendi's access to the international financial markets. Our
focus will remain to build one of the strongest integrated waste services
companies in the United States.
The Company will retain its name and continue to be headquartered in
Milwaukee. Vivendi has insisted that the senior management remain in place.
Each of us on the call today have executed long-term employment agreements
and are very excited about the prospects for continuing to build a truly
"Superior" company.
-1-
<PAGE>
It is very important to me to report to you that we do not expect this
transaction to result in any reduction of Superior's existing employee base
nor the closing of any of its facilities. Our senior management team
throughout the organization will remain intact and their management focus
will not change. We feel that this alliance with Vivendi is the most
advantageous method to continue the growth and development of this company
while at the same time, at $27.00 per share, providing a very attractive
premium to our existing shareholders.
We will also continue to arrange for a significant portion of our own
financing in the United States, and we are looking forward to continuing to
work with our existing commercial and investment banking groups to arrange
financing for our capital needs.
We have for some time been evaluating the strategic alternatives
available to the Company given the recent significant consolidation in the
solid waste industry. We feel that there are still significant opportunities
for continued growth in the waste services industry and we want to be in a
position to take advantage of those opportunities. Given the significant
volatility in the stock market for small cap firms such as ourselves, we feel
this may be a limitation on our ability to access capital effectively in the
future to finance our growth plans. We evaluated internally a number of
alternatives including the outright sale of the Company to a domestic
competitor, use of our existing resources to finance a stock repurchase and
accessing the debt markets to finance a leveraged buyout of the firm.
We concluded that this opportunity with Vivendi offered the most
advantageous position to our stockholders, shareholders and our employees.
We will be able to accelerate our aggressive acquisition program in both
new and existing markets.
Importantly, this transaction will enable us to expand the services
provided by our existing special services operations to a broader base of
commercial and industrial customers. The cash tender offer will commence on
Friday, June 18, 1999. Upon the successful completion of the tender offer and
after receipt of all necessary state, solid waste permit approvals. Superior
will become a subsidiary of Vivendi. We expect the tender offer to conclude
in mid-July. The back-end of the transaction may take up to several months to
complete given the timing of receipt of many of the regulatory permits;
however, we do not expect any problems regarding the various regulatory
consents and approvals required.
Superior has also granted Vivendi an option to purchase newly issued
Superior shares in an amount not to exceed 19.9% of its then outstanding
common stock. Vivendi may exercise the option upon the occurrence of any
event that would entitle Vivendi to receive a termination fee under the terms
of the Merger Agreement. In addition, Vivendi is required to exercise the
option upon conclusion of the tender offer for that number of shares that
would give Vivendi control of at least 50.1% of the shareholder votes needed
to approve the second step merger.
Superior's chairman, founder and largest shareholder, Joseph P. Tate,
owning approximately 8% of Superior's shares, has entered into a shareholder
agreement with Vivendi whereby he has agreed to tender his shares into the
offer and not withdraw his shares.
-2-
<PAGE>
In conclusion, I would like to thank our financial advisors, Deutsche
Banc Alex. Brown and Robert W. Baird for their assistance in this transaction.
I'm looking forward to working with the management at Vivendi to
continue to build a first-class waste services operation in this country.
Finally, I would like to thank our numerous stockholders and market
markers for their support over the years.
<PAGE>
EXHIBIT (c)(7)
March 3, 1999
Vivendi
42, Avenue de Friedland
75008 Paris
FRANCE
Attention: Mr. Henri Proglio
Directeur General Delegue
Gentlemen:
We understand from BT Alex. Brown Incorporated ("BT Alex.
Brown"), our financial adviser, that you may be interested in pursuing a
transaction with Superior Services, Inc. (the "Company") on a mutually agreeable
basis. In connection with your possible interest in a transaction with the
Company, each party proposes to provide to the other party certain information
related to the disclosing party (herein referred to as the "Confidential
Information"). Confidential Information includes not only written information
but also information transferred orally, visually, electronically or by any
other means about, among other things, the disclosing party's properties,
customers, operations, strategies, plans, prospects, profitability, financial
condition and forecasts. Further, the fact that such information has been
delivered to either or both parties, that such a transaction is under
consideration by each or either party, that discussions or negotiations have
occurred or are occurring regarding a possible transaction involving the Company
and you, and the status of any such discussions or negotiations, are considered
Confidential Information for purposes of this Agreement. For purposes of this
Agreement, the party receiving Confidential Information hereunder (whether you,
the Company or both you and the Company) is herein called the `Recipient" and
the party providing (directly or indirectly) such Confidential Information
hereunder (whether you, the Company or both you and the Company) is herein
called the "Provider."
In consideration of the Provider furnishing the Recipient with
Confidential Information, and as a condition to such disclosure, each party
hereto agrees as follows:
1. The Confidential Information will be used by the Recipient
solely for the purpose of its evaluation of the desirability of entering into a
transaction with the Provider, and for no other purpose, including but not
limited to the furtherance of the Recipient's business or otherwise to the
Provider's detriment.
2. The Recipient shall keep all Confidential Information
secret and in strict confidence and shall not, without the prior written consent
of the Provider, disclose it to anyone except to a limited group of the
Recipient's own employees, directors, officers, agents and outside advisors
("Representatives") who are actually engaged in, and need to know such
<PAGE>
Vivendi
Attention: Mr. Henri Proglio
March 3, 1999
Page 2
Confidential Information to perform, the evaluation referred to above, each of
whom must be advised of the confidential nature of the Confidential Information
and of the terms of this Agreement, and provided, that, such Confidential
Information shall only be disclosed to the extent necessary for the Recipient's
Representatives to fulfill their responsibilities. The Recipient shall be
responsible for any breach of this Agreement by any of its Representatives.
3. Upon notice from the Provider to the Recipient (i) the
Recipient will return to the Provider the Confidential Information which is in
tangible form, including any copies which the Recipient may have made, and the
Recipient will destroy all abstracts, summaries thereof or references thereto in
its documents, and certify to the Provider that the Recipient has done so, and
(ii) neither the Recipient nor its Representatives will use any of the
Confidential Information with respect to, or in furtherance of, the Recipient's
business, any of their respective businesses, or in the business of anyone else,
whether or not in competition with the Provider, or for any other purpose
whatsoever.
4. Confidential Information includes all analyses,
compilations, forecasts, studies or other documents prepared by the Recipient or
its Representatives in connection with its evaluation of pursuing a transaction
with the Provider. Confidential Information does not include any information
which was publicly available prior to the Recipient's receipt of such
information or thereafter became publicly available (other than as a result of
disclosure by the Recipient or any of its Representatives). Information shall be
deemed "publicly available" if it becomes a matter of public knowledge or is
contained in materials available to the public or is obtained from any source
other than the Provider (or its directors, officers, employees, agents or
outside advisors, including, without limitation, BT Alex. Brown or Lazard
Freres), provided that such source is not to the Recipient's knowledge
prohibited from disclosing such information by a legal, contractual or fiduciary
obligation to the Provider and did not, to the Recipient's knowledge, obtain the
information from an entity or person prohibited from disclosing such information
by a legal, contractual or fiduciary obligation to the Provider.
5. The Recipient understands that the Provider will endeavor
to include in the Confidential Information those materials which it believes to
be reliable and relevant for the purpose of the Recipient's evaluation, but the
Provider acknowledges that neither the Recipient nor BT Alex. Brown, Lazard
Freres nor any of their respective directors, officers, employees, agents or
outside advisors makes any representation or warranty hereunder as to the
accuracy or completeness of the Confidential Information and each party agrees
that such persons shall have no liability to the other party or any of the other
party's Representatives hereunder resulting from any use of the Confidential
Information. Each party understands that the Confidential Information is not
being furnished for use in an offer or sale of securities of the Provider and is
not designed to satisfy the requirements of federal or state securities laws in
connection with any offer or sale of such securities to the Recipient.
<PAGE>
Vivendi
Attention: Mr. Henri Proglio
March 3, 1999
Page 3
6. In the event that the Recipient or any of its
Representatives is required by law to disclose any of the Confidential
Information, the Recipient will provide the Provider with prompt prior notice so
that the Provider may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement and the Recipient agrees
to cooperate (and to cause its Representatives to cooperate) with the Provider
if the Provider seeks such protective order or other appropriate remedy. In the
event that the Provider is unable to obtain such protective order or other
appropriate remedy, the Recipient will furnish only that portion of the
Confidential Information which the Recipient is advised by an opinion of counsel
is legally required, the Recipient will give the Provider written notice of the
information to be disclosed as far in advance as practicable, and the Recipient
will exercise its reasonable best efforts to obtain a protective order or other
reliable assurance, at the Provider's expense, that confidential treatment will
be accorded the Confidential Information so disclosed.
7. In consideration of the Recipient being provided
Confidential Information, without the prior written consent of the Provider, the
Recipient will not, and will not encourage or assist others to, for a period of
18 months from the date hereof (i) propose or disclose an intent to propose any
form of business combination, acquisition, restructuring, recapitalization or
other similar transaction relating to the Provider, (ii) acquire or offer, seek,
propose or agree to acquire, directly or indirectly, by purchase or otherwise,
any voting securities or assets or direct or indirect rights or options to
acquire any voting securities or assets of the Provider, (iii) make, or in any
way participate, directly or indirectly, in any "solicitation" of any "proxy" to
vote (as such terms are used in the proxy rules of the Securities and Exchange
Commission) or seek to advise or influence any person or entity with respect to
the voting of any voting securities of the Provider, (iv) form, join or in any
way participate, directly or indirectly, in a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, with
respect to any voting securities of the Provider, (v) enter into any
discussions, negotiations, arrangements or understandings with any third party
with respect to any of the foregoing, (vi) disclose any intention, plan or
arrangement inconsistent with the foregoing, (vii) otherwise act, alone or in
concert with others, directly or indirectly, to seek control of the management,
board of directors, or policies of the Provider, (viii) request the Provider,
directly or indirectly, to amend or waive any provisions of this paragraph.
8. The Recipient agrees that for a period of 18 months from
the date hereof, the Recipient will not, directly or indirectly, solicit for
employment or hire any employee of the Provider or any of its subsidiaries with
whom the Recipient has had contact or who became known to the Provider in
connection with its evaluation of a possible transaction involving the Provider;
PROVIDED that the foregoing provision will not prevent the Recipient from
employing any such person who contacts the Recipient on his or her own
initiative without any direct or indirect solicitation by, or encouragement (not
including a general solicitation of employment not specifically directed towards
employees of the Provider) from, the Recipient.
<PAGE>
Vivendi
Attention: Mr. Henri Proglio
March 3, 1999
Page 4
9. The Recipient understands and agrees that money damages
would not be a sufficient remedy for any breach of this Agreement by it or its
Representatives, and that the Provider, its agents and representatives shall be
entitled to specific performance and/or injunctive relief as a remedy for any
such breach. Such remedy shall not be deemed to be the exclusive remedy for any
such breach of this Agreement but shall be in addition to all other remedies
available at law or in equity. The Recipient further agrees that no failure or
delay by the Provider, its directors, officers, employees, agents or outside
advisors or representatives in exercising any right, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege under this Agreement.
10. Nothing in this Agreement shall impose any obligation upon
you or us to consummate a transaction or to enter into any discussion or
negotiations with respect thereto.
11. The Recipient agrees to indemnify and hold harmless the
Provider, its shareholders, directors, officers, employees and affiliates from
and against any and all loss, damage, cost or expense (including reasonable
attorney's fees and disbursements) resulting from or arising out of the breach
of any covenant or agreement made by the Recipient herein.
12. Except as otherwise provided herein, this Agreement shall
terminate two years from the date hereof.
If you are in agreement with the foregoing, please sign and
return the enclosed copy of this letter which will constitute our agreement with
respect to the subject matter of this letter as of the date first above written.
Very truly yours,
SUPERIOR SERVICES, INC.
By: /s/ George K. Farr
--------------------------------
Name
Chief Financial Officer
--------------------------------
Title
AGREED AND ACCEPTED:
VIVENDI
By: /s/ Henri Proglio
--------------------------------
Its: Directeur General
--------------------------------
<PAGE>
EXHIBIT (c)(8)
AMENDMENT NO. 1 TO CONFIDENTIALITY AGREEMENT
AMENDMENT NO. 1, dated as of June 11, 1999 (this "AMENDMENT"),
to the Confidentiality Agreement, dated as of March 3, 1999 (the "AGREEMENT"),
between SUPERIOR SERVICES, INC., a Wisconsin corporation (the "COMPANY") and
VIVENDI, a SOCIETE ANONYME organized under the laws of France ("VIVENDI").
W I T N E S S E T H:
WHEREAS, the Company, Vivendi and ONYX SOLID WASTE ACQUISITION
CORP., a Wisconsin corporation and an indirect wholly-owned subsidiary of
Vivendi ("MERGER SUB") have entered into an Agreement and Plan of Merger, dated
as of the date hereof (the "MERGER AGREEMENT"), providing for, among other
things, an Offer by Merger Sub for all the outstanding Shares of the Company
and, subsequent thereto, assuming the Offer is consummated on the terms set
forth in the Offer Documents and all other conditions to the Merger are
satisfied or waived, the Merger of Merger Sub with and into the Company with the
Company as the surviving corporation in the Merger, pursuant to which the
Company will become a wholly-owned subsidiary of Vivendi; and
WHEREAS, as a condition and inducement to each of Vivendi's
and Merger Sub's willingness to enter into the Merger Agreement, Vivendi and the
Company have entered into the Stock Option Agreement, dated as of the date
hereof (the "STOCK OPTION AGREEMENT") pursuant to which the Company has granted
Vivendi an option to purchase Option Shares (as that term is defined in the
Stock Option Agreement) under certain circumstances; and
WHEREAS, as a condition and inducement to each of Vivendi's
and Merger Sub's willingness to enter into the Merger Agreement, Joseph P. Tate
("SHAREHOLDER") has entered into a Shareholder Tender Agreement, dated as of the
date hereof (the "SHAREHOLDER TENDER AGREEMENT"), with Vivendi and Merger Sub
pursuant to which Shareholder has, among other things, agreed to tender
Shareholder's Shares (as that term is defined in the Shareholder Tender
Agreement) in the Offer and grant Merger Sub an Option (as that term is defined
in the Shareholder Tender Agreement) to purchase Shareholder's Shares under
certain circumstances; and
WHEREAS, the respective Boards of Directors of the Company and
Vivendi have approved this Amendment and authorized their duly authorized
officers to execute and deliver this Amendment; and
WHEREAS, the Company and Vivendi desire to amend the
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
<PAGE>
ARTICLE I
AMENDMENTS TO THE AGREEMENT
1.1 Section 7 of the Agreement is hereby amended as follows:
By deleting the period at the end of the paragraph and
inserting in lieu thereof, the words "; PROVIDED, HOWEVER, that the foregoing
shall not limit any of Recipient's and Merger Sub's rights under each of the
Merger Agreement, the Stock Option Agreement and the Shareholder Tender
Agreement (collectively, the "Agreements") or prohibit or otherwise restrict any
of the transactions contemplated by the Agreements, including, without
limitation, Recipient and Merger Sub's right to (a) commence and consummate each
of the Offer and the Merger pursuant to the Merger Agreement, (b) purchase
Shares pursuant to the option granted to Recipient pursuant to the Stock Option
Agreement, (c) purchase Shares pursuant to the option granted to Recipient
pursuant to the Shareholder Tender Agreement and (d) receive a proxy from
Shareholder with respect to Shareholder's Shares (as that term is defined in the
Shareholder Tender Agreement) pursuant to the Shareholder Tender Agreement.
Capitalized terms used in this Section 7 and not otherwise defined in this
Agreement shall have the respective meanings ascribed to such terms in the
Merger Agreement."
ARTICLE II
MISCELLANEOUS
2.1 DEFINITIONS. Capitalized terms used in this Amendment and not
defined herein shall have the respective meanings assigned to them in the Merger
Agreement.
2.2 ENTIRE AGREEMENT; RESTATEMENT. Other than as amended by Section 1.1
above, the Agreement shall remain in full force and effect unaffected hereby.
The Agreement, as amended by this Amendment, is hereinafter referred to as the
"Agreement", and the parties hereto hereby agree that the Agreement may be
restated to reflect the amendments provided for in this Amendment.
2.3 GOVERNING LAW AND VENUE. THIS AMENDMENT SHALL BE DEEMED TO BE MADE
IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS TO BE
PERFORMED WHOLLY IN SUCH STATE. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the Federal courts of
the United States of America located in the State of Delaware solely in respect
of the interpretation and enforcement of the provisions of this Amendment and in
respect of the transactions contemplated hereby, and hereby waive, and agree not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement hereof, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Amendment may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a Delaware State or Federal court. The parties hereby consent to and
-2-
<PAGE>
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 10.7 of the Merger Agreement or in such other manner as may be permitted
by law shall be valid and sufficient service thereof.
2.4 COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each such counterpart being deemed an original instrument, and all
such counterparts shall together constitute the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused
this Amendment to be executed as of the date first written above.
SUPERIOR SERVICES, INC.
By: /s/ G. W. Dietrich
------------------------------
Name: G. W. Dietrich
Title: President and CEO
VIVENDI
By: /s/ Henri Proglio
------------------------------
Name: Henri Proglio
Title: Directeur General
-3-
<PAGE>
EXHIBIT (c)(11)
PORTIONS OF SUPERIOR SERVICES, INC.'S PROXY STATEMENT FOR THE 1999
ANNUAL MEETING OF SHAREHOLDERS THAT ARE INCORPORATED BY REFERENCE
IN THIS SCHEDULE 14D-9
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record
Date with respect to the beneficial ownership of Common Stock by (a) all persons
or entities known to the Company to be the beneficial owner of more than five
percent or more of the Common Stock; (b) each executive officer named in the
Summary Compensation Table set forth below; (c) each of the current directors
and nominees; and (d) all executive officers and directors as a group. Unless
otherwise noted, each person has sole investment and voting power with respect
to the shares indicated (subject to applicable marital property laws).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
------------------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------ -------
<S> <C> <C>
Joseph P. Tate (1) (2) (4).................................... 2,591,184 8.0%
G. William Dietrich (3) (4)................................... 488,876 1.5
George K. Farr (4)............................................ 292,452 *
Francis J. Podvin (4)......................................... 45,306 *
Donald Taylor (4)............................................. 24,875 *
Walter G. Winding (4)......................................... 24,875 *
Warner C. Frazier (4)......................................... 19,142 *
Gary Blacktopp (4)............................................ 83,652 *
John King (4)................................................. 47,983 *
Scott Cramer (4).............................................. 33,538 *
Paul M. Burke (5)............................................. 1,915,658 5.9
All executive officers and directors as a group (10
persons) (4).................................................. 3,651,883 10.9
</TABLE>
- ------------
*Indicates less than 1%.
(1) Address is c/o 125 South 84th Street, Suite 200, Milwaukee, WI 53214.
(2) The listed shares include 2,397,431 shares owned by two trusts established
by Mr. Tate, in which Mr. Tate acts as trustee.
(3) The listed shares include 1,000 shares owned by Mr. Dietrich's spouse.
(4) The shares listed for Messrs. Tate, Dietrich, Farr, Blacktopp, Cramer and
King include 38,753, 487,676, 292,352, 81,152, 33,338 and 47,983 shares,
respectively, subject to acquisition upon the exercise of stock options
currently exercisable or exercisable within 60 days of the Record Date. The
shares listed for Messrs. Podvin, Taylor, Winding and Frazier include
24,375, 24,375, 24,375, and 18,542 shares, respectively, subject to
acquisition upon the exercise of stock options currently exercisable or
exercisable within 60 days of the Record Date. The shares listed for all
executive officers and directors as a group include 1,067,921 shares
subject to acquisition upon exercise of stock options currently exercisable
or exercisable within 60 days of the Record Date.
<PAGE>
(5) Address is 2806 Juniper Hill Court, Louisville, Kentucky 40206. The
information with respect to Mr. Burke is as of February 12, 1999, as
reported by Mr. Burke in his Schedule 13G/A dated February 10, 1999 except
to the extent otherwise known to the Company.
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for reviewing
and approving the compensation program for the Company's executive officers,
including the Chairman of the Board and the President/Chief Executive Officer.
The philosophy underlying the Company's executive compensation program is that
executive compensation should be designed and implemented in a manner which
attracts, motivates, and retains qualified senior managers, including its
executive officers, who are committed to achieving sustainable growth in
shareholder value.
The Company's executive compensation program includes base salary, cash
bonus and stock option bonus elements. The base salary paid to each executive
officer is based upon the Committee's evaluation of various factors including
the scope of the executive's role and responsibilities, the past performance of
the individual and the Company, the executive's present and future value to the
Company, market compensation data for executives of other companies in the solid
waste industry (including most of those included in the Company's peer group for
measuring shareholder total return) and non-solid waste industry companies with
similar revenues and growth rates, and other relevant factors. Consistent with
the Company's compensation philosophy, the executive compensation program, which
includes elements of both cash bonus and stock options, is weighted towards
incentive compensation directly tied to performance goals which contribute
significantly to long-term growth in shareholder value. By including stock
options in the incentive compensation program, the Company intends to align the
interests of the participating executives with those of shareholders by
providing value to the executive through appreciation in share value.
The Company's management incentive compensation plan for 1998 included
qualifying criteria and measurement targets based upon year over year
improvement in the Company's earnings per share. These financial performance
criteria were designed and intended to directly link executive compensation to
the shareholders' interest in the creation of shareholder value through growth
of the Company's earnings. In addition, the incentive compensation plan for each
individual executive officer included non-financial criteria tied to the
executive's expected contribution to the Company's continuous improvement
programs. The Committee retained the discretion to modify or deviate from
financial performance measures where consistent with the primary objective of
long-term growth in shareholder value.
Cash bonuses and stock option grants are usually awarded by the
Committee to the named Executive Officers subsequent to the end of the Company's
fiscal year. Bonus awards are based upon the Committee's review with Mr.
Dietrich of the Company's achievement of financial performance criteria and each
named Executive Officer's achievement of his individual non-financial criteria.
In some circumstances, special stock option grants may also be awarded by the
Committee during the Company's fiscal year, for example to adjust the
compensation package of an executive officer who has been assigned additional
2
<PAGE>
responsibilities, to recognize extraordinary performance related to a specific
event or activity or to otherwise promote the Company's compensation philosophy.
In November 1998, the Compensation Committee also authorized a special
grant of stock options to a broad based group of management employees. In the
Committee's judgment, stock options are critical to the Company's compensation
program's underlying philosophy of motivating managers to realize higher stock
prices for the Company's shareholders. In the Committee's view, the decline in
the Company's share price in the second half of 1998, to the extent it was
attributable to general stock market conditions rather than operating
performance, had reduced the effectiveness of outstanding stock options to
motivate and retain employees and respond to competitive pressures.
In determining the 1998 base salary of Mr. Dietrich, the Compensation
Committee considered (i) Mr. Dietrich's contribution to the Company's financial
performance in 1997 which included significant growth in both revenues and
profitability, (ii) Mr. Dietrich's critical role in the successful "follow-on"
public offering which was completed in 1997, (iii) the compensation practices of
other companies (including most of those included in the Company's peer group
for measuring shareholder total return) for executives with similar levels of
responsibility, (iv) the effort required to continue to generate significant
growth in earnings per share in light of the significant increase in the number
of shares outstanding and (v) his commitment to implementation of the Company's
long-term strategic plan. In addition, the Compensation Committee engaged the
services of an outside compensation consultant for the purpose of reviewing
executive compensation survey data.
The CEO's compensation plan for 1998 was heavily weighted to
pay-for-performance compensation. Mr. Dietrich's base salary was increased from
$236,600 for 1997 to $324,000 for 1998. The increase was intended to reflect Mr.
Dietrich's role in the Company's 1997 financial performance (specifically, the
substantial increase in earnings and significant increase in profitability
during a time of accelerating growth) and to keep the CEO's salary comparable
with compensation of executives of other companies in the solid waste industry,
including most of those in the Company's Self-Determined Peer Group Index, as
well as executives of other companies with comparable revenues and growth rates
who have similar responsibilities. The annual cash bonus incentive awarded to
Mr. Dietrich for 1998 was $276,670, based upon the earnings per share growth
qualifying criteria and measurement targets under the Company's 1998 management
incentive plan. In February 1999, Mr. Dietrich also was granted stock options
exercisable for 85,392 shares at the fair market value of the stock on the grant
date, based upon the 1998 earnings per share measurement targets under the
Company's 1998 management incentive plan. The incentive compensation awarded to
Mr. Dietrich for 1998 represented 71.2% of the maximum possible payout under his
1998 compensation plan. In addition to the stock options granted to Mr. Dietrich
under the Company's 1998 compensation plan, the Compensation Committee also
authorized a special award to Mr. Dietrich in November 1998 of stock options for
250,000 shares at the stock's fair market value on the grant date, as part of a
broad-based stock option grant to the Company's operating management intended to
provide additional incentives to successfully implement the Company's long-term
growth strategies.
Since the Company believes its stock option plans have been adopted and
are being administered in accordance with Internal Revenue Code Section 162(m),
it is the Committee's position that no further action is necessary to conform
its compensation plans to comply with
3
<PAGE>
the regulations proposed under Internal Revenue Code Section 162(m) relating to
the $1 million cap on executive compensation deductibility.
BY THE COMPENSATION COMMITTEE:
Francis J. Podvin, Chairman
Donald Taylor
Walter G. Winding
Warner C. Frazier
SUMMARY COMPENSATION INFORMATION
The following table sets forth certain information concerning
compensation paid by the Company for the last three fiscal years to (i) the
Company's Chief Executive Officer, (ii) the four most highly compensated
executive officers other than the CEO who were servicing as such as of December
31, 1998 (or for any part of the fiscal year ended December 31, 1998), and (iii)
individuals who would have been included in the group described in (ii) above,
but for the fact that the individual was not serving as an executive officer as
of December 31, 1998. The persons named in this table are sometimes referred to
herein as the named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SHARES
UNDERLYING
FISCAL ANNUAL ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) GRANTED (2) COMPENSATION (3)
--------------------------- ------ -------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Joseph P. Tate.............................. 1998 $170,000 $120,000 45,000 $5,110
Chairman 1997 $155,000 $155,000 24,495 $3,873
1996 $155,000 $134,816 8,300 $3,873
G. William Dietrich......................... 1998 $324,000 $276,670 350,000 $9,795
President and CEO 1997 $236,000 $307,580 180,000 $9,794
1996 $182,000 $285,000 $4,184
10,435
George K. Farr.............................. 1998 $180,000 $115,279 250,000 $3,112
Chief Financial Officer and Treasurer 1997 $150,000 $150,000 146,530 $2,705
1996 $135,000 $101,000 5,739 $2,665
Gary Blacktopp.............................. 1998 $170,000 $108,875 34,449 $6,780
Senior Vice President--Operations(4) 1997 $153,482 $128,426 101,558 $4,193
John H. King................................ 1998 $135,200 $69,270 32,613 $2,951
Regional Vice President--Special Services
Scott S. Cramer............................. 1998 $125,000 $64,044 30,687 $ 696
Vice President--General Counsel
</TABLE>
- ----------
(1) The value of perquisites and other personal benefits received by any
named Executive Officer did not exceed the lesser of $50,000 or 10% of
the named Executive Officer's salary and bonus. Annual bonus is
reflected in the year earned, even though it may have been paid in the
subsequent year.
4
<PAGE>
(2) Options are reflected in the year of grant, even though they may have
been based upon performance in the year preceding grant. See "Stock
Options" below.
(3) The majority of other compensation is Company contributions to the
Company's 401(k) Plan. Also includes life insurance premiums paid by
the Company on executive group policy insurance in excess of $50,000
payable to the named Executive Officers or their respective families.
1998 and 1997 includes $3,851 and $1,790 respectively of club dues for
G. William Dietrich. 1997 also includes $3,187 imputed interest for G.
William Dietrich, see "Certain Transactions." 1998 includes $2,552 of
personal airfare reimbursed to Gary Blacktopp.
(4) Mr. Blacktopp's title was Senior Vice President-Operations until
October, 1998 when he became Vice President-Maintenance.
STOCK OPTIONS
OPTION GRANTS. The following table sets forth certain information with
respect to stock options granted during 1998 to each of the named Executive
Officers:
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SHARES OPTIONS ASSUMED ANNUAL RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -------------------------------------
NAME GRANTED (1) 1998 SHARE (2) DATE (7) 5% 10%
---- ----------- ----- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tate............. 30,000 1.85% $28.4625 2/24/03(4) $136,839 $396,283
15,000 .92% $18.375 11/24/08(5) $173,339 $439,283
G. William Dietrich........ 100,000 6.16% $25.875 2/24/08(4) $1,627,265 $4,123,809
250,000 15.40% $18.375 11/24/08(5) $2,888,985 $7,321,254
George K. Farr............. 50,000 3.08% $25.875 2/24/08(4) $813,632 $2,061,904
200,000 12.32% $18.375 11/24/08(5) $2,311,188 $5,857,004
Gary Blacktopp............. 4,449 .27% $25.875 2/24/08(4) $72,397 $183,468
30,000 1.85% $18.375 11/24/08(6) $346,678 $878,551
John King.................. 2,613 .16% $25.875 2/24/08(4) $42,250 $107,755
30,000 1.85% $18.375 11/24/08(6) $346,678 $878,551
Scott S. Cramer............ 687 .04% $25.875 2/24/08(4) $11,179 $28,331
30,000 1.85% $18.375 11/24/08(6) $346,678 $878,551
All named Executive
Officers as a group (8).... 742,749 45.75% $20.586 Various $9,117,108 $23,154,744
All Shareholders........... 30,138,156(9) N/A N/A N/A $348,274,685(9) $882,596,432(9)
</TABLE>
- ---------------
(1) Includes nonqualified stock options and incentive stock options granted
under the Company's 1996 Equity Incentive Plan.
(2) Exercise price is equal to the market value of the Common Stock on the
date of grant (except for the 30,000 share option grant to Mr. Tate
which expires 2/24/03 for which the exercise price is 110% of market
value on the date of grant).
(3) The potential realizable values set forth under the columns represent
the difference between the stated option exercise price and the market
value of the Common Stock based on certain assumed rates of stock price
appreciation from the grant price and assuming that the options are
exercised on their stated expiration date; the potential realizable
values set forth do not take into account applicable tax and expense
payments which may be associated with such option exercises. Actual
realizable value, if any, will be dependent on the future stock price
of the Common Stock on the actual date of exercise, which may be
earlier than the stated expiration date. The 5% and 10% assumed rates
of stock price appreciation over the ten-year exercise period of the
options used in the table above are mandated by
5
<PAGE>
rules of the SEC and do not represent the Company's estimate or
projection of the future price of the Common Stock on any date. There
can be no assurance that the stock price appreciation rates for the
Common Stock assumed for purposes of this table will actually be
achieved.
(4) The stock options vest at the rate of 25% after the first 12 months
after grant and 6.25% per quarter thereafter.
(5) 50% of the options vested immediately upon grant, the balance vest at
the rate of 6.25% per quarter.
(6) 25% of the options vested immediately upon grant, the balance vest at
the rate of 6.25% per quarter.
(7) Although not a provision of the 1996 Plan, all option agreements
evidencing option grants made under the 1996 Plan have historically
included, and are expected to continue to include, a provision allowing
the Board to accelerate the vesting of all outstanding options
represented thereby upon the occurrence of a change in control of the
Company. Under the terms of their respective employment agreement or
KEESA, the vesting of options grated to Messrs. Tate, Dietrich, Farr,
Blacktopp, King and Cramer is automatically accelerated upon the
occurrence of a change in control of the Company (as defined in the
applicable employment agreement or KEESA).
(8) This row represents the total number of shares granted in 1998 to all
named Executive Officers and the potential realizable value of all such
options at assumed annual rates of stock price appreciation as
described in footnote (3) to the table.
(9) These dollar values represent the potential realizable value to all
shareholders as a group with respect to all 30,138,156 shares
outstanding as of November 24, 1998, the last grant date of options to
named Executive Officers during 1998, based on the difference between
the fair market value of all shares outstanding on November 24, 1998
and the market value of the Common Stock based on certain assumed rates
of stock price appreciation as described in footnote (3) to the table.
OPTION VALUES; OPTION EXERCISES. The following table sets forth the
aggregate value of unexercised options at December 31, 1998, held by each of the
named Executive Officers and information regarding option exercises during 1998
by each of the named Executive Officers.
1998 OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION> NUMBER OF UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END (2) AT FISCAL YEAR END (3)
SHARES ACQUIRED VALUE ------------------------- ------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tate........... 0 $ 0 23,922 53,873 $ 54,952 $ 31,884
G. William Deitrich...... 15,149 $280,976 402,024 348,262 $2,486,646 $238,861
George K. Farr........... 0 $ 0 233,051 252,968 $1,138,138 $184,111
Gary Blacktopp........... 0 $ 0 65,300 112,881 $ 136,480 $ 93,010
John King................ 0 $ 0 42,411 44,275 $ 262,560 $ 94,125
Scott Cramer............. 0 $ 0 23,125 57,562 $ 12,656 $ 37,969
</TABLE>
- ---------------
(1) The value realized is the difference between the gross proceeds from
sale of the acquired shares less the exercise price paid to acquire the
shares.
(2) Includes nonqualified stock options and incentive stock options granted
under the Company's 1993 Incentive Stock Option Plan (the "1993 Plan")
and the Company's 1996 Equity Incentive Plan (the "1996 Plan") with
prices equal to the market value of the Common Stock on the date of
grant (except for options granted to Mr. Tate for which the exercise
price is 110% of market value on the date of grants). The stock options
have varying vesting schedules with some options partially vesting
immediately upon grant, but generally vest at the rate of 25% after the
first 12 months after grant and 6.25% per quarter thereafter. As
provided in the 1993 Plan and as historically provided in option
agreements evidencing options under the 1996 Plan, the Board may
accelerate the vesting of all outstanding options under the 1993 Plan
and 1996 Plan upon the occurrence of a change in control of the
Company. Under the terms of their respective employment agreement or
KEESA, the vesting of options granted to Messrs. Tate,
6
<PAGE>
Dietrich, Farr, Blacktopp, King and Cramer is automatically accelerated
upon the occurrence of a change in control of the Company (as defined
in the applicable employment agreement or KEESA).
(3) The dollar values were calculated by determining the difference between
the fair market value of the underlying Common Stock and the various
applicable exercise prices of the named Executive Officers' outstanding
options at the end of 1998. The last reported sale price of the
Company's Common Stock on The Nasdaq Stock Market on December 31, 1998
was $20.0625 per share.
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
The Company has entered into employment agreements with Messrs.
Dietrich and Farr. The employment agreements provide for three-year terms which
are extended automatically on each anniversary date for one additional year,
unless either party gives notice of nonrenewal. The Company may also terminate
any of the employment agreements at any time for "cause" as defined in the
officer's KEESA. See "Severance and Change in Control Arrangements". If the
Company terminates the officer's employment other than for cause or the
officer's death or disability of if the Company elects not to extend the
officer's employment agreement, the officer is entitled to receive a severance
payment equal to three (3) times the officer's average annual total compensation
for the five years prior to termination as well as continuation of the officer's
medical benefits. The employment agreements with Messrs. Dietrich and Farr
terminate immediately upon a "change in control" as defined in the officer's
KEESA. In such event the officers will continue to serve as consultants to the
Company through the expiration date of the then current term of the employment
agreement with monthly consulting fees equal to the officer's then current
salary. The consulting payments automatically accelerate upon the
officer/consultant's death or disability and are subject to acceleration by
either the Company or the officer/consultant at any time. Mr. Dietrich's
employment agreement also provides that, in the event of a change of control,
the Company would reimburse him for closing costs and commissions on the sale of
his home and make him whole if his home sells for less than his cost basis.
The Company has also entered into employment agreements with Messrs.
Blacktopp, King and Cramer. The employment agreements provide for two-year
terms, which are extended automatically on each anniversary date for one
additional year, unless either party gives notice of nonrenewal. The Company may
also terminate the employment agreements at any time for "cause" as defined in
the employment agreements. If the Company elects to terminate Messrs.
Blacktopp's, King's or Cramer's employment, other than for cause or his death or
disability, such individual is entitled to receive a severance payment equal to
the unpaid balance of the employee's base salary through the expiration of the
initial term or the renewal term within which termination takes place, subject
to the change of control provisions described below.
If the employment of any of the above officers is terminated as a
result of his death, his estate or representative is entitled to receive an
amount equal to the officer's base salary for the month in which he dies. If the
employment of Messrs. Dietrich or Farr is terminated as a result of his
disability, such officer is entitled to receive his base salary for a period of
180 days after the Company notifies the officer of such termination, reduced by
the amount of any disability benefits received under the Company's disability
benefit plan. If the employment of Messrs. Blacktopp, King or Cramer is
terminated as a result of his disability, such officer is entitled to receive
his base salary through the date of termination.
7
<PAGE>
Mr. Dietrich is subject to a noncompetition agreement which prohibits
him during the term of his employment and for one year thereafter from competing
with the Company within 50 miles of any Company facility or from using or
disclosing confidential information of the Company. Messrs. Farr, Cramer, King
and Blacktopp are also subject to noncompetition agreements substantially
identical to Mr. Dietrich's, except that the noncompetition term extends for two
years following the termination of their respective employment with the Company.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
The Company has Key Executive Employment and Severance Agreements, as
amended ("KEESAs") with Messrs. Tate, Dietrich, and Farr.
Under the terms of the KEESAs, such officers are entitled to receive
compensation at the same rate in effect at the date of change in control
(subject to increase by the Compensation Committee) during an officer's
employment period following the change in control and to be included in the
Company's benefit plans available to employees of comparable status. If during
the employment period the officer's employment is terminated by the Company,
other than for "cause" (as dividend in the KEESAs), or if the officer's duties
are changed substantially without his written consent and the officer terminates
his employment as a result, or the officer terminates employment at any time
within 12 months after the change in control either voluntarily or as a result
of his death or disability, the officer is entitled to receive a lump sum
payment equal to three times the officer's average annual total compensation for
the five years prior to the change in control. Immediately upon a change in
control, all outstanding stock options held by such officers automatically vest.
At the option of each officer, upon a change in control each officer may receive
cash in an amount equal to the difference between the exercise price for the
options and the fair market value of the shares that would be received upon
exercise, unless the officer's exercise of his right to receive cash would make
the change in control transaction ineligible for pooling of interests treatment
under APB No. 16. Under the terms of the KEESA's, the officer and his spouse are
entitled to coverage under the Company's medical benefit plans until age 85 and
the officer's other dependents are entitled to coverage to age 21. In the event
the officers are required to pay an excise tax on "excess parachute payments"
received from the Company upon a change in control, the Company has agreed in
the KEESA's to pay the officer an amount necessary to place the executive in the
same after-tax financial position as the executive would have been in had the
executive not incurred such tax.
Under the terms of the employment agreements with Messrs. Blacktopp,
King and Cramer, if any of the officers is terminated due to a "change in
control" (as defined in the employment agreements) the officer is entitled to
receive a lump sum severance payment equal to three times for Mr. Blacktopp or
two times for Messrs. King or Cramer, of his base salary in effect on the
effective date of the change in control.
DIRECTOR COMPENSATION
Under the Company's director compensation policy, each independent
director receives an annual retainer fee of $16,000, plus $500 for attending
each committee meeting or Board meeting, in addition to reimbursement of
out-of-pocket expenses. The Chairman of the Compensation Committee of the Board
receives an additional annual retainer fee of $1,000.
8
<PAGE>
In addition, under the Company's 1996 Equity Incentive Plan (the "1996
Plan"), on the effective date of the Company's initial public offering (March 7,
1996), each then serving independent director was automatically granted
non-qualified stock options under the 1996 Plan to purchase 10,000 shares of
Common Stock at a per share exercise price equal to the initial public offering
price of $11.50 per share. Each new independent director joining the Board will
automatically receive an initial non-qualified stock option to purchase 10,000
shares of Common Stock exercisable at the closing sale price of the Common Stock
on the date of grant. Each independent director's initial option grant will vest
ratably over an approximate three-year period, provided that the independent
director continues to serve as a member of the Board at the end of each vesting
period with respect to the increment then vesting. The 1996 Plan also provides
that, at the time of each annual meeting, each then serving and continuing
independent director will receive automatically an additional non-qualified
stock option to purchase 2,500 shares of Common Stock at an exercise price equal
to the closing sale price of the Common Stock on the date of grant. These annual
option grants will vest in full within six months form the date of grant. The
1996 Plan also authorizes the Board to make special option grants to independent
directors. A special grant of options to purchase 15,000 shares at an exercise
price equal to the closing sale price of the Common Stock on the date of grant
was made to independent directors in November 1998. Under the terms of the
special option grant, the options were 50% vested immediately upon grant with
the balance vesting at the rate of 6.25% per quarter thereafter. Notwithstanding
the aforementioned vesting provisions, all outstanding options granted to
independent directors under the 1996 Plan will vest immediately upon a change in
control, or the director's death or disability. All options granted to
independent directors under the 1996 Plan will expire upon the earlier to occur
of ten years from the grant or one year from the independent director ceasing to
hold such position.
SHARE OWNERSHIP REQUIREMENTS
To further support the Company's philosophy of maintaining a strong
link between stockholder and management interests, the Company has amended its
By-laws to expand the stock ownership requirements for independent directors.
Each independent director is required to purchase (over a five-year period of
time) and hold directly or through one or more affiliates, investments in
Company Common Stock valued at three times their annual retainer. In addition,
the Board of Directors has directed the Compensation Committee to establish
ownership guidelines for the Company's executive officers.
CERTAIN TRANSACTIONS
The Company loaned G. William Dietrich $75,000 in June 1994. The loan
is represented by an unsecured promissory note, with interest accruing from June
29, 1997, and payable annually at the Company's average annual borrowing rate as
adjusted from time to time and principal payable in one lump sum payment 90 days
after Mr. Dietrich terminates employment with the Company for any reason. The
principal amount outstanding at December 31, 1998 was $75,000. All accrued
interest as of December 31, 1998 had been paid in full. The Company loaned G.
William Dietrich $150,000 in March 1999. The loan is represented by an unsecured
promissory note, with principal and interest, at the Company's average borrowing
rate, payable in one lump sum on April 30, 1999.
In 1998, the Company purchased public relations, employee
communications and graphics arts services from Whole Hog Productions, Inc. Ms.
Jenifer Ortwein, a principal
9
<PAGE>
shareholder of Whole Hog Productions, Inc., married Joseph P. Tate, the Chairman
and a director of the Company, in February 1999. The Company paid Whole Hog
Productions, Inc., a total of $25,603 for services purchased by the Company in
1998. The Company believes that the purchase of service from Whole Hog
Productions, Inc. was on terms no less favorable to the Company than could be
obtained from an unaffiliated third party.
10
<PAGE>
SUPERIOR SERVICES, INC.
LONG TERM PERFORMANCE AWARD PLAN
1. PURPOSE OF THE PLAN.
The purpose of the Superior Services, Inc. Long Term
Performance Award Plan (the "Plan") is to provide additional incentives and
rewards to certain employees of Superior Services, Inc. (the "Company") based on
their achievement of the Company's strategic business plan, by making them
participants in the success of the Company; and to attract and retain employees
of outstanding skill and competence.
2. DEFINITIONS.
Unless otherwise required by the context, the terms used in
the Plan shall have the meanings set forth in this Section 2.
2.1 "Amount of Total Pool" shall mean the following: If
Adjusted Pre-Tax Earnings is less than Target Earnings, the Amount of Total Pool
shall be 0. If Adjusted Pre-Tax Earnings equals or exceeds Target Earnings, the
Amount of Total Pool shall be $10 million, and shall be increased by $1000 for
each 0.003333% increase in Adjusted Pre-Tax Earnings above Target Earnings until
the Amount of Pool reaches a maximum of $20
<PAGE>
million when Adjusted Pre-Tax Earnings equals or exceeds 133.33% of Target
Earnings.
2.2 "Adjusted Pre-Tax Earnings" shall mean Company's pre-tax
earnings computed from the Company's books and records in accordance with United
States generally accepted accounting principles as currently in effect ("GAAP")
and as consistently and historically applied by the Company prior to June 30,
1999 before taking into account the following: (i) any expenses or accruals
resulting from the Performance Awards payable under the Plan or the costs of
administration of the Plan; (ii) any headquarters, corporate, administrative,
general or home office overhead or administrative or service charges imposed on
or charged to Company or its subsidiaries by Parent or its affiliates, PROVIDED,
HOWEVER that charges equal to or less than the prevailing market rate for
services requested by the Company provided by Parent or its affiliates which
Company otherwise would have had to obtain from a third party will be included
in the computation of Adjusted Pre-Tax Earnings; (iii) payments of, or accrued
charges, expenses or amortization for the severance payments (including those to
be paid to certain officers of the Company after the Effective Date), stock
option cash-out payments and other benefits paid to employees of the Company in
connection with or as a result of the Acquisition or the other related
-2-
<PAGE>
transactions contemplated by the Merger Agreement; (iv) costs, charges, fees or
expenses associated with the Acquisition or the other transactions contemplated
by the Merger Agreement; (v) costs, charges, fees and expenses associated with
integrating and combining the Company's operations, management, information
systems and administration with those of Parent or its affiliates and any costs
and expenses of changing, conforming or incorporating the Company's (or its
subsidiaries') business or trade name or identity with the business or trade
name or identity of Parent or any of its affiliates; (vi) any allocation or
amortization of goodwill from the Acquisition or the other transactions
contemplated by the Merger Agreement; (vii) any interest or capital costs
resulting from the issuance or incurrence by Parent or its affiliates of any
equity, funded debt or other borrowed money used to finance the Acquisition and
the other related transactions and payments contemplated by the Merger
Agreement; PROVIDED, HOWEVER, that if Parent increases its capital share of the
Company and interest charges are therefore decreased, such decrease in charges
shall not be included in the computation of Adjusted Pre-Tax Earnings, and
FURTHER PROVIDED, that if the Company at its request borrows financial resources
from Parent the interest charges will be included in the computation of Adjusted
Pre-Tax Earnings, provided that such
-3-
<PAGE>
rates are not any higher than those the Company could obtain from third party
financing sources on an arm's length basis; (viii) any changes in the Company's
internal accounting policies as in effect on June 30, 1999; and (ix) any
subsequent changes in GAAP. Adjusted Pre-Tax Earnings shall also be equitably
adjusted to take into account any failure or delay by Parent or its affiliates
to provide the Company (and its subsidiaries) with the financial resources
contemplated in the Company's business plan necessary for Company to meet its
Target Earnings.
2.3 "Allocated Pool Percentage" means any Pool Percentage that
has been allocated to Participants, excluding those Pool Percentages that were
forfeited for any reason which shall be reallocated pro rata amongst the
remaining participants.
2.4 "Award Payment Date" means the date designated by the
Committee for payment of the Performance Award, which in no event shall be later
than 45 days following the end of the Performance Period.
2.5 "Beneficiary," as applied to a Participant, means a person
or entity (including a trust or the estate of the Participant) designated by the
Participant, pursuant to Section 7 hereunder, to receive any Performance Award
issued in respect of Performance Units.
-4-
<PAGE>
2.6 "Committee" means the Committee as mutually designated by
the Parent and the Chief Executive Officer of the Company to administer the
Plan.
2.7 "Disability" means, with respect to a Participant, that
such Participant has become "disabled" within the meaning of the Company's
long-term disability plan then in effect, as determined by the administrative of
such plan.
2.8 "Employee" means a regular, salaried employee of
the Company.
2.9 "Merger Agreement" means the agreement, dated June 11,
1999, by and among Parent, Onyx Solid Waste Acquisition Corp., and Company.
2.10 "Participant" means an Employee that has been selected by
the Committee to receive an allocation of the Pool Percentage under the Plan,
pursuant to Section 5.1 hereof.
2.11 "Performance Period" means the four and one half year
period beginning on July 1, 1999 and ending December 31, 2003.
2.12 "Performance Award" means an award granted pursuant to
Section 4.1 hereof.
2.13 "Plan" means this Superior Services, Inc. Long Term
Performance Award Plan, as it may be amended from time to time in accordance
with the terms hereof.
-5-
<PAGE>
2.14 "Retirement" means the retirement of a Participant under
the terms of the applicable retirement plan of the Company.
2.15 "Pool" means the Amount of Total Pool available to grant
Pool Percentages under the Plan.
2.16 "Pool Percentage" means a percentage of the Pool to be
allocated to Participants as determined by the Committee under Section 5.1.
2.17 "Target Earnings" means the sum of Adjusted Pre-Tax
Earnings from June 30, 1999 to December 31, 2003, which amount shall be
$534,547,000.
2.18 "Parent" means Vivendi, a SOCIETE ANONYME
organized under the laws of France.
3. ADOPTION AND ADMINISTRATION OF THE PLAN.
3.1 EFFECTIVE DATE. The Plan shall be effective as of the date
Parent becomes irrevocably committed to purchase the tendered shares under the
Merger Agreement.
3.2 ADMINISTRATION. Subject to the limitations herein, the
Committee shall have power and discretion to administer, construe, interpret the
Plan and may establish and, from time to time, amend rules and regulations of
general application for the administration of the Plan, subject to the
provisions hereof. Any action taken or decision made under the respective
provisions of the Plan by the Committee, arising out
-6-
<PAGE>
of or in connection with the administration, construction, interpretation or
effect of the Plan, or recommendations in accordance therewith, or of any rules
and regulations adopted thereunder, shall in each case lie within its discretion
and shall be conclusive and binding on the Company, Participants, Beneficiaries
and all other persons. Notwithstanding the other provisions of this Plan, the
Committee shall not have the authority, without the relevant Participant's
consent (which may be denied, withheld, delayed or conditioned for any reason)
to take any action that adversely affects in any respect any Participant's
rights or benefits hereunder as in effect prior to any such action.
3.3 DELEGATION. The Committee may delegate some or all of its
authority under the Plan to any person or persons provided that any such
delegation be in writing.
4. ELIGIBILITY.
4.1 To the extent there are Unallocated Pool Percentages or
the amount of the Total Pool is equitably increased so as not to reduce the
potential Performance Awards payable to each then-current Participant, the
Committee shall have the power and discretion, to add Participants to the list
of Participants attached as Annex A and to allocate Pool Percentages
-7-
<PAGE>
hereunder in accordance with the terms of the Plan, PROVIDED, HOWEVER that,
subject to the proviso above, the Committee may, in its sole discretion,
designate Employees who begin employment between July 1, 1999 and December 31,
2003 as Participants.
4.2 A Participant must be continuously employed throughout the
Performance Period beginning on the day such Employee is selected to become a
Participant and ending on the last day of the Performance Period.
5. PAYMENTS UNDER THE PLAN.
5.1 ALLOCATION OF POOL PERCENTAGES. The Committee shall
allocate Pool Percentages to Participants. The initial allocation of Pool
Percentages is set forth on Annex A. Unallocated Pool Percentages shall be
reserved, at the Committee's discretion, for awards to new hires as authorized
by Section 4.1 of the Plan or for additional awards to existing Participants. On
the Award Payment Date, the Amount of Total Pool shall be paid out to
Participants, with any unallocated or forfeited Pool Percentages or Performance
Awards being reallocated pro rata by relative Pool Percentage among the other
remaining Participants.
Upon any sale of all, or substantially all, of the
assets or capital stock of the Company or Parent or other
-8-
<PAGE>
business combination which results in a change in control thereof, Performance
Awards shall be accelerated and immediately paid to all Participants with the
Amount of the Total Pool equal to the sum of $10 million, plus $1,000 for each
0.00333% increase in Adjusted Pre-Tax Earnings through the date of such sale or
business combination above the Pro-Rated Target Earnings. "ProRated Target
Earnings" shall be equal to Target Earnings multiplied by a fraction, the
numerator of which is the number of months (including fractions thereof) through
the date of such sale or business combination and the denominator of which is
the number of months in the Performance Period.
5.2 NATURE OF POOL PERCENTAGES. Each Pool Percentage shall
consist of an unvested right to receive a cash payment at the conclusion of the
Performance Period. Pool Percentages shall be used solely as a device for the
measurement and determination of the value of the Performance Award to be paid
to Participants who have received an allocation of Pool Percentages under the
Plan. Pool Percentages shall not constitute or be treated as property or as a
trust fund of any kind or as stock, stock options or any other form of equity or
security.
5.3 CALCULATION OF ADJUSTED PRE-TAX EARNINGS. No
later than 30 days after the conclusion of the Performance Period
(or any acceleration thereof), the independent accounting firm
-9-
<PAGE>
employed by the Company as its auditors prior to June 30, 1999 shall determine
and report the Adjusted Pre-Tax Earnings for the Performance Period; PROVIDED,
however, that interim reports shall be prepared by such auditors no later than
30 days after the end of each calendar year during the Performance Period. Based
on such auditor's report, the value of each Performance Award, if any, earned by
each Participant, shall be equal to the product of (A) the Pool Percentage
allocated to such Participant, and (B) the Amount of Total Pool.
5.4 NO RIGHT TO PERFORMANCE AWARDS. The Committee shall have
the sole power and discretion to grant any Performance Awards under the Plan.
The adoption of this Plan shall not be deemed to give any Employee or any other
individual any right to be selected as a Participant or to be granted a
Performance Award.
6. TERMINATION OF EMPLOYMENT.
6.1 In the event that a Participant's employment with the
Company is terminated prior to December 31, 2003 for any reason other than the
death, Disability or Retirement of the Participant, or the termination of
Employee without Cause or by Employee for Good Reason as such terms are defined
in such Employee's employment agreement with the Company, all Pool
-10-
<PAGE>
Percentages held by such Participant shall be forfeited and shall not entitle
such Participant to any Performance Award under the Plan.
6.2 In the event that a Participant's employment with the
Company terminates prior to December 31, 2003 by reason of such Participant's
death, Retirement, Disability, or the termination of Employee without Cause or
by Employee for Good Reason(s), such terms are defined in such Employee's
employment agreement with the Company, such Participant (or his or her
beneficiary) shall receive a pro-rata Performance Award when otherwise paid
hereunder to all Participants with respect to the Pool Percentage allocated to
such Participant based on the number of months from the date of his or her
selection as a Participant through the end of the month in which his or her
employment terminates and the remaining pro-rata portion of such Performance
Award shall be reallocated to the remaining Participants pro rata.
7. BENEFICIARIES
7.1 DESIGNATION OF BENEFICIARIES. Each Participant may file
with the Committee a written designation signed by such Participant, of one or
more persons as the Beneficiary who, to the extent permitted by applicable law,
shall have the rights set
-11-
<PAGE>
forth in Section 6.2 hereof with respect to Performance Awards under the Plan,
in the event of the Participant's death prior to payment. To the extent
permitted by applicable law, a Participant may revoke or change his Beneficiary,
by filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided however, that no
designation, change or revocation shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. The Committee shall have no
liability for any claim arising out of any payment made in good faith to a
Beneficiary in accordance with a written designation of such Beneficiary which
appears valid on its face, and such payment shall be a complete discharge of the
liability, if any, of the Committee, the Company, Parent or any person acting in
good faith on their behalf.
7.2. ABSENCE OF DESIGNATION. If no Beneficiary designation is
in effect at the time of a Participant's death or if no designated Beneficiary
survives the Participant or if any designation of a Beneficiary conflicts with
applicable law, the Participant's estate shall be deemed to have been designated
the Beneficiary and shall have the rights set forth in Section 7.1 hereof.
-12-
<PAGE>
8. MISCELLANEOUS.
8.1 The Company shall deduct from any payment under the Plan,
the amount of all applicable income, employment and other taxes required by
applicable law to be withheld with respect to such payment or may require the
Participant to pay to it such tax prior to and as a condition of the making of
such payment.
8.2 The value of Performance Award shall not be considered as
compensation in determining a Participants' benefits under any benefit plan of
Parent or the Company, including, but not limited to, group life insurance,
long-term disability, retirement plans and savings plans.
8.3 The interpretation and construction of the Plan shall be
governed by and enforced in accordance with the internal laws of the State of
Wisconsin without regard to the principle of conflicts of laws.
-13-
<PAGE>
6/15/99
ANNEX A
LIST OF INITIAL PARTICIPANTS
<TABLE>
<CAPTION> POOL PERCENTAGES
PARTICIPANT TITLE ALLOCATION
------------ ----- ----------------
<S> <C> <C>
1. G.W. Dietrich CEO 6-10%*
2. G. Farr CEO 6-10%*
3. P. Ruud SVP 6-10%*
4. G. Blacktopp VP-Maintenance 6-10%*
5. J. King VP-Special Services 6-10%*
6. S. Cramer General Counsel 6-10%*
7. B.T. Watermolen VP Engineering/Compliance 6-10%*
8. P. Auld RVP-Eastern Region 6-10%*
9. J. Dancy RVP-Southern Region 6-10%*
10. P. Jenks VP-Special Projects 6-10%*
11. L. Goswick RVP-Midwest 6-10%*
12. J. Meredith VP-Market Development 6-10%*
13. TBA TVP-Western Region 6-10%*
-----
TOTAL 100% (not to exceed)
</TABLE>
- --------------------
* The applicable specific percentage within this range will be determined by
the Committee based on the recommendation of the CEO, subject to the
aggregate percentage not exceeding 100%.
