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Superior Services, Inc. Logo
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM TO
.
COMMISSION FILE NUMBER 0-27508
SUPERIOR SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WISCONSIN 39-1733405
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER
125 SOUTH 84TH STREET, SUITE 200 IDENTIFICATION NO.)
MILWAUKEE, WISCONSIN 53214
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (414) 479-7800
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:COMMON STOCK, $.01
PAR VALUE; COMMON
STOCK PURCHASE RIGHTS
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 10, 1999.(1)
$603,001,463
Number of shares outstanding of each of the classes of the registrant's
capital stock as of March 10, 1999:
COMMON STOCK, $.01 PAR VALUE: 32,356,812 SHARES
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED
HEREIN BY REFERENCE:
PROXY STATEMENT FOR 1999 ANNUAL MEETING OF SHAREHOLDERS (TO BE
INCORPORATED BY REFERENCE INTO PART III UPON THE FILING OF THE PROXY STATEMENT
WITH THE SECURITIES AND EXCHANGE COMMISSION, TO THE EXTENT INDICATED THEREIN).
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(1) Excludes only shares held by directors and officers of the registrant.
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<PAGE>
PART I
Unless the context indicates otherwise, references to the number of the
Company's various facilities set forth in this Form 10-K Annual Report are as of
December 31, 1998.
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Annual Report on Form 10-K are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects" or words of similar import. Whether or not these
forward-looking statements will be accurate in the future will depend on certain
risks and factors including risk factors associated with (i) the Company's
ability to manage its growth; (ii) the availability to the Company of additional
acquisition opportunities at favorable pricing levels and the ability of the
Company to effectively integrate its existing and potential future acquisitions;
(iii) the continuing seasonality of its business; and (iv) competition for both
collection and disposal services and acquisitions. These and other risks and
uncertainties are also set forth in the Company's S-4 Registration Statement
dated March 30, 1998, as amended (No. 333-48887) under the caption "Risk
Factors." Shareholders, potential investors and other readers should carefully
consider these risks and factors and the impact they may have when evaluating
these forward-looking statements. The forward-looking statements included herein
are only made as of the date of this report and the Company undertakes no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
ITEM 1. BUSINESS.
GENERAL
Superior Services, Inc. ("Superior" or the "Company") is an
acquisition-oriented integrated solid waste services company providing a range
of collection, transfer, transportation, disposal and recycling services to
generators of solid waste and special waste. The Company provides solid waste
collection, transfer, transportation, recycling and disposal services to over
750,000 residential, commercial and industrial customers in Alabama, Florida,
Georgia, Illinois, Michigan, Minnesota, Missouri, New Jersey, Ohio,
Pennsylvania, West Virginia and Wisconsin. The Company also provides other
integrated waste services, most of which are project-based and many of which
provide additional waste volumes to the Company's landfills and recycling
facilities. As of December 31, 1998, the Company owned and operated 19 landfills
(including a greenfield landfill), 45 solid waste collection operations, 15
recycling facilities and 19 solid waste transfer stations. The Company also
manages four other third party owned landfills.
Superior's objective is to be one of the largest and most profitable
fully integrated providers of solid waste collection and disposal services in
each market it serves. The Company's strategy to achieve this objective is to
(i) continue to expand its operations and customer base in existing markets and
to enter new markets through the acquisition of other solid waste operations;
(ii) pursue internal growth opportunities in its current markets; and (iii)
achieve continuing operating improvements in its business. Superior's principal
strategy for future growth is through the acquisition of additional solid waste
disposal, transfer and collection operations. The Company's operating strategy
emphasizes the integration of its solid waste collection and disposal operations
and the internalization of waste collected.
Acquisitions
In recent years, the solid waste collection and disposal industry has
undergone significant consolidation and integration. The Company believes that
this consolidation and integration is caused primarily by four factors: (i)
increasingly stringent environmental regulation and enforcement resulting in
increased capital requirements; (ii) the inability of many smaller operators to
achieve the economies of scale necessary to compete effectively with large
integrated solid waste service providers; (iii) the evolution of an industry
competitive model which emphasizes providing both collection and
disposal/recycling capabilities; and (iv) the continued privatization of solid
waste collection and disposal services by municipalities and other
2
<PAGE>
governmental bodies and authorities. Despite the considerable consolidation and
integration occurring in the solid waste industry, the Company believes the
industry remains primarily regional in nature and highly fragmented, and that a
substantial number of potential acquisition opportunities remain.
Since the Company's March 1996 initial public offering through December
31, 1998, the Company has acquired 70 solid waste collection, transfer and
disposal operations, including 13 landfills, one greenfield landfill, two
recycling operations, and 54 collection operations, taking the Company into
numerous new service markets in seven new states. During 1998, the Company
acquired or merged with 31 solid waste, transfer and disposal operations,
including five landfills plus one landfill previously managed under an operating
agreement since 1997, and 25 solid waste collection operations, with annualized
revenues of approximately $140 million. A single acquisition transaction may
involve the purchase of multiple business operations.
The Company intends to continue to expand its geographic scope through
acquisitions by (i) expanding into adjacent and new markets by pursuing
principally a "hub and spoke" acquisition strategy and (ii) increasing its
revenues and operational and administrative efficiencies through "tuck-in" and
other acquisitions of profitable solid waste collection operations in its
existing markets.
In addition to eight full time market development personnel, the
Company's senior and executive management teams focus a substantial part of
their time identifying acquisition candidates and consummating acquisitions.
The following table sets forth the Company's acquisitions of operations
completed in 1998:
<TABLE>
<CAPTION>
ACQUIRED COMPANY MONTH ACQUIRED PRINCIPAL BUSINESS LOCATION MARKET AREA
---------------- -------------- ------------------ -------- -----------
<S> <C> <C> <C> <C>
Sycamore Landfill, December 1998 Solid waste landfill Hurricane, WV Western West
Inc. Virginia
Otto Jacobs Company December 1998 Solid waste collection and Lake Geneva, WI Southeastern
LLC transportation Wisconsin
Certain assets of BFI November 1998 Solid waste collection and Eau Claire, WI Western
Waste Systems of transportation Wisconsin
North America, Inc.
Ray's Disposal November 1998 Solid waste collection and Warren, PA Northwest
transportation Pennsylvania
Macon County Landfill October 1998 Solid waste landfill Decatur, IL Central
Corporation Illinois
GeoWaste Incorporated October 1998 Solid waste landfill, solid Valdosta, GA, Southern
(GeoWaste of GA, waste collection and Bronx, NY and Georgia,
Inc., GeoWaste transportation Ocala, FL New York City,
Transfer, Inc., and Northern
Spectrum Group, Florida
Inc. d/b/a United
Sanitation)
PenPac, Inc., September 1998 Solid waste collection, Totowa, NJ Northern New
Heritage Recycling, transportation and transfer Jersey
Inc. Iorio Carting, stations
Inc.
3
<PAGE>
<CAPTION>
ACQUIRED COMPANY MONTH ACQUIRED PRINCIPAL BUSINESS LOCATION MARKET AREA
---------------- -------------- ------------------ -------- -----------
<S> <C> <C> <C> <C>
ACS Services, Inc., September 1998 Solid waste collection, Paterson, NJ Northern New
Recycling transportation and transfer Jersey
Techniques, Inc. stations
Advanced Waste
Technologies, Inc.,
Baray, Inc.,
Nicholas
Enterprises, Inc.
d/b/a Nicholas
Sanitation
Santangelo Hauling, September 1998 Solid waste collection, Norristown, PA Eastern
Inc., Santangelo transportation and transfer Pennsylvania
Transfer, Inc., station
Keystone Disposal,
Co., and Gold Star
Leasing Corp.
South Lake Refuse August 1998 Solid waste and recyclables Groveland, FL Central Florida
Service, Inc. and collection and
Commercial Refuse, transportation
Inc.
Gopher Disposal, August 1998 Solid waste and recyclables St. Paul and Central and
Inc., Eagle collection and Rochester, MN Southeastern
Environmental, transportation Minnesota
Inc., Materials
Recovery, Ltd.,
Newport Properties,
and Watson's
Rochester Disposal,
Inc.
Superior Disposal, August 1998 Solid waste collection and Ocala, FL Northern
Inc. and All Bright transportation Florida
Sanitation
Wilson Waste Systems, August 1998 Solid waste collection and Defiance, MO Central
Inc. transportation Missouri
Strunk Sanitary August 1998 Solid waste collection and Clearfield, PA Western
Service, Inc. transportation Pennsylvania
Sandman Trucking May 1998 Construction and demolition Ocala, FL North Central
Corp. landfill and construction Florida
and demolition
transportation
Certain assets of May 1998 Solid, liquid & foundry Milwaukee, Racine, Southeastern
BFI Waste Systems sand waste and recyclables Ozaukee, Walworth, Wisconsin
of North America, collection and & Washington
Inc. transportation Counties, WI
CBF, Inc. May 1998 Solid waste landfill and McClellandtown, PA Southwestern
solid waste collection and Pennsylvania
transportation
Eggers Sanitation, April 1998 Solid waste and recyclables Prescott, WI Central
Inc. collection and Wisconsin
transportation
Longview of March 1998 Solid waste and recyclables Bethany, MO Central
Livingston County, collection and Missouri
Inc. transportation
4
<PAGE>
<CAPTION>
ACQUIRED COMPANY MONTH ACQUIRED PRINCIPAL BUSINESS LOCATION MARKET AREA
---------------- -------------- ------------------ -------- -----------
<S> <C> <C> <C> <C>
Missouri Disposal March 1998 Solid waste and recyclables Galt, MO Central
Partners collection and Missouri
transportation
Alabama Waste March 1998 Solid waste and recyclables Moody, AL Central Alabama
Services, Inc. collection and
transportation
ACMAR Regional March 1998 Solid waste landfill Moody, AL Central Alabama
Landfill, Inc.
Weaver Sanitation March 1998 Solid waste and recyclables Punxsutawney, PA Eastern
collection and Pennsylvania
transportation
Dick's Rubbish March 1998 Solid waste and recyclables Winona, MN Central
collection and Minnesota
transportation
Johnson Disposal March 1998 Solid waste and recyclables Eau Claire, WI Western
Service, Inc. collection and Wisconsin
transportation
TWR, Inc. March 1998 Solid waste collection and Tuscaloosa, AL Central Alabama
transportation
Nelson & Son February 1998 Solid waste collection and Ashland, OH North/Central
Sanitation transportation Ohio
Ideal Disposal February 1998 Solid waste and recyclables Germantown, WI Southeastern
Service, Inc. collection and Wisconsin
transportation
Pozanc Trucking February 1998 Solid waste and recyclables Winona, MN Central
collection and Minnesota
transportation
Love's Disposal January 1998 Solid waste collection and Audrain County, MO Central
Service, Inc. transportation Missouri
T-MAC, Inc. January 1998 Solid waste and recyclables Columbia, MO Central
collection and Missouri
transportation
</TABLE>
There can be no assurance that the Company will be able to continue to
identify suitable acquisition candidates or, if identified, successfully
negotiate their acquisition. If the Company is successful in identifying and
negotiating suitable acquisitions, there can be no assurance that any debt or
equity financing necessary to complete any such acquisitions can be arranged on
terms satisfactory to the Company or that any such financing will not
significantly increase the Company's leverage or result in additional dilution
to existing shareholders. Moreover, there can be no assurance that the Company
will be able to continue to integrate successfully any acquired operations, or
manage or improve the operating or administrative efficiencies or productivity
of any acquired operations. As the Company continues to pursue acquisition
opportunities in new market areas, the potential additional geographic expansion
of the Company's operations resulting from the successful completion of some of
those acquisition opportunities will make it more difficult for the Company to
successfully and efficiently integrate such operations with the Company's
existing operations. Similarly, the Company may not realize as many synergies
and efficiencies from acquiring operations outside its existing market areas.
Failure by the Company to implement successfully its acquisition strategy will
limit, and may limit materially, the Company's growth potential and may
adversely affect the Company's results of operations.
The ongoing consolidation and integration activity in the solid waste
industry, as well as the difficulties, uncertainties, and expense relating to
the development and permitting of solid waste landfills and transfer stations,
has increased competition for the acquisition of existing solid waste
collection, transfer and disposal
5
<PAGE>
operations. Increased competition for acquisition candidates has resulted, and
may continue to result, in fewer attractive acquisition opportunities being
available to the Company as well as on less advantageous acquisition terms,
including particularly increased purchase prices. These circumstances may
increase acquisition costs to levels beyond the Company's financial capabilities
or pricing parameters or, as to acquisitions made by the Company, may have an
adverse effect on the Company's results of operations. Several of the Company's
competitors for acquisitions are larger, better known companies with
significantly greater resources than the Company. The Company believes that a
significant factor in its ability to consummate additional acquisitions will be
the relative attractiveness of its Common Stock as an investment instrument to
potential acquisition candidates. This attractiveness may, in large part, be
dependent upon the relative market price and capital appreciation prospects of
the Common Stock compared to the equity securities of the Company's competitors.
Internal Growth
Superior believes its internal growth will come from additional sales
penetration in its current and adjacent markets, marketing additional services
to existing customers, including recycling services, and selective price
adjustments. Utilizing a decentralized operations strategy, the Company has
added an executive sales manager to its existing sales force, consisting of
approximately 75 sales representatives dedicated to increasing the Company's
sales to new and existing commercial, industrial and municipal customers. A
principal component of the Company's internal growth strategy is to become the
sole provider of solid waste services to its customers, including other
integrated waste and recycling services.
Operating Improvements
The Company has programs and benchmarking systems designed to improve the
operational productivity, administrative efficiency and profitability of its
operations through improved collection and disposal routing efficiency,
consolidation of "back office" operations, equipment utilization, cost controls,
employee training and safety.
An important element of the Company's strategy for improving operating
margins is to establish new transfer stations within a 150-mile radius of its
existing landfills to increase its collection and transportation efficiencies
and improve the Company's internalization of collected solid waste. For example,
the Company recently acquired transfer stations in Bethany and Mexico, Missouri,
which will provide additional disposal to the Company's local landfill.
CURRENT OPERATIONS
Introduction
As of December 31, 1998, the Company provides integrated waste services
to its customers in 12 states. Specifically, the Company operates solid waste
collection operations, solid waste transfer stations, recycling facilities,
Company-owned solid waste landfills and managed third party landfills. The
Company also provides other integrated waste services, most of which are
project-based and many of which provide additional waste volumes to the
Company's landfills and recycling facilities. These other integrated waste
services include the remediation and disposal of contaminated soils and similar
materials; underwater remediation and industrial services; wastewater biosolids
management; full container consumer product recycling; and temporary storage and
transportation of special and hazardous waste, including household hazardous
waste. However, solid waste services have been and will remain the Company's
core business.
Superior markets its services principally through its facility managers
and direct sales representatives. The Company also obtains new customers from
referral sources, reputation, and local media marketing. The Company has a
diverse customer base, with no single customer accounting for more than 3% of
the Company's revenues in 1998. The Company does not believe that the loss of
any single customer would have a material adverse effect on the Company's
results of operations.
Solid Waste Collection and Transfer
As of December 31, 1998, the Company provided solid waste collection
services to over 750,000 residential, commercial and industrial customers. The
Company's collection operations are generally conducted within a 150-mile radius
from its landfills or transfer stations. The Company contracts with local
6
<PAGE>
generators of solid waste and directs the waste to its own landfill for
disposal; to a third-party landfill; or for additional handling at one of its
owned or third party transfer stations or recycling facilities. After compacting
and/or separating at a transfer station, the Company has historically directed
the waste to either its own landfill or a third party landfill.
In 1998, approximately 58% of the solid waste collected by the Company
was delivered for disposal at its own landfills, compared to approximately 52%
in 1997, as restated. Solid waste collection and transfer services accounted for
approximately 61% of the Company's revenues for 1998, including revenues from
disposal services provided to customers of the Company's collection and transfer
units, compared to approximately 60% in 1997, as restated.
The Company's commercial and industrial collection services are generally
performed under one-year to three-year service agreements, and fees are
determined by such factors as collection frequency, type of equipment and
containers furnished, the type, volume and weight of the waste collected, the
distance to the disposal or processing facility, and the cost of disposal or
processing. The Company's commercial and industrial customers generally utilize
portable containers that temporarily hold solid waste, thereby enabling the
Company to service many customers with fewer collection vehicles.
A majority of the Company's municipal solid waste collection services
have historically been performed under contracts with municipalities. These
contracts grant the Company exclusive rights to service all or a portion of the
residential homes in a specified community or provide a central repository for
residential waste drop-off. The Company had approximately 370 municipal
contracts in place as of December 31, 1998, compared to over 350 as of December
31, 1997, as restated. No single municipal contract is individually material to
the Company's results of operations. Municipal contracts in the Company's market
areas are typically awarded, at least initially, on a competitive bid basis and
usually range in duration from one to three years. Fees are based primarily on
the frequency and type of service, the distance to the disposal or processing
facility, and the cost of disposal or processing. Municipal collection fees are
usually paid either by the municipalities from tax revenues or through direct
service charges to the residents receiving the service. The Company also
provides subscription residential collection services directly to households.
The Company's transfer stations receive solid waste collected primarily
from its various collection operations, compact the waste, and transfer the
waste to larger vehicles for transport to landfills. This procedure reduces the
Company's costs by improving its utilization of collection personnel and
equipment. Approximately 51% of the solid waste accepted for transfer at the
Company's transfer stations in 1998 was from third parties compared to
approximately 55% in 1997, as restated.
Recycling Services
The Company also provides recycling services to customers in most markets
as part of its strategy to be a full-service integrated solid waste services
company. Recycling involves the removal of reusable materials from the waste
stream for processing and sale in various applications.
The Company operates 15 recycling facilities as part of its collection
and transfer operations at which it processes, sorts and recycles paper
products, certain plastics, glass, aluminum and tin cans and certain other
items. The Company also operates a wood pallet recycling operation and curbside
residential recycling programs in connection with its residential collection
operations in many communities.
The Company attempts to resell recycled waste products in the most
commercially reasonable manner practicable and, by contract, to pass on a
portion of the commodity pricing risk to its commercial and industrial clients.
The Company has a five-year wastepaper purchase agreement effective through
April 2000 with a national paper company pursuant to which the paper company
purchases certain grades of recyclable wastepaper from the Company at
above-market prices, subject to certain minimum floor resale pricing assurances.
Under the terms of this agreement, the Company has the ability to sell up to
all, but not less than 50%, of its supply of certain grades of recyclable
wastepaper to this company. The Company believes that this agreement helps
mitigate some of the variability associated with the resale of its collected and
recyclable wastepaper.
7
<PAGE>
In 1998, the Company processed an average of approximately 12,000 tons of
recyclable paper and cardboard per month, compared to approximately 9,850 tons
per month in 1997, as restated. The decrease of the average price received for
recyclable wastepaper caused total revenues in 1998 to decrease by approximately
1% compared to 1997. The Company expects this trend to continue assuming resale
prices are similar to 1998 levels.
Solid Waste Landfill Disposal
The Company owns and operates 19 solid waste landfills in Alabama,
Florida, Georgia, Illinois, Minnesota, Missouri, Ohio, Pennsylvania, West
Virginia, and Wisconsin. This includes one greenfield landfill in Wisconsin
expected to open in the first half of 1999. The Company's landfill facilities
are designed and operated to meet federal, state, and local regulations in all
material respects and the Company believes each of its landfill sites are in
compliance with current applicable state and federal Subtitle D Regulations in
all material respects. None of the Company's landfills are permitted to accept
hazardous waste. In both 1998 and 1997, as restated, approximately 39% of the
solid waste disposed of at the Company's landfills was delivered by the Company.
The average daily volume of waste accepted for disposal at the Company's
open landfills increased to approximately 15,100 tons per day in 1998 from
approximately 10,100 tons per day in 1997, in each case as restated to reflect
the Company's acquisitions of landfills in transactions which were accounted for
as pooling of interests. The increase in revenues from landfill disposal
operations is the result of waste received at three new disposal sites purchased
during 1998 and increased volumes of special waste from the Company's project-
driven other integrated waste services.
The following table provides certain information with respect to Superior
landfills which are owned or under development:
<TABLE>
<CAPTION>
APPROXIMATE
PERMITTED TOTAL
LANDFILL NAME AND LOCATION MONTH ACQUIRED YEAR OPENED ACREAGE(1) ACREAGE(1)
-------------------------- -------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Superior Cranberry Creek landfill, * 1986 34 1,060
Wisconsin Rapids, WI (Central Wisconsin)
Superior Valley Meadows landfill, * 1979 29 600(2)
Fort Atkinson, WI (Southeastern Wisconsin)
Superior Glacier Ridge landfill, March 1993 1986 59 560
Mayville, WI (Eastern Wisconsin)
Superior Emerald Park landfill, November 1993 1994 35 340
Muskego, WI (Milwaukee metropolitan area)
Superior FCR landfill, Buffalo, MN July 1994 1965 24 397
(Minneapolis metropolitan area)
Superior Seven Mile Creek landfill, September 1996 1978 37 160(3)
Eau Claire, WI (Northwest Wisconsin)
Superior Oak Ridge landfill, Ballwin, MO September 1996 1975 111 180(4)
(St. Louis metropolitan area)
Superior Hickory Meadows landfill, April 1997 Scheduled to 59 317
Chilton, WI (Northeastern Wisconsin)(5) open mid 1999
Superior Greentree landfill, Kersey, PA April 1997 1986 91 1,336
(Central Pennsylvania)
Superior Eagle Bluff landfill, Tuscaloosa, June 1997 1988 24 87
AL (Central Alabama)(6)
Superior Cedar Hill landfill, Pell City, AL June 1997 1975 59 418
(Central Alabama)(7)
Superior Maple Hill landfill, Macon, MO October 1997 1976 30 380
(Northeastern Missouri)(8)
Superior Oakland Marsh landfill, Mansfield, December 1997 1997 102 288
OH (Central Ohio)(9)
Macon County landfill, Decatur, Illinois October 1998 1965 89 250
(Central Illinois)
8
<PAGE>
<CAPTION>
APPROXIMATE
PERMITTED TOTAL
LANDFILL NAME AND LOCATION MONTH ACQUIRED YEAR OPENED ACREAGE(1) ACREAGE(1)
-------------------------- -------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
CBF landfill, McClellandtown, PA June 1998 1960 36 84
(Southwestern Pennsylvania)
Superior Star Ridge landfill April 1998 1983 336 763
Moody, Alabama (Central Alabama)
Superior Cypress Acres landfill, Ocala, May 1998 1991 33 48
Florida (North Central Florida)(10)
Pecan Row landfill, Valdosta, Georgia October 1998 1991 57 129
(Southern Georgia)(11)
Sycamore landfill, Hurricane, WV December 1998 1975 25 93
(Western West Virginia)(12)
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* Acquired as part of the Company's original consolidation in 1993.
(1) Permitted acreage represents the portion of the total acreage on which
disposal cells have been constructed (including any that may have been
filled or capped) or may be constructed based upon an approval issued
by the regulatory agency generally authorizing the development of a
landfill on the acreage. The portion of total acreage that is not
currently permitted is not available for waste disposal.
(2) Does not include approximately 80 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(3) Does not include approximately 80 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(4) Includes approximately 125 acres leased by the Company. See
"Properties." Does not include approximately 58 acres subject to
acquisition by the Company upon exercise of a purchase option.
(5) Formerly M & N Disposal, Inc. In February 1998, the WDNR approved the
Company's application for 58.7 permitted acres at this site. In
December 1998, the Company completed the first phase of construction.
The Company is currently negotiating a local host community agreement
and awaiting regulatory approval of the construction.
(6) Construction and demolition landfill, formerly Holt Landfill Co., Inc.
(7) Formerly Urban Sanitation Corporation.
(8) Formerly Teter Sanitary Landfill and Refuse Hauling, Inc.
(9) Also known as Noble Road Landfill, Inc.
(10) Construction and demolition landfill, formerly Sandman Trucking Corp.
(11) Also known as GeoWaste of GA, Inc.
(12) Operated by the Company since September 1997 pursuant to an operating
agreement.
</TABLE>
Management of Third Party Landfills
As of December 31, 1998, the Company managed four landfills owned by
third parties including a fly ash monofill in Oak Creek, Wisconsin, a bottom ash
monofill in Port Washington, Wisconsin, and two paper sludge and ash captive
monofills owned by separate paper companies. A monofill is a landfill that only
accepts one type of waste. The fly ash and bottom ash monofills are managed with
a Wisconsin public electric utility company under agreements that expire in
April 2000. One of the paper company monofills is located in Brokaw, Wisconsin,
and is managed under a ten-year waste hauling and landfill operation agreement
that expires in January 2009. The remaining monofill is located in Quinnesec,
Michigan, and is managed under an agreement that expires in July 1999. None of
these contracts are considered material to Superior.
Other Integrated Waste Services
In order to provide integrated solid waste services to a wide range of
customers, Superior provides a variety of other waste services, most of which
are project-based and many of which provide additional waste volumes to the
Company's landfills. These services include the remediation and disposal of
contaminated soils and similar materials; underwater remediation and industrial
services; wastewater biosolids management; full container consumer product
recycling; and temporary storage and transportation of special and hazardous
waste, including household hazardous waste. Revenues from these other integrated
waste services constituted
9
<PAGE>
approximately 12% of the Company's revenues in 1998 and 11% in 1997, as
restated. This trend is expected to continue as the Company pursues its growth
strategy of acquiring additional solid waste disposal, transfer and collection
operations.
The Company's project-based remediation services involve the removal and
transportation of contaminated soil from environmental remediation projects for
disposal at the Company's landfills in compliance with applicable regulations.
The Company also provides value-added services to bioremediate contaminated
soils at its landfills prior to final disposal. After excavation, the Company
uses nutrients and micro-organisms to naturally remove or reduce contaminants
from contaminated soil before disposing of the remediated soils in its landfills
or using the remediated soils in landfill construction. The Company's
environmental field services, which are provided principally to industrial
clients in Wisconsin, include the containment and cleanup of actual and
threatened releases of hazardous materials into the environment on both a
planned and an emergency response basis. These services include clean out of
wastewater treatment tanks, cleanup of abandoned oil recycling facilities,
cleanup and demolition of manufacturing facilities, and removal and remediation
of underground storage tanks. The Company is the primary standby provider of
environmental emergency spill response services to the Wisconsin Department of
Natural Resources ("WDNR") in Eastern and Central Wisconsin, the United States
Coast Guard in District Nine, and is a subcontractor to the U.S. Environmental
Protection Agency ("EPA") in Region V.
The Company's wastewater biosolids operations consist principally of the
removal, transportation, storage and beneficial reuse through land application
of industrial and municipal nonhazardous wastewater biosolids and food wastes.
The Company contracts with municipalities, paper mills and food processing
plants to remove, transport and dispose of both municipal and industrial
wastewater biosolids. In most cases, municipalities or industrial processors
have on-site wastewater treatment facilities which pretreat and concentrate
biosolid wastes prior to removal and reuse. In other cases, the Company will
transport a generator's wastewater biosolids from holding tanks or lagoons to a
third party wastewater treatment facility. Land application is generally limited
by state regulations to six months out of the year in Wisconsin. Consequently,
the Company built a one million gallon permitted wastewater biosolid storage
tank in which it stores certain liquid and biosolid wastes until they can be
land applied during the spring and fall.
The Company provides nonhazardous "special" waste and hazardous waste
(including household hazardous waste) services, transportation, and temporary
storage services to industrial clients, principally in Wisconsin. The Company
provides its hazardous waste services from its fully-permitted temporary storage
facility ("TSF") located in Port Washington, Wisconsin (approximately 25 miles
north of Milwaukee) and operates a hazardous household waste collection and
transfer facility in St. Paul, Minnesota. Hazardous waste collected by the
Company is transported to third party treatment or disposal facilities that have
been selected by the customer in virtually all cases. The Company also reclaims
mercury at its TSF from discarded mercury-containing items such as utility
meters, fluorescent lights and thermometers. The Company does not typically take
title to collected hazardous waste nor does it handle or accept radioactive
wastes, explosives, certain poisons, certain PCBs and certain other types of
hazardous wastes. The Company does not own or operate, or intend to own or
operate, a hazardous waste disposal facility. Revenues from hazardous waste
transportation and temporary storage services accounted for less than 2% of the
Company's revenues in 1998 and in 1997, as restated. Although the Company may
under certain conditions from time to time acquire additional operations which
focus on providing other integrated waste services, including certain hazardous
waste services, this trend is expected to continue over the long term as the
Company pursues its growth strategy of acquiring additional solid waste
disposal, transfer and collection operations.
COMPETITION
The solid waste management industry is highly competitive, very
fragmented and requires substantial labor and capital resources. Intense
competition exists within the industry not only for collection, transportation
and disposal volume, but also for acquisition candidates. The industry includes
four large national waste companies: Waste Management, Inc.; Browning-Ferris
Industries, Inc.; Allied Waste Industries, Inc.; and Republic Industries, Inc.
The Company also competes with a number of regional and local companies.
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Superior competes for landfill disposal business primarily on the basis
of disposal fees, geographical location and quality of operations. The Company's
ability to obtain landfill disposal volume may be limited by the fact that some
major collection companies also own or operate their own landfills in the
Company's market areas, to which they send their waste. The Company also
competes, to a lesser extent, with certain municipalities that maintain their
own solid waste disposal operations. These municipalities may have certain
advantages over the Company in financing their operations due to the
availability of tax revenues and tax-exempt financing. The Company competes for
collection and recycling accounts primarily on the basis of price and quality of
its services. From time to time, competitors may reduce the price of their
services in an effort to expand market share or to win a competitively bid
municipal contract. These practices may also lead to reduced pricing for the
Company's services or the loss of business. The Company provides a substantial
portion of its residential collection services under municipal contracts. As is
generally the case in the industry, these contracts are subject to periodic
competitive bidding. There can be no assurance that the Company will be the
successful bidder to obtain or retain these contracts.
EMPLOYEES
At December 31, 1998, the Company employed approximately 2,250 full-time
employees. Drivers at two of the Company's current locations have voted in favor
of union representation. These employees are not yet covered by a collective
bargaining agreement and, in fact, the Company has challenged the election
process involved in one of these elections. Through acquisitions, the Company
has also acquired other locations that are party to existing collective
bargaining agreements. The Company considers its employee relations to be
satisfactory.
REGULATION
Introduction
The Company is currently subject to extensive and evolving federal, state
and local environmental laws and regulations that have been enacted in response
to technological advances and increased concern over environmental issues. These
regulations not only strictly regulate the conduct of the Company's operations
but also are related directly to the demand for many of the services offered by
the Company. Some of the federal statutes discussed below contain provisions
authorizing, under certain circumstances, the institution of lawsuits by private
citizens to enforce the provisions of the statutes.
The regulations affecting the Company are administered by the EPA and
various other federal, state and local environmental, zoning, and health and
safety agencies. The Company believes that it is currently in substantial
compliance with applicable federal, state and local laws, permits, orders and
regulations. The Company believes there will continue to be increased
regulation, legislation and regulatory enforcement actions related to the solid
waste services industry. As a result, the Company attempts to anticipate future
regulatory requirements and to plan accordingly to remain in compliance with the
regulatory framework.
In order to develop and operate a landfill, a biosolid storage facility,
a transfer station, most other solid waste facilities, or a hazardous waste
treatment/storage facility, the Company must typically go through several
governmental review processes and obtain one or more permits and often zoning or
other land use approvals. Obtaining these permits and zoning or land use
approvals is difficult, time consuming, and expensive and is often opposed by
various local elected officials and citizens' groups. Once obtained, operating
permits generally must be reviewed periodically and are subject to modification
and revocation by the issuing agency.
The Company's operating facilities are subject to a variety of
operational, monitoring, site maintenance, closure, post-closure and financial
assurance obligations which change from time to time and which could give rise
to increased capital expenditures and operating costs. In connection with the
Company's expansion of its existing or any newly acquired landfills, it is often
necessary to expend considerable time, effort, and money in complying with the
governmental review and permitting process necessary to maintain or increase the
capacity of these landfills. Governmental authorities have broad power to
enforce compliance with these laws and regulations and to obtain injunctions or
impose civil or criminal penalties in the case of violations. In the
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ordinary course of its landfill, transfer station and TSF operations, the
Company has from time to time received notices from regulatory authorities that
its operations may not be in compliance with certain applicable environmental
laws and regulations. Upon receipt of any notices, the Company generally
cooperates with the authorities in an attempt to resolve the issues raised by
such notices and pays the agreed upon fine or penalty, if any. Failure to
correct the problems to the satisfaction of the authorities could lead to
curtailed operations, fines and penalties or even closure of a landfill or other
facility.
In order to transport waste, it is necessary for the Company to possess
one or more permits from state or local agencies. These permits also must be
periodically renewed and are subject to modification and revocation by the
issuing agency.
The principal federal, state and local statutes and regulations
applicable to the Company's various operations are as follows:
The Resource Conservation and Recovery Act of 1976, as amended ("RCRA")
RCRA regulates the generation, treatment, storage, handling,
transportation, and disposal of solid waste and requires states to develop
programs to ensure the safe disposal of solid waste. RCRA divides solid waste
into two groups, hazardous and nonhazardous. Wastes are generally classified as
hazardous if they (i) either (a) are specifically included on a list of
hazardous wastes or (b) exhibit certain hazardous characteristics, and (ii) are
not specifically designated as nonhazardous. Wastes classified as hazardous
under RCRA are subject to much stricter regulation than wastes classified as
nonhazardous. Among the wastes that are specifically designated as nonhazardous
waste are household waste and "special" waste, including items such as petroleum
contaminated soils, asbestos, foundry sand, shredder fluff and most nonhazardous
industrial waste products.
The EPA regulations issued under Subtitle C of RCRA impose a
comprehensive "cradle to grave" system for tracking the generation,
transportation, treatment, storage and disposal of hazardous wastes. The
Subtitle C regulations provide standards for generators, transporters and
disposers of hazardous wastes, and for the issuance of permits for sites where
such material is treated, stored or disposed. Subtitle C imposes detailed
operating, inspection, training and emergency preparedness and response
standards, as well as requirements for manifesting, record keeping and
reporting, facility closure, post-closure and financial responsibilities. These
regulations require the Company's transfer/storage facilities to demonstrate
financial assurance for sudden and nonsudden pollution occurrences. Financial
assurance for future closure and post-closure expenses must also be maintained.
The Company believes that its hazardous waste transportation activities and its
TSF comply in all material respects with the applicable requirements of Subtitle
C of RCRA.
In October 1991, the EPA adopted the Subtitle D Regulations governing
solid waste landfills. The Subtitle D Regulations, which generally became
effective in October 1993, include location restrictions, facility design
standards, operating criteria, closure and post-closure requirements, financial
assurance requirements, groundwater monitoring requirements, groundwater
remediation standards, and corrective action requirements. In addition, the
Subtitle D Regulations require that new landfill sites meet more stringent liner
design criteria (typically, composite soil and synthetic liners or two or more
synthetic liners) designed to keep leachate out of groundwater and have
extensive collection systems to carry away leachate for treatment prior to
disposal. Groundwater monitoring wells must also be installed at virtually all
landfills to monitor groundwater quality and, indirectly, the leachate
collection system operation. The Subtitle D Regulations also require, where
threshold test levels are present, that methane gas generated at landfills be
controlled in a manner that protects human health and the environment. Each
state is required to revise its landfill regulations to meet these requirements
or such requirements will be automatically imposed upon it by the EPA. Each
state is also required to adopt and implement a permit program or other
appropriate system to ensure that landfills within the state comply with the
Subtitle D Regulations criteria. Wisconsin and various states into which the
Company has entered, or may enter, have adopted regulations or programs as
stringent as, or more stringent than, the Subtitle D Regulations. The Company
believes that all of its present landfill operations are in compliance with
current applicable state and federal Subtitle D Regulations in all material
respects.
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The Federal Water Pollution Control Act of 1972, as amended ("Clean Water
Act")
The Clean Water Act establishes rules regulating the discharge of
pollutants from a variety of sources, including solid waste disposal sites and
transfer stations, into waters of the United States. If surface water run off
from the Company's landfills or transfer stations is discharged into streams,
rivers or other surface waters, the Clean Water Act would require the Company to
apply for and obtain a discharge permit, conduct sampling and monitoring and,
under certain circumstances, reduce the quantity of pollutants in such
discharge. Also, virtually all landfills are required to comply with the EPA's
storm water regulations issued in November 1990, which are designed to prevent
possibly contaminated landfill storm water runoff from flowing into surface
waters. The Company believes that its facilities are in compliance in all
material respects with Clean Water Act requirements, particularly as they apply
to treatment and discharge of storm water. The Company believes it has secured
or has applied for all material required discharge permits under the Clean Water
Act or comparable state-delegated programs. In those instances where the
Company's applications for discharge permits are pending and a final discharge
permit has not been issued, the Company believes it is in substantial compliance
with the applicable substantive state standards in its market areas in
administering the Clean Water Act.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA")
CERCLA establishes a regulatory and remedial program intended to provide
for the investigation and cleanup of facilities from which there has been, or is
threatened, a release of any hazardous substance into the environment. CERCLA's
primary mechanism for remedying such problems is to impose strict joint and
several liability for cleanup of facilities on current owners and operators of
the site, former owners and operators of the site at the time of the disposal of
the hazardous substances, as well as the generators of the hazardous substances
and the transporters who arranged for disposal or transportation of the
hazardous substances. The costs of CERCLA investigation and cleanup can be very
substantial. Liability under CERCLA does not depend upon the existence or
disposal of "hazardous waste" as defined by RCRA, but can also be founded upon
the existence of even very small amounts of the more than 700 "hazardous
substances" listed by the EPA, many of which can be found in household waste. If
the Company were to be found to be a responsible party for a CERCLA cleanup, the
enforcing agency could hold the Company, or any other generator, transporter, or
the owner or operator of the facility, completely responsible for all
investigative and remedial costs even if others may also be liable. CERCLA,
however, provides a responsible party with the right to bring legal action
against other responsible parties for their allocable share of investigative and
remedial costs. The Company's ability to get others to reimburse it for their
allocable share of such costs would be limited by the Company's ability to find
other responsible parties and prove the extent of their responsibility and by
the financial resources of such other parties. CERCLA requires the EPA to
establish a National Priorities List ("NPL") of sites at which hazardous
substances have been or are threatened to be released into the environment and
which require investigation or cleanup. In addition, CERCLA authorizes the
imposition of a lien in favor of the United States upon all real property
subject to, or affected by, a remedial action for all costs for which a party is
liable.
The Clean Air Act
Through state implementation of federal requirements, the Clean Air Act
provides for regulation of the emission of air pollutants from certain landfills
based upon the date of the landfill construction, reconstruction, or
modification, and volume of emissions of regulated pollutants or capacity of the
landfill. The EPA has issued new source performance standards regulating air
emissions of methane and non-methane organic compounds from municipal solid
waste landfills with certain capacity, constructed or reconstructed after May
1991. States are required to develop regulations for landfills that existed
prior to that date and the regulations are in various stages of development in
the states where the Company operates. The state regulations will require
installation of pollution controls for pre-1991 landfills that emit over certain
amounts of non-methane organic compounds. In addition to these requirements,
landfills may be subject to more extensive pollution controls, emission
limitations, and pre-construction permitting requirements, depending on the
amount of air
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pollutants the landfill emits or has the potential to emit; these requirements
are more stringent for landfills located in areas with air pollution problems.
Some states may require a permit to install pollution controls at landfills,
particularly gas extraction and flaring systems. The EPA has also issued
standards to regulate the disposal of asbestos-containing wastes. The landfill
may be required to obtain a federal operating permit under Title V. Finally,
future regulations under development by EPA for the control of emissions of
hazardous air pollutants from landfills may apply; EPA plans to issue these
rules in November 2000.
The Occupational Safety and Health Act of 1970, as amended ("OSHA")
OSHA authorizes the Occupational Safety and Health Administration to
promulgate occupational safety and health standards. Various of these
promulgated standards, including standards for notices of hazards, safety in
excavation, and the handling of asbestos, may apply to the Company's operations.
The Company has no direct involvement in asbestos removal or abatement projects.
However, asbestos-containing waste materials are accepted at certain of the
Company's landfills that are authorized to accept such materials, and some of
the Company's collection operations receive asbestos-containing waste materials
that have already been packaged and labeled. These packages are loaded onto the
Company's vehicles by employees of the asbestos abatement contractors for
transportation to and disposal at the Company's authorized landfills.
Accordingly, OSHA regulations designed to minimize employees' exposure to
airborne asbestos fibers and provide employees with proper training and
protection generally apply to the Company's operations in the transportation and
handling of the asbestos waste. The Company's employees are trained to respond
appropriately in the event there is an accidental spill or release of the
packaged asbestos-containing materials during transportation or landfill
disposal.
State and Local Regulations
Each state in which the Company currently operates, or may operate in the
future, has laws and regulations governing the generation, storage, treatment,
handling, transportation, and disposal of solid and hazardous waste, water and
air pollution and, in most cases, the siting, design, operation, maintenance,
closure and post-closure maintenance of landfills and other solid and hazardous
waste management facilities. In addition, many states have programs that require
investigation and clean up of sites containing hazardous materials in a manner
comparable to CERCLA. These statutes impose requirements for investigation and
cleanup of contaminated sites and liability for costs and damages associated
with such sites, and some provide for the imposition of liens on property owned
by responsible parties. Furthermore, many municipalities also have ordinances,
local laws, and regulations affecting the Company's operations. These include
zoning and health measures that limit solid waste management activities to
specified facilities, laws that grant the right to establish franchises for
collection services and then put out for bid the right to provide collection
services, and bans or other restrictions on the movement of solid wastes into a
municipality.
Certain permits and approvals may limit the types of waste that may be
accepted at a landfill or the quantity of waste that may be accepted at a
landfill during a given time period. In addition, certain permits and approvals,
as well as certain state and local regulations, may limit a landfill to
accepting waste that originates from specified geographic areas or seek to
restrict the importation of out-of-state waste or otherwise discriminate against
out-of-state waste. Generally, restrictions on the importation of out-of-state
waste have not withstood judicial challenge. However, from time to time federal
legislation is proposed which would allow individual states to prohibit the
disposal of out-of-state waste or to limit the amount of out-of-state waste that
could be imported for disposal and would require states, under certain
circumstances, to reduce the amounts of waste exported to other states. Although
such legislation has not yet been passed by Congress, if this or similar
legislation is enacted, states in which the Company operates landfills could act
to limit or prohibit the importation of out-of-state waste. Such state actions
could materially adversely affect landfills within those states that receive a
significant portion of waste originating from out-of-state.
In addition, certain states and localities may for economic or other
reasons restrict the exportation of waste from their jurisdiction or require
that a specified amount of waste be disposed of at facilities within their
jurisdiction. In 1994, the United States Supreme Court held unconstitutional,
and therefore invalid, a local ordinance that sought to impose flow controls on
taking waste out of the locality. In response to that decision,
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some local jurisdictions attempt to flow control through contractual means as
opposed to through ordinance means. In certain circumstances, flow control by
contract may be valid. Additionally, certain state and local jurisdictions
continue to seek to enforce such restrictions and, in certain cases, the Company
may elect not to challenge such restrictions based upon various considerations.
In addition, the aforementioned proposed federal legislation would allow states
and localities to impose certain flow control restrictions. These restrictions
could result in the volume of waste going to landfills being reduced in certain
areas, which may materially adversely affect the Company's ability to operate
its landfills at their full capacity and/or affect the prices that can be
charged for landfill disposal services. These restrictions may also result in
higher disposal costs for the Company's collection operations. If the Company
were unable to pass such higher costs through to its customers, the Company's
business, financial condition, and result of operations could be materially
adversely affected.
The permits or other land use approvals with respect to a landfill, as well
as state or local laws and regulations, may (i) specify the quantity of waste
that may be accepted at the landfill during a given time period and/or (ii)
specify the types of waste that may be accepted at the landfill. Once an
operating permit for a landfill is obtained, it is generally necessary to renew
the permit periodically.
There has been an increasing trend at the state and local level to mandate
and encourage waste reduction at the source and to provide waste recycling and
limit or prohibit the disposal of certain types of solid wastes, such as yard
wastes, in landfills. The enactment of regulations reducing the volume and types
of wastes available for transport to and disposal in landfills has reduced the
volume of waste disposed of by the Company's continuing customers. The Company
has responded to these trends by increasing its emphasis on providing recycling
services to its customers.
ITEM 2. PROPERTIES.
The Company owns solid waste landfills, solid waste collection operations,
recycling facilities, solid waste transfer facilities, a TSF, a waste water
treatment plant and other operating facilities in Alabama, Florida, Georgia,
Illinois, Minnesota, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and
Wisconsin. The Company leases its various offices and facilities, including its
executive offices in Milwaukee under a lease expiring in 2003. The Company also
leases property that provides access to its Superior Oak Ridge landfill in
Ballwin, Missouri. See "Business." The real estate owned by the Company is not
subject to material encumbrances. The Company believes that its existing
facilities are generally adequate for its current needs and requirements.
ITEM 3. LEGAL PROCEEDINGS.
In connection with an acquisition in March 1993, the Company was required
to accept the transfer of an adjacent closed landfill that is listed on the
National Priorities List ("NPL"). A remedial investigation performed by the
potentially responsible parties ("PRPs") (including the Company) has determined
the scope and nature of the contamination at the site and the PRPs have
submitted a feasibility study to the EPA and WDNR, which describes the
alternatives for remediating the associated groundwater contamination. The WDNR
has formally approved the remedial alternative recommended by the PRPs which
calls for the installation of two to four additional gas extraction wells (which
would be connected to the existing gas extraction system at the site) and
continued groundwater monitoring. The estimate of total costs of the remedial
alternative approved by the WDNR is approximately $2.8 million, consisting of
one-time capital costs for the additional extractions wells of $107,000, and
annual operating, maintenance and monitoring costs for the new extraction wells,
the landfill cap, the existing gas extraction system, and groundwater monitoring
system estimated at $90,000 per year. The operating duration of the proposed
remediation is uncertain, but could be 30 years or longer. As the duration is
uncertain, the accrual was not measured on a discounted basis. The Company has
an accrued liability of approximately $2.3 million relating to this matter. The
Company has entered into settlement agreements with certain generator PRPs that
allocates the costs of the remediation. Under the settlement agreements certain
of the generator PRPs agreed to contribute to a total of approximately 42% of
future costs for remedial action and the annual operating, maintenance, and
monitoring costs related to the site.
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The seller and former owner of the closed landfill agreed to indemnify the
Company up to $2.8 million for any site liabilities, including the annual costs
of operating, maintaining, and monitoring the closed landfill and any costs the
Company may incur as a PRP. The Company has been paid approximately $500,000 by
the seller as of December 31, 1998. The seller's remaining potential
indemnification obligation was collateralized as of December 31, 1998, by
$2,317,245 in cash held in escrow. On August 15, 1997, an engineer selected by
the seller determined that the reasonable present value of the cost of a likely
remediation plan for the closed landfill approximates $688,000. The Company and
seller are in dispute regarding the cost of a likely remedial action plan. The
seller demanded arbitration and filed a declaratory judgment action in state
circuit court. The state court entered judgment on March 23, 1998 finding that
the engineer's estimate is final and binding on the parties. On April 30, 1998
the Company filed its notice of appeal of the lower court judgment in state
appellate court. On December 17, 1998 the appellate court issued a decision
reversing the judgment of the trial court and directed that the dispute be
arbitrated. The matter is now before the arbitrator. If the seller's position is
accepted or upheld in the pending proceeding, the Company may be required to
return to the seller substantially all or a substantial portion of the current
amount held in escrow. The Company has recorded as an asset approximately $2.3
million that is deemed probable of recovery from the generator PRPs and through
indemnification from the seller. As is the case with all sites on the NPL, the
performance of the selected remedy at the closed landfill will be subject to
periodic review by the WDNR and the EPA. In the event the selected remedy does
not perform adequately to meet applicable state and federal standards,
additional remedial measures beyond those currently anticipated could be
required by the WDNR or EPA. Implementation of any such additional remedial
measures may involve substantial additional costs beyond those currently
anticipated.
In connection with the formation of the Company in 1993 through the
consolidation of three groups of independent waste services companies, certain
potential environmental liabilities associated with the previously filled
portion of the Superior Valley Meadows landfill were identified. The range of
possible loss has been estimated not to exceed $1.3 million. At the time of the
consolidation of these companies into the Company, a contingent liability escrow
was established to cover the then estimated costs of remediation and monitoring
with respect to the contingent liabilities. To indemnify the Company against up
to $1,308,000 of these contingent liabilities, 130,800 shares of the Company's
common stock otherwise issuable as part of the consolidation to the individual
who was the principal shareholder of the prior owner of the site and who is now
a director, executive officer, and significant shareholder of the Company, were
withheld from issuance. In order to preserve the Company's rights under this
indemnification arrangement prior to the February 24, 1997 expiration date for
advancing such types of indemnification claims, the Company formally notified
the individual of the Company's claim against the withheld shares for the entire
amount of the originally established liability escrow. The Company believes that
the entire amount of such environmental liabilities will either be covered by
the foregoing indemnification arrangement or otherwise is not expected to have a
material adverse effect on the Company's results of operations or financial
condition.
In connection with the ACMAR Regional Landfill, Inc. merger on March 31,
1998, a landfill was acquired which was subject to legal proceedings brought by
the local municipality. In October 1996, the municipality filed an
administrative appeal challenging the State of Alabama Department of
Environmental Management's ("ADEM") decision to issue a landfill permit
modification. An administrative commission appointed a judge to act as a hearing
officer to oversee the permit appeal. Based upon the hearing officer's
recommendation, the administrative commission in June 1997 unanimously adopted
the recommendation of the hearing officer that the landfill permit modification
was properly issued. Subsequently, the municipality filed an appeal of this
administrative decision in state circuit court. While the Company believes it
will be successful in defending the appeal of this decision, there can be no
assurance that this appeal will not be determined adversely to the Company. Any
such adverse decision, if ultimately upheld, could impact the ability of such
landfill to accept any or certain volumes of waste and, in turn, could adversely
effect the Company's results of operations. The Company has landfill assets with
a net book value of $3.8 million at this site. Separately, the municipality in
August 1996 filed in Federal district court a citizen's suit against the
landfill brought under provisions of the RCRA. The Company does not believe
there is a basis for a claim supporting the citizen's suit. In addition to the
Federal claims, the municipality has alleged certain state law claims that,
among other things, the prior owners of the landfill misrepresented the geology
and hydrogeology
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of an expansion portion of the landfill, allegedly inducing the municipality to
grant local approval for the expansion of the landfill. This local approval is a
prerequisite for issuance of the ADEM solid waste permit. Prior to the
acquisition of this landfill, the prior owners were engaged in settlement
negotiations with the municipality regarding these proceedings. Since the
acquisition, the Company has met with municipal officials and presented
settlement offers that the municipality currently has under consideration. The
Company believes that the ultimate resolution of the citizen's suit and the
municipality's state law claims will not have a material adverse effect on the
Company's financial condition or results of operations.
As part of the Company's PenPac acquisition on September 30, 1998, the
Company acquired Nicholas Enterprises, Inc. ("Nicholas"). Prior to the Company's
acquisition of PenPac, Nicholas was named as a defendant in litigation commenced
pursuant to the New Jersey Spill Compensation and Control Act and was named as a
PRP commenced pursuant to the Comprehensive Environmental Response, Compensation
and Control Act ("CERCLA" or "Superfund"), respectively, at two sites: (i)
Sharkey's Landfill in Parsippany--Troy Hills Township, New Jersey, and (ii)
Cortese Landfill in the Hamlet of Narrowsburg--Town of Tusten, New York. During
1998, Nicholas entered into a Hardship Buyout Agreement pertaining to the
Sharkey Landfill, whereby Nicholas was released from its liability regarding the
site in exchange for remitting $300,000 of insurance proceeds and other
additional assessments up to $50,000. During 1994, Nicholas agreed to pay
$200,000 to the State of New York in final settlement of its share of past costs
at the Cortese Landfill. This amount has been paid. Nicholas has requested, but
not yet received, release of liability for any subsequent costs related to this
site. Under the terms of the acquisition agreement for Nicholas, its former
shareholders have agreed to indemnify the Company, to the extent not covered by
insurance, for all claims arising from any liability at or related to disposal
of waste at these sites.
The Company carries a range of insurance, including a commercial general
liability policy and a property damage policy. The Company maintains a limited
environmental impairment liability policy on its landfills and transfer stations
that provides coverage, on a "claims made" basis, against certain third party
off-site environmental damage. There can be no assurance that the limited
environmental impairment policy will remain in place or provide sufficient
coverage for existing, but not yet known, third party, off-site environmental
liabilities. The Company is also a party to various legal proceedings arising in
the normal course of business. The Company believes that the ultimate resolution
of these other matters will not have a material adverse effect on the Company's
financial condition or result of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of 1998.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "SUPR". The following table sets forth the range of high and low sale
prices for the Common Stock for the past two years. The prices below may reflect
interday trading prices and may include intradealer prices without retail mark
up, mark down, or commission and may not reflect actual transactions.
HIGH LOW
---- -----
1997
First quarter ended March 31, 1997..................... $24 $17
Second quarter ended June 30, 1997..................... $23 3/4 $20 1/8
Third quarter ended September 30, 1997................. $29 $22 3/4
Fourth quarter ended December 31, 1997................. $29 1/2 $20 7/8
1997
First quarter ended March 31, 1998..................... $31 7/8 $24 11/16
Second quarter ended June 30, 1998..................... $33 3/8 $28 1/2
Third quarter ended September 30, 1998................. $30 3/8 $24 7/8
Fourth quarter ended December 31, 1998................. $27 1/4 $17 1/4
At March 1, 1999, there were approximately 1,050 shareholders of record of
the Company's common stock and, based on security position listings, the Company
believes it has in excess of 6,500 beneficial owners.
The Company has never paid cash dividends on its Common Stock and has no
present intention to pay cash dividends. In addition, the Company's revolving
credit facility prohibits the payment of cash dividends on its Common Stock. It
is the Company's intention to retain earnings to finance the expansion of its
business.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA.
The following table presents selected consolidated statement of operations,
balance sheet, and other operating data of the Company for the periods
presented. The following selected financial and operating data were derived from
the Company's consolidated financial statements, which have been audited by
Ernst & Young LLP, independent auditors. The selected consolidated financial
data below should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto at December 31, 1997 and 1998 and for the
three years in the period ended December 31, 1998 and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations. All
financial data for 1994 through 1998 have been restated and give retroactive
effect to reflect the Company's merger with Resource Recovery Transfer &
Transportation, Inc. ("R(2)T(2)") completed on June 27, 1997; Alabama Waste
Services, Inc. and ACMAR Regional Landfill, Inc. (collectively "AWS") completed
on March 31, 1998; South Lake Refuse Service, Inc. and Commercial Refuse, Inc.
(collectively "South Lake") completed on August 17, 1998; Gopher Disposal, Inc.,
Eagle Environmental, Inc., Materials Recovery, Ltd., Newport Properties, and
Watson's Rochester Disposal, Inc. (collectively "Gopher") completed on August
26, 1998; Wilson Waste Systems, Inc. ("Wilson") completed on August 31, 1998;
PenPac, Inc., Heritage Recycling, Inc., Iorio Carting, Inc., ACS Services, Inc.,
Recycling Techniques, Inc., Advanced Waste Technologies, Inc., Baray, Inc., and
Nicholas Enterprises, Inc. (collectively "PenPac") completed on September 30,
1998; and GeoWaste Incorporated ("GeoWaste") completed on October 30, 1998, and
all accounted for using the pooling of interests method except 1995 was not
restated to include the accounts and operation of Wilson and
18
<PAGE>
periods prior to 1995 have not been restated to include the accounts and
operation of R(2)T(2), or Wilson as combined results are not materially
different from the results as previously presented.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, (1)
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................. $119,395 $145,295 $180,720 $253,241 $319,673
Cost of operations........................ 74,375 78,613 99,150 144,377 184,964
Selling, general and administrative
expenses................................ 24,158 26,086 30,416 38,458 40,224
Merger costs (2).......................... -- -- -- 1,035 10,599
Unusual charges (3)....................... -- -- -- 2,873 --
Depreciation and amortization............. 14,108 19,691 24,389 32,397 39,121
-------- -------- -------- -------- --------
Operating income from continuing
operations.............................. 6,754 20,905 26,765 34,101 44,765
Interest expense.......................... (3,435) (4,349) (2,617) (3,440) (3,116)
Other income.............................. 2,247 1,675 2,069 1,888 912
-------- -------- -------- -------- --------
Income from continuing operations before
income taxes............................ 5,566 18,231 26,217 32,549 42,561
Income taxes.............................. 1,203 6,382 9,814 12,912 22,060
-------- -------- -------- -------- --------
Income from continuing operations......... 4,363 11,849 16,403 19,637 20,501
Income (loss) from discontinued
operations, net of income tax (4)....... (5,735) (329) -- -- --
-------- -------- -------- -------- --------
Net income (loss)......................... $ (1,372) $ 11,520 $ 16,403 $ 19,637 $ 20,501
======== ======== ======== ======== ========
Earnings (loss) per share:
Basic................................ $ (0.07) $ 0.52 $ 0.65 $ 0.70 $ 0.64
======== ======== ======== ======== ========
Diluted (5).......................... $ (0.07) $ 0.51 $ 0.64 $ 0.69 $ 0.63
======== ======== ======== ======== ========
OTHER OPERATING DATA:
EBITDA (6)................................ $ 20,862 $ 40,596 $ 51,154 $ 66,498 $ 83,886
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 4,732 $ 8,807 $ 23,657 $ 44,955 $ 9,715
Working capital........................... 12,920 7,004 10,956 39,533 13,759
Property and equipment, net............... 104,491 113,393 149,226 251,414 312,497
Total assets.............................. 166,676 179,166 256,183 442,855 526,842
Long-term debt, net of current
maturities.............................. 50,456 35,157 18,815 27,215 66,284
Total common shareholders' investment..... 46,981 55,886 133,271 285,384 316,742
- ------------
(1) All financial data for the period ending on December 31, 1994 has been
restated to reflect separately the results of discontinued operations.
(2) During 1998, the Company incurred nonrecurring merger costs totaling
$10,599,000 in connection with its mergers with TWR, AWS, PenPac, Gopher,
Wilson, South Lake and GeoWaste. These mergers were accounted for as
poolings of interest. In 1997, the Company completed its merger with
R(2)T(2) accounted for as a pooling of interest. The Company incurred
nonrecurring merger costs of $1,035,000 during 1997 as a result of the
merger with R(2)T(2).
(3) Prior to their acquisition by the Company, AWS and GeoWaste incurred charges
classified as unusual. ACMAR Regional Landfill, Inc. negotiated a settlement
agreement with the United States Government with respect to a "Clean Water
Act" violation in 1993 resulting in fines and restitutions totaling
$1,790,000 and was placed on probation for three years. This amount was
accrued for in the
19
<PAGE>
December 31, 1997 financial statements. As provided in the settlement
agreement, its probation was terminated as a result of the payment of the
fine and its merger with the Company on March 31, 1998. Additionally, AWS
incurred legal fees included in selling, general and administrative costs of
$342,000 during 1997 in connection with this matter. During 1997, GeoWaste
terminated an existing transfer, transportation and disposal agreement with
the City of St. Augustine. Due to the termination of the agreement, assets
related specifically to the project for the City of St. Augustine were
impaired and the related expense of $436,000 was classified as an unusual
charge. Additionally, the Company incurred legal, consulting and other costs
to terminate the agreement of $647,000 which were classified as unusual
charges. These unusual charges amounted to approximately $0.10 per share in
1997.
(4) Includes estimated losses on disposition of discontinued operations, net of
income taxes of $5,042,000 and $329,000 for 1994 and 1995, respectively.
(5) The earnings per share excluding the merger costs and unusual charges
described above; excluding cumulative deferred tax provisions for those
companies that were S Corporations prior to acquisition by the Company; and
including Federal and State income tax provisions as if the Companies
reported as C Corporations would be $0.75 in 1997 and $0.96 in 1998.
(6) EBITDA is defined as operating income from continuing operations, plus
depreciation and amortization. EBITDA should not be considered an
alternative to (i) operating income or net income (as determined in
accordance with generally accepted accounting principles ("GAAP")) as an
indicator of the Company's operating performance or (ii) cash flows from
operating activities (as determined in accordance with GAAP) as a measure of
operating performance or liquidity. However, the Company has included EBITDA
data (which are not a measure of financial performance under GAAP) because
it understands that such data are commonly used by certain investors to
evaluate a Company's performance in the solid waste industry. Furthermore,
the Company believes that EBITDA data are relevant to an understanding of
the Company's performance because they reflect the Company's ability to
generate cash flows sufficient to satisfy its debt service, capital
expenditure and working capital requirements. The Company therefore
interprets the trends that EBITDA depicts as one measure of the Company's
operating performance. However, funds depicted by the EBITDA measure may not
be available for debt service, capital expenditures, or working capital due
to legal or functional requirements to conserve funds or other commitments
or uncertainties. EBITDA, as measured by the Company, might not be
comparable to similarly titled measure reported by other companies.
Therefore, in evaluating EBITDA data, investors should consider, among other
factors: the non-GAAP nature of EBITDA data; actual cash flows; the actual
availability of funds for debt service; capital expenditures and working
capital; and the comparability of the Company's EBITDA data to similarly
titled measures reported by other companies.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
Superior provides solid waste collection, transfer, transportation,
recycling and disposal services to customers in Alabama, Florida, Georgia,
Illinois, Michigan, Minnesota, Missouri, New Jersey, Ohio, Pennsylvania, West
Virginia and Wisconsin. The Company also provides other integrated waste
services, most of which are project-based and many of which provide additional
waste volumes to the Company's landfills and recycling facilities. As of
December 31, 1998, solid waste operations consisted of 19 Company owned and
operated landfills (including a greenfield landfill), 4 managed third party
landfills, 45 solid waste collection operations, 15 recycling facilities and 19
solid waste transfer stations.
20
<PAGE>
As described more fully below, revenues for the periods presented were
comprised of fees received for the following services:
1996 1997 1998
---- ---- ----
Collection.............................................. 61% 60% 61%
Disposal................................................ 19% 20% 20%
Recycling............................................... 8% 9% 7%
Other integrated waste services......................... 12% 11% 12%
---- ---- ----
100% 100% 100%
==== ==== ====
The Company's strategy for future growth anticipates additional revenue
resulting from its acquisition program and continued internal growth. The
Company acquired businesses with estimated annualized revenues of more than $140
million in 1998. The percentage of revenue obtained from collection services
increased to 61% in 1998 compared to 60% in 1997 due to a greater portion of
revenue being generated from collection operations acquired. The Company
believes that future operations acquired will move its revenue mix away from
recycling and other integrated waste services and more towards solid waste
collection and disposal.
All financial data for 1996, 1997, and 1998 have been restated and give
retroactive effect to reflect the Company's (i) June 27, 1997 acquisition of
R(2)T(2); (ii) March 31, 1998 acquisition of AWS; (iii) August 17, 1998
acquisition of South Lake; (iv) August 26, 1998 acquisition of Gopher; (v)
August 31, 1998 acquisition of Wilson; (vi) September 30, 1998 acquisition of
PenPac; and (vii) October 30, 1998 acquisition of GeoWaste in transactions
accounted for as pooling of interests.
RESULTS OF OPERATIONS
The information below reflects pro forma net income which includes federal
and state income tax provisions for 1997 and 1998 as if AWS, Gopher and PenPac
had been taxable entities, and excludes the cumulative deferred tax provision
for AWS, Gopher and PenPac which were Subchapter S Corporations prior to their
acquisition. Adjusted net income excludes merger costs incurred in connection
with accounted for as poolings of interest, as well as unusual charges incurred
during 1997 related to the termination of an agreement and settlement of a Clean
Water Act dispute with the United States Government. See Note #3 "Mergers and
Acquisitions" in the Notes to Consolidated Financial Statements for more
detailed explanations of these costs.
<TABLE>
<CAPTION>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 PER PER
(RESTATED) SHARE 1998 SHARE
---------- ------ -------- ------
<S> <C> <C> <C> <C>
Revenue................................................. $253,241 -- $319,673 --
Net Income, as reported................................. $ 19,637 $ 0.69 $ 20,501 $ 0.63
Pro forma adjustments:
Adjustment for income taxes........................... (1,324) (0.05) (620) (0.02)
-------- ------ -------- ------
Pro forma net income.................................... 18,313 0.64 19,881 0.61
Adjustments:
Adjustment for deferred income taxes.................. -- -- 2,686 0.08
Merger costs, net of tax.............................. 762 0.03 8,681 0.27
Unusual charges, net of tax........................... 2,258 0.08 -- --
-------- ------ -------- ------
Adjusted net income, exclusive of merger costs, unusual
charges and cumulative deferred tax provisions........ $ 21,333 $ 0.75 $ 31,248 $ 0.96
======== ====== ======== ======
</TABLE>
21
<PAGE>
Overview
In 1998, revenues increased 26.2% to $319.7 million compared to $253.2
million in 1997. Income from operations increased 31.3% to $44.8 million in 1998
from $34.1 million in 1997. Diluted earnings per share decreased 8.7% to $0.63
for 1998 from $0.69 per share for 1997. Diluted earnings per share excluding the
effect of merger costs, nonrecurring items and the cumulative effect of deferred
tax adjustments increased 28.0% to $0.96 per share in 1998 from $0.75 per share
in 1997. The weighted average of common and common equivalent shares outstanding
was 32.6 million for 1998 and 28.4 million for 1997.
The following table sets forth for the years indicated the percentage of
revenues represented by the individual line items reflected in the Company's
consolidated statements of operations:
<TABLE>
<CAPTION>
PERIOD-TO-PERIOD
PERCENTAGE RELATIONSHIP TO CHANGE YEARS ENDED
TOTAL REVENUES DECEMBER 31,
YEARS ENDED DECEMBER 31, --------------------
-------------------------- 1997 VS. 1998 VS.
1996 1997 1998 1996 1997
------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C>
Revenues......................................... 100.0% 100.0% 100.0% 40.1 % 26.2 %
Cost of operations............................... 54.9 57.0 57.9 45.6 % 28.1 %
Selling, general and administrative expenses..... 16.8 15.2 12.6 26.4 % 4.6 %
Merger costs..................................... -- 0.4 3.3 N/A* N/M**
Unusual charges.................................. -- 1.1 -- N/A* N/A*
Depreciation and amortization.................... 13.5 12.8 12.2 32.8 % 20.8 %
------ ------ ------ ------ -------
Operating income................................. 14.8 13.5 14.0 27.4 % 31.3 %
Interest expense................................. (1.4) (1.3) (1.0) 31.4 % (9.4)%
Other income..................................... 1.1 0.7 0.3 (8.7)% (51.7)%
------ ------ ------ ------ -------
Income from operations before income taxes....... 14.5 12.9 13.3 24.2 % 30.8 %
Income taxes..................................... 5.4 5.1 6.9 31.6 % 70.8 %
------ ------ ------ ------ -------
Income from operations........................... 9.1% 7.8% 6.4% 19.7 % 4.4 %
====== ====== ====== ====== =======
- ------------
* N/A not applicable
** N/M not meaningful
</TABLE>
Revenues
Revenues increased approximately $66.5 million, or 26.2%, to $319.7 million
in 1998 from $253.2 million in 1997 due primarily to the impact of operations
acquired which were accounted for under the purchase method of accounting.
During 1998, the Company acquired or merged with 31 businesses with estimated
annualized revenues of approximately $140 million. The Company expects its
revenues and income from operations to increase in 1999 in comparison to those
reported historically due to the inclusion of a full year of revenue and income
in 1999 from these acquired businesses, as well as a result of its ongoing
acquisition program. The increase in revenue was also due, to a much lesser
extent, to increases in volumes of wastes collected and disposed of at the
Company's landfills. Internal growth from sales activities increased
approximately 6% over 1997 primarily due to increased volumes. Daily disposal
volume at the Company's landfills rose to an average of approximately 15,100
tons per day in 1998 compared to an average of 11,500 tons per day in 1997, as
restated. The Company expects to continue to increase disposal volumes in 1999
due primarily to the inclusion of a full year of disposal income from landfills
acquired during 1998 and continued internal sales growth activities.
Revenues increased approximately $72.5 million, or 40.1%, to $253.2 million
in 1997 from $180.7 million in 1996 due primarily to the impact of operations
acquired which were accounted for under the purchase method of accounting.
During 1997, the Company acquired or merged with 26 businesses with estimated
annualized revenues of approximately $75 million. The increase in revenue was
also due, to a much lesser extent, to increases in volumes of wastes collected
and disposed at the Company's landfills. Internal growth from sales activities
increased 5% over 1996, exclusive of the impact of an increase in recyclable
commodity
22
<PAGE>
prices which caused an approximately 1% increase in total revenues compared to
the previous year. Daily disposal volume at the Company's landfills rose to an
average of approximately 11,500 tons per day in 1997 compared to an average of
approximately 8,300 tons per day in 1996, as restated. The higher landfill
volume was predominantly the result of waste received at disposal sites
acquired, as well as increased volumes of special waste streams from the
Company's project-driven other integrated waste services.
Cost of Operations
Cost of operations increased $40.6 million, or 28.1%, for 1998 compared to
1997. As a percentage of revenues, cost of operations increased to 57.9% from
57.0% in 1997. The slight increase in cost of operations as a percentage of
revenues was due to a higher relative percentage of business recognized from
collection operations (which typically have higher costs of operations as a
percentage of revenues than disposal operations). Changes in this trend are
dependent on the timing and mix of potential future business acquisitions, the
ability to internalize waste streams from new and planned transfer stations, and
the seasonality of the Company's operations. See "Seasonality." The increase in
the dollar amount of cost of operations was primarily attributable to the costs
of collecting and disposing of the increased volumes of wastes received from
services provided to new customers, including the operation of new businesses
acquired.
Cost of operations increased $45.2 million, or 45.6%, for 1997 compared to
1996. As a percentage of revenues in 1997, cost of operations increased to 57.0%
compared to 54.9% in 1996. The increase in cost of operations as a percentage of
revenues was due to the higher relative percentage of non-integrated collection
revenues from businesses acquired resulting in a lower overall percentage of
waste collected by the Company which is disposed of at its own facilities. The
increase in the cost of operations was primarily attributable to the costs of
collecting and disposing of the increased volumes of wastes received from
services provided to new customers, including the operation of new operations
acquired.
Merger Costs
The Company incurred nonrecurring merger costs of approximately $10.6
million during 1998 compared to $1.0 million in 1997, as a result of the mergers
completed with TWR, AWS, South Lake, Gopher, Wilson, PenPac and GeoWaste during
1998. The one-time merger costs included severance and bonuses, professional
fees and other related merger costs. As of December 31, 1998, $6.7 million of
the merger costs had been paid with the remaining $3.9 million to be paid during
1999.
Unusual Charges
There were no unusual charges incurred in 1998 compared to $2.9 million
incurred in 1997. During 1997, prior to the merger with the Company, GeoWaste
terminated an existing transfer, transportation, and disposal agreement. Unusual
charges of $1.1 million were recognized related to assets which were impaired as
a result as well as costs incurred to terminate the agreement. Also during 1997,
AWS recognized $1.8 million in an unusual charge related to settlement of a
Clean Water Act dispute with the United States Government, prior to its merger
with the Company.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $1.8 million, or 4.6%, for 1998 compared to 1997. As a
percentage of revenues, SG&A decreased to 12.6% in 1998 from 15.2% in 1997. The
percentage decline in SG&A was primarily due to the significant increase in
revenues acquired without a corresponding increase in SG&A support functions,
particularly at the headquarters. This trend is expected to continue in 1999 as
the Company continues to pursue further SG&A efficiencies. While SG&A decreased
as a percentage of revenues, the actual dollars spent to support SG&A functions
increased primarily due to increased costs for personnel necessary to support
service to new customers, including those associated with the operations
acquired.
SG&A increased $8.0 million, or 26.4%, for 1997 compared to 1996. As a
percentage of revenues, SG&A decreased to 15.2% in 1997 from 16.8% in 1996. The
percentage decline in SG&A was due to the significant increase in disposal
revenues without a corresponding increase in SG&A support functions. While SG&A
23
<PAGE>
decreased as a percentage of revenues, the actual dollars increased primarily
due to increased costs for personnel necessary to support the Company's
acquisition program and to service new customers, including those associated
with the operations acquired and increased expenditures for 6 additional market
development personnel.
Depreciation and Amortization
Depreciation and amortization increased $6.7 million, or 20.8%, for 1998
compared to 1997 primarily as a result of increased depreciation costs of the
additional assets and businesses acquired, increased landfill depletion costs,
and increased goodwill amortization as a result of acquisitions completed during
1998. As a percentage of revenues, depreciation, and amortization decreased to
12.2% in 1998 compared to 12.8% in 1997 reflecting the change in revenue mix
towards collection operations which typically reflect lower depreciation as a
percentage of revenue as well as lower relative depletion rates at the landfills
resulting from better compaction rates. Changes in this trend are dependent on
the timing and mix of potential future business acquisitions and the seasonality
of the Company's operations. See "Seasonality".
Depreciation and amortization increased $8.0 million, or 32.8%, for 1997
compared to 1996, primarily as a result of increased depreciation costs of the
additional assets and businesses acquired, increased landfill depletion costs,
and increased goodwill amortization as a result of acquisitions completed during
1997. As a percentage of revenues, depreciation and amortization decreased to
12.8% in 1997 compared to 13.5% in 1996 reflecting lower relative depletion
rates at the landfills resulting from better compaction rates.
Interest Expense
Gross interest expense (exclusive of interest income) decreased $324,000,
or 9.4%, for 1998 compared to 1997. Interest expense in 1998 was lower because
indebtedness was repaid in September 1997 through the use of proceeds from the
Company's September 1997 follow-on offering. Interest expense as a percentage of
revenues was 1.0% in 1998 and 1.3% in 1997. Interest of $712,000 was capitalized
during 1998 related to landfills under development.
Interest expense increased $823,000, or 31.4%, for 1997 compared to 1996.
Interest expense as a percentage of revenues was 1.3% in 1997 compared to 1.4%
in 1996. The increase in interest expense was due to the application of a
portion of the net proceeds from the Company's September 1997 follow-on offering
later in 1997 compared to the application of a portion of the net proceeds from
the Company's March 1996 initial public offering to repay indebtedness earlier
in 1996. Interest of $1.0 million was capitalized during 1997 related to
landfills under development.
Income Taxes
The Company's effective tax rate increased to 51.8% for 1998 compared to
39.7% in 1997 and 37.4% in 1996. The increase in the effective tax rate in 1998
is due to the $2.4 million tax effect of non-deductible merger costs associated
with businesses acquired and the $2.7 million tax effect of the cumulative
deferred tax provision associated with the termination of S Corporation
elections of merged companies. As indicated in the pro forma provision for
income taxes, income tax would have been $1,324,000 higher in 1997 and $620,000
higher in 1998 had AWS, South Lake Refuse Service, Inc., Gopher and PenPac (the
Pooled Entities) been C Corporations. Exclusive of these nondeductible charges
and cumulative deferred tax provision, and including the pro forma tax expense
of the pooled entities, the Company's effective tax rate would be 43.7% and
41.3% in 1997 and 1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's balance sheet at December 31, 1998 reflected approximately
$9.7 million in cash and cash equivalents compared to $45.0 million at December
31, 1997. Pending specific application, the Company has invested the unused cash
in short-term interest bearing securities. At December 31, 1998, the Company had
$62.1 million outstanding borrowings and approximately $3.9 million in letters
of credit outstanding under its $275 million revolving credit facility. At
December 31, 1998, the ratio of the Company's long-term debt to
24
<PAGE>
total capitalization was 17.3% compared to 8.7% at December 31, 1997. The
increase was attributable to the increase in the use of debt during 1998 to fund
the Company's growth through acquisitions.
The Company's principal strategy for future growth is through the
acquisition of additional solid waste disposal and collection operations. During
1998, exclusive of pooled company acquisitions, the Company acquired 22
businesses, including four operational landfills, which were accounted for as
purchases. Consideration for these acquisitions was $71.4 million in cash (net
of cash acquired), $10.8 million in future payments or notes payable, and
148,348 shares of Common Stock. In addition, 63,041 shares were issued in
payment of debt of entities acquired in 1998. Also during 1998, as a result of
final valuations pertaining to previous acquisitions, $4.4 million in cash was
paid and 194,000 shares of common stock were issued. Although there can be no
assurance that the Company will be able to successfully continue its acquisition
program at the same pace as in 1998, the Company intends to fund any such future
acquisitions through the use of cash, assumption of indebtedness, future
royalties and/or capital stock. The cash required to fund any future
acquisitions will likely be provided from one or more of the following sources:
existing cash balances, cash flow from operations and/or borrowings under the
Company's revolving credit facility. $209.0 million of the $275 million facility
was available at December 31, 1998. The revolving credit facility requires the
Company to maintain certain financial ratios and satisfy other requirements,
including a prohibition on the payment of cash dividends. Availability under
this facility is based on the Company's cash flow and leverage. Interest is
payable monthly based on the agent bank's base rate or quarterly based on a
Eurodollar borrowing rate, depending upon how advances are drawn, plus a margin.
The facility matures in September 2003.
Capital expenditures for 1999 currently are expected to be approximately
$55 million compared to $52.9 million in 1998. These amounts are primarily
allocated to continued spending for landfill expansions. The Company intends to
fund future capital expenditures principally through internally generated funds
and, to a lesser extent, equipment lease financing. In addition, the Company
also anticipates that it may require substantial additional capital expenditures
to facilitate its growth strategy of acquiring additional solid waste collection
and disposal businesses. If the Company is successful in acquiring additional
landfill disposal facilities, the Company may also be required to make
significant expenditures to bring any such newly acquired disposal facilities
into compliance with applicable regulatory requirements, obtain permits for any
such newly acquired disposal facilities, or expand the available disposal
capacity at any such newly acquired disposal facilities. The amount of these
expenditures cannot be currently determined, since they will depend on the
nature and extent of any acquired landfill disposal facilities, the condition of
any facilities acquired and the permitting status of any acquired sites. In the
past, the Company has been able to obtain other types of financing arrangements,
such as equipment lease financing, to fund its various capital requirements. The
Company believes it can readily access such additional sources of financing as
necessary to facilitate the Company's growth.
The Company also has material financial obligations relating to closure and
post-closure costs or remediation of disposal facilities it operates or for
which it is or may become responsible. While the precise amounts of these future
obligations cannot be determined, at December 31, 1998, the Company estimated
the total costs (on a current dollar as opposed to a discounted present value
basis) to be approximately $160 million for final closure of its operating
facilities and post closure monitoring costs pursuant to applicable regulations
(generally for a term of 30 to 40 years after final closure), as well as ongoing
remediation. At December 31, 1998, the Company had accrued $50.9 million for
such projected costs. The Company will provide additional accruals based on
engineering estimates of consumption of permitted landfill airspace over the
useful lives of its landfills.
Net cash provided by operations for the year ended December 31, 1998
increased to $51.2 million from $47.6 million during 1997. The increase was
primarily due to the increase in depreciation and amortization, a noncash
expense, of $6.7 million between 1997 and 1998. These increases were offset by
the $4.7 million decrease in accounts payable and accrued expenses as well as
the increase in accounts receivable of $2.2 million attributable to the
increased sales volume from operations acquired.
Net cash used in investing activities for the year ended December 31, 1998
decreased to $120.3 million from $148.6 million for the year ended December 31,
1997. The decrease was primarily due to $75.8 million of
25
<PAGE>
net cash payments for businesses acquired compared to $113.8 million in 1997.
Purchases of property and equipment increased $14.8 million to $52.9 million for
1998, primarily due to landfill expansions.
Net cash provided by financing activities in the year ended December 31,
1998 totaled $33.9 million compared to $122.4 million in the year ended December
31, 1997. This decrease reflected the receipt of $116.7 million in net proceeds
from the follow-on offering of the Company's stock in September 1997 with no
corresponding proceeds during 1998.
QUARTERLY RESULTS
The following table presents the Company's unaudited consolidated quarterly
results and the percentages of revenues represented by the individual line items
reflected in the Company's consolidated statements of operations for each of the
four quarters in the years ended December 31, 1998 and December 31, 1997, all
restated to give retroactive effect to the Company's acquisitions during the
periods which were accounted for as poolings of interests. This information has
been presented on the same basis as the Company's audited consolidated financial
statements and, in the Company's opinion, contains all necessary adjustments
(consisting only of normal recurring accruals) to present fairly the Company's
unaudited quarterly results when read in conjunction with the Company's audited
consolidated financial statements and notes thereto. These interim operating
results, however, are not necessarily indicative of the Company's results for
any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
--------------- --------------- --------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.............................. $68,163 100.0% $81,462 100.0% $84,255 100.0% $85,793 100.0%
Expenses:
Cost of operations.................. 39,879 58.5 46,825 57.5 48,086 57.1 50,174 58.5
Selling general and administrative
expenses.......................... 10,007 14.6 9,667 11.9 10,213 12.1 10,337 12.0
Merger costs........................ 1,543 2.3 315 0.4 5,595 6.6 3,146 3.7
Depreciation and amortization....... 9,338 13.7 9,977 12.2 9,661 11.5 10,145 11.8
------- ----- ------- ----- ------- ----- ------- -----
Operating income...................... 7,396 10.9 14,678 18.0 10,700 12.7 11,991 14.0
Other income:
Interest expense.................... (928) (1.4) (815) (1.0) (554) (0.7) (819) (1.0)
Other income (expense), net......... 538 0.8 460 0.6 (56) -- (30) --
------- ----- ------- ----- ------- ----- ------- -----
Income before income taxes.......... 7,006 10.3 14,323 17.6 10,090 12.0 11,142 13.0
Income taxes........................ 3,687 5.4 5,676 7.0 7,267 8.6 5,430 6.3
------- ----- ------- ----- ------- ----- ------- -----
Net income............................ $ 3,319 4.9% $ 8,647 10.6% $ 2,823 3.4% $ 5,712 6.7%
======= ======= ======= =======
Earnings per share:
Basic........................... $ 0.10 $ 0.27 $ 0.09 $ 0.18
======= ======= ======= =======
Diluted......................... $ 0.10 $ 0.26 $ 0.09 $ 0.18
======= ======= ======= =======
Adjusted:
Net income, as adjusted(1).......... $ 5,041 $ 8,552 $ 9,300 $ 8,355
======= ======= ======= =======
Earnings per share, as adjusted--
diluted(1)........................ $ 0.16 $ 0.26 $ 0.28 $ 0.26
======= ======= ======= =======
26
<PAGE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997
--------------- --------------- --------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.............................. 47,935 100.0 63,882 100.0 71,684 100.0 69,740 100.0
Expenses:
Cost of operations.................. 26,962 56.2 36,235 56.7 41,215 57.5 39,965 57.3
Selling, general and administrative
expenses.......................... 8,652 18.0 9,686 15.2 9,547 13.3 10,573 15.1
Merger costs........................ -- -- 1,035 1.6 -- -- -- --
Unusual charges..................... 1,083 2.3 -- -- -- 1,790 2.6
Depreciation and amortization....... 6,554 13.7 7,698 12.1 9,171 12.8 8,974 12.9
------- ----- ------- ----- ------- ----- ------- -----
Operating income...................... 4,684 9.8 9,228 14.4 11,751 16.4 8,438 12.1
Other income:
Interest expense.................... (668) (1.4) (899) (1.4) (1,081) (1.5) (792) (1.1)
Other income (expense), net......... 379 0.8 (28) -- 538 0.8 999 1.4
------- ----- ------- ----- ------- ----- ------- -----
Income before income taxes.......... 4,395 9.2 8,301 13.0 11,208 15.6 8,645 12.4
Income taxes........................ 1,720 3.6 3,029 4.7 4,038 5.6 4,125 5.9
------- ----- ------- ----- ------- ----- ------- -----
Net income............................ $ 2,675 5.6% $ 5,272 8.3% $ 7,170 10.0% $ 4,520 6.5%
======= ======= ======= =======
Earnings per share:
Basic............................... $ 0.10 $ 0.20 $ 0.26 $ 0.15
======= ======= ======= =======
Diluted............................. $ 0.10 $ 0.19 $ 0.26 $ 0.14
======= ======= ======= =======
Adjusted:
Net income, as adjusted(1).......... $ 3,176 $ 5,478 $ 6,559 $ 6,120
======= ======= ======= =======
Earnings per share, as adjusted--
diluted(1)........................ $ 0.12 $ 0.20 $ 0.24 $ 0.19
======= ======= ======= =======
- ------------
(1) Adjusted financial information is presented to reflect net income and
earnings per share exclusive of merger costs and unusual charges incurred in
connection with acquisitions accounted for as poolings of interest and
cumulative deferred tax provisions for those companies that were S
Corporations prior to acquisition by the Company. Net income, as adjusted,
includes federal and state income tax provisions as if the companies
reported as C Corporations.
</TABLE>
SEASONALITY
The Company's results of operations tend to vary seasonally, with the first
quarter of the year typically generating the least amount of revenues, and with
revenues higher in the second and third quarters, followed by a decline in the
fourth quarter. This seasonality reflects the lower volume of waste, as well as
decreased revenues from project-based and other integrated waste services during
the fall and winter months, as well as the operating difficulties experienced
during the protracted periods of cold and inclement weather typically
experienced during the winter in the Upper Midwest. In 1998, revenues increased
during the fourth quarter compared to the third quarter due to the revenues
recognized from operations acquired by the Company at the end of the third and
the beginning of the fourth quarters, thereby partially offsetting the typical
effects of seasonality. Also, certain operating and other fixed costs remain
relatively constant throughout the calendar year, resulting in a similar
seasonality of operating income.
YEAR 2000 INITIATIVE
The Company is conducting a comprehensive review to ensure that all
internal computer systems and equipment are, or prior to the end of 1999 will
be, Year 2000 compliant. The Company's Year 2000 readiness plan includes the
following phases: (i) conducting an inventory of the Company's internal systems,
including information technology systems and non-information technology systems
(which include office and facilities' environment related systems) and the
systems acquired or to be acquired by the Company from third parties;
27
<PAGE>
(ii) assessing and prioritizing any required remediation; (iii) remediating any
problems by repairing or, if appropriate, replacing the non-compliant systems;
(iv) testing of all remediated systems for Year 2000 compliance; and (v)
developing contingency plans that may be employed in the event that any system
used by the Company is unexpectedly affected by an unanticipated Year 2000
problem. The Company has completed its inventory phase of this plan and is
actively engaged in completing the remaining phases. The Company currently
expects to complete all phases of this plan and that all computer systems will
be Year 2000 complaint before August 31, 1999.
In addition to assessing its own systems, the Company has initiated
communication with all of its vendors, service providers and third party
business partners to assess their Year 2000 readiness. The Company plans to
continue assessment of its vendors, service suppliers and third party business
partners to ensure Year 2000 readiness. Despite the Company's diligence, there
can be no guarantee that the non-compliant systems of other entities which the
Company relies upon in its day to day operations will not have a material
adverse impact on the Company. The actual impact on the Company resulting from
non- compliance of these entities cannot be determined at this time.
The Company has limited the scope of its risk assessment to those factors
which it can reasonably be expected to influence. The Company has made the
assumption that government agencies, utility companies and national
telecommunication providers will continue to operate. Obviously, the lack of
such services could have a material impact on the Company's ability to operate,
but the Company has little, if any, ability to influence such an outcome, or to
make alternative arrangements in advance for such services if they are
unavailable. Additionally, the Company believes that disruptions in the economy
generally resulting from Year 2000 issues could have a material adverse impact
on the Company. The Company could be subject to litigation for computer system
failures such as equipment shutdown or failure to properly update business
records. Other potential consequences include the inability to accurately and
timely update customers' accounts, process financial transactions, bill
customers, report accurate data to management, shareholders, customers, and
others as well as business interruptions and financial losses. The amount of
potential liability or loss of revenue to the Company cannot be reasonably
estimated at this time.
The Company intends to develop contingency plans within the second quarter
of 1999 to address Year 2000 problems. The Company believes that this is an
appropriate time frame for developing these contingency plans and that efforts
prior to that time should be focused on the remediation and testing phases of
the Company's Year 2000 readiness plan.
While the Company believes its planning efforts are adequate to address its
Year 2000 concerns, there can be no guarantee that the systems of other
companies on which the Company's systems and operations rely will be converted
on a timely basis and will not have a material effect on the Company. The
Company currently estimates that it will cost approximately $250,000 to fully
execute its Year 2000 initiative. Through December 31, 1998, the Company has
spent approximately $35,000 in connection with Year 2000 issues. All Year 2000
expenditures are made from the Information Systems department budget. The
percentage of the Information Systems budget during 1999 expected to be used for
Year 2000 remediation is less than 10%. No Information Systems projects have
been deferred due to Year 2000 efforts.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to market risks, primarily related to changes in
U.S. interest rates and, to a lesser extent, recyclable prices. The Company does
not engage in financial transactions for trading or speculative purposes.
INTEREST RATE RISK
The interest payable on the Company's Credit Facility is affected by
changes in market interest rates. As of December 31, 1998, the Company had
$62,100,000 outstanding under the Credit Facility. Based on borrowings during
1996 through 1998, a 5% increase or decrease in the average cost of the
Company's Credit Facility debt would not be material. In addition, the Company
has fixed income investments consisting of cash
28
<PAGE>
equivalents and short-term investments in marketable debt securities, which are
also affected by changes in market interest rates. The Company does not use
derivative financial instruments in its investment portfolio.
RECYCLABLE PRICES
The Company is exposed to fluctuations in market prices for recyclable
materials. The Company manages its exposure to changes in those prices primarily
through the terms of its wastepaper purchase agreement limiting the impact to
the difference between the market price and the minimum floor resale price.
29
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Superior Services, Inc.
We have audited the accompanying consolidated balance sheets of Superior
Services, Inc. (the Company) as of December 31, 1997 and 1998, and the related
consolidated statements of income, shareholders' investment, and cash flows for
the three years in the period ended December 31, 1998. Our audits also include
the financial statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits. We did not audit the financial
statements of GeoWaste Incorporated (GeoWaste), a wholly owned subsidiary, as of
December 31, 1997 and for the two years then ended, which statements reflect
total assets of $32,108,899 as of December 31, 1997, and total revenues of
$19,396,772 and $13,702,708 for the years ended December 31, 1996 and 1997,
respectively. Those statements were audited by other auditors whose report has
been furnished to us and our opinion, insofar as it relates to data included for
GeoWaste, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the Company at December 31, 1997 and
1998, and the consolidated results of its operations and its cash flows for each
of the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
February 5, 1999
30
<PAGE>
REPORT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS
The Board of Directors
GeoWaste Incorporated:
We have audited the accompanying consolidated balance sheet of GeoWaste
Incorporated and Subsidiaries as of December 31, 1997 and the consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1997 and 1996 (such financial statements are not included
herein). These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GeoWaste
Incorporated and Subsidiaries as of December 31, 1997, and the results of its
operations and cash flows for the years ended December 31, 1997 and 1996 in
conformity with generally accepted accounting principles.
PricewaterhouseCoopers LLP
Jacksonville, Florida
March 24, 1998
31
<PAGE>
SUPERIOR SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1997 1998
--------- ---------
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 44,955 $ 9,715
Trade accounts receivable.............................. 41,921 58,122
Prepaid expenses and other current assets.............. 6,878 5,607
-------- --------
Total current assets........................................ 93,754 73,444
Property and equipment, net................................. 251,414 312,497
Restricted funds held in trust.............................. 7,714 1,149
Other assets................................................ 4,782 5,529
Intangible assets, net...................................... 85,191 134,223
-------- --------
Total assets...................................... $442,855 $526,842
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt................... $ 9,820 $ 5,194
Trade accounts payable................................. 15,543 18,069
Accrued payroll and related expenses................... 5,150 4,584
Other accrued expenses................................. 23,708 31,838
-------- --------
Total current liabilities......................... 54,221 59,685
Long-term debt, net of current maturities................... 27,215 66,284
Disposal site closure and long-term care obligation......... 43,329 48,289
Deferred income taxes....................................... 18,858 23,865
Other liabilities........................................... 13,848 11,977
Commitments and contingencies (Note 10) Shareholders' investment:
Common stock, $.01 par value; 100,000,000 shares
authorized; 31,438,730 and 32,202,297 issued and
outstanding in 1997 and 1998, respectively............ 315 322
Additional paid-in capital............................. 236,391 249,023
Retained earnings...................................... 48,678 67,397
-------- --------
Total shareholders' investment.................... 285,384 316,742
-------- --------
Total liabilities and shareholders' investment.... $442,855 $526,842
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
SUPERIOR SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1996 1997 1998
-------- -------- --------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues.................................................... $180,720 $253,241 $319,673
Expenses:
Cost of operations..................................... 99,150 144,377 184,964
Selling, general and administrative expenses........... 30,416 38,458 40,224
Merger costs........................................... -- 1,035 10,599
Unusual charges........................................ -- 2,873 --
Depreciation and amortization.......................... 24,389 32,397 39,121
-------- -------- --------
153,955 219,140 274,908
-------- -------- --------
Operating income............................................ 26,765 34,101 44,765
Other income (expense):
Interest expense....................................... (2,617) (3,440) (3,116)
Other income........................................... 2,069 1,888 912
-------- -------- --------
Income before income taxes.................................. 26,217 32,549 42,561
Provision for income taxes.................................. 9,814 12,912 22,060
-------- -------- --------
Net income.................................................. $ 16,403 $ 19,637 $ 20,501
======== ======== ========
Earnings per share:
Basic.................................................. $ .65 $ .70 $ .64
======== ======== ========
Diluted................................................ $ .64 $ .69 $ .63
======== ======== ========
Pro forma adjustments:
Net income............................................. $ 16,403 $ 19,637 $ 20,501
Adjustment for income taxes............................ 1,387 1,324 620
-------- -------- --------
Pro forma net income........................................ $ 15,016 $ 18,313 $ 19,881
======== ======== ========
Pro forma earnings per share:
Basic.................................................. $ .60 $ .66 $ .62
======== ======== ========
Diluted................................................ $ .59 $ .64 $ .61
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
SUPERIOR SERVICES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
---------- ------ ---------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995................ 18,847,457 $189 $ 37,922 $17,774 $ 55,885
Net income............................. -- -- -- 16,403 16,403
Issuance of common stock:
Shares sold to public, net of
offering costs.................... 3,532,500 35 37,195 -- 37,230
Acquisitions......................... 114,381 1 8,423 -- 8,424
Conversion of preferred stock........ 3,317,890 33 14,967 -- 15,000
Stock options........................ 169,863 2 1,520 -- 1,522
Contributions to former S Corporation
shareholders, net................. -- -- 76 (1,996) (1,920)
Tax benefit of stock options......... -- -- 625 -- 625
Other................................ 111,156 1 666 (564) 103
---------- ---- -------- ------- --------
Balance at December 31, 1996................ 26,093,247 261 101,394 31,617 133,272
Net income............................. -- -- -- 19,637 19,637
Issuance of common stock:
Shares sold to public, net of
offering costs.................... 4,403,500 44 116,684 -- 116,728
Acquisitions......................... 467,142 5 11,006 -- 11,011
Payment of debt...................... 59,114 1 1,278 -- 1,279
Stock options........................ 415,727 4 3,513 -- 3,517
Contributions to former S Corporation
shareholders, net................. -- -- 94 (2,575) (2,481)
Tax benefit of stock options......... -- -- 2,141 -- 2,141
Other................................ -- -- 281 (1) 280
---------- ---- -------- ------- --------
Balance at December 31, 1997................ 31,438,730 315 236,391 48,678 285,384
Net income............................. -- -- -- 20,501 20,501
Issuance of common stock:
Acquisitions......................... 342,348 3 9,423 -- 9,426
Payment of debt...................... 63,041 1 1,635 -- 1,636
Stock options........................ 208,178 3 1,722 -- 1,725
Distributions to former S Corporation
shareholders, net................. -- -- (339) (2,074) (2,413)
Other................................ 150,000 -- 191 292 483
---------- ---- -------- ------- --------
Balance at December 31, 1998................ 32,202,297 $322 $249,023 $67,397 $316,742
========== ==== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
SUPERIOR SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1996 1997 1998
-------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 16,403 $ 19,637 $ 20,501
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 24,389 32,397 39,121
Deferred income taxes.................................. (358) 1,153 4,858
Loss (gain) on sale of assets.......................... (504) 181 (389)
Change in operating assets and liabilities, net of
effects of acquired businesses:
Accounts receivable............................... (3,390) (12,519) (14,764)
Prepaid expenses and other current assets......... 1,090 (2,413) 781
Accounts payable and accrued expenses............. 3,339 7,598 2,912
Disposal site closure and long-term care
obligation...................................... 2,737 462 1,927
Other............................................. 2,120 1,053 (3,764)
-------- --------- ---------
Net cash provided by operating activities................... 45,826 47,549 51,183
INVESTING ACTIVITIES
Acquisition of businesses and landfills under development,
net of cash acquired...................................... (24,986) (113,779) (75,760)
Purchases of property and equipment......................... (26,768) (38,085) (52,888)
Proceeds from sale of discontinued operations............... 562 -- --
Proceeds from sale of property and equipment................ 1,729 2,409 1,807
Decrease in restricted funds held in trust.................. 172 850 6,565
-------- --------- ---------
Net cash used in investing activities....................... (49,291) (148,605) (120,276)
FINANCING ACTIVITIES
Net decrease in short-term borrowings....................... -- (2,259) (4,626)
Net proceeds from public stock offering..................... 37,230 116,728 --
Issuance of stock under employee stock plans................ 1,522 3,517 1,725
Proceeds from long-term debt................................ 8,951 24,658 82,715
Payments of long-term debt.................................. (27,468) (17,809) (43,548)
Distributions to former S Corporation shareholders, net..... (1,920) (2,481) (2,413)
-------- --------- ---------
Net cash provided by financing activities................... 18,315 122,354 33,853
-------- --------- ---------
Net increase (decrease) in cash and cash equivalents........ 14,850 21,298 (35,240)
Cash and cash equivalents at beginning of year.............. 8,807 23,657 44,955
-------- --------- ---------
Cash and cash equivalents at end of year.................... $ 23,657 $ 44,955 $ 9,715
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION
Superior Services, Inc. (Superior or the Company) is an integrated waste
management services company providing a range of collection, transfer,
transportation, disposal and recycling services to generators of solid waste and
special waste in Alabama, Florida, Georgia, Illinois, Michigan, Minnesota,
Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and Wisconsin.
The Company has restated its previously issued financial statements for the
years ended December 31, 1996 and 1997 and its consolidated balance sheet as of
December 31, 1997 to reflect the acquisition of TWR, Inc. (TWR), completed on
March 1, 1998; Alabama Waste Services, Inc. and ACMAR Regional Landfill, Inc.
(collectively, AWS), completed on March 31, 1998; South Lake Refuse Service,
Inc. and Commercial Refuse, Inc. (collectively, South Lake), completed on August
17, 1998; Gopher Disposal, Inc., Eagle Environmental, Inc., Materials Recovery,
Ltd., Newport Properties, and Watson's Rochester Disposal, Inc. (collectively,
Gopher), completed on August 26, 1998; Wilson Waste Systems, Inc. (Wilson),
completed on August 31, 1998; PenPac, Inc., Heritage Recycling, Inc., Iorio
Carting, Inc., ACS Services, Inc., Recycling Techniques, Inc., Advanced Waste
Technologies, Inc., Baray, Inc., and Nicholas Enterprises, Inc. (collectively,
PenPac), completed on September 30, 1998; and GeoWaste Incorporated (GeoWaste),
completed on October 30, 1998, all of which were accounted for using the pooling
of interests method. Prior to their merger, AWS, South Lake Refuse Service,
Inc., and a substantial number of companies comprising Gopher and PenPac had
each elected S Corporation status for income tax purposes. Accordingly, the
individual income statements of these entities did not include provisions for
income taxes. Pro forma provisions for income taxes are presented for the years
ended December 31, 1996, 1997 and 1998 and have been computed as if AWS, South
Lake Refuse Service, Inc., Gopher and PenPac had been C Corporations during all
periods presented.
The accompanying consolidated financial statements include the accounts of
Superior and its subsidiaries. All significant intercompany transactions and
balances have been eliminated.
2. ACCOUNTING POLICIES AND SELECTED BALANCE SHEET INFORMATION
Revenue Recognition
The Company generates revenue principally by providing collection,
transportation, recycling and disposal services to generators of solid and
special waste. Revenues are recorded as services are provided. Certain customers
are billed in advance and, accordingly, recognition of the related revenues is
deferred until the services are provided.
The Company grants credit to the majority of its customers. Potential loss
amounts associated with the granting of credit are included in management's
estimate of the allowance for doubtful accounts, which totals $2,524,000 and
$2,639,000 at December 31, 1997 and 1998, respectively. It is not the policy of
the Company to require collateral from its customers in order to obtain credit.
Property and Equipment
Property and equipment are stated at cost. Depreciation for financial
reporting purposes is provided using the straight-line method over the estimated
useful lives of the respective assets.
Landfill costs, including engineering and other professional fees, are
amortized using the units-of-production method, which is calculated using the
total units of airspace filled during the year in relation to total estimated
permitted airspace capacity. The determination of airspace usage and remaining
airspace is an essential component in the calculation of landfill asset
depletion. This determination is performed by conducting annual topographic
surveys, using aerial and field survey techniques of the Company's landfill
facilities to determine remaining airspace in each landfill. The surveys are
reviewed by the Company's
36
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. ACCOUNTING POLICIES AND SELECTED BALANCE SHEET INFORMATION--(CONTINUED)
consulting engineers, the Company's internal engineering staff and its
accounting staff. The reevaluation process did not significantly impact results
of operations for any year presented.
Engineering and legal fees paid to third parties incurred to obtain a
disposal facility permit are capitalized as landfill costs and amortized over
the estimated related airspace capacity. These costs are not amortized until the
permit is obtained and operations have commenced. If the Company determines that
the facility cannot be developed, these costs are charged to expense.
Intangible Assets
Intangible assets primarily consist of goodwill, customer lists and
covenants not to compete acquired in business acquisitions. Goodwill is being
amortized over a 15- to 40-year period. Customer lists are being amortized over
5- to 10-year periods. Covenants not to compete are being amortized over 3- to
10-year periods. Should events or circumstances occur subsequent to the
acquisition of a business which bring into question the realizable value or
impairment of the related intangible asset, the Company will evaluate the
remaining useful life and balance of the asset and make appropriate adjustments.
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1997 1998
------- --------
(IN THOUSANDS)
<S> <C> <C>
Goodwill............................................ $86,416 $138,554
Customer lists...................................... 2,077 2,997
Covenants not to compete............................ 5,791 6,186
Other............................................... 2,327 2,804
------- --------
96,611 150,541
Less accumulated amortization....................... 11,420 16,318
------- --------
$85,191 $134,223
======= ========
Other Accrued Expenses
Other accrued expenses consist of the following:
<CAPTION>
DECEMBER 31
------------------
1997 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Acquisition payments due............................. $ 6,059 $ 5,279
Real estate and personal property taxes.............. 1,126 1,471
Accrued environmental surcharges..................... 1,825 1,932
Liabilities for covenants not-to-compete............. 2,279 234
Deferred revenue..................................... 6,829 9,329
Insurance............................................ 1,923 3,095
Litigation settlement costs.......................... 1,790 --
Income taxes payable................................. -- 1,791
Accrued merger costs................................. -- 3,880
Closure liability.................................... -- 2,601
Other................................................ 1,877 2,226
------- -------
$23,708 $31,838
======= =======
</TABLE>
37
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. ACCOUNTING POLICIES AND SELECTED BALANCE SHEET INFORMATION--(CONTINUED)
Disposal Site Closure and Long-Term Care
The Company has material financial obligations relating to closure and
post-closure costs (long-term care) or remediation of disposal facilities it
operates or for which it is or may become responsible. While the precise amounts
of these future obligations cannot be determined, at December 31, 1998, the
Company estimates the total costs to be approximately $160 million for
remediation, final closure of its current operating facilities and post-closure
monitoring costs pursuant to applicable regulations (generally for a term of 30
to 40 years after final closure). The Company's estimate of these costs is
expressed in current dollars and is not discounted to reflect anticipated timing
of future expenditures. The Company had accrued approximately $43,329,000 and
$50,890,000 for such projected costs at December 31, 1997 and 1998,
respectively. As of December 31, 1998, $2,601,000 is included in other accrued
expenses, representing the current portion of this liability. The Company will
provide additional accruals based on engineering estimates of consumption of
airspace over the useful lives of the facilities.
Restricted funds held in trust at December 31, 1997 and 1998 consist of
amounts on deposit with various regulatory bodies. The Company also pays annual
premiums to obtain performance bonds underwritten by a large insurance carrier
which support the Company's financial assurance obligations for its facilities
closure and post-closure costs. These premiums are expensed as incurred.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, all short-term
investments with maturities of three months or less are considered cash
equivalents. Supplemental disclosures of cash flow information for each of the
three years are as follows:
DECEMBER 31
----------------------------
1996 1997 1998
------ ------- -------
(IN THOUSANDS)
Interest paid.............................. $2,691 $ 3,621 $ 2,789
Income taxes paid.......................... 9,584 11,630 14,900
The effects of noncash transactions related to business combinations are
disclosed in Note 3.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, investments in closure trust funds, trade
payables and debt instruments. The book values of cash and cash equivalents,
trade receivables, investments in closure trust funds and trade payables are
considered to be representative of their respective fair values. None of the
Company's debt instruments that are outstanding as of December 31, 1998, have
readily ascertainable market values; however, the carrying values are considered
to approximate their respective fair values. See Note 5 for the terms and
carrying values of the Company's various debt instruments.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which is required to be adopted
in years beginning after June 15, 1999. Because the Company does not use
derivatives, management does not anticipate that the adoption of the new
Statement will have a significant effect on earnings or the financial position
of the Company.
38
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. ACCOUNTING POLICIES AND SELECTED BALANCE SHEET INFORMATION--(CONTINUED)
Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS No. 131). SFAS
No. 131 establishes standards for public companies to report information about
operating segments in annual financial statements and also requires that those
companies report selected information about operating segments in interim
financial reports. SFAS No. 131 also establishes standards for related
disclosures about products and services, geographic areas and major customers.
The adoption of SFAS No. 131 did not affect results of operations or financial
position.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in the financial statements.
Comprehensive income for the Company is the same as net income in all periods
presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications
Certain 1996 and 1997 amounts have been reclassified to conform to the 1998
presentation.
3. MERGERS AND ACQUISITIONS
During 1998, the Company completed mergers with TWR, AWS (consisting of two
groups), South Lake, Gopher, Wilson, PenPac (consisting of two groups) and
GeoWaste, which were accounted for as poolings of interest. The Company issued
approximately 6.6 million shares of Common Stock in the mergers. The financial
statements were not restated for the TWR merger because the impact of such
restatement would not have been material. The Company incurred nonrecurring
merger costs of approximately $10.6 million as a result of these mergers. The
merger costs include severance and bonuses, professional fees and other merger
related costs, of which $6,719,000 were paid prior to December 31, 1998, with
substantially all of the remaining $3,880,000 to be paid during 1999. Prior to
their merger, AWS, South Lake Refuse Service, Inc., and a substantial number of
companies comprising Gopher and PenPac had each elected S Corporation status for
income tax purposes. As a result of the merger, AWS, South Lake Refuse Service,
Inc., Gopher and PenPac terminated their S Corporation elections. The Company
included a charge of approximately $2,700,000 in the provision for income taxes
for 1998 representing the cumulative net deferred income tax liability required
to be recorded upon termination of the S Corporation elections. As indicated in
the pro forma provision for income taxes, income tax expense would have been
$1,324,000 higher in 1997 and $620,000 higher in 1998 had AWS, South Lake Refuse
Service, Inc., Gopher and PenPac been C Corporations.
39
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. MERGERS AND ACQUISITIONS--(CONTINUED)
Combined and separate results of operations of the Company prior to
completion of the 1998 mergers for the restated periods are as follows:
<TABLE>
<CAPTION>
SUPERIOR AWS GOPHER PENPAC SOUTH LAKE WILSON GEOWASTE COMBINED
-------- ------- ------- ------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1996:
Revenue........................ $117,121 $12,322 $13,946 $16,753 $3,463 $3,412 $13,703 $180,720
Income (loss) before income
taxes........................ 20,703 1,191 944 591 12 (207) 2,983 26,217
Net income (loss).............. 12,163 1,191 944 532 (11) (124) 1,708 16,403
Year ended December 31, 1997:
Revenue........................ $177,833 $13,745 $16,713 $18,193 $3,834 $3,526 $19,397 $253,241
Income (loss) before income
taxes........................ 30,461 640 1,757 (100) 65 (93) (181) 32,549
Net income (loss).............. 17,755 640 1,757 (110) 75 (56) (424) 19,637
</TABLE>
During 1997, GeoWaste terminated an existing transfer, transportation and
disposal agreement with the City of St. Augustine. Due to the termination of the
agreement, assets related specifically to the project for the City of St.
Augustine were impaired and the related expense of $436,000 was classified as an
unusual charge. Additionally, GeoWaste incurred legal, consulting and other
costs to terminate the agreement of $647,000 that were classified as unusual
charges.
During 1997, AWS recognized expense of $1,790,000 relating to settlement of
a Clean Water Act dispute with the United States Government. This amount was
paid in full during 1998. The expense is classified as an unusual charge.
On June 27, 1997, the Company completed its merger with Resource Recovery
Transfer & Transportation, Inc. (R(2)T(2)), accounted for as a pooling of
interests, pursuant to which the Company issued 1,705,000 shares of common stock
to the former shareholders of R(2)T(2). The Company incurred nonrecurring merger
costs of $1,035,000 during 1997 as a result of the merger. The merger costs
include severance and bonuses, professional fees and other merger related costs,
substantially all of which were paid prior to December 31, 1997.
Reported diluted earnings per share for 1998 were reduced by $0.33 per
share for the net effect of the merger costs incurred of $10,599,000 and
recorded cumulative deferred tax provisions of approximately $2,700,000 offset
by $620,000 of reduced income tax expense due to S Corporation status of several
of the 1998 pooled acquisitions. Reported diluted earnings per share for 1997
were reduced by $0.06 per share for the net effect of the merger costs incurred
of $1,035,000 and unusual charges of $2,873,000 offset by $1,324,000 of reduced
income tax expense due to S Corporation status of several of the 1998 pooled
acquisitions.
During 1998, the Company acquired twenty two businesses, including four
operational landfills, which were accounted for as purchases. Aggregate
consideration for these acquisitions consisted of $71,365,000 in cash (net of
cash acquired), $10,824,000 in future payments or notes payable and 148,348
shares of common stock. The final determination of cost, and allocations
thereof, of certain of the Company's acquisitions is subject to resolution of
certain contingencies. Once such contingencies are resolved, the purchase price
is adjusted. Future payments are contingent based on working capital
adjustments, debt adjustments and contingent liabilities and are recorded at the
time of acquisition if the contingent payment is determinable beyond a
reasonable doubt. The results of operations of the acquired businesses have been
included in the Company's consolidated financial statements from their
respective acquisition dates.
During 1998, as a result of final valuations pertaining to previous
acquisitions, $4,395,000 in cash and 194,000 shares of common stock were issued.
In addition, 63,041 shares were issued in payment of debt of entities acquired
in 1998.
40
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. MERGERS AND ACQUISITIONS--(CONTINUED)
During 1997, the Company acquired twenty-three businesses, including four
operational landfills, which were accounted for as purchases. Aggregate
consideration for these acquisitions consisted of $104,914,000 in cash (net of
cash acquired), $6,059,000 in future payments or in notes payable and 384,893
shares of common stock. In addition, businesses acquired which were accounted
for using the pooling-of-interests method completed acquisitions of seven
businesses in 1997 that were accounted for as purchases. Aggregate consideration
for these acquisitions consisted of $6,931,000 in cash (net of cash acquired)
and $1,309,000 in notes payable. The results of operations of the acquired
businesses have been included in the Company's consolidated financial statements
from their respective acquisition dates.
During 1997, as the result of final valuations pertaining to previous
acquisitions, $1,934,000 in cash and 82,249 shares of common stock were issued.
In addition, 59,114 shares were issued in payment of debt of entities acquired
in 1997.
During 1996, the Company acquired thirteen businesses, including two
operational landfills, all of which were accounted for as purchases. Aggregate
consideration for these acquisitions consisted of $15,273,000 in cash (net of
cash acquired), $8,280,000 in notes payable and 114,381 shares of common stock.
In addition, businesses acquired which were accounted for using the
pooling-of-interests method completed acquisitions of five businesses in 1996
that were accounted for as purchases. Aggregate consideration for these
acquisitions consisted of $4,556,000 in cash (net of cash acquired). The results
of operations of the acquired businesses have been included in the Company's
consolidated financial statements from their respective acquisition dates.
Resource Recovery Transfer & Transportation, Inc. (merged with Superior
Services, Inc. in June 1997 and accounted for as a pooling of interests) paid
additional consideration for acquisitions in 1996 that consisted of $5,157,000
in cash and $777,000 in notes payable.
The unaudited pro forma results of operations below assume that the
acquisitions had occurred at the beginning of each period presented.
YEAR ENDED DECEMBER 31
----------------------
1997 1998
--------- ---------
(UNAUDITED)
Revenues....................................... $320,029 $340,167
Net income..................................... 20,893 20,546
Basic earnings per share....................... 0.74 0.64
Diluted earnings per share..................... 0.73 0.63
The pro forma results do not purport to be indicative of the results of
operations which actually would have resulted had the acquisitions occurred on
January 1, 1997, nor are they necessarily indicative of future operating
results.
As an integral part of certain acquisitions, the former shareholders signed
noncompetition agreements and, in certain situations, key management members
entered into employment agreements to continue in the management of these
businesses. Costs associated with these agreements are charged to operations
over their respective lives.
41
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
DECEMBER 31
--------------------
1997 1998
-------- --------
(IN THOUSANDS)
Land and land improvements............................ $191,282 $248,205
Vehicles and equipment................................ 147,252 178,194
Buildings and leasehold improvements.................. 32,810 36,541
-------- --------
371,344 462,940
Less accumulated depreciation and amortization........ 119,930 150,443
-------- --------
$251,414 $312,497
======== ========
Landfill costs of approximately $181,337,000 and $236,760,000 are included
in land and land improvements at December 31, 1997 and 1998, respectively.
Landfill costs include land held for development, representing various landfill
properties with an aggregate cost of approximately $72,555,000 and $54,879,000
at December 31, 1997 and 1998, respectively, which is not being amortized.
During 1997 and 1998, interest of approximately $1,043,000 and $712,000,
respectively, was capitalized related to land being actively developed.
5. LONG-TERM DEBT
Long-term debt consists of the following:
DECEMBER 31
------------------
1997 1998
------- -------
(IN THOUSANDS)
Primary revolving credit facility........................... $ -- $62,100
Equipment loan facilities at variable interest rates
(weighted-average interest rate of 8.73% and 8.61% at
December 31, 1997 and 1998, respectively)................. 24,148 6,627
Industrial revenue bonds--paid in 1998...................... 290 --
United States Small Business Administration loans at fixed
interest rates of 8.27% to 8.88% in 1997 and 1998......... 637 622
Other....................................................... 1,853 2,129
Other credit facilities--paid in 1998....................... 6,507 --
Mortgage facilities at variable interest rates--paid in
1998...................................................... 1,452 --
Unsecured notes payable to individuals--paid in 1998........ 2,148 --
------- -------
Total long-term debt........................................ 37,035 71,478
Less current maturities..................................... 9,820 5,194
------- -------
$27,215 $66,284
======= =======
The Company's primary revolving credit facility provides for a borrowing
capacity up to a maximum of $275,000,000, including letters of credit.
Availability under this facility is based on the Company's cash flow and
leverage, with $209,000,000 available at December 31, 1998. Interest is payable
monthly based on the agent bank's base rate, or quarterly based on a Eurodollar
borrowing rate plus a margin, depending upon how advances are drawn. The entire
$62,100,000 of revolving line of credit borrowings has been excluded from
current liabilities because the Company intends that at least that amount would
remain outstanding for an uninterrupted period extending beyond one year from
the balance sheet date. The borrowings under this facility mature in September
2003. In addition to the outstanding borrowings, the Company had approximately
$2,284,000 and $3,933,000 in letters of credit issued under the facility at
December 31, 1997
42
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. LONG-TERM DEBT--(CONTINUED)
and 1998, respectively. This facility is collateralized by the stock of the
Company's subsidiaries. The facility has provisions for the maintenance of
certain financial ratios and other requirements, including a prohibition on the
payment of cash dividends.
Maturities of long-term debt, excluding amounts under the revolving credit
facility, for each of the years succeeding December 31, 1998, are as follows (in
thousands):
Year ending December 31:
1999.................................................. $ 5,194
2000.................................................. 1,608
2001.................................................. 1,230
2002.................................................. 671
2003.................................................. 62,207
Thereafter............................................ 568
6. PREFERRED STOCK AND SHAREHOLDERS' INVESTMENT
Preferred Stock
Superior is authorized to issue up to 500,000 shares of preferred stock in
one or more undesignated series. In February 1993, the Company issued 331,789
shares of Series A Preferred Stock for $15,000,000 to an investor group pursuant
to a Series A Convertible Preferred Stock Purchase Agreement (the Agreement).
Pursuant to the Agreement, the Series A Preferred Stock holders exercised
their rights to convert their preferred stock into 3,317,890 shares of common
stock at the time of the public offering. Upon the conversion, all cumulative
dividends in connection with the Preferred Stock were defeased.
Common Stock
In March 1996, the Company completed an initial public offering in which it
issued 3,532,500 shares of common stock at a price of $11.50 per share resulting
in net proceeds after deduction of underwriting discounts and commissions and
other offering expenses to the Company of approximately $37,230,000.
In September 1997, the Company completed a follow-on public stock offering
in which it issued 4,403,500 shares of common stock at a price of $28.00 per
share, resulting in net proceeds after deduction of underwriting discounts and
commissions and other offering expenses to the Company of approximately
$116,728,000.
Common Stock Purchase Rights
On February 21, 1997, the Board of Directors of the Company declared a
dividend of one common share purchase right (a Right) for each outstanding share
of common stock. The dividend was paid on March 24, 1997, to the shareholders of
record on March 10, 1997.
The Rights are attached to and traded with the shares of common stock and
are not exercisable until certain conditions occur. Generally, a distribution
date will occur when 15% or more of the common stock is acquired by a third
party or ten business days following the commencement of, or an announcement of
an intention to make, a tender or exchange offer for at least 15% of the common
stock. Upon a distribution date, the Rights will become exercisable and will
allow the holders of Rights (other than the person or entity which caused the
distribution date, whose Rights shall become void) to purchase at a price per
share equal to one-half of the market price on the distribution date, shares of
the Company's common stock or the stock of the acquirer.
43
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. PREFERRED STOCK AND SHAREHOLDERS' INVESTMENT--(CONTINUED)
Warrants
Prior to its merger with the Company, GeoWaste issued warrants to a related
party for investment advisory services rendered. These warrants, which allow the
holders to acquire up to 110,190 shares of the Company's common stock at $6.33
per share through February 1999, are subject to anti-dilution rights and are
adjustable for stock splits, stock dividends and similar events.
Stock Options
The Company has three stock option plans (the Option Plans) under which
nonqualified and/or incentive options for the purchase of up to 4,535,000 shares
may be granted at exercise prices no less than the estimated fair market value
of the common stock on the date of grant. The options have various vesting
schedules ranging from immediate vesting to gradual vesting with all options
exercisable after four years. At December 31, 1998, there were 1,906,337 shares
available for grants under the Option Plans.
As part of the Company's acquisition of GeoWaste, two stock option plans
were acquired under which nonqualified and/or incentive options for the purchase
of up to 2,803,000 shares may be granted at exercise prices no less than the
estimated fair market value of the common stock on the date of grant. The
options vest over a three-year period based upon the length of service with the
Company. At December 31, 1998, there were 93,977 options exercisable. No
additional options will be granted under these plans.
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25), and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under SFAS
No. 123, "Accounting for Stock-Based Compensation," requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, because the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized. In determining the effect of FASB
Statement No. 123, the Black-Scholes option pricing model was used with the
following weighted-average assumptions for 1997 and 1998: risk-free interest
rates of 5%, dividend yields of 0%, volatility factors of the expected market
price of the Company's common stock of .39 and .61, and a weighted-average
expected life of the options of five years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands except for earnings per share
information):
1996 1997 1998
------- ------- -------
Pro forma net income........................... $16,181 $18,433 $14,862
Pro forma earnings per share:
Basic........................................ $ 0.64 $ 0.66 $ 0.46
Diluted...................................... 0.63 0.65 0.46
44
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. PREFERRED STOCK AND SHAREHOLDERS' INVESTMENT--(CONTINUED)
The following table summarizes the transactions of the Company's Stock
Option Plans for the three-year period ended December 31, 1998:
<TABLE>
<CAPTION>
1996 1997 1998
---------------------- ---------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of
year................................ 1,319,192 $ 8.37 1,405,703 $10.23 1,795,403 $16.64
Options granted....................... 350,842 15.60 841,545 23.39 1,623,058 20.59
Options exercised..................... (182,588) 7.86 (415,784) 8.26 (208,150) 8.40
Options canceled...................... (81,743) 11.50 (36,061) 17.99 (88,681) 22.09
--------- --------- ---------
Options outstanding at end of year.... 1,405,703 $10.23 1,795,403 $16.64 3,121,630 $19.16
========= ========= =========
Weighted-average fair value of options
granted during the year............. $ 15.60 $ 23.39 $ 20.59
========= ========= =========
Number of options exercisable at end
of year............................. 1,055,677 $ 9.02 773,565 $10.22 1,280,925 $15.92
========= ========= =========
Options outstanding:
Price range $3.16 to $12.65;
weighted-average contractual life
of 3.3 years...................... 554,488 $ 9.41
Price range $12.66 to $22.14;
weighted-average contractual life
of 9.3 years...................... 1,634,979 $18.93
Price range $22.15 to $31.63;
weighted-average contractual life
of 8.5 years...................... 932,163 $25.38
---------
3,121,630
=========
</TABLE>
7. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share amounts).
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
NUMERATOR
Income from continuing operations used in computing
basic and diluted earnings per share................ $16,403,000 $19,637,000 $20,501,000
=========== =========== ===========
DENOMINATOR
Denominator for basic earnings per share--weighted
average common shares............................... 25,142,017 27,873,392 31,974,060
Effect of dilutive securities--warrants and employee
stock options....................................... 524,387 572,963 602,950
----------- ----------- -----------
Denominator for diluted earnings per share--adjusted
weighted average common shares...................... 25,666,404 28,446,355 32,577,010
=========== =========== ===========
</TABLE>
Shares of common stock held in escrow pursuant to the indemnification
agreements discussed in Note 10 are included in the number of shares issued and
outstanding for all years presented.
45
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS
The Company has defined contribution 401(k) savings plans that cover
substantially all employees meeting certain minimum eligibility requirements.
Participating employees can elect to defer a portion of their compensation and
contribute it to the plan on a pretax basis. The Company also matches certain
amounts, as defined. Contributions made by the Company under the various plans
were $256,000, $344,000 and $431,000, for the years ending December 31, 1996,
1997 and 1998, respectively.
9. INCOME TAXES
The provisions for income taxes attributable to continuing operations for
the years ended December 31, consist of the following:
1996 1997 1998
------ ------- -------
(IN THOUSANDS)
Current:
Federal................................... $9,031 $ 9,143 $15,670
State..................................... 2,259 2,489 4,217
------ ------- -------
11,290 11,632 19,887
Deferred:
Federal................................... (1,192) 1,051 1,712
State..................................... (284) 229 461
------ ------- -------
(1,476) 1,280 2,173
------ ------- -------
Total................................ $9,814 $12,912 $22,060
====== ======= =======
The difference in the provisions for income taxes attributable to
continuing operations and the amounts determined by applying the federal
statutory rate of 35% for 1996, 1997 and 1998, to income from continuing
operations before income taxes for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax at statutory rate............................... $9,176 $11,392 $14,896
State income taxes.................................. 1,515 1,345 2,213
Income from S Corporations not subject to income
tax............................................... (918) (874) (601)
Nondeductible merger costs.......................... -- 142 2,383
Cumulative deferred tax provision associated with
the termination of S Corporation elections........ -- -- 2,686
Other............................................... 41 907 483
------ ------- -------
$9,814 $12,912 $22,060
====== ======= =======
</TABLE>
Deferred income taxes reflect the impact of temporary differences between
the amounts of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for income tax purposes.
46
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. INCOME TAXES--(CONTINUED)
The deferred income tax balances consist of the following:
DECEMBER 31
------------------
1997 1998
------- -------
(IN THOUSANDS)
Deferred tax liabilities:
Property and equipment basis differences.............. $25,372 $35,965
Other................................................. 1,481 1,352
------- -------
Total deferred tax liabilities.......................... 26,853 37,317
Deferred tax assets:
Closure and long-term care obligations................ 6,100 8,314
Other expenses not currently deductible............... 1,190 4,135
State and federal net operating loss carryforwards.... 820 1,178
Other................................................. 246 326
------- -------
Total deferred tax assets............................... 8,356 13,953
Valuation allowance for deferred tax assets............. (235) (235)
------- -------
Net deferred tax assets................................. 8,121 13,718
------- -------
Net deferred tax liabilities............................ $18,732 $23,599
======= =======
Included in prepaid expenses and other current assets are current deferred
tax assets of $126,000 and $266,000 at December 31, 1997 and 1998, respectively.
At December 31, 1998, the Company has net operating loss carryforwards of
approximately $23.6 million for state income tax purposes that begin to expire
in 2008 and 2009.
10. COMMITMENTS AND CONTINGENCIES
Certain shareholders are entitled to receive additional consideration from
the Company in the event of future permitted landfill expansion at two sites.
For permitted horizontal expansion at both landfills, the additional
consideration is $.40 per cubic yard, less associated permitting costs, not to
exceed $2,000,000 per site.
In connection with certain landfill acquisitions, the sellers are entitled
to receive additional consideration from the Company, if regulatory approval, as
defined, is obtained for expansions of permitted airspace. For permitted
vertical and horizontal expansion above certain defined minimums, the additional
consideration varies between approximately $.11 and $1.25 per cubic yard, less
associated costs. These amounts, if any, will be capitalized when paid or
payable as additional purchase price. The Company is also obligated to make
royalty payments of $1.50 per ton of tonnage received at a particular landfill
to a landfill's former owners. The royalty applies to tons received in excess of
400,000 annually, for each of the first five years. For each year thereafter,
the $1.50 per ton royalty applies to all tonnage received and is guaranteed to
be at least $600,000 annually for the life of the landfill, including any
permitted expansions.
The Company is obligated to make royalty payments to a landfill's former
owners of 5% of the gross revenues generated from the expanded capacity.
Approximately 125 acres occupied in connection with the landfill activities is
leased from a third party. Under the terms of the lease, the Company pays the
property owner monthly rental equal to the greater of 3% of the landfill's gross
operating receipts or $3,650. The Company is also obligated to make an
additional contingent consideration payment of $1,800,000 to a landfill's former
owners in the event all applicable state and local permits are received for an
expansion of the landfill.
47
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
In connection with the formation of the Company in 1993 through the
consolidation of three groups of independent waste services companies, certain
potential environmental liabilities associated with the previously filled
portion of the Superior Valley Meadows landfill were identified. The range of
possible loss has been estimated not to exceed $1.3 million. At the time of the
consolidation of these companies into the Company, a contingent liability escrow
was established to cover the highest estimated costs of redemption and
monitoring with respect to the contingent liabilities. To indemnify the Company
against up to $1,308,000 of these contingent liabilities, 130,800 shares of the
Company's common stock otherwise issuable as part of the consolidation to the
individual who was the principal shareholder of the prior owner of the site and
who is now a director, executive officer and significant shareholder of the
Company, were withheld from issuance. In order to preserve the Company's rights
under this indemnification arrangement prior to the February 24, 1997 expiration
date for advancing such types of indemnification claims, the Company formally
notified the individual of the Company's claim against the withheld shares for
the entire amount of the originally established liability escrow. The Company
believes that the entire amount of such environmental liabilities will either be
covered by the foregoing indemnification arrangement or otherwise is not
expected to have a material adverse effect on the Company's results of
operations or financial condition.
As of December 31, 1997, the Company or its subsidiaries have been notified
that they are potentially responsible parties (PRPs) in connection with three
sites listed on the National Priorities List (NPL). When the Company concludes
that it is probable that a liability has been incurred with respect to a site,
provision will be made in the Company's financial statements reflecting its best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially responsible
parties who are jointly and severally liable for remediation of the site as well
as the typical allocation of costs among such parties. If a range of possible
outcomes is estimated and no amount within the range appears to be a better
estimate than any other, then the Company will provide for the minimum amount
within the range, in accordance with generally accepted accounting principles.
One NPL location is a landfill owned by the Company for which the range of
total costs for remaining remediation is estimated to be between $688,000 and
$2.3 million. The Company has an accrued liability of approximately $2.3 million
relating to this matter. As the timing of payments is uncertain, the accrual was
not measured on a discounted basis. The reasonably possible loss for this site
does not exceed the amounts accrued by the Company for the selected remedial
action. The Company has entered into settlement agreements with certain of the
generator PRPs, in which the generator PRPs agree to contribute a total of
approximately 42% of future remediation costs and the annual operating,
maintenance, and monitoring costs. The former owner of the location agreed to
indemnify the Company up to $2.8 million for any site liabilities the Company
may incur as a PRP. The Company has been paid approximately $500,000 by the
former owner. The Company and the former owner are in dispute regarding the cost
of a likely remediation plan. An engineer selected by the former owner has
estimated the total remediation costs to be $688,000. This dispute is now before
an arbitrator. The Company has recorded as an asset approximately $2.3 million
that is deemed probable of recovery from the generator PRPs and through
indemnification from the former owner. The Company believes its existing
financial reserves, together with the amounts paid and remaining payable by the
former owner and the contribution obligations of the generator PRPs, are
adequate to cover the currently anticipated remediation costs.
The Company acquired Nicholas Enterprises, Inc. (Nicholas) as part of the
PenPac acquisition on September 30, 1998. Prior to the Company's acquisition of
PenPac, Nicholas was named as a defendant in litigation pursuant to the New
Jersey Spill Compensation and Control Act at Sharkey's Landfill, a site in New
Jersey. During 1998, Nicholas was released from its liability pertaining to the
site in exchange for remitting $300,000 of insurance proceeds and other
additional assessments up to $50,000. Further, prior to the
48
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
acquisition by the Company, Nicholas was named as a PRP at the Cortese Landfill,
an NPL site in New York pursuant to the Comprehensive Response, Compensation and
Control Act. During 1994, Nicholas agreed to pay approximately $200,000 to the
State of New York in final settlement of its share of past costs at the site.
This amount has been paid. Nicholas has requested, but not yet received, release
of liability for any subsequent costs related to this site. Although the Company
has not been informed of any additional liability related to these sites, under
the terms of the acquisition agreement for Nicholas, its former shareholders
have agreed to indemnify the Company, to the extent not covered by insurance,
for all claims arising from these sites.
As is the case with all sites, the performance of the elected remedies will
be subject to periodic review by regulatory agencies. In the event the selected
remedies do not perform adequately to meet applicable state and federal
standards, additional remedial measures beyond those currently anticipated could
be required by regulatory agencies. Implementation of any such additional
remedial measures may involve substantial additional costs beyond those
currently anticipated.
In connection with the AWS merger on March 31, 1998, a landfill was
acquired which was subject to legal proceedings brought by the local
municipality. In October 1996, the municipality filed an administrative appeal
challenging the State of Alabama Department of Environmental Management's (ADEM)
decision to issue a landfill permit modification. An administrative commission
appointed a judge to act as a hearing officer to oversee the permit appeal.
Based upon the hearing officer's recommendation, the administrative commission
in June 1997 unanimously adopted the recommendation of the hearing officer that
the landfill permit modification was properly issued. Subsequently, the
municipality filed an appeal of this administrative decision in state circuit
court. While the Company believes it will be successful in defending the appeal
of this decision, there can be no assurance that this appeal will not be
determined adversely to the Company. Any such adverse decision, if ultimately
upheld, could impact the ability of such landfill to accept any or certain
volumes of waste and, in turn, could adversely effect the Company's results of
operations. The Company has landfill assets with a net book value of $3.8
million at this site. Separately, the municipality in August 1996 filed in
federal district court a citizen's suit against the landfill brought under
provisions of the Clean Water Act and the Resource Conservation and Recovery
Act. The Company does not believe there is a basis for a claim supporting the
citizen's suit. In addition to federal claims, the municipality has alleged
certain state law claims that, among other things, the prior owners of the
landfill misrepresented the geology and hydrogeology of an expansion portion of
the landfill, allegedly inducing the municipality to grant local approval for
the expansion of the landfill. This local approval is a prerequisite for
issuance of the ADEM solid waste permit. Prior to the acquisition of the
landfill, the prior owners were engaged in settlement negotiations with the
municipality regarding these proceedings. Since the acquisition, the Company has
met with municipal officials and presented settlement offers that the
municipality currently has under consideration. The Company believes that the
ultimate resolution of the citizen's suit and the municipality's state law
claims will not have a material adverse effect on the Company's financial
condition or results of operations.
In the normal course of its business and as a result of the extensive
government regulation of the solid waste industry, the Company periodically may
become subject to various judicial and administrative proceedings and
investigations involving federal, state or local agencies. To date, the Company
has not been required to pay any material fine or judgment for violation of an
environmental law. From time to time, the Company also may be subjected to
actions brought by citizen's groups in connection with the permitting of
landfills or transfer stations, or alleging violations of the permits pursuant
to which the Company operates. The Company is also subject from time to time to
claims for personal injury or property damage arising out of accidents involving
its vehicles. The Company believes that the ultimate resolution of these other
matters will not have a material adverse effect on the Company's financial
condition or results of operations.
49
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company carries a range of insurance, including a commercial general
liability policy and a property damage policy. The Company maintains a limited
environmental impairment liability policy on its landfills and transfer stations
that provides coverage, on a "claims made" basis, against certain third-party
off-site environmental damage. There can be no assurance that the limited
environmental impairment policy will remain in place or provide sufficient
coverage for existing, but not yet known, third-party, off-site environmental
liabilities.
50
<PAGE>
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The information required by this item is incorporated herein by reference
to the information pertaining thereto set forth under the captions entitled
"Election of Directors" and "Compliance With Section 16(a) of the Exchange Act"
in the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated herein by reference
to the information pertaining thereto set forth under the caption entitled
"Executive Compensation" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated herein by reference
to the information pertaining thereto set forth under the caption entitled
"Stock Ownership of Certain Beneficial Owners and Management" in the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item, to the extent applicable, is
incorporated herein by reference to the information pertaining thereto set forth
under the caption entitled "Certain Transactions" in the Proxy Statement.
51
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Form 10-K:
FORM 10-K
PAGE NO.
---------
1. Financial Statements
Report of Ernst & Young LLP, Independent Auditors........... 30
Report of PricewaterhouseCoopers LLP, Independent
Auditors.................................................... 31
Consolidated Balance Sheets as of December 31, 1997 and
1998........................................................ 32
Consolidated Statements of Income for the years ended
December 31, 1996, 1997, and 1998......................... 33
Consolidated Statements of Shareholders' Investment for the
years ended December 31, 1996, 1997, and 1998............. 34
Consolidated Statements of Cash Flows for the years ended
December 31, 1996 1997, and 1998.......................... 35
Notes to Consolidated Financial Statements.................. 36
2. Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts.............. 53
Schedules other than those listed above are omitted because
they are not applicable or not required or because the
required information is included in the consolidated
financial statements or notes thereto.
3. Exhibits and Reports on Form 8-K
(a) The Exhibits filed herewith or incorporated by reference herein are
set forth on the attached Exhibit Index.*
(b) The Company filed the following Current Reports on Form 8-K with
the Securities and Exchange Commission during the fourth quarter of
fiscal 1998 and the first quarter of fiscal 1998 and the first
quarter of fiscal 1999 through the date of this Form 10-K:
DATE FILED DATE OF REPORT ITEM
---------- -------------- ----
November 5, 1998........... October 30, 1998 Item 2--Acquisition of
GeoWaste Incorporated
December 15, 1998.......... December 15, 1998 Item 5--Restatement
of consolidated
total revenues,
consolidated net
earnings, basic
earnings per share
and diluted earnings
per share to reflect
the use of
pooling-of-interest
method of accounting
of GeoWaste,
Incorporated
acquisition
- ------------
* Exhibits to this Form 10-K will be furnished to shareholders upon advance
payment of a fee of $0.20 per page, plus mailing expenses. Requests for
copies should be addressed to Scott S. Cramer, Vice President, General
Counsel, Superior Services, Inc., 125 South 84th Street, Suite 200,
Milwaukee, Wisconsin 53214.
52
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
SUPERIOR SERVICES, INC.
(IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C ADDITIONS COL. D COL. E
------ ------ ---------------- ------ ------
(1)
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER DEDUCTIONS END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (ADDITIONS) PERIOD
----------- ---------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Allowance for doubtful accounts........... $ 2,524 $1,954 $ 71 $1,910(2) $ 2,639
Closure and long-term care obligations
(3)..................................... 43,329 4,366 4,592 1,398 50,889
------- ------ ------ ------ -------
$45,853 $6,320 $4,663 $3,308 $53,528
======= ====== ====== ====== =======
Year ended December 31, 1997
Allowance for doubtful accounts........... $ 1,223 $1,507 -- $ 206(2) $ 2,524
Closure and long-term care obligation..... 34,781 3,686 7,698 2,836 43,329
------- ------ ------ ------ -------
$36,004 $5,193 $7,698 $3,042 $45,853
======= ====== ====== ====== =======
Year ended December 31, 1996
Allowance for doubtful accounts........... $ 752 $1,655 $ 24 $1,208(2) $ 1,223
Closure and long-term care obligation..... 26,334 3,593 5,618 764 34,781
------- ------ ------ ------ -------
$27,086 $5,248 $5,642 $1,972 $36,004
======= ====== ====== ====== =======
- ------------
(1) Doubtful accounts written off (recovered)
(2) Assumed in acquisitions
(3) Includes current and long-term portions
</TABLE>
53
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, as of March 25, 1999.
SUPERIOR SERVICES, INC.
By: /s/ G. WILLIAM DIETRICH
------------------------------------
G. William Dietrich, President
and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities indicated as of March 25, 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
By: /s/ JOSEPH P. TATE By: /s/ G. WILLIAM DIETRICH By: /s/ GEORGE K. FARR
------------------------- ------------------------- -------------------------
Joseph P. Tate G. William Dietrich George K. Farr
Chairman of the Board and President, Chief Chief Financial Officer
Director Executive (Principal Financial &
Officer and Director Accounting Officer)
(Principal Executive
Officer)
By: /s/ WALTER G. WINDING By: /s/ FRANCIS J. PODVIN By: /s/ WARNER C. FRAZIER
------------------------- ------------------------- -------------------------
Walter G. Winding Francis J. Podvin Warner C. Frazier
Director Director Director
By: /s/ DONALD TAYLOR
-------------------------
Donald Taylor
Director
</TABLE>
54
<PAGE>
SUPERIOR SERVICES, INC.
EXHIBIT INDEX
TO FORM 10-K FOR YEAR ENDED DECEMBER 31, 1998
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
3.0 Restated Articles of Incorporation. [Incorporated by
reference to Exhibit 3.0 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
3.1 Restated Bylaws, dated January 9, 1996, as amended.
3.2 Amendments to Restated Bylaws dated February 23, 1999.
4.1 Rights Agreement dated February 21, 1997, between the
Company and LaSalle National Bank, Chicago, Illinois.
[Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K, dated February 28, 1997.]
4.2 Second Amended and Restated Revolving Credit Agreement,
dated September 17, 1998, among Superior Services, Inc. and
Subsidiaries (the "Borrowers"), BankBoston, N.A., Bank One,
Wisconsin, Harris Trust and Savings Bank, LaSalle National
Bank, Bank of America National Trust and Savings
Association, Firstar Bank Milwaukee, N.A., Fleet Bank, N.A.,
Paribas, PNC Bank, National Association, Comerica Bank,
Fifth Third Bank, Hibernia National Bank (the "Banks") and
BankBoston, N.A., as Agent, Bank One, Wisconsin, as
Co-Agent, Harris Trust and Savings Bank, as Co-Agent,
LaSalle National Bank, as Co-Agent and Bank of America
National Trust and Savings Association, as Co-Agent.
[Incorporated by reference to Exhibit 4.8 to the Company's
Form 10-Q for the period ended September 30, 1998.]
10.0** Stock Option Agreement, dated as of February 25, 1993, and as
amended on May 5, 1995 and August 15, 1995, and November 29,
1995, between George K. Farr and the Company. [Incorporated by
reference to Exhibit 10.1 filed with the Company's Form S-1
Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.1** 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 the Company. [Incorporated by
reference to Exhibit 10.2 filed with the Company's Form S-1
Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.2** Amendment to Restated Option Agreement dated November 26, 1996
between G. William Dietrich and the Company. [Incorporated by
reference to Exhibit 10.2 filed with the Company's Form 10-K
for the year ended December 31, 1997.]
10.3** Employment Agreement, dated as of September 1, 1993 and as
amended August 15, 1995, between Peter J. Ruud and the Company.
[Incorporated by reference to Exhibit 10.3 filed with the
Company's Form S-1 Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.4** Noncompetition Agreement, dated February 14, 1995, between
G. William Dietrich and the Company. [Incorporated by
reference to Exhibit 10.4 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
10.5** Key Executive Employment and Severance Agreement, dated August
15, 1995, between G. William Dietrich and the Company.
[Incorporated by reference to Exhibit 10.5 filed with the
Company's Form S-1 Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.6** Key Executive Employment and Severance Agreement, dated August
15, 1995, between George K. Farr and the Company. [Incorporated
by reference to Exhibit 10.6 filed with the Company's Form S-1
Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
55
<PAGE>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
10.7** Key Executive Employment and Severance Agreement, dated August
15, 1995, between Peter J. Ruud and the Company. [Incorporated
by reference to Exhibit 10.7 filed with the Company's Form S-1
Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.8** 1993 Incentive Stock Option Plan. [Incorporated by reference
to Exhibit 10.8 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
10.9** Form of Stock Option Agreement under 1993 Stock Option Plan.
[Incorporated by reference to Exhibit 10.9 filed with the
Company's Form S-1 Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.10** 1996 Equity Incentive Plan. [Incorporated by reference to
Exhibit 10.10 filed with the Company's Form S-1 Registration
Statement No. 333-240, dated January 9, 1996.]
10.11** Amendment to the Superior Services, Inc. 1996 Equity
Incentive Plan, dated November 24, 1998.
10.12** Superior Services, Inc. Outside Directors Deferred Fee Plan
(supplements the terms of the Superior Services, Inc. 1996
Equity Incentive Plan).
10.13** Form of Non-Employee Director Non-Qualified Stock Option
Agreement under 1996 Equity Incentive Plan. [Incorporated by
reference to Exhibit 10.11 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
10.14* Form of Key Employee Stock Option Agreement under 1996
Equity Incentive Plan.
10.15** Employment Agreement between the Company and Scott S. Cramer
dated as of July 1, 1997. [Incorporated by reference to Exhibit
10.14 filed with the Company's Form 10-K for the year ended
December 31, 1998.]
10.16** Employment Agreement between the Company and Gary Blacktopp
dated as of January 1, 1997, and amended as of August 26, 1997.
[Incorporated by reference to Exhibit 10.15 filed with the
Company's Form 10-K for the year ended December 31, 1997.]
10.17** 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.
10.18** 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 filed with the Company's Form 10-Q for the
period ended March 31, 1998.]
10.19** Key Executive Employment and Severance Agreement between
Superior Services, Inc. and Joseph P. Tate, dated August 18,
1998.
10.20** 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.
10.21** 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.
10.22** 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.
10.23** Amendment to Employment Agreement between the Company and G.
William Dietrich, dated August 18, 1998, supplementing and
amending the Employment Agreement, dated January 1, 1996.
56
<PAGE>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
10.24** Amendment to Employment Agreement between the Company and Peter
J. Ruud, dated August 18, 1998, supplementing and amending the
Employment Agreement, dated January 1, 1996.
10.25** Amendment to Employment Agreement Between the Company and
George K. Farr, dated August 18, 1998, supplementing and
amending the Employment Agreement, dated January 1, 1996.
10.26** Employment Agreement between the Company and G.W. Dietrich
dated January 1, 1996 [incorporated by reference to Exhibit
10.14 to the Company's Form 10-Q for the period ended March 31,
1996].
10.27** Employment Agreement between the Company and George K. Farr
dated January 1, 1996 [incorporated by reference to Exhibit
10.15 to the Company's Form 10-Q for the period ended March 31,
1996].
10.28** Second Amendment to Employment Agreement between the Company
and Peter J. Ruud dated January 1, 1996 [incorporated by
reference to Exhibit 10.16 to the Company's Form 10-Q for the
period ended March 31, 1996].
10.29** Second Amendment and Amendment No. 3 to Employment Agreement
between the Company and Gary Blacktopp dated August 18, 1998
and November 24, 1998, respectively, supplementing and amending
the Employment Agreement dated January 1, 1997, as previously
amended.
10.30** Amendment and Amendment No. 2 to Employment Agreement between
the Company and Scott Cramer dated August 18, 1998 and November
24, 1998, respectively, supplementing and amending the
Employment Agreement dated July 1, 1997.
10.31** Amendment and Amendment No. 2 to Employment Agreement between
the Company and John King dated August 18, 1998 and November
24, 1998, respectively, supplementing and amending the
Employment Agreement dated January 1, 1997.
10.32** Employment Agreement between the Company and James M. Dancy,
Jr. dated September 14, 1998, as amended October 2, 1998.
10.33** Employment Agreement between the Company and Paul Jenks dated
September 21, 1998.
10.34** Employment Agreement between the Company and Philip J. Auld
dated October 5, 1998.
10.35** Employment Agreement between the Company and Larry E. Goswick
dated December 7, 1998.
10.36** Superior Services, Inc. 1999 Management Incentive Plan.
21 List of subsidiaries as of December 31, 1998.
23a Consent of Ernst & Young LLP.
23b Consent of PricewaterhouseCoopers LLP.
27 Financial Data Schedule.
99 Proxy Statement to the Company's 1998 Annual Shareholders
meeting scheduled to be held, May 11, 1999. [To be filed
with the Commission prior to 120 days after December 31,
1998, and incorporated by reference herein to the extent
indicated in Part III to this Form 10-K.]
- ------------
*The exhibits, schedules and ancillary documents to the listed agreement
are not being filed herewith because the Company believes that the
information contained in such exhibits, schedules and ancillary documents
should not be considered material to an investment decision in the
Company. The listed agreement includes a list briefly identifying the
contents of all omitted exhibits, schedules and ancillary documents. The
Company agrees to furnish supplementally to the Commission (but not to
file) a copy of any such exhibit, schedule or ancillary document upon
request.
**This exhibit is a management contract or compensatory plan or arrangement
required to be filed as an exhibit to the Form 10-K pursuant to Item 14
of Form 10-K.
57
EXHIBIT 3.1
AMENDED AND RESTATED BY-LAWS
OF
SUPERIOR SERVICES, INC.
(Adopted as of November 29, 1995)
ARTICLE I.
OFFICES
ss. 1.01. Business Office.
The Corporation's principal office shall be within the State of Wisconsin
and shall be located in Milwaukee County. The Corporation may have such other
offices, either within or without the State of Wisconsin, as the Board of
Directors may designate or as the Corporation's business may require from time
to time. The Corporation shall maintain at its principal office a copy of
certain records, as required by the Wisconsin Business Corporation Law (the
"Act").
ss. 1.02. Registered Office.
The Corporation's registered office required by the Act to be maintained
in the State of Wisconsin shall be the place designated by resolution of the
Corporation's Board of Directors and may be, but need not be, identical to the
principal office in the State of Wisconsin. The address of the registered office
may be changed from time to time.
ARTICLE II.
SHAREHOLDERS
ss. 2.01. Annual Shareholder Meeting.
The annual meeting of the shareholders shall be held on the second
Tuesday in May in each year at the hour of 10:00 a.m., or at such other time and
date as may be fixed by or under the authority of the Board of Directors, as
they deem appropriate in the good faith exercise of their business judgment, for
the purposes of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday in the State of Wisconsin, such meeting shall be held
at the same time on the next succeeding business day. If the election of
directors shall not be held on the day designated herein for the annual meeting
of the shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as conveniently may be held.
<PAGE>
ss. 2.02. Special Shareholder Meetings.
(a) Generally. Special meetings of the shareholders, for any purpose
or purposes, may be called by (1) the Chairperson of the Board, (2) the
President, (3) the Board of Directors or such officers as the Board of Directors
may authorize from time to time, or (4) the President or Secretary upon the
written request of the holders of record of at least one-tenth of all the
outstanding shares of the Corporation entitled to vote on any issue at the
meeting. The party calling the special meeting shall designate the date and hour
of the meeting, which date shall not be more than seventy (70) days after the
demand record date, as specified herein.
(b) Meetings Called by Shareholders. For purposes of determining the
number of shareholders necessary to demand a special meeting of the
shareholders, the record date (the "demand record date") shall be the sixtieth
(60th) day preceding the date of the special shareholder meeting. The requisite
number of shareholders demanding such a meeting (the "demanding shareholders")
shall deliver a written request to the President or Secretary, via hand delivery
or registered mail, within fifteen (15) days after the demand record date. The
costs of any special meeting, including, without limitation, the costs or
expenses of preparing and mailing the notice of meeting and any related proxy
materials shall be the responsibility of the demanding shareholders.
(c) Notice Requirements. Upon delivery to the President or Secretary
of a written request by the demanding shareholders, stating the purpose(s) of
the requested meeting, dated and signed by the person(s) entitled to request
such a meeting, it shall be the duty of the officer to whom the request is
delivered to give, within thirty (30) days of such delivery, notice of the
meeting to the shareholders. Notice of any special meeting shall be given in the
manner provided in ss. 2.04 of these By-laws. Only business within the
purpose(s) described in the special meeting notice shall be conducted at a
special shareholders meeting.
(d) Independent Verification. The Board may utilize independent
inspectors to verify that demand has properly been made by the requisite ten
percent (10%) of the outstanding shares of the Corporation, and that the
procedures required by this Section 2.02 have been followed.
ss. 2.03. Place of Shareholder Meeting.
The Board of Directors may design any place, either within or without the
State of Wisconsin, as the place of meeting for any annual or for any special
meeting called by the Board of Directors. A waiver of notice signed by all
persons entitled to vote at a meeting also may designate any place, either
within or without the State of Wisconsin, as the place for the holding of such
meeting. If no designation is made by the Board of Directors, or if a special
meeting be otherwise called, the place of the meeting shall be the Corporation's
principal business office in the State of Wisconsin, but any meeting may be
adjourned to reconvene at any place designated by vote of a majority of the
shares represented thereat.
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ss. 2.04. Notice of Shareholder Meeting.
(a) Required Notice. Unless otherwise required by the Act, written
notice stating the place, day and hour of any annual or special shareholder
meeting shall be delivered not less than ten (10) nor more than sixty (60) days
before the meeting date, either personally or by mail, by or at the direction of
the President, the Board of Directors, or other persons calling the meeting, to
each shareholder of record entitled to vote at such meeting and to any other
shareholder entitled by the Act or the Articles of Incorporation to receive
notice of the meeting. Notice shall be deemed to be effective at the earlier of:
(1) when deposited in the United States mail, addressed to the shareholder at
his or her address as it appears on the Corporation's stock transfer books, with
postage thereon prepaid; (2) on the date shown on the return receipt if sent by
registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee; (3) when received; or (4) 5 days after
deposit in the United States mail, if mailed postpaid and correctly addressed to
an address other than that shown in the Corporation's current record of
shareholders.
(b) Adjourned Meeting. If any shareholder meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
and place, if the new date, time, and place is announced at the meeting before
adjournment. But if a new record date for the adjourned meeting is or must be
fixed (see ss. 2.05 of this Article II), then notice must be given pursuant to
the requirements of paragraph (a) of this ss. 2.04, to those persons who are
shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive notice of meeting (or
any notice required by the Act, Articles of Incorporation, or By-laws), by a
writing signed by the shareholder entitled to the notice, which is delivered to
the Corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(i) waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting;
(ii) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
(d) Contents of Notice. The notice of each special shareholder
meeting shall include a description of the purpose or purposes for which the
meeting is called. If a purpose of any shareholder meeting is to consider
either: (1) a proposed amendment to the Articles of Incorporation (including any
restated articles requiring shareholder approval); (2) a plan of merger or share
exchange; (3) the sale, lease, exchange or other disposition of all, or
substantially all, of the Corporation's property; (4) the dissolution of the
Corporation; or (5) the removal of a director, the notice must so state and be
accompanied by, respectively, a copy
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or summary of the: (1) articles of amendment; (2) plan of merger or share
exchange; or (3) transaction for disposition of the Corporation's property. If
the proposed corporate action creates dissenters' rights, the notice must state
that shareholders are, or may be entitled to assert dissenters' rights, and must
be accompanied by a copy of Section 180.1301 of the Act. Except as provided in
this ss. 2.04(d), or as provided in the Corporation's Articles of Incorporation,
or otherwise in the Act, the notice of an annual shareholder meeting need not
include a description of the purpose or purposes for which the meeting is
called.
ss. 2.05. Notice of Shareholder Business and Nomination of Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be
considered by the shareholders may be made at an Annual Meeting (A)
pursuant to the Corporation's notice of meeting, (B) by or at the
direction of the Board of Directors or (C) by any shareholder of the
Corporation who is a shareholder of record at the time of giving of
notice provided for in this By-law and who is entitled to vote at the
meeting and complies with the notice procedures in this Section 2.05.
(ii) For nominations or other business to be properly
brought before an Annual Meeting by a shareholder pursuant to clause
(C) of Paragraph (a)(i) of this Section 2.05, the shareholder must
have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be received
by the Secretary of the Corporation at the principal offices of the
Corporation not less than 60 days nor more than 90 days prior to the
second Tuesday in the month of May; provided, however, that in the
event that the date of the Annual Meeting is advanced by more than 30
days or delayed by more than 60 days from the second Tuesday in the
month of May, notice by the shareholder to be timely must also be so
received not earlier than the 90th day prior to the date of such
Annual Meeting and not later than the close of business on the later
of (x) the 60th day prior to such Annual Meeting and (y) the 10th day
following the day on which public announcement of the date of such
meeting is first made. Such shareholder's notice shall be signed by
the shareholder of record who intends to make the nomination or
introduce the other business (or his duly authorized proxy or other
representative), shall bear the date of signature of such shareholder
(or proxy or other representative) and shall set forth: (A) the name
and address, as they appear on this Corporation's books, of such
shareholder and the beneficial owner or owners, if any, on whose
behalf the nomination or proposal is made; (B) the class and number
of shares of the Corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that
such shareholder is a holder of record of shares of the Corporation
entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to make the nomination or introduce the other
business specified in the notice; (D) in the case of any proposed
nomination for election or re-election as a director, (i) the name
and
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residence address of the person or persons to be nominated, (ii) a
description of all arrangements or understandings between such
shareholder or beneficial owner or owners and each nominee and any
other person or persons (naming such person or persons) pursuant to
which the nomination is to be made by such shareholder, (iii) such
other information regarding each nominee proposed by such shareholder
as would be required to be disclosed in solicitations of proxies for
elections of directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A under the
Securities and Exchange Act (the "Exchange Act"), including any
information that would be required to be included in a proxy
statement filed pursuant to Regulation 14A had a nominee been
nominated by the Board of Directors and (iv) the written consent of
each nominee to be named in a proxy statement and to serve as a
director of the Corporation if so elected; and (E) in the case of any
other business that such shareholder proposes to bring before the
meeting, (i) a brief description of the business desired to be
brought before the meeting and, if such business includes a proposal
to amend these By-laws, the language of the proposed amendment, (ii)
such shareholder's and beneficial owner's or owners' reasons for
conducting such business at the meeting, and (iii) any material
interest in such business of such shareholder and beneficial owner or
owners.
(b) Special Meetings. Only such business shall be conducted at a
Special Meeting as shall have been described in the notice of meeting sent to
shareholders pursuant to Section 2.04(d) of these By-laws. Nominations of
persons for election to the Board of Directors may be made at a Special Meeting
at which directors are to be elected pursuant to such notice of meeting (i) by
or at the direction of the Board of Directors or (ii) by any shareholder of the
Corporation who (A) is a shareholder of record at the time of giving of such
notice of meeting, (B) is entitled to vote at the meeting and (C) complies with
the notice procedures set forth in this Section 2.05. Any shareholder desiring
to nominate persons for election to the Board of Directors at such a Special
Meeting shall cause a written notice to be received by the Secretary of the
Corporation at the principal offices of the Corporation not earlier than 90 days
prior to such Special Meeting and not later than the close of business on the
later of (x) the 60th day prior to such Special Meeting and (y) the 10th day
following the day on which public announcement is first made of the date of such
Special Meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. Such written notice shall be signed by the shareholder
of record who intends to make the nomination (or his duly authorized proxy or
other representative), shall bear the date of signature of such shareholder (or
proxy or other representative) and shall set forth: (A) the name and address, as
they appear on the Corporation's books, of such shareholder and the beneficial
owner or owners, if any, on whose behalf the nomination is made; (B) the class
and number of shares of the Corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that such
shareholder is a holder of record of shares of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
make the nomination specified in the notice; (D) the name and residence address
of the person or persons to be nominated; (E) a description of all arrangements
or understandings between such shareholder or beneficial owner or owners and
each nominee and other person or persons (naming such person or
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persons) pursuant to which the nomination is to be made by such shareholder; (F)
such other information regarding each nominee proposed by such shareholder as
would be required to be disclosed in solicitations of proxies for elections of
directors, or would be otherwise required to be disclosed, in each case pursuant
to Regulation 14A under the Exchange Act, including any information that would
be required to be included in a proxy statement filed pursuant to Regulation 14A
had the nominee been nominated by the Board of Directors; and (G) the written
consent of each nominee to be named in a proxy statement and to serve as a
director of the Corporation if so elected.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.05 shall be eligible to serve
as directors. Only such business shall be conducted at an Annual
Meeting or Special Meeting as shall have been brought before such
meeting in accordance with the procedures set forth in this Section
2.05. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set
forth in this Section 2.05 and, if any proposed nomination or
business is not in compliance with this Section 2.05 to declare that
such defective proposal shall be disregarded.
(ii) For purposes of this Section 2.05, "public
announcement" shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
Section 2.05, a shareholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section
2.05. Nothing in this Section 2.05 shall be deemed to limit the
Corporation's obligation to include shareholder proposals in its
proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
ss. 2.06. Fixing of Record Date.
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders, or any adjournment thereof, or shareholders
entitled to receive payment of any distribution or dividend, or in order to make
a determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date shall
be not more than seventy (70) days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If no such
record date is fixed, the record date for determination of such shareholders
shall be at the close of business on:
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(a) With respect to an annual shareholder meeting or any special
shareholder meeting called by the Board of Directors or any person specifically
authorized by the Board or these By-laws to call a meeting, the day before the
first notice is delivered to shareholders;
(b) With respect to a special shareholder's meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date the
Board authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting
(pursuant to Article II, ss. 2.12), the date the first shareholder signs a
consent;
(e) With respect to a distribution to shareholders, (other than one
involving a repurchase or acquisition of shares), the date the Board authorizes
the distribution; and
(f) With respect to any other matter for which such a determination
is required, as provided by law.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date which it must do if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting.
ss. 2.07. Voting Lists.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make, before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list must be arranged by voting group, if such exists,
and within each voting group by class or series of shares. The shareholder list
shall be subject to inspection at the Corporation's principal office by any
shareholder at any time during usual business hours for any proper purpose,
beginning two (2) business days after notice is given of the meeting for which
the list was prepared. Such list also shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the meeting for purposes related to the meeting. A
shareholder, or his or her agent or attorney, is entitled on written demand to
inspect and, subject to the requirements of the Act, to copy the list during
regular business hours and at the shareholder's expense, during the period it is
available for inspection. The Corporation shall maintain the shareholder list in
written form or in another form capable of conversion into written form within a
reasonable time. Notwithstanding the foregoing provision to the contrary, the
Corporation's failure or refusal to prepare or make available the shareholder
list shall not affect the validity of any action taken at such shareholder
meeting.
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ss. 2.08. Shareholder Quorum and Voting Requirements.
If the Articles of Incorporation or the Act provide for voting by a
single voting group on a matter, action on that matter is taken when voted upon
by the voting group.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles of Incorporation or the Act provide otherwise, a
majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
If the Articles of Incorporation or the Act provides for voting by two
(2) or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately. Action may be
taken by one voting group on a matter even though no action is taken by another
voting group entitled to vote on the matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting. However, a share represented at a meeting solely for the
purpose of objecting to the holding of the meeting or to the transaction of
business at the meeting shall not be deemed present at the meeting for quorum
purposes.
If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act require a greater number of affirmative
votes.
ss. 2.09. Proxies.
Except as otherwise provided by the Act, at all meetings of shareholders,
a shareholder may vote in person, or vote by proxy which is executed in writing
by the shareholder or which is executed by his duly authorized attorney-in-fact.
Such proxy shall be filed with the secretary of the Corporation or other person
authorized to tabulate votes before or at the time of the meeting. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. Unless otherwise provided in the appointment
form, a proxy appointment may be revoked at any time before it is voted, either
by written notice filed with the Secretary or other officer or agent of the
Corporation authorized to tabulate votes, or by oral notice given by the
shareholder during the meeting. The presence of a shareholder who has filed his
or her proxy appointment shall not of itself constitute a revocation.
ss. 2.10. Voting of Shares.
Unless otherwise provided in the Articles of Incorporation or the Act,
each outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders.
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Except as provided by specific court order, no shares held by another
corporation, if a majority of the shares entitled to vote for the election of
directors of such other corporation are held by the Corporation, shall be voted
at any meeting or counted in determining the total number of outstanding shares
at any given time for purposes of any meeting. Provided, however, the preceding
sentence shall not limit the Corporation's power to vote any shares, including
its own shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
ss. 2.11. Corporation's Acceptance of Votes.
(a) If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the Corporation, if acting
in good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of its shareholder, the Corporation,
if acting in good faith, is nevertheless entitled to accept the vote, consent,
waiver, or proxy appointment and give it effect as the act of the shareholder
if:
(i) the shareholder is an entity as defined in the Act and
the name signed purports to be that of an officer or agent of the
entity;
(ii) the name signed purports to be that of an
administrator, executor, guardian, or conservator representing the
shareholder and, if the Corporation requests, evidence of fiduciary
status acceptable to the Corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment;
(iii) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the Corporation
requests, evidence of this status acceptable to the Corporation has
been presented with respect to the vote, consent, waiver, and proxy
appointment;
(iv) the name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
Corporation requests, evidence acceptable to the Corporation of the
signatory's authority to sign for the shareholder has been presented
with respect to the vote, consent, waiver, or proxy appointment;
(v) two or more persons are the shareholder as covenants
or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be
acting on behalf of all the co-owners.
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(c) The Corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(d) The Corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
ss. 2.12. Unanimous Consent Without Meeting.
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if one or more consents in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof and are delivered to
the Corporation for inclusion in the minute book. A consent signed under this
section has the effect of a meeting vote and may be described as such in any
document.
ss. 2.13. Dissenters' Rights.
Each shareholder shall have the right to dissent from action by the
Corporation and obtain payment for his or her shares when so authorized by the
Act, the Articles of Incorporation, these By-laws, or by resolution of the Board
of Directors.
ss. 2.14. Conduct of Meetings.
The Chairperson of the Board, if one has been elected, or if none has
been elected, the President, or in his or her absence the Vice-President, and in
his or her absence, any person chosen by the shareholders present, shall call
the meeting of the shareholders to order and shall act as Chairman of the
meeting, and the Secretary of the Corporation shall act as Secretary of all
meetings of the shareholders, except that the presiding officer may appoint any
Assistant Secretary or other person to act as Secretary of the meeting.
ARTICLE III.
BOARD OF DIRECTORS
ss. 3.01. General Powers; Number, Tenure and Qualification.
All corporate powers shall be exercised by or under the authority of, and
the Corporation's business and affairs shall be managed under the direction of,
the Board of Directors.
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The number of directors shall be fixed by a resolution adopted by a
majority of the directors then in office, or by amendment of these By-laws, but
in no event shall there be less than seven (7) directors, and a decrease in the
number of directors shall not shorten the term of office of an incumbent
director. The Board of Directors shall be divided into three classes as nearly
equal in number as may be, with the term of office of one class expiring each
year. At the annual meeting of shareholders in 1996, directors of the first
class shall be elected to hold office for a term expiring at the Corporation's
1997 annual meeting; directors of the second class shall be elected to hold
office for a term expiring at the Corporation's 1998 annual meeting; and
directors of the third class shall be elected to hold office for a term expiring
at the Corporation's 1999 annual meeting. At each annual meeting of the
shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third successive annual meeting of the
shareholders after their election. When the number of directors is changed, any
newly created directorships or any decrease in directorships shall be so
apportioned among the classes as to make all classes as nearly equal in number
as possible.
ss. 3.02. Election.
Unless otherwise provided in the Articles of Incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
ss. 3.03. Regular Meetings.
A regular meeting of the Board of Directors shall be held without other
notice than this By-law immediately after, and at the same place as, the annual
meeting of shareholders, and each adjourned session thereof. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Wisconsin, for the holding of additional regular meetings
without other notice than such resolution. Any such regular meeting may be held
by any means of communication as permitted by ss. 3.08.
ss. 3.04. Special Meetings.
Special meetings of the Board of Directors may be called by or at the
request of the Chairperson of the Board, if one has been elected, the President
or any four (4) directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any time and any place, either within
or without the State of Wisconsin, as the time and place for holding any special
meeting of the Board of Directors called by them. If no place is fixed by the
person calling the meeting, the place of meeting shall be the Corporation's
principal office in the State of Wisconsin. Any such special meeting may be held
by any means of communication as permitted by ss. 3.08.
ss. 3.05. Notice of Special Meetings; Waiver of Notice.
Notice stating the time and place of any special meeting of the Board of
Directors shall be given at least twenty-four (24) hours previously thereto by
written notice delivered
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personally or mailed to each director at his or her business address, or such
other address as designated in writing to the Secretary, or by telephone or
telegram. If mailed, such notice shall be deemed to be effective with the
earlier of: (1) when received, or (2) five days after deposit in the United
States Mail, addressed to the director's business office, with postage thereon
prepaid; or (3) the date shown on the return receipt if sent by registered or
certified mail, return receipt requested, and the receipt is signed by or on
behalf of the director. If notice be given by telephone or telegram, such notice
shall be deemed to be delivered when the notice is given personally by telephone
or when the telegram is delivered to the telegraph company. Whenever any notice
is required to be given to any director of the Corporation under the provisions
of these By-laws or under the provisions of the Articles of Incorporation or
under the provisions of any statute, a waiver thereof in writing, signed at any
time, whether before or after the time of the meeting, by the director entitled
to such notice, shall be deemed equivalent to the giving of such notice. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting and objects thereat to
the transaction of the business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
ss. 3.06. Director Quorum.
Except as otherwise specified by law or the Articles of Incorporation or
these By-laws, a majority of the number of directors fixed in the manner
provided by ss. 3.01 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
A majority of the number of directors appointed to serve on a committee
as authorized in ss. 3.15 of these By-laws shall constitute a quorum for the
transaction of business at any committee meeting. These provisions shall not,
however, apply to the determination of a quorum for actions taken under
emergency By-laws or any other provisions of these By-laws that fix different
quorum requirements.
ss. 3.07. Voting Requirement.
The affirmative vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors
or a committee of the Board of Directors. This provision shall not, however,
apply to any action taken by the Board of Directors pursuant to ss. 3.14 or
Article X of these By-laws, or in the event the affirmative vote of a greater
number of directors is required by the Act, the Articles of Incorporation, or
any other provision of these By-laws.
ss. 3.08. Meetings by Telephonic Communication.
To the extent provided in these By-laws, the Board of Directors, or any
committee of the Board, may, in addition to conducting meetings in which each
director participates in person, and notwithstanding any place set forth in the
notice of the meeting or these By-laws,
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conduct any regular or special meeting by the use of any electronic means of
communication, such as by conference telephone, provided all participating
directors may simultaneously hear each other during the meeting. Before the
commencement of any business at a meeting at which any directors do not
participate in person, all participating directors shall be informed that a
meeting is taking place at which official business may be transacted.
ss. 3.09. Director's Assent.
A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is deemed to
have assented to the action taken unless: (1) the director objects at the
beginning of the meeting (or promptly upon the director's arrival) to holding it
or transacting business at the meeting; or (2) the director dissents or abstains
from the action taken and minutes of the meeting are prepared that show the
director's dissent or abstention from the action; (3) the director dissents or
abstains from an action taken, minutes of the meeting are prepared that fail to
show the director's dissent or abstention from the action taken and the director
delivers to the Corporation a written notice of that failure that complies with
Section 180.0141 of the Act promptly after receiving the minutes; or (4) the
director delivers written notice of his or her dissent or abstention to the
presiding officer of the meeting before its adjournment or to the Corporation
immediately after adjournment of the meeting. The right of dissent or abstention
is not available to a director who votes in favor of the action taken.
ss. 3.10. Conduct of Meetings.
The Chairperson of the Board, if one has been elected, or if none has
been elected, the President, and in his absence the Vice-Presidents in the order
appointed under ss. 4.11 of Article IV, and in their absence, any director
chosen by the directors then present, shall call meetings of the Board of
Directors to order and shall act as Chairman of the meeting. The Secretary of
the Corporation shall act as secretary of all meetings of the Board of
Directors, but in the absence of the secretary, the presiding officer may
appoint any Assistant secretary or any director or other person present to act
as secretary of the meeting.
ss. 3.11. Removal; Resignation.
(a) Any director may be removed from office with or without cause,
but only by the affirmative vote of shareholders holding at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of the then outstanding shares
of all classes of capital stock of the Corporation generally possessing voting
rights in the election of directors, considered for this purpose as a single
class; provided, however, that if the Board of Directors by resolution adopted
by the Requisite Vote shall have recommended removal of a director, then the
shareholders may remove such director from office with or without cause by a
majority of such outstanding shares.
(b) A director may resign at any time by filing a written resignation
with the Secretary of the Corporation.
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ss. 3.12. Vacancies.
Any vacancy occurring on the Board of Directors, including a vacancy
crested by an increase in the number of directors, shall be filled by the Board
of Directors. If the directors remaining in office constitute fewer than a
quorum of the Board, then the vacancy shall be filled by the affirmative vote of
a majority of all directors remaining in office. Any director elected to fill
such vacancy shall serve as a director until the next election of the class for
which such director shall have been elected, and until his or her successor
shall be elected and qualified.
ss. 3.13. Compensation and Expenses.
The Board of Directors, irrespective of any personal interest of any of
its members, may (1) establish reasonable compensation of all directors for
services to the Corporation as directors or may delegate this authority to an
appropriate committee, (2) provide for, or delegate authority to an appropriate
committee to provide for, reasonable pensions, disability or death benefits, and
other benefits or payments to directors and to their estates, families,
dependents, or beneficiaries for prior services rendered to the Corporation by
the directors, and (3) provide for reimbursement of reasonable expenses incurred
in the performance of the directors' duties, including the expense of traveling
to and from Board meetings.
ss. 3.14. Unanimous Consent Without Meeting.
Any action required or permitted by the Articles of Incorporation or
By-laws or any provision of law to be taken by the Board of Directors at a
meeting or by resolution may be taken without a meeting if a consent in writing,
setting forth the action so taken shall be signed by all of the directors then
in office, and filed with the Corporation's records. Action taken by consent is
effective when the last director signs the consent, unless the consent specifies
a different effective date. A signed consent has the effect of a meeting and may
be described as such in any document.
ss. 3.15. Committees.
The Board of Directors by resolution adopted by the affirmative vote of a
majority of the number of directors may designate one or more committees, each
committee to consist of two (2) or more directors elected by the Board of
Directors, which to the extent provided in said resolution, as initially
adopted, and as thereafter supplemented or amended by further resolution adopted
by a like vote, shall have and may exercise, when the Board of Directors is not
in session, the powers of the Board of Directors in the management of the
Corporation's business and affairs, except action in respect to the (1)
authorization of distributions, (2) the approval or proposal to shareholders of
action for which the Act requires approval by shareholders, (3) filling
vacancies on the Board of Directors or its committees, (4) amending the Articles
of Incorporation pursuant to Board authority, (5) adopting, amending or
repealing By-laws, (6) approving a plan of merger not requiring shareholder
approval, (7) the authorization or approval to reorganize shares, except
according to a formula or method prescribed by the Board of Directors, (8) the
authorization or approval of the issuance or sale
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or contract for sale of shares, or (9) the determination of the designation and
relative rights, preferences and limitations of a class or series of shares.
Sections 3.03, 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10 and 3.14 of this Article
III, which govern meetings, actions without meetings, notice and waiver of
notice, quorum and voting requirements of the Board of Directors, apply to
committees and their members.
ARTICLE IV.
OFFICERS
ss. 4.01. Number.
The Corporation's principal officers shall be a Chairperson, Chief
Executive Officer, a Chief Financial Officer, a President, a Vice President, a
General Counsel, a Secretary, and a Treasurer, each of whom shall be appointed
by the Board of Directors. Additional officers and assistant officers, including
any Vice Presidents, may be appointed by the Board of Directors as the Board
deems appropriate. If there is more than one Vice President, the Board may
establish designations for the Vice Presidencies to identify their functions or
their order. There may, in addition, be a chairperson or co-chairperson of the
board, whenever the Board shall see fit to cause such office or offices to be
filled. Any two or more offices may be held simultaneously by the same person.
ss. 4.02. Appointment and Term of Office.
The Corporation's officers shall be appointed for a term as determined by
the Board of Directors. If no term is specified, they shall hold office until
their successor shall have been duly appointed and shall have qualified or until
the officer's death, resignation or removal from office in the manner
hereinafter provided.
The designation of a specified term does not grant to the officer any
contract rights, and the Board can remove the officer at any time prior to the
termination of such term.
ss. 4.03. Removal.
Any officer or agent appointed by the Board of Directors may be removed
by the Board of Directors whenever in its judgment the Corporation's best
interests will be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Appointment of an officer
or agent shall not of itself create contract rights.
ss. 4.04. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification, or other reason shall be filled in the manner prescribed for
regular appointments to the office.
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ss. 4.05. Powers, Authority and Duties.
The Corporation's officers shall have the powers and authority conferred
in the duties prescribed by the Board of Directors or the officer who appointed
them in addition to and to the extent not inconsistent with those specified in
other sections of this Article IV.
ss. 4.06. The Chairperson of the Board.
At the Board of Directors' option, it may elect a Chairperson of the
Board of Directors, who shall preside at all shareholders' and directors'
meetings at which he or she is present. If elected, the Chairperson of the Board
shall have and exercise general supervision over the conduct of the
Corporation's affairs and over its other officers, subject, however, to the
board's control. The Chairperson of the Board of Directors shall from time to
time report to the Board all matters within his or her knowledge that the
Corporation's interests may require to be brought to the Board's notice.
ss. 4.07. Chief Executive Officer.
The Chief Executive Officer shall be the senior officer of the
Corporation and in the recess of the Board of Directors shall have the general
control and management of all the business and affairs of the Corporation. He or
she shall also exercise such further powers and perform such other duties as may
from time to time be conferred upon or assigned by the By-laws or the Board of
Directors. He or she shall make annual reports and submit the same to the Board
of directors and also to the shareholders at their annual meeting, showing the
condition and the affairs of the Corporation. He or she shall from time to time
make such recommendations to the Board of Directors, as he or she thinks proper,
and shall bring before the Board of Directors such information as may be
required, relating to the business and property of the Corporation.
ss. 4.08. Chief Financial Officer.
The Chief Financial Officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director.
The Chief Financial Officer shall deposit all money and other valuables
in the name and to the credit of the Corporation with such depositaries as may
be designated by the Board of Directors. He or she shall disburse the funds of
the Corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of all of his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or these By-laws.
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ss. 4.09. General Counsel.
The General Counsel shall advise the Board of Directors and officers on
legal matters except those relating to taxes. The General Counsel shall perform
such additional duties as may be assigned to him by the Board of Directors, the
Chairperson of the Board, or the President.
ss. 4.10. The President.
The President shall be the Corporation's principal executive officer and,
subject to the control of the Board of Directors, shall in general supervise and
control all of the Corporation's business and affairs. If a Chairperson of the
Board has not been elected, or in the Chairperson's absence, the President
shall, when present, preside at all meetings of the shareholders and of the
Board of Directors. The President may sign, with the Secretary or any other
proper officer of the Corporation authorized by the Board of Directors,
certificates for shares of the Corporation and deeds, mortgages, bonds,
contracts, or other instruments in the ordinary course of business or that the
Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by the By-laws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incidental to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
ss. 4.11. The Vice President.
In the absence of the Chairperson of the Board and the President, or in
the event of the President's death or inability or refusal to act as directed by
the Board of Directors, the Vice President (or in the event there be more than
one Vice President, the Vice Presidents in the order designated at the time of
their appointment, or in the absence of any designation, then in order of their
appointment) shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. Any Vice President may sign, with the Secretary or an Assistant
Secretary certificates for shares of the Corporation; and shall perform such
other duties as from time to time may be assigned by the President or by the
Board of Directors.
ss. 4.12. The Secretary.
The Secretary shall: (a) keep the minutes of the meetings of the
shareholders and of the Board of Directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-laws or as required by law; (e) be custodian of the
corporate records and see that books, reports, statements, certificates and all
other documents and records required by law are properly kept and filed; (d)
keep a register of the post office address of each shareholder, which shall be
furnished to the Secretary by such shareholder; (e) sign with the President, or
a Vice President, certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the Corporation; and (g) in
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general perform all duties in the name and to the credit of the Corporation with
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the President and directors, whenever they request
it, an account of all of his or her transactions as Chief Financial Officer and
of the financial condition of the Corporation, and shall have such other powers
and perform such other duties as may be prescribed bust companies, or other
depositories as shall be selected in accordance with the provisions of Article V
of these By-laws, and (c) in general perform all of the duties incidental to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors. If required by the Board
of Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
ss. 4.13. Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries, when authorized by the Board of Directors, may
sign with the President or a Vice President certificates for shares of the
Corporation and issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers if required by the Board of
Directors, shall give bonds for the faithful discharge of their duties in such
sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
ss. 4.14. Salaries.
Officers' salaries shall be fixed from time to time by the Board of
Directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the Corporation.
ARTICLE V.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
ss. 5.01. Contracts.
The Board of Directors may authorize any individual officer or agent or
number of officers or agents to enter into any contract or to execute and
deliver any instrument in the Corporation's name and on its behalf, and such
authorization may be general or confined to specific instances.
ss. 5.02. Loans.
No loans shall be contracted on the Corporation's behalf and no
indebtedness shall be incurred in its name unless authorized by or under the
authority of a resolution of the Board of Directors. Such authorization may be
general or confined to specific instances.
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ss. 5.03. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the Corporation's name, shall be
signed by such officer or officers, agents or agents of the Corporation and in
such manner as shall from time to time be determined by or under the authority
of a resolution of the Board of Directors.
ss. 5.04. Deposits.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the Corporation's credit in such banks, trust companies or
other depositories as may be selected by or under the authority of the Board of
Directors.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
ss. 6.01. Certificates for Shares.
(a) Content
Certificates representing shares of the Corporation shall at a
minimum state on their face the name of the issuing corporation and that it is
formed under the laws of Wisconsin; the name of the person to whom issued; and
the number and class of shares and the designation of the series, if any, the
certificate represents; and be in such form as determined by the Board of
Directors. Such certificates shall be signed (either manually or by facsimile)
by the President or a Vice President and by the Secretary or an Assistant
Secretary. Each certificate for shares shall be consecutively numbered or
otherwise identified.
(b) Legend as to Class or Series
If the Corporation is authorized to issue different classes of
shares or different series within a class, the designations, relative rights,
preferences, and limitations applicable to each class and the variations in
rights, preferences, and limitations determined for each series (and the
authority of the Board of Directors to determine variations for future series)
must be summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the Corporation
will furnish the shareholders this information on request in writing and without
charge.
(c) Shareholder List
The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation.
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(d) Transferred Shares
All certificates surrendered to the Corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnification of the
Corporation as the Board of Directors may prescribe.
ss. 6.02. Registration of the Transfer of Shares.
Registration of the transfer of shares of the Corporation shall be made
only on the Corporation's stock transfer books by the holder of record thereof
or by his or he legal representative, who shall furnish proper evidence of
authority to transfer, or by his or her attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary of the Corporation, and
on surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the Corporation's books shall be deemed by the
Corporation to be the owner thereof for all purposes.
ss. 6.03. Restrictions on Transfer.
The Board of Directors or shareholders may impose restrictions on the
transfer of shares. A restriction does not affect shares issued before the
restriction was adopted unless the holders of the shares are parties to the
restriction agreement or voted in favor of the restriction. The face or reverse
side of each certificate representing shares shall bear a conspicuous notation
of any restriction imposed by the Corporation upon the transfer of such shares.
ss. 6.04. Lost, Destroyed or Stolen Certificates.
Where the owner claims that his certificate of shares has been lost,
destroyed or wrongfully taken, a new certificate shall be issued in place
thereof if the owner (a) so requests before the Corporation has notice that such
shares have been acquired by a bona fide purchaser, and (b) satisfies such other
reasonable requirements as may be prescribed by or under the authority of the
Board of Directors, including the furnishing of an indemnity bond if so
required.
ss. 6.05. Consideration for Shares.
The Corporation's shares may be issued for such consideration as shall be
fixed from time to time by the Board of Directors. The consideration to be paid
for shares may be paid in whole or in part, in money, promissory notes, in other
property, tangible or intangible, or in labor or services actually performed or
to be performed for the Corporation. When payment of the consideration for which
shares are to be issued shall have been received by the Corporation, such shares
shall be deemed to be fully paid and nonassessable by the Corporation. No
certificate shall be issued for any share until such share is fully paid.
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If the consideration to be paid for share consists, in whole or part, of
a promissory note or a contract for services to be performed for the
Corporation, the Board of Directors may, in its discretion, elect to hold those
shares in escrow or otherwise restrict their transfer. In the event that shares
are so escrowed, and the shareholder defaults under his or her obligations under
the promissory note or the contract for services, as applicable, the Corporation
may, in addition to any other legal or equitable remedies, cancel all or part of
the escrowed shares.
ss. 6.06. Acquisition of Shares.
The Corporation may acquire its own shares and unless otherwise provided
in the Articles of Incorporation, the shares so acquired constitute authorized
but unissued shares.
ss. 6.07. Stock Regulations.
The Board of Directors shall have the power and authority to make all
such further rules and regulations not inconsistent with the statutes of the
State of Wisconsin as they may deem expedient concerning the issue, transfer and
registration of certificates representing shares of the Corporation.
ARTICLE VII.
CONFLICTS OF INTEREST POLICY
The Corporation and its subsidiaries (collectively referred to herein as
the "Corporation") shall not enter into any contract, loan or other transaction
in which a director, officer or employee of the Corporation has a direct or
indirect personal interest, other than a contract of employment between such
person and the Corporation, without such director, officer or employee first
fully disclosing to the Audit Committee of the Board of Directors all material
terms of such interest therein and allowing the Audit Committee of the Board of
Directors to specifically authorize and approve such contract, loan or
transaction. Ownership of less than 5% of the capital stock of a corporation
whose stock is publicly traded shall not, in and of itself, constitute a direct
or indirect interest in such corporation for purposes of this Article VII. This
Article VII may only be amended or deleted by a majority vote of directors not
otherwise employed by the Corporation and who do not have a direct or indirect
personal interest in such amendment or deletion.
ARTICLE VIII.
FISCAL YEAR
The Board of Directors shall by resolution establish the Corporation's
fiscal year.
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ARTICLE IX.
DISTRIBUTIONS
The Board of Directors may from time to time authorize, and the
Corporation may make distributions (including dividends on its outstanding
shares) in the manner and upon the terms and conditions provided by law, the
Articles of Incorporation and the resolutions of the Board of Directors.
ARTICLE X.
INDEMNIFICATION
ss. 10.01. Mandatory Indemnification.
The Corporation shall indemnify a director or officer as follows:
(a) To the extent he or she has been successful on the merits or
otherwise in the defense of a proceeding, for all reasonable expenses incurred
in the proceeding, if the director or officer was a party because he or she is
or was at the time of the events upon which the proceeding was based a director
or officer of the Corporation. A director or officer shall exercise his or her
right to indemnification under this ss. 10.01 of Article X by delivering a
written demand for indemnification to the Corporation's Treasurer, or the
President if the party seeking indemnification is the Treasurer.
(b) In all cases not included in ss. 10.01(a) of this Article X, the
Corporation shall indemnify a director or officer against liability incurred by
the director or officer in a proceeding to which the director or officer was a
party because he or she is or was at the time of the events upon which the
proceeding was based a director or officer of the Corporation, unless liability
was incurred because the director or officer breached or failed to perform a
duty he or she owes to the Corporation and the breach or the failure to perform
constitutes:
(i) A willful failure to deal fairly with the Corporation
or its shareholders in connection with a matter in which the director
or officer has 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 benefit; or
(iv) Willful misconduct.
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(c) Whether a director or officer of the Corporation shall be
entitled to indemnification under ss. 10.01(b) shall be determined in accordance
with the procedures established in ss.10.02 of this Article X.
(d) Within sixty (60) days of the completion of a successful
proceeding under ss. 10.01(a), or within sixty (60) days of the date of
determination under ss. 10.01(b) that an officer or director is entitled to
indemnification; the full amount for which such officer or director is entitled
to indemnification shall be paid to him or her, to the extent not previously
paid by the Corporation pursuant to Section 10.03 of these By-laws or otherwise.
(e) The termination of a proceeding by judgment, order, settlement or
conviction, or upon a plea of no contest or an equivalent plea, does not, by
itself, create a presumption that indemnification of the director or officer is
not required under this subsection.
ss. 10.02. Determination of Right to Indemnification.
A director or officer seeking indemnification under ss.10.01(b) of this
Article X shall first make a written request to the Corporation's Treasurer, or
the Corporation's President, if the person seeking indemnification is the
Treasurer, for such indemnification. Determination of whether indemnification is
required shall be made by one of the following means:
(a) By a majority vote of a quorum of the Board of Directors
consisting of directors who are not at the time parties to the same or related
proceedings. If such quorum of disinterested directors cannot be obtained, by a
majority vote of a committee duly appointed by the Board of Directors and
consisting solely of two (2) or more directors who are not at the time parties
to the same or related proceedings. Directors who are parties to the same or
related proceedings may participate in the designation of members of the
committee.
(b) By independent legal counsel selected by a majority vote of a
quorum of the Board of Directors or its committee consisting of directors who
are not at the time parties to the same or related proceedings or, if such a
quorum cannot be obtained, by a majority vote of the full Board of Directors,
including directors who are parties to the same or related proceedings.
(c) By the affirmative majority vote, or unanimous written consent,
of the Corporation's shareholders. However, shares owned by or voted under the
control of persons who at the time of the vote or consent are parties to the
same or related proceedings, whether as plaintiffs or defendants or in any other
capacity, may not be voted in making the determination.
(d) By a panel of three (3) arbitrators consisting of one (1)
arbitrator selected by those directors entitled under subsection (b) above to
select independent legal counsel, one (1) arbitrator selected by the director or
officer seeking indemnification and one (1) arbitrator selected by the other two
(2) arbitrators.
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(e) By a court of competent jurisdiction upon application by the
director or officer for an initial determination of entitlement to
indemnification or for review by the court of an adverse determination.
Indemnification shall be ordered if the court determines that the director or
officer is entitled to indemnification under ss. 10.01 of this Article X or that
the director or officer is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances. If the director of officer is successful
in obtaining indemnification by order of the court, in addition to
indemnification against all other expenses and liability, the director or
officer shall be reimbursed for expenses reasonably incurred in pursuing his or
her request for indemnification.
The director or officer of the Corporation seeking indemnification shall
designate in his or her request for indemnification the method of making the
indemnification determination. In connection with such determination, the
director or officer shall be entitled to a rebuttable presumption that he or she
is entitled to indemnification, which presumption may only be overcome by the
party challenging such indemnification by clear and convincing evidence.
ss. 10.03. Advance of Expenses as Incurred.
The Corporation shall, upon written request by the director of officer,
pay for or reimburse the reasonable expenses incurred by a director or officer
who is a party to a proceeding, as those expenses are incurred, if the director
of officer furnishes the Corporation a written affirmation of his or her good
faith belief that he or she has not breached his or her duties to the
Corporation, and the director or officer furnishes the Corporation with a
written undertaking, executed personally or on his or her behalf, to repay the
allowance to the extent that it is ultimately determined that the
indemnification is not required. The Corporation may accept the undertaking
without reference to his or her ability to repay the allowance, and the
undertaking may be secured or unsecured.
ss. 10.04. Denial of Indemnification.
In the event that it is determined pursuant to the procedures of ss.
10.02 that an officer or director is not entitled to indemnification, the
officer or director who has been denied indemnification shall have the right to
choose the forum, from among the statutorily provided options, in which the
resolution of his or her right to indemnification is to be resolved.
ss. 10.05. Insurance.
The Corporation may purchase and maintain insurance on behalf of its
directors and officers, or to reimburse itself, against liability asserted or
incurred and expenses incurred by the director or officer or corporation in
connection with a proceeding brought against the director or officer in his
capacity as a director or officer or arising from his status as a director or
officer, regardless of whether the Corporation is required or authorized to
indemnify the individual against the same liability pursuant to the provisions
hereof.
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ss. 10.06. Definitions.
The following terms used in this Article X shall have the indicated
meanings:
(a) "Directors" or "officer" means an individual who (i) is or was a
director or officer of the Corporation; (ii) an individual who, while a director
or officer of the Corporation, is or was serving at the Corporation's request as
a director, officer partner, trustee, member of any governing or decision-making
committee, employee or agent of another corporation, partnership,k joint venture
or other enterprise; or (iii) while a director or officer of the Corporation,m
is or was serving an employee benefit plan because his or her duties to the
Corporation also impose duties on, or otherwise involve services by, the person
to the plan or to the participants in or beneficiaries of the plan. "Director"
or "officer" includes the estate or personal representatives of a director or
officer.
(b) "Expenses" include all fees, costs, charges, attorneys' counsel
fees and other expenses and disbursements incurred in connection with a
proceeding.
(c) "Liability" includes the obligation to pay a judgment,
settlement, penalty, fine, assessment or forfeiture, including an excise tax
assessed with respect to or on an employee benefit plan, and reasonable
expenses.
(d) "Party" includes an individual who was or is, or who is
threatened to be made, or is at risk of becoming, a named defendant or
respondent in a proceeding.
(e) "Proceeding" means any threatened, pending or completed action,
suit, claim, litigation, appeal, arbitration or other proceeding, whether civil,
criminal, administrative or investigative, formal or informal, predicated on
foreign, federal, state or local law, brought by or in the right of the
Corporation or by any other person or by an governmental or administrative body.
ss. 10.07. Savings Clause.
To the extent any court of competent jurisdiction shall determine that
the indemnification provided under this Article X shall be invalid as applied to
a particular claim, issue or matter, the provisions hereof shall be deemed
amended to allow and require indemnification to the maximum extent permitted by
law.
ss. 10.08. Effective Date.
This Article X shall be deemed to be a contract between the Corporation
and each previous, current or future director or officer. The provisions of this
Article X shall apply to all proceedings commenced after the date hereof,
whether rising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article X shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is
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based in any material respect on any alleged action or failure to act prior to
such amendment, modification or repeal.
ARTICLE XI.
CORPORATE SEAL
The Corporation shall have no seal.
ARTICLE XII.
AMENDMENTS
ss. 12.01. Board of Directors.
Except as otherwise specified herein or in the Corporation's Amended and
Restated Articles of Incorporation, the Board of Directors, from time to time,
by vote of a majority of the directors then in office, may adopt, amend or
repeal any and all of the Corporation's By-laws, unless the Articles of
Incorporation or the Act reserve this power exclusively to the shareholders in
whole or in part; or the shareholders, in adopting, amending or repealing a
particular bylaw provide expressly that the Board of Directors may not amend or
repeal that bylaw.
ss. 12.02. Shareholders.
Except as otherwise specified herein or in the Corporation's Amended and
Restated Articles of Incorporation, the shareholders, from time to time, by vote
of a majority of the shares entitled to vote, may adopt, amend or repeal any and
all of the Corporation's By-laws.
ss. 12.03. Implied Amendments.
Any action taken or authorized by the shareholders or by the Board of
Directors, which would be inconsistent with the By-laws then in effect but which
is taken or authorized by the unanimous written consent of the shareholders or
Board of Directors or by the affirmative vote of not less than the number of
shares or the number of directors required to amend the By-laws so that the
By-laws would be consistent with such action, shall be given the same effect as
though the By-laws had been temporarily amended or suspended so far, but only so
far as it is necessary to permit the specific action so taken or authorized.
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EXHIBIT 3.2
AMENDMENT TO THE AMENDED AND RESTATED BY-LAWS
OF
SUPERIOR SERVICES, INC.
THIS AMENDMENT dated as of this 24th day of November, 1998 ("Amendment")
amends the Superior Services, Inc. Amended and Restated By-laws (the "By-laws)
adopted as of November 29, 1995 to the extent set forth herein.
WITNESSETH:
WHEREAS, on November 24th 1998, the Board of Directors approved
resolutions to amend the By-laws as specified herein.
NOW, THEREFORE, BE IT RESOLVED, that second sentence of Section
2.05(a)(ii) of the By-laws shall be deleted in its entirety and the following
shall be substituted therefor:
To be timely, a shareholder's notice shall be received by
the Secretary of the corporation at the principal offices of the
Corporation not less than 45 days nor more than 75 days in advance
of the first annual anniversary (the "Anniversary Date") of the
date set forth in the Corporation's proxy statement for the prior
year's Annual Meeting as the date on which the Corporation first
mailed definitive proxy materials for the prior year's Annual
Meeting; provided, however, that in the event that the date of the
Annual Meeting is advanced by more than 30 days or delayed by more
than 60 days from the second Tuesday in the month of May, notice
by the shareholder to be timely must also be so received not
earlier than the 90th day prior to the date of such Annual Meeting
and not later than the close of business on the later of (x) the
60th day prior to such Annual Meeting and (y) the 10th day
following the day on which public announcement of the date of such
meeting is first made.
FURTHER RESOLVED, that the Amendment shall be effective immediately and,
except as amended by this Amendment, the By-laws shall remain in full force and
effect.
<PAGE>
SUPERIOR SERVICES, INC.
BOARD OF DIRECTORS RESOLUTIONS
DECREASING NUMBER OF DIRECTORS
February 23, 1999
RESOLVED, that, effective immediately, the number of directors
constituting the Board of Directors shall be reduced by one (1) director from
seven (7) to six (6).
FURTHER RESOLVED, that, effective immediately, the first sentence of
Section 3.01 of the Company's By-laws is hereby amended and restated in its
entirety as set forth below in order to evidence the change being made today in
the number of directors constituting the Board of Directors from seven (7) to
six (6):
"The number of directors shall be fixed by a resolution adopted by a
majority of the directors then in office, or by amendment of these
by-laws, but in no event shall there be less than six (6) directors, and
a decrease in the number of directors shall not shorten the term of
office of an incumbent director."
FURTHER RESOLVED, that the last sentence of Section 3.01 of the Company's
By-laws is hereby deleted in its entirety.
FURTHER RESOLVED, that the appropriate officers of the Company be, and
hereby are, authorized and directed for, on behalf and in the name of the
Company to take or cause to be taken such further action as such officers, or
any of them, in their sole discretion, shall deem necessary or advisable to
carry into effect the tenor and purport of the foregoing resolutions, including,
without limitation, the insertion of the foregoing amendment into the Company's
By-laws as appropriate; and that any and all actions so taken be and they hereby
are ratified, confirmed and approved in all respects.
<PAGE>
SUPERIOR SERVICES, INC.
BOARD OF DIRECTORS RESOLUTION AMENDING BY-LAWS
February 23, 1999
----------------
RESOLVED, that the following By-law provision is hereby added to the
Company's By-laws effective immediately:
ss. 3.16 Independent Director Stock Ownership Requirement.
Each non-employee director of the Corporation is required to beneficially
own (as defined under Rule 13d-3 of the Securities Exchange Act of 1934) such
number of shares of the Corporation's common stock having a value at least equal
to three times the annual retainer fee paid from time to time by the Corporation
to such non-employee director. Each non-employee director shall have five years
to comply with this Section 3.16 from the later of (i) the date of such
director's first election or appointment to the Board of Directors or (ii) the
date of adoption of this Section 3.16 (February 16, 1999). The value of the
Corporation's common stock for purposes of this Section 3.16 shall be determined
by the Board of Directors in its discretion.
EXHIBIT 10.11
AMENDMENT TO 1996 EQUITY INCENTIVE PLAN
THIS AMENDMENT dated as of this 24th day of November, 1998 ("Amendment")
amends the Superior Services, Inc. 1996 Equity Incentive Plan (the "Plan") to
the extent set forth herein. Defined terms used in this Amendment and not
otherwise defined shall have the meaning ascribed thereto in the Plan.
WITNESSETH:
WHEREAS, on November 24th 1998, the Board of Directors approved
resolutions to amend the Plan as specified herein.
NOW, THEREFORE, BE IT RESOLVED, that the lead-in paragraph to Section
6(a) of the Plan shall be deleted in its entirety and the following shall be
substituted therefore:
Section 6. Option Grants to Independent Directors.
(a) Options to Independent Directors. The Company shall grant
Non-Qualified Stock Options to Independent Directors as set forth below:
FURTHER RESOLVED, that Paragraph 6(a)(i) of the Plan shall be deleted in
its entirety and the following shall be substituted therefore (all new additions
being underlined and all deletions struck through):
(i) Grant of Options. Each Independent director newly elected or
appointed to the Board of Directors during the term of the Plan shall be
granted automatically, on the date of such election or appointment,
Non-Qualified Stock Options to purchase 10,000 Shares. In addition to the
foregoing, on the date of each annual meeting of shareholders of the
Company, each then serving and continuing Independent director shall be
granted automatically a Non-Qualified Stock Option to purchase 2,500
Shares. Finally, the Committee shall be authorized to grant Options to
purchase such number of Shares as the Committee shall determine to any
Independent Director at any time during his term as an Independent
Director (each, a "Special Grant").
FURTHER RESOLVED, that Paragraph 6(a)(iii) of the Plan shall be deleted
in its entirety and the following shall be substituted therefor (all new
additions being underlined and all deletions struck through):
<PAGE>
(iii) Option Term. The term of each Option shall end on the sooner
to occur of ten years from the date of its grant or one year from the
date the Independent Director ceases to be an Independent Director for
any reason.
FURTHER RESOLVED, that Paragraph 6(a)(iv) of the Plan shall be deleted in
its entirety and the following shall be substituted therefor (all new additions
being underlined and all deletions struck through):
(iv) Vesting. Each initial grant of Non-Qualified Stock Options to
an Independent Directors hereunder (upon an Independent Director's
initial election or appointment to the Board) will vest ratably over an
approximate three-year period (i.e., one-third on the Company's first
annual shareholders meeting date occurring at least 12 months after the
initial grant, another one-third on the next succeeding annual
shareholders meeting and the final one-third on the next succeeding
annual shareholders meeting); provided that, the Independent Director
continues to serve as a member of the Board of Directors at the end of
each vesting period with respect to the increment then vesting. The
annual grants and grants of Non-Qualified Stock Options to Independent
Directors on the date of each annual meeting of Company shareholders will
vest in full on the six month anniversary of the annual meeting on which
such Non-Qualified Stock Options were granted, provided, that the
Independent Director remains a member of the Board of Directors on such
six month anniversary date. Special Grants of Non-Qualified Stock Options
to Independent Directors shall vest as determined by the Committee at the
time of grant. Notwithstanding the aforementioned vesting provisions, all
outstanding Non-Qualified Stock Options granted to an Independent
Director under the Plan will vest immediately and in full upon a Change
in Control, the death or disability of such Independent Director,
provided, that the Independent Director continues to serve as a member of
the Board of Directors on the date of such occurrence.
FURTHER RESOLVED, that the Amendment shall be effective immediately and,
except as amended by this Amendment, the Plan shall remain in full force and
effect.
FURTHER RESOLVED, that the Amendment to Paragraph 6(a)(iii) of the Plan
shall be retroactively effective and shall apply to all options granted to
independent directors pursuant to the Plan, including but not limited to options
granted prior to the date of this Amendment.
FURTHER RESOLVED, that the relevant approved form of option agreements
which set forth the terms and conditions of any option previously granted to an
independent director pursuant to the Plan shall be amended to reflect the
Amendment to Paragraph 6(a)(iii) set forth herein.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly
executed, as of the date and year first above written.
SUPERIOR SERVICES, INC.
By:
Peter J. Ruud, Esq.
Secretary
EXHIBIT 10.12
SUPERIOR SERVICES, INC.
OUTSIDE DIRECTORS DEFERRED FEE PLAN
1. Purpose. The Superior Services, Inc. Outside Directors Deferred Fee
Plan (the "Plan") is intended to provide an incentive to members of the Board of
Directors of Superior Services, Inc., a Wisconsin corporation (the "Company"),
who are not employees of the Company ("Directors"), to remain in the service of
the Company and increase their efforts for the success of the Company. The Plan
supplements the terms of the Superior Services, Inc. 1996 Equity Incentive Plan.
2. Definition.
(a) "Actual Average Borrowing Rate" shall mean the interest rate charged
by the Company's commercial lenders, as adjusted from time to time, for amounts
drawn by the Company under its revolving credit facility.
(b) "board" means the Boar of Directors of the Company.
(c) "Committee" means the Compensation Committee appointed from time to
time by the Board.
(d) "Deferral Election" means an election pursuant to Section 4 hereof to
defer receipt of Fees.
(e) "Deferred Amounts" means the amounts credited to a Director's Account
pursuant to a Deferral Election, as well as any interest credited to such
account under Section 4(c).
(f) "Director" means a member of the Board who is not an employee of the
Company.
(g) "Director's Account" means the bookkeeping account established by the
Company to record the Deferred Amounts.
(h) "Fees" means the annual retainer scheduled to be paid to a Director
for the calendar year for his or her services on the Board during the calendar
year plus any additional fees (including meeting and committee fees) earned by a
Director for his or her services on the Board during the calendar year.
3. Administration.
(a) The Plan shall be administered by the Committee.
(b) Subject to the express provisions of the Plan and any limitations
under applicable law, the Committee shall have authority to interpret the Plan.
<PAGE>
(c) Neither the Committee nor any member thereof shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan in good faith, and the members of the Committee shall be entitled
to indemnification and reimbursement by the Company in respect of any claim,
loss, damage or expense (including attorneys' fees) arising therefrom to the
full extent permitted by law and under any directors' and officers' liability
insurance that may be in effect from time to time.
(d) A majority of the Committee shall constitute a quorum, and the acts
of majority of the members present at any meeting at which quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be the acts of the Committee.
4. Deferral Election.
(a) In General. Each Director may irrevocably elect annually to defer
receiving all of the Fees that would be otherwise payable to such Director in
cash.
(b) Timing of Deferral Election. The Deferral Election shall be in
writing and delivered t the Secretary of the Company on or prior to December 31
of the calendar year immediately preceding the calendar year in which the
applicable Fees are to be earned; provided, however, that a Director may make a
Deferral Election with respect to Fees earned subsequent to such election during
the thirty-day period immediately following the commencement of his or her
directorship, or, if later, during the thirty-day period immediately following
the adoption by the Company of this Plan. A Deferral Election, once made, shall
be irrevocable for the calendar year with respect to which it is made and shall
remain in effect for future calendar years unless modified or revoked by a
subsequent Deferral Election. A Deferral Election may be changed only with
respect to fees earned subsequent to the effective date of such Election.
(c) Cash Accounts. A Director's Account shall be credited monthly with
interest at an annual rate equal to the Company's Actual Average Borrowing Rate
during such month.
(d) Commencement of Payments. Except as provided in Section 4(e), a
Director's Deferred Amounts shall be payable commencing on January 1 of the
first calendar year following the termination of his or her status as a director
due to resignation, retirement, death or otherwise.
(e) Manner of Payment. In his or her Deferral Election, each Director
shall elect to receive a payment of his or her Deferred Amounts either in a lump
sum or in two to ten substantially equal annual installments. In the event of a
Director's death, payment of the remaining portion of the Director's Deferred
Amounts will be made to the Director's beneficiary in a lump sum as soon as
practicable following the Director's death.
(f) Changes With Respect to Distributions. With the consent of the
Company, a Director may (i) postpone the date on which Deferred Amounts are to
become
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<PAGE>
payable pursuant to subsection (d) or (ii) change the manner in which the
Deferred Amounts are to be paid pursuant to subsection (e), provided in each
case that any such change is made prior to the calendar year in which such
payments are to commence.
(g) Hardship Distribution. Notwithstanding any Deferral Election, in the
event of severe financial hardship to a Director resulting from a sudden and
unexpected illness, accident or disability of the Director or other similar
extraordinary and unforeseeable circumstances arising as a result of event
beyond the control of the Director, all as determined by the Committee, a
Director may withdraw any portion of his Deferred Amounts by providing written
notice to the Secretary of the Company. Withdrawals shall only be permitted to
the extent reasonably necessary to meet the emergency need due to the severe
financial hardship.
(h) Designation of Beneficiary. Each Director or former Director entitled
to payment of Deferred Amounts hereunder from time to time may designate any
beneficiary or beneficiaries (who may be designated concurrently, contingently
or successively) to whom any such Deferred Amounts are to be paid in case of the
Director's death before receipt of any or all of such Deferred Amounts. Each
designation will revoke all prior designations by the Director or former
Director, shall be in a form prescribed by the Company, and will be effective
only when filed by the Director or former Director, during his or her lifetime,
in writing with the Secretary of the Company. Reference in this Plan to a
Director's "Beneficiary" at any date shall include such persons designated as
concurrent beneficiaries on the Director's beneficiary designation form then in
effect. In the absence of any such designation, a Director's or former
Director's Deferred Amounts at the time of the Director's death shall be paid to
such Director's estate in a lump sum.
5. No Assets. No stock, cash or other property will be deliverable to a
Director in respect of the Director's Deferred Amounts until the date or dates
identified pursuant to Section 4(d), and all Deferred Amounts shall be reflected
in one or more unfunded accounts established for the Director by the Company.
Payment of the Company's obligation will be from general funds, and no special
assets (stock, cash or otherwise) have been or will be set aside for this
obligation.
6. Unsecured Creditor. The right of a Director to receive payments under
Section 4 is that of a general, unsecured creditor of the Company, and the
obligation of the Company to make payments constitutes a mere promise by the
Company to pay such benefits in the future. Further, the arrangements
contemplated by Section 4 are intended to be unfunded for tax purposes and for
purposes of Title I of ERISA.
7. Term of Plan. This Plan shall become effective as of the date of
approval of the Plan by the Board, and shall remain in effect until terminated
by the Board; provided, however, that Deferred Amounts may be delivered pursuant
to any Deferral Election, in accordance with such election, after the Plan's
termination.
8. Amendments; Termination. The Board may, at any time and from time to
time, alter, amend, suspend or terminate the Plan, in whole or in part;
provided, however, that
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<PAGE>
no amendments shall affect adversely any of the rights of any Director under any
election theretofore in effect under the Plan without such Director's consent.
9. Retention as Director. Nothing contained in the Plan shall interfere
with or limit in any way the right of the stockholders of the Company to remove
any Director from the Board pursuant to the by-laws of the Company, nor confer
upon any Director any right to continue in the service of the Company as a
Director.
10. Nontransferability. No right or interest of any Director in Deferred
Amounts shall be assignable or transferable during the lifetime of the Director,
either voluntarily or involuntarily, or subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy. In the event of a Director's
death, a Director's rights and interests in his or her Deferred Amounts shall be
transferable by testamentary will or the laws of descent and distribution. If,
in the opinion of the Committee, a person entitled to payments or to exercise
rights with respect to the Plan is disabled from caring for his or her affairs
because of mental condition, physical condition or age, payment due such person
may be made to, and such rights shall be exercised by, such person's guardian,
conservator or other legal personal representative upon furnishing the Committee
with evidence satisfactory to the Committee of such status.
11. Governing Law. This Plan and all rights hereunder shall be construed
in accordance with, and governed by, the laws of the State of Wisconsin.
12. Headings. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.
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Exhibit 10.14
Form of Key Employee Stock Option Agreement
Under 1996 Equity Incentive Plan
Pursuant to the terms and conditions of the Superior Services, Inc. 1996
Equity Incentive Plan (the "Plan"), you have been granted a Stock Option to
purchase _______ shares (the "Option") of stock as outlined below.
Granted To:
Grant Date:
Options Granted:
Option Price per Share:
Expiration Date:
Vesting Schedule:
G. W. "Bill" Dietrich
President and Chief Executive Officer
By my signature below, I hereby acknowledge receipt of this Option
granted on the date shown above, which has been issued to me under the terms and
conditions of the Plan. I further acknowledge receipt of the copy of the
attached Stock Option Terms and agree to conform to all of the terms and
conditions listed thereon.
Signature: Date:
Note: If there are any discrepancies in the name or address shown above, please
make the appropriate corrections on this form.
Exhibit 10.17
Executive's Name: _______________
Date: ____________, 1998
AMENDMENT
TO
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of the date set forth above,
supplements and amends the Key Employment and Severance Agreement, dated August
15, 1995 ("Agreement"), by and between SUPERIOR SERVICES, INC., a Wisconsin
corporation ("Company"), and the named executive set forth above ("Executive").
All defined terms used herein and not defined shall have the same meaning as in
the Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to Section 19 of the Agreement, the Executive and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 1(h) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(h) Discretionary Termination. For purposes of this Agreement,
`Discretionary Termination' means the determination by the Executive at
any time during the ninety (90) day period commencing on and then after
the occurrence of a Change in Control of the Company, as evidenced by the
Executive's delivery to the Company of a Notice of Termination during
such period (including simultaneously with the occurrence of a Change in
Control of the Company), to terminate his employment hereunder for any
reason whatsoever in his sole discretion, with or without good faith."
2. The first paragraph of Section 1(o) of the Agreement is hereby amended
and restated to read in its entirety as follows:
"(o) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10(b) and Section 17(a) hereof or as set
forth below, the term `Termination date' means (i) if the Executive's
employment is terminated by the Executive's death, the date of death;
(ii) if the Executive's employment is terminated by reason of voluntary
early
<PAGE>
retirement, as agreed in writing by the Company and the Executive, the
date of such early retirement which is set forth in such written
agreement; (iii) if the Executive's employment is terminated by reason of
disability pursuant to Section 12 hereof, the earlier of thirty (30) days
after the Notice of Termination is given or one day prior to the end of
the Employment period; (iv) if the Executive's employment is terminated
by the Executive voluntarily (other than for Good Reason), the date the
Notice of Termination is given; (v) if the Executive's employment is
terminated by the Executive voluntarily pursuant to a Discretionary
Termination, the Termination Date for purposes of the payment of a
Termination Payment under Section 9(b) hereof shall be the date the
Notice of Termination is given to the Company, but for any and all other
purposes (including for all purposes under all of the Executive's stock
option agreements with the Company), the effective Termination Date for
employment termination hereunder and for all other purposes shall be such
date as is specified by the Executive in his Notice of Termination,
provided that such specified date shall not be more than ninety (90) days
after the date of the Change in Control of the Company; and (vi) if the
Executive's employment is terminated by the Company (other than by reason
of disability pursuant to Section 12 hereof) or by the Executive for Good
Reason, the earlier of thirty (30) days after the Notice of Termination
is given or one day prior to the end of the Employment Period.
Notwithstanding the foregoing, ..." [Remainder of existing Section 1(o)
to remain as written in Agreement.]
3. The first paragraph of Section 9(b) of the Agreement shall be amended
and restated in its entirety as follows:
"(b) Termination Payment. The Termination Payment shall be an amount
equal to the average of the Executive's annual total compensation
reportable by the Company on Form W-2 (i.e., base salary plus bonus
amounts and all other taxable compensation) over the five (5) fiscal
years of the Company immediately prior to the Change in Control of the
Company (with such compensation annualized for any initial partial year
of employment) multiplied by three (3); provided that if the Executive
has been employed by the Company for less than three (3) years, then the
Termination Payment shall be an amount equal to the highest amount of the
Executive's annual total compensation for any year during the period of
his employment by the Company prior to the Change in Control of the
Company multiplied by three (3). Except as otherwise provided herein, the
Termination Payment shall be paid to the Executive in cash no later than
ten (10) business days after the Termination Date; provided, however, the
Termination Payment shall be paid to the Executive immediately upon
receipt by the Company of a Notice of Termination relating to a
Discretionary Termination (regardless of any differing effective date of
the Executive's employment termination). The Executive
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<PAGE>
shall not be required to mitigate the amount of the Termination Payment
by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive securing other employment
or for any other reason.
[Remainder of Section 9(b) shall remain as written in the Agreement.]
4. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
_____________________ By: /s/Joseph P. Tate
Executive Joseph P. Tate, Chairman of the Board
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EXHIBIT 10.19
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the 18th day of August, 1998,
by and between SUPERIOR SERVICES, INC., a Wisconsin corporation ("Company"), and
Joseph P. Tate ("Executive").
WITNESSETH:
WHEREAS, the Executive is employed by the Company as a key executive
officer, and the Executive's services in such capacities are critical to the
continued successful conduct of the business of the Company;
WHEREAS, the Company recognizes that circumstances in which a change in
control of the Company occurs, through acquisition or otherwise, are highly
disruptive and will cause uncertainty about the Executive's future employment
with the Company without regard to the Executive's competence or past
contributions and that such uncertainty may materially adversely affect the
Company;
WHEREAS, the Company and the Executive are desirous that any proposal for
a change in control or acquisition of the Company will be considered by the
Executive objectively, with reference only to the best interests of the Company
and its shareholders and without undue regard for the Executive's personal
interests; and
WHEREAS, the Executive will be in a better position to consider the
Company's and its shareholders' best interests if the Executive is afforded
reasonable security, as provided in this Agreement, against altered conditions
of employment which could result from any such change in control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1.Definitions.
(a)Act. For purposes of this Agreement, the term "Act" means the Securities
Exchange Act of 1934, as amended.
(b)Affiliate and Associate. For purposes of this Agreement, the terms
"Affiliate" and "Associate" shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations of the Act.
(c)Beneficial Owner. For purposes of this Agreement, a
Person shall be deemed to be the "Beneficial Owner" of any securities:
(i)which such Person or any of such Person's Affiliates or Associates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person
<PAGE>
shall not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase. (ii)which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Act), including pursuant to
any agreement, arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an agreement, arrangement
or understanding to vote such security if the agreement, arrangement or
understanding: (A) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the Act and
(B) is not also then reportable on a Schedule 13D under the Act (or any
comparable or successor report); or (iii)which are beneficially owned, directly
or indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in Subsection 1(c)(ii) above) or disposing of any
voting securities of the Company.
(d)Cause. "Cause" for termination by the Company of the Executive's employment
after a Change in Control of the Company, for purposes of this Agreement, shall
mean the following and only the following: the Executive's final and
nonappealable conviction of, and sentencing for, a felony offense for a crime
involving an act by the Executive of conduct on behalf of the Company that
results in the Executive being physically imprisoned in a federal or state
penitentiary; provided, that _Cause_ for termination shall only be determined by
a vote of two-thirds of the Board of Directors of the Company after (i)
reasonable written notice to the Executive, setting forth the basis for _Cause,_
specifying the particulars thereof in detail; and (ii) an opportunity for the
Executive, together with his counsel, to be heard before the Board. (e)Change
in Control of the Company. For purposes of this Agreement, prior to the IPO
Effective Date, a "Change in Control of the Company" shall be deemed to have
occurred if (i) the Beneficial Owners of the securities of the Company as of the
date of this Agreement beneficially own securities of the Company representing
less than 50.1% of the combined voting power of the Company's then outstanding
securities or (ii) either of the events described in Subsections 1(e)(II) or
(III) below occur. For purposes of this Agreement, after the IPO Effective Date,
a "Change in Control of the Company" shall be deemed to have occurred if: (I)any
Person (other than any employee benefit plan of the Company, any subsidiary of
the Company or any Person organized, appointed or established pursuant to the
terms of any such benefit plan or any Person who currently owns, or is the
Beneficial Owner of, 25% or more of the combined voting power of the Company's
currently outstanding securities) is or becomes the Beneficial Owner of
securities of the Company representing at least 25% of the combined voting power
of the Company's then outstanding securities;
(II) there shall be consummated (x) any consolidation, merger, share exchange or
other business combination of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
capital stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's capital stock
immediately prior to the merger have the same proportionate ownership of capital
stock of the surviving corporation immediately after the
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<PAGE>
merger, or (y) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
consolidated assets of the Company; or (III)the shareholders' of the Company
approve any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding anything else in this Subsection 1(e), the effective
distribution of the Company's securities in its IPO shall not constitute a
Change in Control of the Company; provided, however, that an IPO which is not
completed but which otherwise leads to any of the events described in the first
sentence of this Subsection 1(e) shall constitute a Change in Control of the
Company.
(f)Code. For purposes of this Agreement, the term "Code" means the Internal
Revenue Code of 1986, including any amendments thereto or successor tax codes
thereof.
(g)Covered Termination. For purposes of this Agreement, the term "Covered
Termination" means any termination of the Executive's employment where the
Termination Date is any date on or prior to the end of the Employment Period.
(h)Discretionary Termination. For purposes of this Agreement, "Discretionary
Termination" means the determination by the Executive, or his estate or personal
representative in the event of the Executive's death or disability, at any time
during the twelve (12) month period commencing on the occurrence of a Change in
Control of the Company, as evidenced by the delivery to the Company, by the
Executive or by his estate or personal representative in the case of the
Executive's death or disability, of a Notice of Termination during such period,
to terminate this Agreement and his employment hereunder for any reason
whatsoever in his sole discretion, with or without good faith, even if the
Company has previously terminated the Executive for death, disability, Cause or
otherwise during such twelve (12) month period following a Change in Control of
the Company.
(i)Employment Period. For purposes of this Agreement, the term "Employment
Period" means a Period commencing on the date of a Change in Control of the
Company and ending at 11:59 p.m. Milwaukee time on the third anniversary of such
date.
(j)Good Reason. For purposes of this Agreement, the Executive shall have a "Good
Reason" for termination of employment after a Change in Control of the Company
in the event of:
(i)any breach of this Agreement by the Company, including specifically any
breach by the Company of its agreements contained in Sections 4, 5 or 6 hereof;
(ii)the removal of the Executive from, or any failure to reelect the Executive
to, any of the positions held with the Company and its subsidiaries on the date
of the Change in Control of the Company or any other positions with the Company
and its subsidiaries to which the Executive shall thereafter be elected or
assigned, except in the event that such removal or failure to reelect relates to
the termination by the Company of the Executive's employment for Cause or by
reason of disability pursuant to Section 12 hereof;
(iii)a good faith determination by the Executive that there has been a
significant adverse change, without the Executive's written consent (which may
be withheld at Executive's discretion), in the Executive's working conditions or
status with the Company or its subsidiaries from such working conditions or
status in effect immediately prior to the Change in Control of the Company,
including but not limited to (A) a significant change in the nature or scope of
the Executive's authority, powers, functions, duties or responsibilities, or (B)
a reduction in the level of support services, staff, secretarial and other
assistance, office space and accoutrements; or
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(iv)failure by the Company to timely obtain the Agreement referred to in Section
17(a) hereof as provided therein.
(k)IPO. For purposes of this Agreement, the term "IPO" means the Company's
initial public offering of equity securities registered under the Securities
Act.
(l)IPO Effective Date. For purposes of this Agreement, the term "IPO Effective
Date" means the date on which the Securities and Exchange Commission declares
the IPO effective pursuant to the Securities Act.
(m)Person. For purposes of this Agreement, the term "Person" shall mean any
individual, firm, partnership, corporation or other entity, including any
successor (by merger or otherwise) of such entity, or a group of any of the
foregoing acting in concert.
(n)Securities Act. For purposes of this Agreement, the term "Securities Act"
means the Securities Act of 1933, as amended.
(o)Termination Date. For purposes of this Agreement, except as otherwise
provided in Section 10(b) and Section 17(a) hereof or as set forth below, the
term "Termination Date" means (i) if the Executive's employment is terminated by
the Executive's death, the date of death; (ii) if the Executive's employment is
terminated by reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the date of such early retirement as set forth in
such written agreement; (iii) if the Executive's employment is terminated by
reason of disability pursuant to Section 12 hereof, the earlier of thirty (30)
days after the Notice of Termination is given or one day prior to the end of the
Employment Period; (iv) if the Executive's employment is terminated by the
Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; (v) if the Executive's employment is terminated by the
Executive voluntarily pursuant to a Discretionary Termination, the Termination
Date for the purposes of the payment of a Termination Payment and a Gross-Up
Payment, if any, under Section 9(b) hereof shall be the date the Notice of
Termination is given to the Company; and (vi) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of thirty
(30) days after the Notice of Termination is given or one day prior to the end
of the Employment Period. Notwithstanding the foregoing,
(A)If termination is by the Company for Cause pursuant to Section 1(d)(iii) of
this Agreement and if the Executive has cured the conduct constituting such
Cause as described by the Company in its Notice of Termination within such
thirty (30) day or shorter period, then the Executive's employment hereunder
shall continue as if the Company had not delivered its Notice of Termination.
(B)If the Company shall give a Notice of Termination for Cause or by reason of
disability and the Executive in good faith notifies the Company that a dispute
exists concerning the termination within the fifteen (15) day period following
receipt thereof, then the Executive may elect to continue his employment during
such dispute and the Termination Date shall be determined under this paragraph.
If the Executive so elects and it is thereafter determined that Cause or
disability (as the case may be) did exist, the Termination Date shall be the
earlier of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 22
hereof, (2) the date of the Executive's death, or (3) one day prior to the end
of the Employment Period. If the Executive so elects and it is thereafter
determined that Cause or disability (as the case may be) did not exist, then the
employment of the Executive hereunder shall continue after such determination as
if the Company had not delivered its Notice of Termination and there shall be no
Termination Date
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arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company had not delivered the Notice of
Termination except that, if it is finally determined that the Company properly
terminated the Executive for the reason asserted in the Notice of Termination,
the Executive shall in no case be entitled to a Termination Payment (as
hereinafter defined) arising out of events occurring after the Company delivered
its Notice of Termination.
(C)If the Executive shall in good faith give a Notice of Termination for Good
Reason and the Company in good faith notifies the Executive that a dispute
exists concerning the termination within the fifteen (15) day period following
receipt thereof, then the Executive may elect to continue his employment during
such dispute and the Termination Date shall be determined under this paragraph.
If the Executive so elects and it is thereafter determined that Good Reason did
exist, the Termination Date shall be the earlier of (1) the date on which the
dispute is finally determined, either (x) by mutual written agreement of the
parties or (y) in accordance with Section 22 hereof, (2) the date of the
Executive's death or (3) one day prior to the end of the Employment Period. If
the Executive so elects and it is thereafter determined that Good Reason did not
exist, then the employment of the Executive hereunder shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the Termination Date, if
any, as if the Executive had not delivered the Notice of Termination except
that, if it is finally determined that Good Reason did exist, the Executive
shall in no case be denied the benefits described in Sections 8(b) and 9 hereof
(including a Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(D)If an opinion is required to be delivered pursuant to Section 9(b) hereof and
such opinion shall not have been delivered, the Termination Date shall be the
earlier of the date on which such opinion is delivered or one day prior to the
end of the Employment Period.
(E)Except as provided in Paragraphs (B) and (C) above and other than a
Discretionary Termination (which cannot be subject to dispute by the Company),
if the party receiving the Notice of Termination in good faith notifies the
other party that a dispute exists concerning the termination within the fifteen
(15) day period following receipt thereof and it is finally determined that the
reason asserted in such Notice of Termination did not exist, then (1) if such
Notice was delivered by the Executive, the Executive will be deemed to have
voluntarily terminated his employment and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason of
death, disability or Cause.
2.Termination or Cancellation Prior to Change in Control. The Company shall
retain the right to terminate the employment of the Executive at any time prior
to a Change in Control of the Company, subject to the terms and conditions of
any other then existing employment arrangement or agreement between the
Executive and the Company; provided, however, that if the Executive's employment
is terminated by the Company, other than by reason of (i) death, (ii) disability
in accordance with Section 12 hereof, or (iii) Cause, at any time after
negotiations are commenced between the Company and another Person which
ultimately lead to a Change in Control of the Company, then the Executive shall
be entitled to receive at the earlier to occur of the closing or the effective
date of such Change in Control of the Company all Accrued Benefits and a
Termination Payment, including benefits under Section 8(b) hereof, as if such
termination of employment was a Covered Termination under Section 8 hereof.
Other than as set forth above or as provided in Section 17 hereof, in the event
the Executive's
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employment is terminated prior to a Change in Control of the Company, this
Agreement shall be terminated and canceled and of no further force and effect
and any and all rights and obligations of the parties hereunder shall cease.
3.Employment Period. If a Change in Control of the Company occurs when the
Executive is employed by the Company, the Company will continue thereafter to
employ the Executive during the Employment Period, and the Executive will remain
in the employ of the Company, in accordance with and subject to the terms and
provisions of this Agreement (including, without limitation, the Executive's
right to exercise a Discretionary Termination), and the terms of this Agreement
shall expressly supersede the terms and conditions of any other then existing
employment arrangement or agreement between the Company and the Executive.
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4.Duties. During the Employment Period, the Executive shall, in the same
capacities and positions held by the Executive at the time immediately prior to
the Change in Control of the Company or in such other capacities and positions
as may be agreed to by the Company and the Executive in writing, devote the
Executive's best efforts and all of the Executive's business time, attention and
skill to the business and affairs of the Company, as such business and affairs
now exist and as they may hereafter be conducted. The services which are to be
performed by the Executive hereunder are to be rendered in the same metropolitan
area in which the Executive was employed immediately prior to the time of such
Change in Control of the Company, or in such other place or places as shall be
mutually agreed upon in writing by the Executive and the Company from time to
time. Without the Executive's consent (which may be withheld in the Executive's
discretion), the Executive shall not be required to be absent from such
metropolitan area more than forty-five (45) days in any twelve (12) month period
or for more than fourteen (14) consecutive days.
5.Compensation. During the Employment Period, the Executive shall be compensated
as follows:
(a)The Executive shall receive, at such intervals and in accordance with such
standard policies of the Company as may be in effect immediately prior to the
Change in Control of the Company, an annual base salary in cash of not less than
the Executive's annual base salary plus any annualized bonus amounts received or
receivable as in effect immediately prior to the Change in Control of the
Company and all other compensation otherwise reportable on a Form W-2 (which
base salary, bonus and other compensation shall, unless otherwise agreed in
writing by the Executive, include the current receipt by the Executive of any
amounts which, prior to the Change in Control of the Company, the Executive had
elected to defer, whether such compensation is deferred under Section 401(k) of
the Code or otherwise), subject to adjustment as hereinafter provided.
(b)The Executive shall, at such intervals and in accordance with such standard
policies as may be in effect immediately prior to the Change in Control of the
Company, be reimbursed for any and all monies advanced in connection with the
Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company, including travel and entertainment expenses.
(c)From the date of a Change in Control of the Company (regardless of whether
the Executive has ceased to be employed by the Company for any reason) until he
reaches age 85, the Executive and the Executive's wife, and each of their
children until they reach the age of 21, shall each be entitled to receive,
without cost, premium, co-pay or deductible charges, full health and medical,
dental and vision care as provided by the Company to its senior executive
employees; provided, that the Executive and his wife shall not be limited to
their choice(s) of doctor or the location(s) at which such care is provided. In
the event that the Executive dies prior to reaching age 85, his wife shall
continue to receive such health care benefits on the same terms and conditions,
until the date when the Executive would have otherwise reached age 85 but for
his death, and each of their children shall continue to receive such health care
benefits on the same terms and conditions until they reach age 21. From the date
of a Change in Control of the Company (regardless of whether the Executive has
ceased to be employed by the Company for any reason) until he reaches age 65,
the Executive will also be entitled to the benefit of a long-term and short-term
disability insurance policy of $3,000 per month, and in the event that the
Executive dies prior to reaching age 65, his wife shall receive the benefits or
continued coverage of such policies (as the case may be). From the date of a
Change in
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Control of the Company (regardless of whether the Executive has ceased to be
employed by the Company for any reason), the Company will not, without the
Executive's consent, make any changes in the foregoing benefits that would
adversely affect in any material respect the rights or benefits of the Executive
or his wife or children thereunder. During the Employment Period, the Executive
shall also be entitled to receive any other perquisites generally made
available, from time to time or at any time, to the Company's key management
personnel. Any payments under this Section 5(c) shall be in addition to any
other payments or benefits to be received by the Executive under this Agreement
or otherwise.
(d)The Executive shall annually be entitled to not less than the amount of paid
vacation and not fewer than the number of paid holidays to which the Executive
was entitled annually immediately prior to the Change in Control of the Company
or such greater amount of paid vacation and number of paid holidays as may be
made available annually to other executives of the Company of comparable status
and position to the Executive.
(e)The Executive shall be included in all plans providing additional benefits to
executives of the Company of comparable status and position to the Executive,
including but not limited to deferred compensation, split-dollar life insurance,
supplemental retirement, stock option, stock appreciation, stock bonus, cash
bonus and similar or comparable plans; provided, that, in no event shall the
aggregate level of benefits under such plans be less than the aggregate level of
benefits under plans of the Company of the type referred to in this Section 5(e)
in which the Executive was participating immediately prior to the Change in
Control of the Company.
(f) Immediately upon a Change in Control of the Company, all awards granted to
the Executive and then outstanding under the Company's stock option and
incentive compensation plans ("Executive Awards") that are not then exercisable
by their terms automatically will become immediately exercisable and fully
vested for the remainder of their stated terms. In addition, for a period of
thirty (30) days following such Change in Control of the Company, the Executive
shall have the right to terminate the Executive Awards and to receive a lump-sum
payment, in cash, equal to the product of (a) the excess of (x) the per-unit
fair market value of the securities underlying the Executive Awards, over (y)
the per-unit exercise price of such Executive Awards, and (b) the number of
units of such securities covered by the Executive Awards. For purposes of the
preceding sentence, the "fair market value" of securities shall be based on the
highest of (i) the per-unit closing sale price of the securities underlying the
Executive Awards, as reported on a national securities exchange or by the Nasdaq
Stock Market, on the execution date of the agreement pursuant to which the
Change in Control of the Company is effected, (ii) the per-unit closing sale
price of the securities underlying the Executive Awards, as reported on a
national securities exchange or by the Nasdaq Stock Market, on the effective
date of the transaction constituting a Change in Control of the Company, and
(iii) the highest per-unit price for such securities actually paid in connection
with such Change in Control of the Company. Notwithstanding the foregoing, if
the exercise of any right granted pursuant to this Section 5(f) would make a
transaction constituting a Change in Control of the Company ineligible for
pooling of interests accounting under APB No. 16 which, but for this Section
5(f), would otherwise be eligible for such accounting treatment, the Board of
Directors of the Company shall have the ability to substitute for the cash
payable pursuant to this Section 5(f) securities of the Company (or of the other
entity surviving the transaction constituting the Change in Control of the
Company, or its parent corporation, if applicable) having a fair market value
equal to the cash that would otherwise be payable hereunder. For purposes of the
preceding sentence, the "fair market
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value" of securities shall be based on the lower of (i) the average closing bid
price of such securities for the ten (10) trading days prior to the execution
date of the agreement pursuant to which the Change in Control of the Company is
effected, and (ii) the average of the closing bid price of such securities for
the ten (10) trading days prior to the effective date of the transaction
constituting a Change in Control of the Company, in each case as such closing
bid prices are reported on a national securities exchange or by the Nasdaq Stock
Market.
6.Annual Compensation Adjustments. During the Employment Period, the Board of
Directors of the Company (or an appropriate committee thereof) will consider and
appraise, at least annually, the contributions of the Executive to the Company's
operating and/or administrative efficiency, growth, cash flow from operations
and operating profits, and, in accordance with the Company's practice prior to
the Change in Control of the Company, due and good faith consideration shall be
given to the upward adjustment of the Executive's base compensation rate, at
least annually, commensurate with (i) increases generally given to other
executives of the Company of comparable status and position to the Executive,
and (ii) as the scope of the Company's operations or the Executive's duties
expand.
7.Termination For Cause or Without Good Reason. If there is a Covered
Termination for Cause or due to the Executive's voluntarily terminating his
employment other than for Good Reason or a Discretionary Termination (any such
terminations to be subject to the procedures set forth in Section 13 hereof),
then the Executive shall be entitled to receive only Accrued Benefits pursuant
to Section 9(a) hereof.
8.Termination Giving Rise to a Termination Payment. (a) If there is a Covered
Termination by the Executive for Good Reason or a Discretionary Termination, or
by the Company other than by reason of (i) death, (ii) disability pursuant to
Section 12 hereof, or (iii) Cause, then the Executive shall be entitled to
receive, and the Company shall promptly pay, Accrued Benefits pursuant to
Section 9(a) hereof and, in lieu of further base salary for periods following
the Termination Date, as liquidated damages and severance pay, the Termination
Payment pursuant to Section 9(b) hereof.
(b)If there is a Covered Termination and the Executive is entitled to Accrued
Benefits and the Termination Payment, then the Executive shall be entitled to
the following additional benefits:
(i)The Executive shall receive, at the expense of the Company, outplacement
services on an individual basis provided by a nationally recognized executive
placement firm selected by the Company and acceptable to Executive until the
earlier of the third anniversary of the Termination Date or such time as the
Executive has obtained new full-time employment comparable to his position at
the Company.
(ii)Until the earlier of the third anniversary of the Termination Date or such
time as the Executive has obtained new employment and is covered by benefits
which in the aggregate are at least equal in value to the following benefits the
Executive shall continue to be covered, at the expense of the Company, by the
same or equivalent life insurance, hospitalization, medical and dental coverage
as was required hereunder with respect to the Executive immediately prior to the
date the Notice of Termination is given.
9.Payments Upon Termination. (a)Accrued Benefits. For purposes of this
Agreement, the Executive's "Accrued Benefits" shall include the following
amounts, payable as described herein: (i) all base salary for the time period
ending with the Termination Date; (ii) reimbursement for any and all monies
advanced in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company for the
time period ending with the Termination
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Date; (iii) any and all other cash earned though the Termination Date and
deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect; (iv) a lump sum payment of the bonus,
incentive compensation and other compensation reportable on Form W-2 otherwise
payable to the Executive with respect to the year in which termination occurs
under all bonus or incentive compensation plan or plans of the Company in which
the Executive is a participant; and (v) all other payments and benefits to which
the Executive may be entitled as compensatory fringe benefits or under the terms
of any benefit plan of the Company, including severance payments under the
Company's severance policies and practices as in effect immediately prior to the
Change in Control of the Company. Payment of Accrued Benefits shall be made
promptly in accordance with the Company's prevailing practice with respect to
Subsections (i) and (ii) or, with respect to Subsections (iii), (iv) and (v),
pursuant to the terms of the benefit plan or practice establishing such
benefits.
(b)Termination Payment. The Termination Payment shall be an amount equal to the
average of the Executive's annual total compensation reportable by the Company
on Form W-2 (i.e., base salary plus bonus amounts and all other taxable
compensation) over the five (5) fiscal years of the Company immediately prior to
the Change in Control of the Company (with such compensation annualized for any
initial partial year of employment) multiplied by three (3); provided that if
the Executive has been employed by the Company for less than three (3) years,
then the Termination Payment shall be an amount equal to the highest amount of
the Executive's annual total compensation for any year during the period of his
employment by the Company prior to the Change in Control of the Company
multiplied by three (3). Except as otherwise provided herein, the Termination
Payment shall be paid to the Executive in cash no later than ten (10) business
days after the Termination Date; provided, however, the Termination Payment
shall be paid to the Executive immediately upon receipt by the Company of a
Notice of Termination relating to a Discretionary Termination (regardless of any
differing effective date of the Executive's employment termination). The
Executive shall not be required to mitigate the amount of the Termination
Payment by securing other employment or otherwise, nor will such Termination
Payment be reduced by reason of the Executive securing other employment or for
any other reason.
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In the event that a portion of the Termination Payment, Accrued Benefits or any
other payment or benefit under this Agreement, or payments to or for the benefit
of the Executive under any other agreement or plan of the Company ("Total
Benefits"), be deemed to be an "excess parachute payment," as defined in Section
280G of the Code, then the Company shall pay the Executive, no later than the
tenth day following the Executive's request, such additional cash amount as is
necessary to place the Executive in the same after-tax financial position that
he would have been in if he had not incurred any liability for Excise Tax
("Excise Tax Liability") under Section 4999 of the Code (the "Gross-Up
Payment"). For purposes of determining whether any of the Total Benefits will be
subject to Excise Tax Liability and the amount of such Excise Tax Liability, (i)
Total Benefits shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the reasonable opinion of the
Company's tax counsel (as confirmed by the Executive's tax counsel), such Total
Benefits (in whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code, and all "excess parachute
payments" (within the meaning of Section 280G(b)(1) of the Code) shall be
treated as subject to Excise Tax Liability, unless, in the reasonable opinion of
the Company's tax counsel (as confirmed by the Executive's tax counsel), such
excess parachute payments represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4)(B) of the Code, or
are not otherwise subject to Excise Tax Liability, and (ii) the value of any
noncash benefits or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the residence of
the Executive, net of the maximum reduction in federal income taxes that could
be obtained from deduction of such state and local taxes.
10.Death. (a) Except as provided in Section 10(b) hereof, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date. (b)In the event the Executive dies after a Notice of
Termination is given (i) by the Company, other than by reason of disability, or
(ii) by the Executive for Good Reason or a Discretionary Termination, the
Executive's estate, heirs and beneficiaries shall be entitled to the benefits
described in Section 10(a) hereof and, subject to the provisions of this
Agreement, to such Termination Payment as the Executive would have been entitled
to had the Executive lived. For purposes of this Section 10(b), the Termination
Date shall be the earlier of thirty (30) days following the giving of the Notice
of Termination or one day prior to the end of the Employment Period, subject to
delay pursuant to Section 1(l) hereof.
11.Retirement. If, during the Employment Period, the Executive and the Company
shall execute an agreement providing for the early retirement of the Executive
from the Company, or the Executive shall otherwise give notice that he is
voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date; provided, that if the
Executive's employment is terminated by the Executive for Good Reason or a
Discretionary Termination or by the Company other than by reason of
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death, disability or Cause and the Executive also, in connection with such
termination, elects voluntary early retirement, the Executive shall also be
entitled to receive a Termination Payment pursuant to Section 9(b) hereof.
12.Termination for Disability. If, during the Employment Period, as a result of
the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties hereunder on a full-time
basis for twelve (12) consecutive months and, within thirty (30) days after the
Company notifies the Executive in writing that it intends to terminate the
Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties hereunder on a substantially full-time
basis, the Company may terminate the Executive's employment pursuant to a Notice
of Termination given in accordance with Section 13 hereof. In the event the
Executive's employment is terminated on account of the Executive's disability in
accordance with this Section, the Executive shall receive Accrued Benefits in
accordance with Section 9(a) hereof and shall remain eligible for all benefits
provided by any long term disability programs of the Company in effect at the
time of such termination.
13.Termination Notice and Procedure. Any Covered Termination by the Company or
the Executive shall be communicated by written Notice of Termination to the
Executive, if such Notice is given by the Company, and to the Company, if such
Notice is given by the Executive, all in accordance with the following
procedures and those set forth in Section 23 hereof:
(a)If such termination is for disability, Cause or Good Reason, the Notice of
Termination shall indicate in reasonable detail the facts and circumstances
alleged to provide a basis for such termination. (No such detail need be
provided for in a Discretionary Termination).
(b)Any Notice of Termination by the Company shall have been approved, prior to
the giving thereof to the Executive, by a resolution duly adopted in good faith
by a majority of the directors of the Company (or any successor corporation)
then in office.
(c)The Executive shall have thirty (30) days, or such longer period as the
Company may determine to be appropriate, to cure any conduct or act, if curable,
alleged to provide grounds for termination of the Executive's employment for
Cause under this Agreement.
(d)The recipient of the Notice of Termination shall personally deliver or mail
in accordance with Section 23 hereof written notice of any dispute relating to
such Notice of Termination to the party giving such Notice within fifteen (15)
days after receipt thereof; provided, however, that a Notice of Termination
relating to a Discretionary Termination shall not be subject to dispute for any
reason by the Company or otherwise. After the expiration of such fifteen (15)
days (or immediately upon receipt of a Notice of Termination relating to a
Discretionary Termination), the contents of the Notice of Termination shall
become final and not subject to dispute.
14.Confidentiality Obligations of the Executive; Noncompetition.
(a)During and following the Executive's employment by the Company, the Executive
shall hold in confidence and not directly or indirectly disclose or use or copy
or make lists of any confidential information or proprietary data of the
Company, except to the extent authorized in writing by the Board of Directors of
the Company or required by any court or administrative agency, other than to an
employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Executive of
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duties as an executive of the Company. Confidential information shall not
include any information known generally to the public or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that of the Company. All records, files,
documents and materials, or copies thereof, relating to the business of the
Company which the Executive shall prepare, or use, or come into contact with,
shall be and remain the sole property of the Company and shall be promptly
returned to the Company upon termination of employment with the Company.
(b)The Executive agrees that, in the event of a Covered Termination in which the
Executive has or will receive a Termination Payment, for a period of two years
after the Termination Date or until the end of the Employment Period, whichever
is shorter, the Employee shall not, within a one hundred (100) mile radius of
any office, landfill or facility of the Company, except as permitted by the
Company's prior written consent (which shall not be unreasonably withheld),
participate in the management of any business which is a direct and substantial
competitor of the Company. The ownership of less than one percent of any class
of securities of any corporation listed on a national securities exchange or
regularly traded over the counter even though such corporation may be a
competitor of the Company as specified above, shall not be deemed as
constituting a financial interest in such competitor.
15.Expenses and Interest. If, after a Change in Control of the Company, a good
faith dispute arises with respect to the enforcement of the Executive's rights
under this Agreement or if any legal or arbitration proceeding shall be brought
in good faith to enforce or interpret any provision contained herein, or to
recover damages for breach hereof, the Executive shall recover from the Company
any reasonable attorneys' fees and necessary costs and disbursements incurred as
a result of such dispute, legal or arbitration proceeding ("Expenses"), and
prejudgment interest on any money judgment or arbitration award obtained by the
Executive calculated at the rate of interest announced by Firstar
Bank-Milwaukee, N.A. from time to time as its prime or base lending rate from
the date that payments to him should have been made under this Agreement. Within
ten (10) days after the Executive's written request therefor, the Company shall
pay in cash to the Executive, or such other person or entity as the Executive
may designate in writing to the Company, the Executive's reasonable Expenses in
advance of the final disposition or conclusion of any such dispute, legal or
arbitration proceeding.
16.Payment Obligations Absolute. The Company's obligation during and after the
Employment Period to pay the Executive the amounts and to make the benefit and
other arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any set
off, counterclaim, recoupment, defense or other right which the Company may have
against him or anyone else. Except as provided in Section 15 of this Agreement,
all amounts payable by the Company hereunder shall be paid without notice or
demand. Except as provided in Section 9(b) of this Agreement, each and every
payment made hereunder by the Company shall be final, and the Company will not
seek to recover all or any part of such payment from the Executive, or from
whomsoever may be entitled thereto, for any reason whatsoever.
17.Assignment; Successors. (a) If the Company proposes to sell, assign or
transfer all or substantially all of its business and assets to any Person, or
if the Company proposes to merge into or consolidate or otherwise combine with
any Person (in either case, whether before or after the IPO Effective Date),
then, at least thirty (30) days in advance of the closing of such event, the
Company shall, subject only to consummation of such Change in Control of the
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Company, assign all of its right, title and interest in this Agreement effective
as of the closing date of such event to such Person, and the Company shall cause
such Person, at least thirty (30) days in advance of the closing of such event,
by written agreement in form and substance reasonably satisfactory to the
Executive and with written notice thereof to Executive, to expressly assume and
agree to perform, subject only to consummation of such Change in Control of the
Company, from and after the effective date of such event all of the terms,
conditions and provisions imposed by this Agreement upon the Company. If such
Change in Control of the Company is consummated, failure of the Company to
obtain such an assumption agreement at least thirty (30) days in advance of the
closing of such event shall be a breach of this Agreement constituting "Good
Reason" hereunder, except that for purposes of implementing the foregoing, the
date upon which such transfer or other succession becomes effective shall be
deemed the Termination Date. In case of an effective assignment by the Company
and of assumption and agreement by such Person, "Company" shall thereafter mean
such Person which executes and delivers the agreement provided for in this
Section 17 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law, and this Agreement shall inure to the
benefit of and be enforceable by such Person. The Executive shall, in his
discretion, be entitled to proceed against any or all of such Persons, any
Person which theretofore was such a successor to the Company (as defined in the
first paragraph of this Agreement) and the Company (as so defined) in any action
to enforce any rights of the Executive hereunder. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
(b)This Agreement and all rights of the Executive shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, heirs and beneficiaries. All amounts payable to the
Executive under Sections 7, 8, 9, 10, 11 and 12 hereof if the Executive had
lived shall be paid, in the event of the Executive's death, to the Executive's
estate, heirs and representatives.
18.Severability. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
19.Amendment. This Agreement may not be amended or modified at any time except
by written instrument executed by the Company and the Executive.
20.Withholding. The Company shall be entitled to withhold from amounts to be
paid to the Executive hereunder any federal, state or local withholding or other
taxes or charges which it is from time to time required to withhold; provided,
that the amount so withheld shall not exceed the minimum amount required to be
withheld by law. The Company shall be entitled to rely on an opinion of
nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
21.Certain Rules of Construction. No party shall be considered as being
responsible for the drafting of this Agreement for the purpose of applying any
rule construing ambiguities against the drafter or otherwise. No draft of this
Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company.
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22.Governing Law: Resolution of Disputes. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Wisconsin. Any dispute arising out of this Agreement shall,
at the Executive's election, be determined by arbitration under the rules of the
American Arbitration Association then in effect or by litigation. Whether the
dispute is to be settled by arbitration or litigation, the venue for the
arbitration or litigation shall be Milwaukee, Wisconsin or, at the Executive's
election, in the judicial district encompassing the city in which the Executive
resides. The parties consent to personal jurisdiction in each trial court in the
selected venue having subject matter jurisdiction notwithstanding their
residence or situs, and each party irrevocably consents to service of process in
the manner provided hereunder for the giving of notices.
23.Notice. Notices given pursuant to this Agreement shall be in writing and,
except as otherwise provided by Section 13(d) hereof, shall be deemed given when
actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company, to
Superior Services, Inc., Attention: Secretary, 10150 West National Avenue, Suite
350, West Allis, Wisconsin 53227, or if to the Executive, at the address set
forth below the Executive's signature to this Agreement, or to such other
address as the party to be notified shall have theretofore given to the other
party in writing. A copy of any notice provided hereunder by either party shall
be provided to Steven R. Barth, Foley & Lardner, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
24.No Waiver. No waiver by either party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.
25.Headings. The headings herein contained are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.
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26. Effect on Other Agreements. No provision of this Agreement shall limit the
Company's obligation to make payments and provide benefits otherwise receivable
by the Executive under the any other agreement, regardless of whether or not the
Executive exercises his right to a Discretionary Termination hereunder."
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
EXECUTIVESUPERIOR SERVICES, INC.
_____________________________ By:___________________________________
Joseph P. Tate G. William Dietrich
Chief Executive Officer
Address:
633 Cowpath
Fort Atkinson, Wisconsin 53538
EXHIBIT 10.20
Executive's Name: G. William Dietrich
AMENDMENT NO. 2 TO
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AMENDMENT NO. 2 (this "Amendment"), dated as of August 18, 1998,
supplements and amends the Key Employment and Severance Agreement, dated as of
August 15, 1995, as previously amended (the "Agreement"), by and between
SUPERIOR SERVICES, INC., a Wisconsin corporation (the "Company"), and the named
executive set forth above (the "Executive"). All defined terms used herein and
not defined shall have the same meaning as in the Agreement.
W I T N E S S E T H
WHEREAS, pursuant to Section 19 of the Agreement, the Executive and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 1(d) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(d) Cause. 'Cause' for termination by the Company of the
Executive's employment after a Change in Control of the Company,
for purposes of this Agreement, shall mean the following and only
the following: the Executive's final and nonappealable conviction
of, and sentencing for, a felony offense for a crime involving an
act by the Executive of conduct on behalf of the Company that
results in the Executive being physically imprisoned in a federal
or state penitentiary; provided, that 'Cause' for termination
shall only be determined by a vote of two-thirds of the Board of
Directors of the Company after (i) reasonable written notice to
the Executive, setting forth the basis for 'Cause,' specifying the
particulars thereof in detail; and (ii) an opportunity for the
Executive, together with his counsel, to be heard before the
Board."
2. Section 1(h) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(h) Discretionary Termination. For purposes of this Agreement,
'Discretionary Termination' means the determination by the
Executive, or his estate or personal representative in the event
of the Executive's death or disability, at any time
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during the twelve (12) month period commencing on the occurrence
of a Change in Control of the Company, as evidenced by the
delivery to the Company, by the Executive or by his estate or
personal representative in the case of the Executive's death or
disability, of a Notice of Termination during such period, to
terminate this Agreement and his employment hereunder for any
reason whatsoever in his sole discretion, with or without good
faith, even if the Company has previously terminated the Executive
for death, disability, Cause or otherwise during such twelve (12)
month period following a Change in Control of the Company."
3. The first paragraph of Section 1(o) of the Agreement is hereby amended
and restated to read in its entirety as follows:
"(o) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10(b) and Section 17(a) hereof or as
set forth below, the term 'Termination Date' means (i) if the
Executive's employment is terminated by the Executive's death, the
date of death; (ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the date of such early retirement as
set forth in such written agreement; (iii) if the Executive's
employment is terminated by reason of disability pursuant to
Section 12 hereof, the earlier of thirty (30) days after the
Notice of Termination is given or one day prior to the end of the
Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good
Reason), the date the Notice of Termination is given; (v) if the
Executive's employment is terminated by the Executive voluntarily
pursuant to a Discretionary Termination, the Termination Date for
the purposes of the payment of a Termination Payment and a
Gross-Up Payment, if any, under Section 9(b) hereof shall be the
date the Notice of Termination is given to the Company; and (vi)
if the Executive's employment is terminated by the Company (other
than by reason of disability pursuant to Section 12 hereof) or by
the Executive for Good Reason, the earlier of thirty (30) days
after the Notice of Termination is given or one day prior to the
end of the Employment Period. Notwithstanding the foregoing,"
[Remainder of existing Section 1(o) to remain as written in the
Agreement.]
4. Section 5(c) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(c) Regardless of whether or not an Employment Period exists or
is ongoing, from the date of a Change in Control of the Company
(regardless of whether the Executive has ceased to be employed by
the Company for any reason) until he reaches age 85, the Executive
and the Executive's wife, and each of their children until they
reach the age of 21, shall each be entitled to receive, without
cost, premium, co-pay or deductible charges, full health and
medical, dental and vision care as provided by the Company to its
senior executive employees; provided,
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<PAGE>
that the Executive and his wife shall not be limited to their
choice(s) of doctor or the location(s) at which such care is
provided. In the event that the Executive dies prior to reaching
age 85, his wife shall continue to receive such health care
benefits on the same terms and conditions, until the date when the
Executive would have otherwise reached age 85 but for his death,
and each of their children shall continue to receive such health
care benefits on the same terms and conditions until they reach
age 21. From the date of a Change in Control of the Company
(regardless of whether the Executive has ceased to be employed by
the Company for any reason) until he reaches age 65, the Executive
will also be entitled to the benefit of a long-term and short-term
disability insurance policy of $3,000 per month, and in the event
that the Executive dies prior to reaching age 65, his wife shall
receive the benefits or continued coverage of such policies (as
the case may be). From the date of a Change in Control of the
Company (regardless of whether the Executive has ceased to be
employed by the Company for any reason), the Company will not,
without the Executive's consent, make any changes in the foregoing
benefits that would adversely affect in any material respect the
rights or benefits of the Executive or his wife or children
thereunder. During the Employment Period, the Executive shall also
be entitled to receive any other perquisites generally made
available, from time to time or at any time, to the Company's key
management personnel. Any payments under this Section 5(c) shall
be in addition to any other payments or benefits to be received by
the Executive under this Agreement or otherwise, including under
Section 4(C)(ii) of that certain Employment Agreement, dated as of
January 1, 1996, by and between the Company and the Executive (the
"Employment Agreement")."
5. A new Section 5(f) is hereby added to the Agreement, to read in its
entirety as follows:
"Regardless of whether or not an Employment Period exists or is
ongoing, immediately upon a Change in Control of the Company, all
awards granted to the Executive and then outstanding under the
Company's stock option and incentive compensation plans
('Executive Awards') that are not then exercisable by their terms
automatically will become immediately exercisable and fully vested
for the remainder of their stated terms. In addition, for a period
of thirty (30) days following such Change in Control of the
Company, the Executive shall have the right to terminate the
Executive Awards and to receive a lump-sum payment, in cash, equal
to the product of (a) the excess of (x) the per-unit fair market
value of the securities underlying the Executive Awards, over (y)
the per-unit exercise price of such Executive Awards, and (b) the
number of units of such securities covered by the Executive
Awards. For purposes of the preceding sentence, the 'fair market
value' of securities shall be based on the highest of (i) the
per-unit closing sale price of the securities underlying the
Executive Awards, as reported on a national securities exchange or
by the Nasdaq Stock Market, on the execution date of the agreement
pursuant to which the Change in Control of the
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Company is effected, (ii) the per-unit closing sale price of the
securities underlying the Executive Awards, as reported on a
national securities exchange or by the Nasdaq Stock Market, on the
effective date of the transaction constituting a Change in Control
of the Company, and (iii) the highest per-unit price for such
securities actually paid in connection with such Change in Control
of the Company. Notwithstanding the foregoing, if the exercise of
any right granted pursuant to this Section 5(f) would make a
transaction constituting a Change in Control of the Company
ineligible for pooling of interests accounting under APB No. 16
which, but for this Section 5(f), would otherwise be eligible for
such accounting treatment, the Board of Directors of the Company
shall have the ability to substitute for the cash payable pursuant
to this Section 5(f) securities of the Company (or of the other
entity surviving the transaction constituting the Change in
Control of the Company, or its parent corporation, if applicable)
having a fair market value equal to the cash that would otherwise
be payable hereunder. For purposes of the preceding sentence, the
'fair market value' of securities shall be based on the lower of
(i) the average closing bid price of such securities for the ten
(10) trading days prior to the execution date of the agreement
pursuant to which the Change in Control of the Company is
effected, and (ii) the average of the closing bid price of such
securities for the ten (10) trading days prior to the effective
date of the transaction constituting a Change in Control of the
Company, in each case as such closing bid prices are reported on a
national securities exchange or by the Nasdaq Stock Market."
6. The second and third paragraphs of Section 9(b) of the Agreement are
hereby deleted in their entirety and a new paragraph inserted in their place, to
read in its entirety as follows:
"In the event that a portion of the Termination Payment, Accrued
Benefits or any other payment or benefit under this Agreement, or
payments to or for the benefit of the Executive under any other
agreement or plan of the Company ('Total Benefits'), be deemed to
be an 'excess parachute payment,' as defined in Section 280G of
the Code, then the Company shall pay the Executive, no later than
the tenth day following the Executive's request, such additional
cash amount as is necessary to place the Executive in the same
after-tax financial position that he would have been in if he had
not incurred any liability for Excise Tax ('Excise Tax Liability')
under Section 4999 of the Code (the 'Gross-Up Payment'). For
purposes of determining whether any of the Total Benefits will be
subject to Excise Tax Liability and the amount of such Excise Tax
Liability, (i) Total Benefits shall be treated as 'parachute
payments' (within the meaning of Section 280G(b)(2) of the Code)
unless, in the reasonable opinion of the Company's tax counsel (as
confirmed by the Executive's tax counsel), such Total Benefits (in
whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code, and all 'excess
parachute payments' (within the meaning of Section 280G(b)(1) of
the Code) shall be treated as subject to
4
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Excise Tax Liability, unless, in the reasonable opinion of the
Company's tax counsel (as confirmed by the Executive's tax
counsel), such excess parachute payments represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4)(B) of the Code, or are not otherwise subject to
Excise Tax Liability, and (ii) the value of any noncash benefits
or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state
and locality of the residence of the Executive, net of the maximum
reduction in federal income taxes that could be obtained from
deduction of such state and local taxes."
7. A new Section 26 is hereby added to the Agreement, to read in its
entirety as follows:
"26. Effect on Employment Agreement. No provision of this
Agreement shall limit the Company's obligation to make payments
and provide benefits otherwise receivable by the Executive under
the Employment Agreement, including under Section 4(C)(ii)
thereof, or any other agreement, regardless of whether or not the
Executive exercises his right to a Discretionary Termination
hereunder."
8. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
_________________________ By:_________________________
Executive Joseph P. Tate
Chairman of the Board
5
EXHIBIT 10.21
Executive's Name: George K. Farr
AMENDMENT NO. 2 TO
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AMENDMENT NO. 2 (this "Amendment"), dated as of August 18, 1998,
supplements and amends the Key Employment and Severance Agreement, dated as of
August 15, 1995, as previously amended (the "Agreement"), by and between
SUPERIOR SERVICES, INC., a Wisconsin corporation (the "Company"), and the named
executive set forth above (the "Executive"). All defined terms used herein and
not defined shall have the same meaning as in the Agreement.
W I T N E S S E T H
WHEREAS, pursuant to Section 19 of the Agreement, the Executive and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 1(d) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(d) Cause. 'Cause' for termination by the Company of the
Executive's employment after a Change in Control of the Company,
for purposes of this Agreement, shall mean the following and only
the following: the Executive's final and nonappealable conviction
of, and sentencing for, a felony offense for a crime involving an
act by the Executive of conduct on behalf of the Company that
results in the Executive being physically imprisoned in a federal
or state penitentiary; provided, that 'Cause' for termination
shall only be determined by a vote of two-thirds of the Board of
Directors of the Company after (i) reasonable written notice to
the Executive, setting forth the basis for 'Cause,' specifying the
particulars thereof in detail; and (ii) an opportunity for the
Executive, together with his counsel, to be heard before the
Board."
2. Section 1(h) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(h) Discretionary Termination. For purposes of this Agreement,
'Discretionary Termination' means the determination by the
Executive, or his estate or personal representative in the event
of the Executive's death or disability, at any time
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during the twelve (12) month period commencing on the occurrence
of a Change in Control of the Company, as evidenced by the
delivery to the Company, by the Executive or by his estate or
personal representative in the case of the Executive's death or
disability, of a Notice of Termination during such period, to
terminate this Agreement and his employment hereunder for any
reason whatsoever in his sole discretion, with or without good
faith, even if the Company has previously terminated the Executive
for death, disability, Cause or otherwise during such twelve (12)
month period following a Change in Control of the Company."
3. The first paragraph of Section 1(o) of the Agreement is hereby amended
and restated to read in its entirety as follows:
"(o) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10(b) and Section 17(a) hereof or as
set forth below, the term 'Termination Date' means (i) if the
Executive's employment is terminated by the Executive's death, the
date of death; (ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the date of such early retirement as
set forth in such written agreement; (iii) if the Executive's
employment is terminated by reason of disability pursuant to
Section 12 hereof, the earlier of thirty (30) days after the
Notice of Termination is given or one day prior to the end of the
Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good
Reason), the date the Notice of Termination is given; (v) if the
Executive's employment is terminated by the Executive voluntarily
pursuant to a Discretionary Termination, the Termination Date for
the purposes of the payment of a Termination Payment and a
Gross-Up Payment, if any, under Section 9(b) hereof shall be the
date the Notice of Termination is given to the Company; and (vi)
if the Executive's employment is terminated by the Company (other
than by reason of disability pursuant to Section 12 hereof) or by
the Executive for Good Reason, the earlier of thirty (30) days
after the Notice of Termination is given or one day prior to the
end of the Employment Period. Notwithstanding the foregoing,"
[Remainder of existing Section 1(o) to remain as written in the
Agreement.]
4. Section 5(c) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(c) Regardless of whether or not an Employment Period exists or
is ongoing, from the date of a Change in Control of the Company
(regardless of whether the Executive has ceased to be employed by
the Company for any reason) until he reaches age 85, the Executive
and the Executive's wife, and each of their children until they
reach the age of 21, shall each be entitled to receive, without
cost, premium, co-pay or deductible charges, full health and
medical, dental and vision care as provided by the Company to its
senior executive employees; provided,
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that the Executive and his wife shall not be limited to their
choice(s) of doctor or the location(s) at which such care is
provided. In the event that the Executive dies prior to reaching
age 85, his wife shall continue to receive such health care
benefits on the same terms and conditions, until the date when the
Executive would have otherwise reached age 85 but for his death,
and each of their children shall continue to receive such health
care benefits on the same terms and conditions until they reach
age 21. From the date of a Change in Control of the Company
(regardless of whether the Executive has ceased to be employed by
the Company for any reason) until he reaches age 65, the Executive
will also be entitled to the benefit of a long-term and short-term
disability insurance policy of $3,000 per month, and in the event
that the Executive dies prior to reaching age 65, his wife shall
receive the benefits or continued coverage of such policies (as
the case may be). From the date of a Change in Control of the
Company (regardless of whether the Executive has ceased to be
employed by the Company for any reason), the Company will not,
without the Executive's consent, make any changes in the foregoing
benefits that would adversely affect in any material respect the
rights or benefits of the Executive or his wife or children
thereunder. During the Employment Period, the Executive shall also
be entitled to receive any other perquisites generally made
available, from time to time or at any time, to the Company's key
management personnel. Any payments under this Section 5(c) shall
be in addition to any other payments or benefits to be received by
the Executive under this Agreement or otherwise, including under
Section 4(C)(ii) of that certain Employment Agreement, dated as of
January 1, 1996, by and between the Company and the Executive (the
"Employment Agreement")."
5. A new Section 5(f) is hereby added to the Agreement, to read in its
entirety as follows:
"(f) Regardless of whether or not an Employment Period exists or
is ongoing, immediately upon a Change in Control of the Company,
all awards granted to the Executive and then outstanding under the
Company's stock option and incentive compensation plans
('Executive Awards') that are not then exercisable by their terms
automatically will become immediately exercisable and fully vested
for the remainder of their stated terms. In addition, for a period
of thirty (30) days following such Change in Control of the
Company, the Executive shall have the right to terminate the
Executive Awards and to receive a lump-sum payment, in cash, equal
to the product of (a) the excess of (x) the per-unit fair market
value of the securities underlying the Executive Awards, over (y)
the per-unit exercise price of such Executive Awards, and (b) the
number of units of such securities covered by the Executive
Awards. For purposes of the preceding sentence, the 'fair market
value' of securities shall be based on the highest of (i) the
per-unit closing sale price of the securities underlying the
Executive Awards, as reported on a national securities exchange or
by the Nasdaq Stock Market, on the execution date of the agreement
pursuant to which the Change in Control of the Company is
effected, (ii) the per-unit closing sale price of the securities
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underlying the Executive Awards, as reported on a national
securities exchange or by the Nasdaq
4
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Stock Market, on the effective date of the transaction
constituting a Change in Control of the Company, and (iii) the
highest per-unit price for such securities actually paid in
connection with such Change in Control of the Company.
Notwithstanding the foregoing, if the exercise of any right
granted pursuant to this Section 5(f) would make a transaction
constituting a Change in Control of the Company ineligible for
pooling of interests accounting under APB No. 16 which, but for
this Section 5(f), would otherwise be eligible for such accounting
treatment, the Board of Directors of the Company shall have the
ability to substitute for the cash payable pursuant to this
Section 5(f) securities of the Company (or of the other entity
surviving the transaction constituting the Change in Control of
the Company, or its parent corporation, if applicable) having a
fair market value equal to the cash that would otherwise be
payable hereunder. For purposes of the preceding sentence, the
'fair market value' of securities shall be based on the lower of
(i) the average closing bid price of such securities for the ten
(10) trading days prior to the execution date of the agreement
pursuant to which the Change in Control of the Company is
effected, and (ii) the average of the closing bid price of such
securities for the ten (10) trading days prior to the effective
date of the transaction constituting a Change in Control of the
Company, in each case as such closing bid prices are reported on a
national securities exchange or by the Nasdaq Stock Market."
6. The second and third paragraphs of Section 9(b) of the Agreement are
hereby deleted in their entirety and a new paragraph inserted in their place, to
read in its entirety as follows:
"In the event that a portion of the Termination Payment, Accrued
Benefits or any other payment or benefit under this Agreement, or
payments to or for the benefit of the Executive under any other
agreement or plan of the Company ('Total Benefits'), be deemed to
be an 'excess parachute payment,' as defined in Section 280G of
the Code, then the Company shall pay the Executive, no later than
the tenth day following the Executive's request, such additional
cash amount as is necessary to place the Executive in the same
after-tax financial position that he would have been in if he had
not incurred any liability for Excise Tax ('Excise Tax Liability')
under Section 4999 of the Code (the 'Gross-Up Payment'). For
purposes of determining whether any of the Total Benefits will be
subject to Excise Tax Liability and the amount of such Excise Tax
Liability, (i) Total Benefits shall be treated as 'parachute
payments' (within the meaning of Section 280G(b)(2) of the Code)
unless, in the reasonable opinion of the Company's tax counsel (as
confirmed by the Executive's tax counsel), such Total Benefits (in
whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code, and all 'excess
parachute payments' (within the meaning of Section 280G(b)(1) of
the Code) shall be treated as subject to Excise Tax Liability,
unless, in the reasonable opinion of the Company's tax counsel (as
confirmed by the Executive's tax counsel), such excess parachute
payments represent reasonable compensation for services actually
rendered within
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the meaning of Section 280G(b)(4)(B) of the Code, or are not
otherwise subject to Excise Tax Liability, and (ii) the value of
any noncash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the
state and locality of the residence of the Executive, net of the
maximum reduction in federal income taxes that could be obtained
from deduction of such state and local taxes."
7. A new Section 26 is hereby added to the Agreement, to read in its
entirety as follows:
"26. Effect on Employment Agreement. No provision of this
Agreement shall limit the Company's obligation to make payments
and provide benefits otherwise receivable by the Executive under
the Employment Agreement, including under Section 4(C)(ii)
thereof, or any other agreement, regardless of whether or not the
Executive exercises his right to a Discretionary Termination
hereunder."
8. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
_________________________ By:_________________________
Executive Joseph P. Tate
Chairman of the Board
6
EXHIBIT 10.22
Executive's Name: Peter J. Ruud
AMENDMENT NO. 2 TO
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AMENDMENT NO. 2 (this "Amendment"), dated as of August 18, 1998,
supplements and amends the Key Employment and Severance Agreement, dated as of
August 15, 1995, as previously amended (the "Agreement"), by and between
SUPERIOR SERVICES, INC., a Wisconsin corporation (the "Company"), and the named
executive set forth above (the "Executive"). All defined terms used herein and
not defined shall have the same meaning as in the Agreement.
W I T N E S S E T H
WHEREAS, pursuant to Section 19 of the Agreement, the Executive and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 1(d) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(d) Cause. 'Cause' for termination by the Company of the
Executive's employment after a Change in Control of the Company,
for purposes of this Agreement, shall mean the following and only
the following: the Executive's final and nonappealable conviction
of, and sentencing for, a felony offense for a crime involving an
act by the Executive of conduct on behalf of the Company that
results in the Executive being physically imprisoned in a federal
or state penitentiary; provided, that 'Cause' for termination
shall only be determined by a vote of two-thirds of the Board of
Directors of the Company after (i) reasonable written notice to
the Executive, setting forth the basis for 'Cause,' specifying the
particulars thereof in detail; and (ii) an opportunity for the
Executive, together with his counsel, to be heard before the
Board."
2. Section 1(h) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(h) Discretionary Termination. For purposes of this Agreement,
'Discretionary Termination' means the determination by the
Executive, or his estate or personal representative in the event
of the Executive's death or disability, at any time
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during the twelve (12) month period commencing on the occurrence
of a Change in Control of the Company, as evidenced by the
delivery to the Company, by the Executive or by his estate or
personal representative in the case of the Executive's death or
disability, of a Notice of Termination during such period, to
terminate this Agreement and his employment hereunder for any
reason whatsoever in his sole discretion, with or without good
faith, even if the Company has previously terminated the Executive
for death, disability, Cause or otherwise during such twelve (12)
month period following a Change in Control of the Company."
3. The first paragraph of Section 1(o) of the Agreement is hereby amended
and restated to read in its entirety as follows:
"(o) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10(b) and Section 17(a) hereof or as
set forth below, the term 'Termination Date' means (i) if the
Executive's employment is terminated by the Executive's death, the
date of death; (ii) if the Executive's employment is terminated by
reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the date of such early retirement as
set forth in such written agreement; (iii) if the Executive's
employment is terminated by reason of disability pursuant to
Section 12 hereof, the earlier of thirty (30) days after the
Notice of Termination is given or one day prior to the end of the
Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good
Reason), the date the Notice of Termination is given; (v) if the
Executive's employment is terminated by the Executive voluntarily
pursuant to a Discretionary Termination, the Termination Date for
the purposes of the payment of a Termination Payment and a
Gross-Up Payment, if any, under Section 9(b) hereof shall be the
date the Notice of Termination is given to the Company; and (vi)
if the Executive's employment is terminated by the Company (other
than by reason of disability pursuant to Section 12 hereof) or by
the Executive for Good Reason, the earlier of thirty (30) days
after the Notice of Termination is given or one day prior to the
end of the Employment Period. Notwithstanding the foregoing,"
[Remainder of existing Section 1(o) to remain as written in the
Agreement.]
4. Section 5(c) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(c) Regardless of whether or not an Employment Period exists or
is ongoing, from the date of a Change in Control of the Company
(regardless of whether the Executive has ceased to be employed by
the Company for any reason) until he reaches age 85, the Executive
and the Executive's wife, and each of their children until they
reach the age of 21, shall each be entitled to receive, without
cost, premium, co-pay or deductible charges, full health and
medical, dental and vision care as provided by the Company to its
senior executive employees; provided,
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that the Executive and his wife shall not be limited to their
choice(s) of doctor or the location(s) at which such care is
provided. In the event that the Executive dies prior to reaching
age 85, his wife shall continue to receive such health care
benefits on the same terms and conditions, until the date when the
Executive would have otherwise reached age 85 but for his death,
and each of their children shall continue to receive such health
care benefits on the same terms and conditions until they reach
age 21. From the date of a Change in Control of the Company
(regardless of whether the Executive has ceased to be employed by
the Company for any reason) until he reaches age 65, the Executive
will also be entitled to the benefit of a long-term and short-term
disability insurance policy of $3,000 per month, and in the event
that the Executive dies prior to reaching age 65, his wife shall
receive the benefits or continued coverage of such policies (as
the case may be). From the date of a Change in Control of the
Company (regardless of whether the Executive has ceased to be
employed by the Company for any reason), the Company will not,
without the Executive's consent, make any changes in the foregoing
benefits that would adversely affect in any material respect the
rights or benefits of the Executive or his wife or children
thereunder. During the Employment Period, the Executive shall also
be entitled to receive any other perquisites generally made
available, from time to time or at any time, to the Company's key
management personnel. Any payments under this Section 5(c) shall
be in addition to any other payments or benefits to be received by
the Executive under this Agreement or otherwise, including under
Section 4(C)(ii) of that certain Employment Agreement, dated as of
January 1, 1996, by and between the Company and the Executive (the
"Employment Agreement")."
5. A new Section 5(f) is hereby added to the Agreement, to read in its
entirety as follows:
"Regardless of whether or not an Employment Period exists or is
ongoing, immediately upon a Change in Control of the Company, all
awards granted to the Executive and then outstanding under the
Company's stock option and incentive compensation plans
('Executive Awards') that are not then exercisable by their terms
automatically will become immediately exercisable and fully vested
for the remainder of their stated terms. In addition, for a period
of thirty (30) days following such Change in Control of the
Company, the Executive shall have the right to terminate the
Executive Awards and to receive a lump-sum payment, in cash, equal
to the product of (a) the excess of (x) the per-unit fair market
value of the securities underlying the Executive Awards, over (y)
the per-unit exercise price of such Executive Awards, and (b) the
number of units of such securities covered by the Executive
Awards. For purposes of the preceding sentence, the 'fair market
value' of securities shall be based on the highest of (i) the
per-unit closing sale price of the securities underlying the
Executive Awards, as reported on a national securities exchange or
by the Nasdaq Stock Market, on the execution date of the agreement
pursuant to which the Change in Control of the
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Company is effected, (ii) the per-unit closing sale price of the
securities underlying the Executive Awards, as reported on a
national securities exchange or by the Nasdaq Stock Market, on the
effective date of the transaction constituting a Change in Control
of the Company, and (iii) the highest per-unit price for such
securities actually paid in connection with such Change in Control
of the Company. Notwithstanding the foregoing, if the exercise of
any right granted pursuant to this Section 5(f) would make a
transaction constituting a Change in Control of the Company
ineligible for pooling of interests accounting under APB No. 16
which, but for this Section 5(f), would otherwise be eligible for
such accounting treatment, the Board of Directors of the Company
shall have the ability to substitute for the cash payable pursuant
to this Section 5(f) securities of the Company (or of the other
entity surviving the transaction constituting the Change in
Control of the Company, or its parent corporation, if applicable)
having a fair market value equal to the cash that would otherwise
be payable hereunder. For purposes of the preceding sentence, the
'fair market value' of securities shall be based on the lower of
(i) the average closing bid price of such securities for the ten
(10) trading days prior to the execution date of the agreement
pursuant to which the Change in Control of the Company is
effected, and (ii) the average of the closing bid price of such
securities for the ten (10) trading days prior to the effective
date of the transaction constituting a Change in Control of the
Company, in each case as such closing bid prices are reported on a
national securities exchange or by the Nasdaq Stock Market."
6. The second and third paragraphs of Section 9(b) of the Agreement are
hereby deleted in their entirety and a new paragraph inserted in their place, to
read in its entirety as follows:
"In the event that a portion of the Termination Payment, Accrued
Benefits or any other payment or benefit under this Agreement, or
payments to or for the benefit of the Executive under any other
agreement or plan of the Company ('Total Benefits'), be deemed to
be an 'excess parachute payment,' as defined in Section 280G of
the Code, then the Company shall pay the Executive, no later than
the tenth day following the Executive's request, such additional
cash amount as is necessary to place the Executive in the same
after-tax financial position that he would have been in if he had
not incurred any liability for Excise Tax ('Excise Tax Liability')
under Section 4999 of the Code (the 'Gross-Up Payment'). For
purposes of determining whether any of the Total Benefits will be
subject to Excise Tax Liability and the amount of such Excise Tax
Liability, (i) Total Benefits shall be treated as 'parachute
payments' (within the meaning of Section 280G(b)(2) of the Code)
unless, in the reasonable opinion of the Company's tax counsel (as
confirmed by the Executive's tax counsel), such Total Benefits (in
whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code, and all 'excess
parachute payments' (within the meaning of Section 280G(b)(1) of
the Code) shall be treated as subject to
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Excise Tax Liability, unless, in the reasonable opinion of the
Company's tax counsel (as confirmed by the Executive's tax
counsel), such excess parachute payments represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4)(B) of the Code, or are not otherwise subject to
Excise Tax Liability, and (ii) the value of any noncash benefits
or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state
and locality of the residence of the Executive, net of the maximum
reduction in federal income taxes that could be obtained from
deduction of such state and local taxes."
7. A new Section 26 is hereby added to the Agreement, to read in its
entirety as follows:
"26. Effect on Employment Agreement. No provision of this
Agreement shall limit the Company's obligation to make payments
and provide benefits otherwise receivable by the Executive under
the Employment Agreement, including under Section 4(C)(ii)
thereof, or any other agreement, regardless of whether or not the
Executive exercises his right to a Discretionary Termination
hereunder."
8. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
_________________________ By:_________________________
Executive G. W. "Bill" Dietrich
President and Chief Executive Officer
5
EXHIBIT 10.23
Employee's Name: G. William Dietrich
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT (this "Amendment"), dated as of August 18, 1998,
supplements and amends the Employment Agreement, dated January 1, 1996 (the
"Agreement"), by and between SUPERIOR SERVICES, INC., a Wisconsin corporation
(the "Company"), and the named executive set forth above (the "Employee"). All
defined terms used herein and not defined shall have the same meaning as in the
Agreement.
W I T N E S S E T H
WHEREAS, pursuant to Section 8 of the Agreement, the Employee and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 4(A) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(A) Termination by the Company. The employment of the Employee
under this Agreement, while the Employee is on active status, may
be terminated at any time by the Company:
(i) if the Board of Directors of the Company (by a
two-thirds vote) shall determine that this Agreement shall be
terminated for 'Cause;' provided, however, that the Employee shall
not be deemed to have been terminated for Cause without (i)
reasonable written notice to the Employee, setting forth the
reasons for the Company's intention to terminate him for 'Cause;'
(ii) an opportunity for the Employee, together with his counsel,
to be heard before the Board; and (iii) delivery to the Employee
of a written notice of termination (which date of delivery of such
notice shall be the 'Early Termination Date') from the Board,
finding that, in the good faith reasonable opinion of the Board
(as evidenced by a two-thirds vote thereof), the Employee was
guilty of conduct constituting 'Cause' and specifying the
particulars thereof in detail; for purposes of this Agreement,
'Cause' shall mean the following and only the following: the
Employee's final and nonappealable conviction of, and sentencing
for, a felony offense for a crime involving an act by the Employee
of conduct on behalf of the Company that results in the Employee
being physically imprisoned in a federal or state penitentiary; or
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(ii) for any reason, in its sole discretion, after written
notice to the Employee, which termination shall be effective at
the end of the term of this Agreement as in effect at the date of
such notice, so that the term of this Agreement will not be
shortened by such notice of termination, but no future extensions
of the term hereof shall occur after such notice.
2. Section 4(B) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(B) Termination Payment and Benefits. In the event of termination
of the Employee's employment under this Agreement by the Company
under Section 4(A)(i), the Employee shall only be entitled to
receive the monthly installment of his Base Salary being paid at
the time of such termination and, notwithstanding anything to the
contrary herein contained, the Employee shall receive all
compensation, expense reimbursements and other benefits to which
he is otherwise entitled hereunder through the date of the
Employee's termination for Cause and, in addition, shall receive
all other benefits to which he is otherwise entitled under any
benefit plans as then in effect or otherwise under this or any
other agreement. If this Agreement is terminated pursuant to
Section 4(A)(ii), the Company shall be obligated to pay to the
Employee a severance payment equal to the average of the
Employee's annual total compensation reportable by the Company on
Form W-2 (i.e., base salary, plus bonus amounts and all other
taxable compensation) over the five (5) fiscal years of the
Company (or such shorter period that the Employee has been
employed by the Company) immediately prior to such termination,
multiplied by three (3). Such severance payment shall be payable
in a lump sum payment within fifteen (15) days of the termination
of the Employee's employment. If this Agreement is terminated
pursuant to Section 4(A)(ii), until the Employee reaches age 85,
the Employee and his wife, and each of their children until they
reach the age of 21, shall also each be entitled to receive,
without premium, co-pay or deductible charges, full health and
medical, dental and vision care as provided by the Company to its
senior executive employees; provided, that the Employee and his
wife shall not be limited to their choice(s) of doctor or the
location(s) at which such care is provided. If, after this
Agreement is terminated pursuant to Section 4(A)(ii), the Employee
dies prior to reaching age 85, his wife shall continue to receive
such health care benefits on the same terms and conditions, until
the date when the Employee would have otherwise reached age 85 but
for his death, and each of their children shall continue to
receive such health care benefits on the same terms and conditions
until they reach age 21."
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3. Section 4(C) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(C) Termination by Employee; Automatic Termination Upon Change in
Control.
(i) Employee shall have the right at any time during his
employment, by giving written notice to the Secretary of the
Company, to terminate the Employee's employment under this
Agreement effective ninety (90) days after the date on which such
notice is given by the Employee. In the event the Employee shall
make such election under this Subsection 4(C)(i), the Employee
shall, in addition to all other reimbursements, payments, or other
allowances required to be paid under this Agreement or under any
other plan, agreement, or policy which survives the termination of
this Agreement, be entitled to be paid, the Base Salary payable
during such ninety (90) day period following the giving of such
notice. Thereupon, this agreement shall terminate and Employee
shall have no further rights under or be entitled to any other
benefits of this Agreement, provided that the provisions of
Section 5 shall survive such termination.
(ii) In the event of a Change in Control of the Company, as
defined in the Key Executive Employment and Severance Agreement,
dated as of August 15, 1995, between the Company and the Employee,
as amended (the 'KEESA'), this Agreement shall automatically be
terminated upon such Change in Control of the Company, except that
the provisions of this Subsection 4(C)(ii) and Section 5 hereof
shall survive such termination and, on the effective date of such
Change in Control of the Company (in addition to any other
payments or benefits to which the Employee is otherwise entitled
under this Agreement, the KEESA or otherwise), the Company shall
pay or issue to the Employee the maximum amount of all cash, stock
option and other bonuses and benefits that the Employee would
otherwise have been eligible to receive for the year in which such
Change in Control of the Company occurs, prorated for the portion
of such year then completed. Beginning immediately from and after
the effective date of the Change in Control of the Company and the
termination of the Employee's employment hereunder, the Employee
shall continue to serve the Company as an independent contractor
consultant from the date of the Change in Control of the Company
through the expiration of the then current term of this Agreement
that would otherwise have been in effect without taking into
account such Change in Control of the Company (the Consultancy
Period). During the Consultancy Period, the Company shall pay the
Employee, in cash, on a monthly basis, consulting fees equal to
the Employee's Base Salary then in effect at the date of the
Change in Control of the Company. During the Consultancy Period,
the Employee shall not be required to devote, and payment of the
Employee's compensation and benefits under this Subsection
4(C)(ii) may not be conditioned on, delayed, withheld or
diminished by the Employee's failure to devote any
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specific amount of time, energy, effort, expertise or ability as a
consultant to the Company or to perform any services to the
Company at any particular time and/or location or to any specified
level or expectation of performance or results. The Employee may
perform his consulting services under this Subsection in such
manner, at such times and in such locations (including by
telephone, mail, facsimile, telecommunication or the like) as the
Employee determines in his discretion is appropriate or adequate
under the circumstances. During the Consultancy Period, either the
Employee or the Company may, upon notice to the other party as
provided herein, elect to immediately terminate the Consultancy
Period, whereupon the entire amount of the consulting fees that
would otherwise have been paid to the Employee through the end of
the Consultancy Period shall be accelerated and the Company shall
pay all such fees to the Employee in a single lump-sum cash
payment within ten (10) days of the date of such notice. If the
Employee dies or becomes permanently disabled (for purposes of
Section 4(E) below) during the Consultancy Period, then the
payment of the consulting fees that would otherwise have been paid
to the Employee through the end of the Consultancy Period shall be
accelerated and the Company shall pay all such fees to the
Employee or his fiduciary in a single lump-sum cash payment within
ten (10) days of such death or disability.
In the event of a Change in Control of the Company, the Company
shall also pay or reimburse the Employee for any and all costs and
expenses incurred by the Employee, during five (5) years following
such Change in Control of the Company, in connection with the
relocation of his personal permanent residence from his then
current permanent address (the 'Wisconsin Residence') to a new
permanent residence of his choosing, including but not limited to,
moving and storage expenses (for a period of twelve (12) months
following the move) for all personal belongings, real estate
commissions and closing costs incurred in the sale of the
Wisconsin Residence, any loss incurred by the Employee as a result
of the sale of the Wisconsin Residence for less than the
Employee's tax basis therein and any temporary living expenses
incurred by the Employee during such five-year period. The
Employee may, in his sole discretion, determine to sell the
Wisconsin Residence at any time during such five-year period and
at any bona fide price from a third party and receive the benefits
provided in this paragraph. Upon the closing of the sale of the
Wisconsin Residence, the Employer shall repay in full to the
Company, if not already repaid, that certain $75,000 personal loan
borrowed by the Employee from the Company, together with all
stated interest thereon.
For purposes of this Subsection 4(C)(ii), the term 'Company'
refers to the Company or to its acquiror as appropriate."
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4. Section 4(F) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(F) Effect of KEESA. This Agreement shall be subject in all
respects to the provisions of the KEESA. This Agreement (other
than Subsection 4(C)(ii) and Section 5 hereof) shall terminate
upon a Change in Control of the Company, as defined in the KEESA.
In such event, the Employee shall have no further rights or
obligations under this Agreement (other than pursuant to
Subsection 4(C)(ii) hereof)."
5. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
______________________________ By:______________________________
Executive Joseph P. Tate
Chairman of the Board
5
EXHIBIT 10.24
Employee's Name: Peter J. Ruud
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT (this "Amendment"), dated as of August 18, 1998,
supplements and amends the Employment Agreement, dated January 1, 1996 (the
"Agreement"), by and between SUPERIOR SERVICES, INC., a Wisconsin corporation
(the "Company"), and the named executive set forth above (the "Employee"). All
defined terms used herein and not defined shall have the same meaning as in the
Agreement.
W I T N E S S E T H
WHEREAS, pursuant to Section 8 of the Agreement, the Employee and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 4(A) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(A) Termination by the Company. The employment of the Employee
under this Agreement, while the Employee is on active status, may
be terminated at any time by the Company:
(i) if the Board of Directors of the Company (by a
two-thirds vote) shall determine that this Agreement shall be
terminated for 'Cause;' provided, however, that the Employee shall
not be deemed to have been terminated for Cause without (i)
reasonable written notice to the Employee, setting forth the
reasons for the Company's intention to terminate him for 'Cause;'
(ii) an opportunity for the Employee, together with his counsel,
to be heard before the Board; and (iii) delivery to the Employee
of a written notice of termination (which date of delivery of such
notice shall be the 'Early Termination Date') from the Board,
finding that, in the good faith reasonable opinion of the Board
(as evidenced by a two-thirds vote thereof), the Employee was
guilty of conduct constituting 'Cause' and specifying the
particulars thereof in detail; for purposes of this Agreement,
'Cause' shall mean the following and only the following: the
Employee's final and nonappealable conviction of, and sentencing
for, a felony offense for a crime involving an act by the Employee
of conduct on behalf of the Company that results in the Employee
being physically imprisoned in a federal or state penitentiary; or
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(ii) for any reason, in its sole discretion, after written
notice to the Employee, which termination shall be effective at
the end of the term of this Agreement as in effect at the date of
such notice, so that the term of this Agreement will not be
shortened by such notice of termination, but no future extensions
of the term hereof shall occur after such notice.
2. Section 4(B) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(B) Termination Payment and Benefits. In the event of termination
of the Employee's employment under this Agreement by the Company
under Section 4(A)(i), the Employee shall only be entitled to
receive the monthly installment of his Base Salary being paid at
the time of such termination and, notwithstanding anything to the
contrary herein contained, the Employee shall receive all
compensation, expense reimbursements and other benefits to which
he is otherwise entitled hereunder through the date of the
Employee's termination for Cause and, in addition, shall receive
all other benefits to which he is otherwise entitled under any
benefit plans as then in effect or otherwise under this or any
other agreement. If this Agreement is terminated pursuant to
Section 4(A)(ii), the Company shall be obligated to pay to the
Employee a severance payment equal to the average of the
Employee's annual total compensation reportable by the Company on
Form W-2 (i.e., base salary, plus bonus amounts and all other
taxable compensation) over the five (5) fiscal years of the
Company (or such shorter period that the Employee has been
employed by the Company) immediately prior to such termination,
multiplied by three (3). Such severance payment shall be payable
in a lump sum payment within fifteen (15) days of the termination
of the Employee's employment. If this Agreement is terminated
pursuant to Section 4(A)(ii), until the Employee reaches age 85,
the Employee and his wife, and each of their children until they
reach the age of 21, shall also each be entitled to receive,
without premium, co-pay or deductible charges, full health and
medical, dental and vision care as provided by the Company to its
senior executive employees; provided, that the Employee and his
wife shall not be limited to their choice(s) of doctor or the
location(s) at which such care is provided. If, after this
Agreement is terminated pursuant to Section 4(A)(ii), the Employee
dies prior to reaching age 85, his wife shall continue to receive
such health care benefits on the same terms and conditions, until
the date when the Employee would have otherwise reached age 85 but
for his death, and each of their children shall continue to
receive such health care benefits on the same terms and conditions
until they reach age 21."
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3. Section 4(C) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(C) Termination by Employee; Automatic Termination Upon Change in
Control.
(i) Employee shall have the right at any time during his
employment, by giving written notice to the Secretary of the
Company, to terminate the Employee's employment under this
Agreement effective ninety (90) days after the date on which such
notice is given by the Employee. In the event the Employee shall
make such election under this Subsection 4(C)(i), the Employee
shall, in addition to all other reimbursements, payments, or other
allowances required to be paid under this Agreement or under any
other plan, agreement, or policy which survives the termination of
this Agreement, be entitled to be paid, the Base Salary payable
during such ninety (90) day period following the giving of such
notice. Thereupon, this agreement shall terminate and Employee
shall have no further rights under or be entitled to any other
benefits of this Agreement, provided that the provisions of
Section 5 shall survive such termination.
(ii) In the event of a Change in Control of the Company, as
defined in the Key Executive Employment and Severance Agreement,
dated as of August 15, 1995, between the Company and the Employee,
as amended (the 'KEESA'), this Agreement shall automatically be
terminated upon such Change in Control of the Company, except that
the provisions of this Subsection 4(C)(ii) and Section 5 hereof
shall survive such termination and, on the effective date of such
Change in Control of the Company (in addition to any other
payments or benefits to which the Employee is otherwise entitled
under this Agreement, the KEESA or otherwise), the Company shall
pay or issue to the Employee the maximum amount of all cash, stock
option and other bonuses and benefits that the Employee would
otherwise have been eligible to receive for the year in which such
Change in Control of the Company occurs, prorated for the portion
of such year then completed. Beginning immediately from and after
the effective date of the Change in Control of the Company and the
termination of the Employee's employment hereunder, the Employee
shall continue to serve the Company as an independent contractor
consultant from the date of the Change in Control of the Company
through the expiration of the then current term of this Agreement
that would otherwise have been in effect without taking into
account such Change in Control of the Company (the 'Consultancy
Period'). During the Consultancy Period, the Company shall pay the
Employee, in cash, on a monthly basis, consulting fees equal to
the Employee's Base Salary then in effect at the date of the
Change in Control of the Company. During the Consultancy Period,
the Employee shall not be required to devote, and payment of the
Employee's compensation and benefits under this Subsection
4(C)(ii) may not be conditioned on, delayed, withheld or
diminished by the Employee's failure to devote any
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specific amount of time, energy, effort, expertise or ability as a
consultant to the Company or to perform any services to the
Company at any particular time and/or location or to any specified
level or expectation of performance or results. The Employee may
perform his consulting services under this Subsection in such
manner, at such times and in such locations (including by
telephone, mail, facsimile, telecommunication or the like) as the
Employee determines in his discretion is appropriate or adequate
under the circumstances. During the Consultancy Period, either the
Employee or the Company may, upon notice to the other party as
provided herein, elect to immediately terminate the Consultancy
Period, whereupon the entire amount of the consulting fees that
would otherwise have been paid to the Employee through the end of
the Consultancy Period shall be accelerated and the Company shall
pay all such fees to the Employee in a single lump-sum cash
payment within ten (10) days of the date of such notice. If the
Employee dies or becomes permanently disabled (for purposes of
Section 4(E) below) during the Consultancy Period, then the
payment of the consulting fees that would otherwise have been paid
to the Employee through the end of the Consultancy Period shall be
accelerated and the Company shall pay all such fees to the
Employee or his fiduciary in a single lump-sum cash payment within
ten (10) days of such death or disability. For purposes of this
paragraph, the term 'Company' refers to the Company or to its
acquiror as appropriate."
4. Section 4(F) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(F) Effect of KEESA. This Agreement shall be subject in all
respects to the provisions of the KEESA. This Agreement (other
than Subsection 4(C)(ii) and Section 5 hereof) shall terminate
upon a Change in Control of the Company, as defined in the KEESA.
In such event, the Employee shall have no further rights or
obligations under this Agreement (other than pursuant to
Subsection 4(C)(ii) hereof)."
5. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
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IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
______________________________ By:______________________________
Executive Joseph P. Tate
Chairman of the Board
5
EXHIBIT 10.25
Employee's Name: George K. Farr
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT (this "Amendment"), dated as of August 18, 1998,
supplements and amends the Employment Agreement, dated January 1, 1996 (the
"Agreement"), by and between SUPERIOR SERVICES, INC., a Wisconsin corporation
(the "Company"), and the named executive set forth above (the "Employee"). All
defined terms used herein and not defined shall have the same meaning as in the
Agreement.
W I T N E S S E T H
WHEREAS, pursuant to Section 8 of the Agreement, the Employee and the
Company desire to supplement and amend the Agreement as specifically set forth
in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 4(A) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(A) Termination by the Company. The employment of the Employee
under this Agreement, while the Employee is on active status, may
be terminated at any time by the Company:
(i) if the Board of Directors of the Company (by a
two-thirds vote) shall determine that this Agreement shall be
terminated for 'Cause;' provided, however, that the Employee shall
not be deemed to have been terminated for Cause without (i)
reasonable written notice to the Employee, setting forth the
reasons for the Company's intention to terminate him for 'Cause;'
(ii) an opportunity for the Employee, together with his counsel,
to be heard before the Board; and (iii) delivery to the Employee
of a written notice of termination (which date of delivery of such
notice shall be the 'Early Termination Date') from the Board,
finding that, in the good faith reasonable opinion of the Board
(as evidenced by a two-thirds vote thereof), the Employee was
guilty of conduct constituting 'Cause' and specifying the
particulars thereof in detail; for purposes of this Agreement,
'Cause' shall mean the following and only the following: the
Employee's final and nonappealable conviction of, and sentencing
for, a felony offense for a crime involving an act by the Employee
of conduct on behalf of the Company that results in the Employee
being physically imprisoned in a federal or state penitentiary; or
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(ii) for any reason, in its sole discretion, after written
notice to the Employee, which termination shall be effective at
the end of the term of this Agreement as in effect at the date of
such notice, so that the term of this Agreement will not be
shortened by such notice of termination, but no future extensions
of the term hereof shall occur after such notice.
2. Section 4(B) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(B) Termination Payment and Benefits. In the event of termination
of the Employee's employment under this Agreement by the Company
under Section 4(A)(i), the Employee shall only be entitled to
receive the monthly installment of his Base Salary being paid at
the time of such termination and, notwithstanding anything to the
contrary herein contained, the Employee shall receive all
compensation, expense reimbursements and other benefits to which
he is otherwise entitled hereunder through the date of the
Employee's termination for Cause and, in addition, shall receive
all other benefits to which he is otherwise entitled under any
benefit plans as then in effect or otherwise under this or any
other agreement. If this Agreement is terminated pursuant to
Section 4(A)(ii), the Company shall be obligated to pay to the
Employee a severance payment equal to the average of the
Employee's annual total compensation reportable by the Company on
Form W-2 (i.e., base salary, plus bonus amounts and all other
taxable compensation) over the five (5) fiscal years of the
Company (or such shorter period that the Employee has been
employed by the Company) immediately prior to such termination,
multiplied by three (3). Such severance payment shall be payable
in a lump sum payment within fifteen (15) days of the termination
of the Employee's employment. If this Agreement is terminated
pursuant to Section 4(A)(ii), until the Employee reaches age 85,
the Employee and his wife, and each of their children until they
reach the age of 21, shall also each be entitled to receive,
without premium, co-pay or deductible charges, full health and
medical, dental and vision care as provided by the Company to its
senior executive employees; provided, that the Employee and his
wife shall not be limited to their choice(s) of doctor or the
location(s) at which such care is provided. If, after this
Agreement is terminated pursuant to Section 4(A)(ii), the Employee
dies prior to reaching age 85, his wife shall continue to receive
such health care benefits on the same terms and conditions, until
the date when the Employee would have otherwise reached age 85 but
for his death, and each of their children shall continue to
receive such health care benefits on the same terms and conditions
until they reach age 21."
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3. Section 4(C) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(C) Termination by Employee; Automatic Termination Upon Change in
Control.
(i) Employee shall have the right at any time during his
employment, by giving written notice to the Secretary of the
Company, to terminate the Employee's employment under this
Agreement effective ninety (90) days after the date on which such
notice is given by the Employee. In the event the Employee shall
make such election under this Subsection 4(C)(i), the Employee
shall, in addition to all other reimbursements, payments, or other
allowances required to be paid under this Agreement or under any
other plan, agreement, or policy which survives the termination of
this Agreement, be entitled to be paid, the Base Salary payable
during such ninety (90) day period following the giving of such
notice. Thereupon, this agreement shall terminate and Employee
shall have no further rights under or be entitled to any other
benefits of this Agreement, provided that the provisions of
Section 5 shall survive such termination.
(ii) In the event of a Change in Control of the Company, as
defined in the Key Executive Employment and Severance Agreement,
dated as of August 15, 1995, between the Company and the Employee,
as amended (the 'KEESA'), this Agreement shall automatically be
terminated upon such Change in Control of the Company, except that
the provisions of this Subsection 4(C)(ii) and Section 5 hereof
shall survive such termination and, on the effective date of such
Change in Control of the Company (in addition to any other
payments or benefits to which the Employee is otherwise entitled
under this Agreement, the KEESA or otherwise), the Company shall
pay or issue to the Employee the maximum amount of all cash, stock
option and other bonuses and benefits that the Employee would
otherwise have been eligible to receive for the year in which such
Change in Control of the Company occurs, prorated for the portion
of such year then completed. Beginning immediately from and after
the effective date of the Change in Control of the Company and the
termination of the Employee's employment hereunder, the Employee
shall continue to serve the Company as an independent contractor
consultant from the date of the Change in Control of the Company
through the expiration of the then current term of this Agreement
that would otherwise have been in effect without taking into
account such Change in Control of the Company (the 'Consultancy
Period'). During the Consultancy Period, the Company shall pay the
Employee, in cash, on a monthly basis, consulting fees equal to
the Employee's Base Salary then in effect at the date of the
Change in Control of the Company. During the Consultancy Period,
the Employee shall not be required to devote, and payment of the
Employee's compensation and benefits under this Subsection
4(C)(ii) may not be conditioned on, delayed, withheld or
diminished by the Employee's failure to devote any
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specific amount of time, energy, effort, expertise or ability as a
consultant to the Company or to perform any services to the
Company at any particular time and/or location or to any specified
level or expectation of performance or results. The Employee may
perform his consulting services under this Subsection in such
manner, at such times and in such locations (including by
telephone, mail, facsimile, telecommunication or the like) as the
Employee determines in his discretion is appropriate or adequate
under the circumstances. During the Consultancy Period, either the
Employee or the Company may, upon notice to the other party as
provided herein, elect to immediately terminate the Consultancy
Period, whereupon the entire amount of the consulting fees that
would otherwise have been paid to the Employee through the end of
the Consultancy Period shall be accelerated and the Company shall
pay all such fees to the Employee in a single lump-sum cash
payment within ten (10) days of the date of such notice. If the
Employee dies or becomes permanently disabled (for purposes of
Section 4(E) below) during the Consultancy Period, then the
payment of the consulting fees that would otherwise have been paid
to the Employee through the end of the Consultancy Period shall be
accelerated and the Company shall pay all such fees to the
Employee or his fiduciary in a single lump-sum cash payment within
ten (10) days of such death or disability. For purposes of this
paragraph, the term 'Company' refers to the Company or to its
acquiror as appropriate."
4. Section 4(F) of the Agreement is hereby amended and restated to read
in its entirety as follows:
"(F) Effect of KEESA. This Agreement shall be subject in all
respects to the provisions of the KEESA. This Agreement (other
than Subsection 4(C)(ii) and Section 5 hereof) shall terminate
upon a Change in Control of the Company, as defined in the KEESA.
In such event, the Employee shall have no further rights or
obligations under this Agreement (other than pursuant to
Subsection 4(C)(ii) hereof)."
5. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes immediately as of
the date first written above.
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IN WITNESS WHEREOF, the Executive and the Company have set their hands
hereto as of the date above.
SUPERIOR SERVICES, INC.
______________________________ By:______________________________
Executive G. W. "Bill" Dietrich
President and Chief Executive Officer
5
EXHIBIT 10.29
Employee's name: Gary Blacktopp
Date: August 18, 1998
Second Amendment
To
Employment Agreement
This Amendment ("Amendment"), dated as of the date set forth above, supplements
and amends the Employment Agreement, dated January 1, 1997 ("Agreement"), by and
among Superior Services, Inc., a Wisconsin corporation ("Company"), and the
named executive set forth above ("Employee"). All defined terms used herein and
not defined shall have the same meaning as in the Agreement.
Whereas, pursuant to Section 8 of the Agreement, the Executive and the Company
desire to supplement and amend the Agreement as specifically set forth in this
amendment.
Now, Therefore, in consideration of the foregoing and of the mutual covenants
and agreements herein set forth, and for other valuable consideration, the
parties hereto covenant and agree as follows:
1. Section 2 of the Agreement is hereby amended and restated to read in
its entirely as follows:
2. TERM Subject only to the provisions of Section 4 of this
Agreement, the term of the Employee's employment under this Agreement shall be
for a term of two (2) years. The term of this Agreement shall be automatically
extended for one additional year on each anniversary date of this Agreement
unless, at least one (1) year prior to such anniversary date, either Employee or
the Company shall have given written notice to the other that it does not wish
to extend the Term. References herein to the Term shall refer to both the
initial Term and any such extended Term.
2. Section 4 of the Agreement is hereby amended and restated to read in
its entirety as follow:
4. TERMINATION
4.1 Termination by the Company Defined
(a) Termination Without Cause. Subject to the provisions set
forth in Paragraph 4.3 below, "Termination Without Cause" shall constitute any
termination by the Company other than termination for "Cause" (as defined in
Paragraph 4.1(b) below).
(b) Termination for Cause. Subject to the provisions set forth in
Paragraph 4.3 below, during the Term, the Company shall have the right to
terminate this Agreement for "Cause." For purposes of this Agreement, "Cause"
shall mean (i) the willful and continued failure of Employee substantially to
perform his or her duties (other than as a result of physical or mental illness)
or (ii) upon a determination that the Employee (A) has engaged in willful fraud
or defalcation involving funds or other assets of the Company, or (B) has been
convicted of, or has pleaded nolo contendere to, a felony or any other crime
involving moral turpitude.
(c) Termination by Reason of Death or Disability. Subject to the
provisions set forth in Paragraph 4.3 below, during the Term, this Agreement
shall terminate by reason of Employee's death or Permanent Disability. For
purposes of this Agreement, "Permanent Disability" shall have the same
definition as contained in the group long-term disability insurance policy
maintained by the Company.
4.2 Termination by Employee Defined
(a) Termination Other Than For Good Reason following a Change in
Control. Subject to the provisions set forth in Paragraph 4.3 below, Employee
shall have the right to terminate this Agreement for any reason other than for
Good Reason (as defined in
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Paragraph 4.2 (b) below), upon written notice delivered to the Company 30 days
prior to the effective date of termination specified in such notice (which date
shall be the applicable Early Termination Date).
(b) Good Reason Following a Change in Control. Following a Change
in Control, "Good Reason" shall mean, without Employee's express written
consent, a material breach of this Agreement by the Company, including the
occurrence of any of the following circumstances, which breach is not fully
corrected within 30 days after written notice thereof specifying the nature of
such breach has been delivered to the Company:
(i) the assignment to Employee of any duties inconsistent
with the position in the Company that Employee held immediately prior
to the Change in Control, or an adverse alteration in the nature or
status of Employee's responsibilities from those in effect
immediately prior to such change;
(ii) a substantial change in the nature of the business
operations of the Company;
(iii) a reduction by the Company in employee's Base Salary
as in effect on the date hereof or as the same may be increased from
time to time;
(iv) the relocation of the Company's principal executive
offices to a location more than 25 miles from the Company's
headquarters location immediately prior to the Change in Control, or
the Company's requiring Employee to be based anywhere other than the
Company's principal executive offices, except for required travel on
the Company's business to an extent substantially consistent with
Employee's business travel obligations immediately prior to the
Change in Control;
(v) the failure by the Company to pay Employee any portion
of his current compensation;
(vi) the failure by the Company to continue in effect any
compensation plan in which Employee participates immediately prior to
the Change in Control which is material to Employee's total
compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Employee's
participation therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of participation relative to other
participants, as existed at the time of the Change in Control;
(vii) the failure by the Company to continue to provide
Employee with benefits substantially similar to those under any of
the Company's medical, health and accident, or disability plans in
which Employee was participating at the time of the Change in
Control, the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits or deprive
Employee of any material fringe benefit enjoyed by him or her at the
time of the Change in Control, or the failure by the Company to
provide Employee with the number of paid vacation days to which he or
she is entitled on the basis of years of service with the Company in
accordance with Company's normal vacation policy in effect at the
time of the Change in Control or pursuant to Employee's existing
employment agreement, if any; or
(viii)the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement.
Notwithstanding the above, during the one-year period immediately
following the occurrence of a Change in Control, "Good Reason" shall mean
termination of employment by the Employee for any reason other than death or
Permanent Disability.
Employee's right to terminate Employee's employment for Good Reason shall
not be affected by Employee's incapacity due to physical or mental illness.
Employee's continued employment shall not
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constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
4.3 Effect of Termination. In the event that this Agreement is
terminated by the Company or Employee during the Term in accordance with the
provisions of this Paragraph 4, the obligations and covenant of the parties
under this Paragraph 4 shall be of no further force and effect, except for (i)
the obligations of the parties set forth below in this Paragraph 4.3, and (ii)
the provisions of Paragraph 5 below. Except as otherwise specifically set forth,
all amounts due upon termination shall be payable on the date such amounts would
otherwise have been paid had this Agreement continued through the Term.
In the event of any such early termination in accordance with the
provisions of this Paragraph 4.3, employee shall be entitled to the following:
(a) Termination by the Company
(i) Termination Without Cause. In the event that
the Company terminates this Agreement without Cause pursuant to
paragraph 4.1(a) above, Employee shall be entitled to (i) Earned
Base Salary (as defined below) through the Early Termination
Date; (ii) earned benefits and reimbursable expenses through the
Early Termination Date; (iii) any earned bonus which Employee has
been awarded pursuant to the terms of this Agreement or any other
plan or arrangement as of the Early Termination Date, but which
has not been received by Employee as of such date; and (iv) the
Severance Payment (as defined in Paragraph 4.4 below).
(ii) Termination For Cause. In the event that the
Company terminates this Agreement for Cause pursuant to paragraph
4.1(b) above, Employee shall be entitled to (i) Earned Base
Salary through the Early Termination Date; (ii) any earned bonus
which Employee has been awarded pursuant to the terms of this
Agreement or any other plan or arrangement as of the Early
Termination Date, but which has not been received by Employee as
of such date; and (iii) earned benefits and reimbursable expenses
through the Early Termination Date. Employee shall not be
entitled to any future annual bonus or Severance Payment.
(iii) Termination Due to Death or Permanent
Disability. In the event that the Company terminates the
Agreement by reason of employee's death or Permanent Disability
pursuant to Paragraph 4.1(c) above, Employee shall be entitled to
(i) Earned Base Salary through the Early Termination Date; (ii)
earned benefits and reimbursable expenses through the Early
Termination Date; and (iii) any earned bonus which Employee has
been awarded pursuant to the terms of this Agreement or any other
plan or arrangement as of the Early Termination Date, but which
has not been received by Employee as of such date.
(b) Termination by Employee
(i) Termination Other Than For Good Reason. In the
event that Employee terminates this Agreement other than for Good
Reason, employee shall be entitled to (i) Earned Base Salary
through the Early Termination Date; (ii) any earned bonus which
Employee has been awarded pursuant to the terms of this Agreement
or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Employee as of such
date; and (iii) earned benefits and reimbursable expenses through
the Early Termination Date. Employee shall not be entitled to any
future annual bonus or Severance payment.
(ii) Termination For Good Reason. In the event
that Employee terminates the Agreement for Good Reason, employee
shall be entitled to (i) Earned Base Salary through the Early
Termination Date; (ii) earned benefits and reimbursable expenses
through the Early Termination Date; (iii) any earned bonus which
Employee has been awarded pursuant to the terms of this Agreement
or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Employee as of such
date; and (iv) the Severance Payment.
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The term "Earned Base Salary" shall mean all semimonthly
installments of the Base Salary which have become due and payable to
Employee, together with any partial monthly installment prorated on a
daily basis up to and including the applicable Early Termination Date.
4.4 Severance Payment
(a) Definition of Severance Payment. For purposes of this
Agreement, the term "Severance Payment" shall mean an amount equal to the sum of
the Base Salary otherwise payable to Employee during the remainder of the Term
had such early termination of the Agreement not occurred ("Severance Period");
provided, however, that in the event that, following a Change in Control, the
Company terminates this Agreement without Cause pursuant to Paragraph 4.1(a)
above or Employee terminates this Agreement for Good Reason pursuant to
Paragraph 4.2(b) above, the term "Severance Payment" shall mean an amount equal
to three (3) times Employee's Base Salary then in effect.
(b) Payment of Severance Payment. In the event that Employee is
entitled to any Severance Payment pursuant to Paragraph 4.3 above, that portion
of such Severance Payment that represents Base Salary shall be payable in
monthly installments, and that portion of such Severance Payment that represents
the earned bonus, if any, shall be Payable on the dates such amounts would have
been paid had Employee continued in the Company's employment for the Severance
Period; provided, however, that in the event of a Termination Following a Change
in Control (as defined in Paragraph 4.4(e) below, the Severance Payment shall be
payable in a lump sum within ten days following such termination.
(c) Full Settlement of All Obligations. Employee hereby
acknowledges and agrees that any Severance Payment paid to Employee hereunder
shall be deemed to be in full and complete settlement of all obligations of the
Company under this Agreement.
(d) Change in Control. For purposes of this Agreement,
"Termination Following a Change in Control" shall mean a termination of
Employee's employment with the Company following a "Change in Control" by
Employee for Good Reason or by the Company other than for Cause. A "Change in
Control" shall be deemed to have occurred if, at any time after the date hereof
during the Term:
(i) Any Person, as such term is used in section
3(a)(9) of the Securities Exchange Act of 1934 as amended from
time to time (the "Exchange Act"), as modified and used in
sections 13(d) and 14(d) thereof (other than (A) the Company or
any of its subsidiaries, (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its affiliates, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, (D) a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, or (E) a person or group as
used in Rule 13d-1(b) under the Exchange Act, that is or becomes
the Beneficial Owner, as such term is defined in Rule 13d-3 under
the Exchange Act, directly or indirectly, of securities of the
Company and is entitled to file on Schedule 13G or any successor
form with respect to such securities becomes the Beneficial Owner
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates
of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(ii) The following individuals cease for any
reason to constitute a majority of the number of directors then
serving: individuals who, as of immediately after August 18,
1998, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the
Board or nomination for election by the Company's stockholders
was approved or recommended by a vote of at least two-thirds of
the directors then still in office who either were directors as
of immediately after August 18, 1998 or whose appointment,
election or nomination for election was previously so approved or
recommended; or
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(iii) There is consummated a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least 51% of the combined
voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates
of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(iv) The stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least
51% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company
immediately prior to such sale."
3. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes as of the date
first written above.
In Witness Whereof, the Employee and the Company have set their hands
hereto as of the date above.
Superior Services, Inc.
Employee:
By:________________________________
__________________________________ G.W. "Bill" Dietrich
Gary Blacktopp President and Chief
Executive Officer
<PAGE>
Employee's name: Gary Blacktopp
Date: November 24, 1998
Amendment No. 3
To
Employment Agreement
This Amendment ("Amendment"), dated as of the date set forth above,
supplements and amends the Employment Agreement, dated January 1, 1997 as
amended ("Agreement"), by and among Superior Services, Inc., a Wisconsin
corporation ("Company"), and the named key management employee set forth above
("Employee"). All defined terms used herein and not defined shall have the same
meaning as in the Agreement.
Whereas, pursuant to Section 8 of the Agreement, the Employee and the
Company desire to supplement and amend the Agreement as specifically set forth
in this amendment.
Now, Therefore, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the parties hereto covenant and agree as follows:
1. Section 4.4 (a) of the Agreement is amended and restated to read as
follows:
"(a) Definition of Severance Payment... provided, however, that in
the event that, following a Change in Control, the Company terminates this
Agreement without Cause pursuant to Paragraph 4.1(a) above or Employee
terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b) above,
the term "Severance Payment" shall mean an amount equal to three (3) times
Employee's Base Salary and annualized auto allowance then in effect." (amended
language is italicized for reference)
2. Section 4 of the Agreement is amended to add the following subsection
(e):
"(e)Acceleration of Stock Options. Immediately upon a Change in
Control of the Company, all awards granted to the Employee and then outstanding
under the Company's stock option and incentive compensation plans ("Options")
that are not then exercisable by their terms automatically will become
immediately exercisable and fully vested for the remainder of their stated
terms. In addition, for a period of thirty (30) days following such Change in
Control of the Company, the Employee shall have the right to terminate the
Options and to receive a lump-sum payment, in cash, equal to the product of (a)
the excess of (x) the per-unit fair market value of the securities underlying
the Options, over (y) the per-unit exercise price of such Options, and (b) the
number of units of such securities covered by the Options. For purposes of the
preceding sentence, the "fair market value" of securities shall be based on the
highest of (i) the per-unit closing sale price of the securities underlying the
Options, as reported on a national securities exchange or by the Nasdaq Stock
Market, on the execution date of the agreement pursuant to which the Change in
Control of the Company is effected, (ii) the per-unit closing sale price of the
securities underlying the Options, as reported on a national securities exchange
or by the Nasdaq Stock Market, on the effective date of the transaction
constituting a Change in Control of the Company, and (iii) the highest per-unit
price for such securities actually paid in connection with such Change in
Control of the Company. Notwithstanding the foregoing, if the exercise of any
right granted pursuant to this Section 4(e) would make a transaction
constituting a Change in Control of the Company ineligible for pooling of
interests accounting under APB No. 16 which, but for this Section 4(e), would
otherwise be eligible for such accounting treatment, the Board of Directors of
the Company shall have the ability to substitute
<PAGE>
for the cash payable pursuant to this Section 4(e) securities of the Company (or
of the other entity surviving the transaction constituting the Change in Control
of the Company, or its parent corporation, if applicable) having a fair market
value equal to the cash that would otherwise be payable hereunder. For purposes
of the preceding sentence, the "fair market value" of securities shall be based
on the lower of (i) the average closing bid price of such securities for the ten
(10) trading days prior to the execution date of the agreement pursuant to which
the Change in Control of the Company is effected, and (ii) the average of the
closing bid price of such securities for the ten (10) trading days prior to the
effective date of the transaction constituting a Change in Control of the
Company, in each case as such closing bid prices are reported on a national
securities exchange or by the Nasdaq Stock Market".
3. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes as of the date
first written above.
In Witness Whereof, the Employee and the Company have set their hands
hereto as of the date above.
Superior Services, Inc.
Employee:
By:________________________________
_______________________________ G.W. "Bill" Dietrich
Gary Blacktopp President and Chief Executive Officer
EXHIBIT 10.30
Employee's name: Scott Cramer
Date: August 18, 1998
Amendment
To
Employment Agreement
This Amendment ("Amendment"), dated as of the date set forth above, supplements
and amends the Employment Agreement, dated July 1, 1997 ("Agreement"), by and
among Superior Services, Inc., a Wisconsin corporation ("Company"), and the
named executive set forth above ("Employee"). All defined terms used herein and
not defined shall have the same meaning as in the Agreement.
Whereas, pursuant to Section 8 of the Agreement, the Executive and the Company
desire to supplement and amend the Agreement as specifically set forth in this
amendment.
Now, Therefore, in consideration of the foregoing and of the mutual covenants
and agreements herein set forth, and for other valuable consideration, the
parties hereto covenant and agree as follows:
1. Section 2 of the Agreement is hereby amended and restated to read in
its entirely as follows:
2. TERM Subject only to the provisions of Section 4 of this
Agreement, the term of the Employee's employment under this Agreement shall be
for a term of two (2) years. The term of this Agreement shall be automatically
extended for one additional year on each anniversary date of this Agreement
unless, at least one (1) year prior to such anniversary date, either Employee or
the Company shall have given written notice to the other that it does not wish
to extend the Term. References herein to the Term shall refer to both the
initial Term and any such extended Term.
2. Section 4 of the Agreement is hereby amended and restated to read in
its entirety as follow:
4. TERMINATION
4.1 Termination by the Company Defined
(a) Termination Without Cause. Subject to the provisions set
forth in Paragraph 4.3 below, "Termination Without Cause" shall constitute any
termination by the Company other than termination for "Cause" (as defined in
Paragraph 4.1(b) below).
(b) Termination for Cause. Subject to the provisions set
forth in Paragraph 4.3 below, during the Term, the Company shall have the right
to terminate this Agreement for "Cause." For purposes of this Agreement, "Cause"
shall mean (i) the willful and continued failure of Employee substantially to
perform his or her duties (other than as a result of physical or mental illness)
or (ii) upon a determination that the Employee (A) has engaged in willful fraud
or defalcation involving funds or other assets of the Company, or (B) has been
convicted of, or has pleaded nolo contendere to, a felony or any other crime
involving moral turpitude.
(c) Termination by Reason of Death or Disability. Subject to
the provisions set forth in Paragraph 4.3 below, during the Term, this Agreement
shall terminate by reason of Employee's death or Permanent Disability. For
purposes of this Agreement, "Permanent Disability" shall have the same
definition as contained in the group long-term disability insurance policy
maintained by the Company.
4.2 Termination by Employee Defined
(a) Termination Other Than For Good Reason following a Change
in Control. Subject to the provisions set forth in Paragraph 4.3 below, Employee
shall have the
1
<PAGE>
right to terminate this Agreement for any reason other than for Good Reason (as
defined in Paragraph 4.2 (b) below), upon written notice delivered to the
Company 30 days prior to the effective date of termination specified in such
notice (which date shall be the applicable Early Termination Date).
(b) Good Reason Following a Change in Control. Following a
Change in Control, "Good Reason" shall mean, without Employee's express written
consent, a material breach of this Agreement by the Company, including the
occurrence of any of the following circumstances, which breach is not fully
corrected within 30 days after written notice thereof specifying the nature of
such breach has been delivered to the Company:
(i) the assignment to Employee of any duties
inconsistent with the position in the Company that Employee held
immediately prior to the Change in Control, or an adverse
alteration in the nature or status of Employee's responsibilities
from those in effect immediately prior to such change;
(ii) a substantial change in the nature of the
business operations of the Company;
(iii) a reduction by the Company in employee's
Base Salary as in effect on the date hereof or as the same may be
increased from time to time;
(iv) the relocation of the Company's principal
executive offices to a location more than 25 miles from the
Company's headquarters location immediately prior to the Change
in Control, or the Company's requiring Employee to be based
anywhere other than the Company's principal executive offices,
except for required travel on the Company's business to an extent
substantially consistent with Employee's business travel
obligations immediately prior to the Change in Control;
(v) the failure by the Company to pay Employee any
portion of his current compensation;
(vi) the failure by the Company to continue in
effect any compensation plan in which Employee participates
immediately prior to the Change in Control which is material to
Employee's total compensation, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to
continue the Employee's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and
the level of participation relative to other participants, as
existed at the time of the Change in Control;
(vii) the failure by the Company to continue to
provide Employee with benefits substantially similar to those
under any of the Company's medical, health and accident, or
disability plans in which Employee was participating at the time
of the Change in Control, the taking of any action by the Company
which would directly or indirectly materially reduce any of such
benefits or deprive Employee of any material fringe benefit
enjoyed by him or her at the time of the Change in Control, or
the failure by the Company to provide Employee with the number of
paid vacation days to which he or she is entitled on the basis of
years of service with the Company in accordance with Company's
normal vacation policy in effect at the time of the Change in
Control or pursuant to Employee's existing employment agreement,
if any; or
(viii) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement.
Notwithstanding the above, during the one-year period immediately
following the occurrence of a Change in Control, "Good Reason" shall mean
termination of employment by the Employee for any reason other than death or
Permanent Disability.
Employee's right to terminate Employee's employment for Good Reason shall
not be affected by Employee's incapacity due to physical or mental illness.
Employee's continued employment shall not
2
<PAGE>
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
4.3 Effect of Termination. In the event that this Agreement is
terminated by the Company or Employee during the Term in accordance with the
provisions of this Paragraph 4, the obligations and covenant of the parties
under this Paragraph 4 shall be of no further force and effect, except for (i)
the obligations of the parties set forth below in this Paragraph 4.3, and (ii)
the provisions of Paragraph 5 below. Except as otherwise specifically set forth,
all amounts due upon termination shall be payable on the date such amounts would
otherwise have been paid had this Agreement continued through the Term.
In the event of any such early termination in accordance with the
provisions of this Paragraph 4.3, employee shall be entitled to the following:
(a) Termination by the Company
(i) Termination Without Cause. In the event that
the Company terminates this Agreement without Cause pursuant to
paragraph 4.1(a) above, Employee shall be entitled to (i) Earned
Base Salary (as defined below) through the Early Termination
Date; (ii) earned benefits and reimbursable expenses through the
Early Termination Date; (iii) any earned bonus which Employee has
been awarded pursuant to the terms of this Agreement or any other
plan or arrangement as of the Early Termination Date, but which
has not been received by Employee as of such date; and (iv) the
Severance Payment (as defined in Paragraph 4.4 below).
(ii) Termination For Cause. In the event that the
Company terminates this Agreement for Cause pursuant to paragraph
4.1(b) above, Employee shall be entitled to (i) Earned Base
Salary through the Early Termination Date; (ii) any earned bonus
which Employee has been awarded pursuant to the terms of this
Agreement or any other plan or arrangement as of the Early
Termination Date, but which has not been received by Employee as
of such date; and (iii) earned benefits and reimbursable expenses
through the Early Termination Date. Employee shall not be
entitled to any future annual bonus or Severance Payment.
(iii) Termination Due to Death or Permanent
Disability. In the event that the Company terminates the
Agreement by reason of employee's death or Permanent Disability
pursuant to Paragraph 4.1(c) above, Employee shall be entitled to
(i) Earned Base Salary through the Early Termination Date; (ii)
earned benefits and reimbursable expenses through the Early
Termination Date; and (iii) any earned bonus which Employee has
been awarded pursuant to the terms of this Agreement or any other
plan or arrangement as of the Early Termination Date, but which
has not been received by Employee as of such date.
(b) Termination by Employee
(i) Termination Other Than For Good Reason. In the
event that Employee terminates this Agreement other than for Good
Reason, employee shall be entitled to (i) Earned Base Salary
through the Early Termination Date; (ii) any earned bonus which
Employee has been awarded pursuant to the terms of this Agreement
or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Employee as of such
date; and (iii) earned benefits and reimbursable expenses through
the Early Termination Date. Employee shall not be entitled to any
future annual bonus or Severance payment.
(ii) Termination For Good Reason. In the event
that Employee terminates the Agreement for Good Reason employee
shall be entitled to (i) Earned Base Salary through the Early
Termination Date; (ii) earned benefits and reimbursable expenses
through the Early Termination Date; (iii) any earned bonus which
Employee has been awarded pursuant to the terms of this Agreement
or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Employee as of such
date; and (iv) the Severance Payment.
3
<PAGE>
The term "Earned Base Salary" shall mean all semimonthly installments of
the Base Salary which have become due and payable to Employee, together with any
partial monthly installment prorated on a daily basis up to and including the
applicable Early Termination Date.
4.4 Severance Payment
(a) Definition of Severance Payment. For purposes of this
Agreement, the term "Severance Payment" shall mean an amount equal to the sum of
the Base Salary otherwise payable to Employee during the remainder of the Term
had such early termination of the Agreement not occurred ("Severance Period");
provided, however, that in the event that, following a Change in Control, the
Company terminates this Agreement without Cause pursuant to Paragraph 4.1(a)
above or Employee terminates this Agreement for Good Reason pursuant to
Paragraph 4.2(b) above, the term "Severance Payment" shall mean an amount equal
to two (2) times Employee's Base Salary then in effect.
(b) Payment of Severance Payment. In the event that Employee
is entitled to any Severance Payment pursuant to Paragraph 4.3 above, that
portion of such Severance Payment that represents Base Salary shall be payable
in monthly installments, and that portion of such Severance Payment that
represents the earned bonus, if any, shall be Payable on the dates such amounts
would have been paid had Employee continued in the Company's employment for the
Severance Period; provided, however, that in the event of a Termination
Following a Change in Control (as defined in Paragraph 4.4(e) below, the
Severance Payment shall be payable in a lump sum within ten days following such
termination.
(c) Full Settlement of All Obligations. Employee hereby
acknowledges and agrees that any Severance Payment paid to Employee hereunder
shall be deemed to be in full and complete settlement of all obligations of the
Company under this Agreement.
(d) Change in Control. For purposes of this Agreement,
"Termination Following a Change in Control" shall mean a termination of
Employee's employment with the Company following a "Change in Control" by
Employee for Good Reason or by the Company other than for Cause. A "Change in
Control" shall be deemed to have occurred if, at any time after the date hereof
during the Term:
(i) Any Person, as such term is used in section
3(a)(9) of the Securities Exchange Act of 1934 as amended from
time to time (the "Exchange Act"), as modified and used in
sections 13(d) and 14(d) thereof (other than (A) the Company or
any of its subsidiaries, (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its affiliates, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, (D) a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, or (E) a person or group as
used in Rule 13d-1(b) under the Exchange Act, that is or becomes
the Beneficial Owner, as such term is defined in Rule 13d-3 under
the Exchange Act, directly or indirectly, of securities of the
Company and is entitled to file on Schedule 13G or any successor
form with respect to such securities becomes the Beneficial Owner
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates
of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(ii) The following individuals cease for any
reason to constitute a majority of the number of directors then
serving: individuals who, as of immediately after August 18,
1998, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the
Board or nomination for election by the Company's stockholders
was approved or recommended by a vote of at least two-thirds of
the directors then still in office who either were directors as
of immediately after August 18, 1998 or whose appointment,
election or nomination for election was previously so approved or
recommended; or
4
<PAGE>
(iii) There is consummated a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least 51% of the combined
voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates
of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(iv) The stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least
51% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company
immediately prior to such sale."
3. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes as of the date
first written above.
In Witness Whereof, the Employee and the Company have set their hands
hereto as of the date above.
Superior Services, Inc.
Employee:
By:________________________________
__________________________________ G.W. "Bill" Dietrich
Scott Cramer President and Chief Executive Officer
5
<PAGE>
Employee's name: Scott Cramer
Date: November 24, 1998
Amendment No. 2
To
Employment Agreement
This Amendment ("Amendment"), dated as of the date set forth above, supplements
and amends the Employment Agreement, dated July 1, 1997 as amended
("Agreement"), by and among Superior Services, Inc., a Wisconsin corporation
("Company"), and the named key management employee set forth above ("Employee").
All defined terms used herein and not defined shall have the same meaning as in
the Agreement.
Whereas, pursuant to Section 8 of the Agreement, the Employee and the Company
desire to supplement and amend the Agreement as specifically set forth in this
amendment.
Now, Therefore, in consideration of the foregoing and of the mutual covenants
and agreements herein set forth, and for other valuable consideration, the
parties hereto covenant and agree as follows:
1. Section 4.4 (a) of the Agreement is amended and restated to read as
follows:
"(a) Definition of Severance Payment... provided, however,
that in the event that, following a Change in Control, the Company terminates
this Agreement without Cause pursuant to Paragraph 4.1(a) above or Employee
terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b) above,
the term "Severance Payment" shall mean an amount equal to two (2) times
Employee's Base Salary and annualized auto allowance then in effect." (amended
language is italicized for reference)
2. Section 4 of the Agreement is amended to add the following subsection
(e):
"(e) Acceleration of Stock Options. Immediately upon a Change
in Control of the Company, all awards granted to the Employee and then
outstanding under the Company's stock option and incentive compensation plans
("Options") that are not then exercisable by their terms automatically will
become immediately exercisable and fully vested for the remainder of their
stated terms. In addition, for a period of thirty (30) days following such
Change in Control of the Company, the Employee shall have the right to terminate
the Options and to receive a lump-sum payment, in cash, equal to the product of
(a) the excess of (x) the per-unit fair market value of the securities
underlying the Options, over (y) the per-unit exercise price of such Options,
and (b) the number of units of such securities covered by the Options. For
purposes of the preceding sentence, the "fair market value" of securities shall
be based on the highest of (i) the per-unit closing sale price of the securities
underlying the Options, as reported on a national securities exchange or by the
Nasdaq Stock Market, on the execution date of the agreement pursuant to which
the Change in Control of the Company is effected, (ii) the per-unit closing sale
price of the securities underlying the Options, as reported on a national
securities exchange or by the Nasdaq Stock Market, on the effective date of the
transaction constituting a Change in Control of the Company, and (iii) the
highest per-unit price for such securities actually paid in connection with such
Change in Control of the Company. Notwithstanding the foregoing, if the exercise
of any right granted pursuant to this Section 4(e) would make a transaction
constituting a Change in Control of the Company ineligible for pooling of
interests accounting under APB No. 16 which, but for this Section 4(e), would
otherwise be eligible for such accounting treatment, the Board of Directors of
the Company shall have the ability to substitute
1
<PAGE>
for the cash payable pursuant to this Section 4(e) securities of the Company (or
of the other entity surviving the transaction constituting the Change in Control
of the Company, or its parent corporation, if applicable) having a fair market
value equal to the cash that would otherwise be payable hereunder. For purposes
of the preceding sentence, the "fair market value" of securities shall be based
on the lower of (i) the average closing bid price of such securities for the ten
(10) trading days prior to the execution date of the agreement pursuant to which
the Change in Control of the Company is effected, and (ii) the average of the
closing bid price of such securities for the ten (10) trading days prior to the
effective date of the transaction constituting a Change in Control of the
Company, in each case as such closing bid prices are reported on a national
securities exchange or by the Nasdaq Stock Market".
3. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes as of the date
first written above.
In Witness Whereof, the Employee and the Company have set their hands
hereto as of the date above.
Superior Services, Inc.
Employee:
By:________________________________
_______________________________ G.W. "Bill" Dietrich
Scott Cramer President and Chief Executive Officer
EXHIBIT 10.31
Employee's name: John King
Date: August 18, 1998
Amendment
To
Employment Agreement
This Amendment ("Amendment"), dated as of the date set forth above, supplements
and amends the Employment Agreement, dated January 1, 1997 ("Agreement"), by and
among Superior Services, Inc., a Wisconsin corporation ("Company"), and the
named executive set forth above ("Employee"). All defined terms used herein and
not defined shall have the same meaning as in the Agreement.
Whereas, pursuant to Section 8 of the Agreement, the Executive and the Company
desire to supplement and amend the Agreement as specifically set forth in this
amendment.
Now, Therefore, in consideration of the foregoing and of the mutual covenants
and agreements herein set forth, and for other valuable consideration, the
parties hereto covenant and agree as follows:
1. Section 2 of the Agreement is hereby amended and restated to read in
its entirely as follows:
2. TERM Subject only to the provisions of Section 4 of this
Agreement, the term of the Employee's employment under this Agreement shall be
for a term of two (2) years. The term of this Agreement shall be automatically
extended for one additional year on each anniversary date of this Agreement
unless, at least one (1) year prior to such anniversary date, either Employee or
the Company shall have given written notice to the other that it does not wish
to extend the Term. References herein to the Term shall refer to both the
initial Term and any such extended Term.
2. Section 4 of the Agreement is hereby amended and restated to read in
its entirety as follow:
4. TERMINATION
4.1 Termination by the Company Defined
(a) Termination Without Cause. Subject to the provisions set
forth in Paragraph 4.3 below, "Termination Without Cause" shall constitute any
termination by the Company other than termination for "Cause" (as defined in
Paragraph 4.1(b) below).
(b) Termination for Cause. Subject to the provisions set
forth in Paragraph 4.3 below, during the Term, the Company shall have the right
to terminate this Agreement for "Cause." For purposes of this Agreement, "Cause"
shall mean (i) the willful and continued failure of Employee substantially to
perform his or her duties (other than as a result of physical or mental illness)
or (ii) upon a determination that the Employee (A) has engaged in willful fraud
or defalcation involving funds or other assets of the Company, or (B) has been
convicted of, or has pleaded nolo contendere to, a felony or any other crime
involving moral turpitude.
(c) Termination by Reason of Death or Disability. Subject to
the provisions set forth in Paragraph 4.3 below, during the Term, this Agreement
shall terminate by reason of Employee's death or Permanent Disability. For
purposes of this Agreement, "Permanent Disability" shall have the same
definition as contained in the group long-term disability insurance policy
maintained by the Company.
4.2 Termination by Employee Defined
(a) Termination Other Than For Good Reason following a Change
in Control. Subject to the provisions set forth in Paragraph 4.3 below, Employee
shall have the right to terminate this Agreement for any reason other than for
Good Reason (as defined in
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<PAGE>
Paragraph 4.2 (b) below), upon written notice delivered to the Company 30 days
prior to the effective date of termination specified in such notice (which date
shall be the applicable Early Termination Date).
(b) Good Reason Following a Change in Control. Following a
Change in Control, "Good Reason" shall mean, without Employee's express written
consent, a material breach of this Agreement by the Company, including the
occurrence of any of the following circumstances, which breach is not fully
corrected within 30 days after written notice thereof specifying the nature of
such breach has been delivered to the Company:
(i) the assignment to Employee of any duties
inconsistent with the position in the Company that Employee held
immediately prior to the Change in Control, or an adverse
alteration in the nature or status of Employee's responsibilities
from those in effect immediately prior to such change;
(ii) a substantial change in the nature of the
business operations of the Company;
(iii) a reduction by the Company in employee's
Base Salary as in effect on the date hereof or as the same may be
increased from time to time;
(iv) the relocation of the Company's principal
executive offices to a location more than 25 miles from the
Company's headquarters location immediately prior to the Change
in Control, or the Company's requiring Employee to be based
anywhere other than the Company's principal executive offices,
except for required travel on the Company's business to an extent
substantially consistent with Employee's business travel
obligations immediately prior to the Change in Control;
(v) the failure by the Company to pay Employee any
portion of his current compensation;
(vi) the failure by the Company to continue in
effect any compensation plan in which Employee participates
immediately prior to the Change in Control which is material to
Employee's total compensation, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to
continue the Employee's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and
the level of participation relative to other participants, as
existed at the time of the Change in Control;
(vii) the failure by the Company to continue to
provide Employee with benefits substantially similar to those
under any of the Company's medical, health and accident, or
disability plans in which Employee was participating at the time
of the Change in Control, the taking of any action by the Company
which would directly or indirectly materially reduce any of such
benefits or deprive Employee of any material fringe benefit
enjoyed by him or her at the time of the Change in Control, or
the failure by the Company to provide Employee with the number of
paid vacation days to which he or she is entitled on the basis of
years of service with the Company in accordance with Company's
normal vacation policy in effect at the time of the Change in
Control or pursuant to Employee's existing employment agreement,
if any; or
(viii) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement.
Notwithstanding the above, during the one-year period immediately
following the occurrence of a Change in Control, "Good Reason" shall mean
termination of employment by the Employee for any reason other than death or
Permanent Disability.
Employee's right to terminate Employee's employment for Good Reason shall
not be affected by Employee's incapacity due to physical or mental illness.
Employee's continued employment shall not
2
<PAGE>
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
4.3 Effect of Termination. In the event that this Agreement is
terminated by the Company or Employee during the Term in accordance with the
provisions of this Paragraph 4, the obligations and covenant of the parties
under this Paragraph 4 shall be of no further force and effect, except for (i)
the obligations of the parties set forth below in this Paragraph 4.3, and (ii)
the provisions of Paragraph 5 below. Except as otherwise specifically set forth,
all amounts due upon termination shall be payable on the date such amounts would
otherwise have been paid had this Agreement continued through the Term.
In the event of any such early termination in accordance with the
provisions of this Paragraph 4.3, employee shall be entitled to the following:
(a) Termination by the Company
(i) Termination Without Cause. In the event that
the Company terminates this Agreement without Cause pursuant to
paragraph 4.1(a) above, Employee shall be entitled to (i) Earned
Base Salary (as defined below) through the Early Termination
Date; (ii) earned benefits and reimbursable expenses through the
Early Termination Date; (iii) any earned bonus which Employee has
been awarded pursuant to the terms of this Agreement or any other
plan or arrangement as of the Early Termination Date, but which
has not been received by Employee as of such date; and (iv) the
Severance Payment (as defined in Paragraph 4.4 below).
(ii) Termination For Cause. In the event that the
Company terminates this Agreement for Cause pursuant to paragraph
4.1(b) above, Employee shall be entitled to (i) Earned Base
Salary through the Early Termination Date; (ii) any earned bonus
which Employee has been awarded pursuant to the terms of this
Agreement or any other plan or arrangement as of the Early
Termination Date, but which has not been received by Employee as
of such date; and (iii) earned benefits and reimbursable expenses
through the Early Termination Date. Employee shall not be
entitled to any future annual bonus or Severance Payment.
(iii) Termination Due to Death or Permanent
Disability. In the event that the Company terminates the
Agreement by reason of employee's death or Permanent Disability
pursuant to Paragraph 4.1(c) above, Employee shall be entitled to
(i) Earned Base Salary through the Early Termination Date; (ii)
earned benefits and reimbursable expenses through the Early
Termination Date; and (iii) any earned bonus which Employee has
been awarded pursuant to the terms of this Agreement or any other
plan or arrangement as of the Early Termination Date, but which
has not been received by Employee as of such date.
(b) Termination by Employee
(i) Termination Other Than For Good Reason. In the
event that Employee terminates this Agreement other than for Good
Reason, employee shall be entitled to (i) Earned Base Salary
through the Early Termination Date; (ii) any earned bonus which
Employee has been awarded pursuant to the terms of this Agreement
or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Employee as of such
date; and (iii) earned benefits and reimbursable expenses through
the Early Termination Date. Employee shall not be entitled to any
future annual bonus or Severance payment.
(ii) Termination For Good Reason. In the event
that Employee terminates the Agreement for Good Reason employee
shall be entitled to (i) Earned Base Salary through the Early
Termination Date; (ii) earned benefits and reimbursable expenses
through the Early Termination Date; (iii) any earned bonus which
Employee has been awarded pursuant to the terms of this Agreement
or any other plan or arrangement as of the Early Termination
Date, but which has not been received by Employee as of such
date; and (iv) the Severance Payment.
3
<PAGE>
The term "Earned Base Salary" shall mean all semimonthly installments of
the Base Salary which have become due and payable to Employee, together with any
partial monthly installment prorated on a daily basis up to and including the
applicable Early Termination Date.
4.4 Severance Payment
(a) Definition of Severance Payment. For purposes of this
Agreement, the term "Severance Payment" shall mean an amount equal to the sum of
the Base Salary otherwise payable to Employee during the remainder of the Term
had such early termination of the Agreement not occurred ("Severance Period");
provided, however, that in the event that, following a Change in Control, the
Company terminates this Agreement without Cause pursuant to Paragraph 4.1(a)
above or Employee terminates this Agreement for Good Reason pursuant to
Paragraph 4.2(b) above, the term "Severance Payment" shall mean an amount equal
to two (2) times Employee's Base Salary then in effect.
(b) Payment of Severance Payment. In the event that Employee
is entitled to any Severance Payment pursuant to Paragraph 4.3 above, that
portion of such Severance Payment that represents Base Salary shall be payable
in monthly installments, and that portion of such Severance Payment that
represents the earned bonus, if any, shall be Payable on the dates such amounts
would have been paid had Employee continued in the Company's employment for the
Severance Period; provided, however, that in the event of a Termination
Following a Change in Control (as defined in Paragraph 4.4(e) below, the
Severance Payment shall be payable in a lump sum within ten days following such
termination.
(c) Full Settlement of All Obligations. Employee hereby
acknowledges and agrees that any Severance Payment paid to Employee hereunder
shall be deemed to be in full and complete settlement of all obligations of the
Company under this Agreement.
(d) Change in Control. For purposes of this Agreement,
"Termination Following a Change in Control" shall mean a termination of
Employee's employment with the Company following a "Change in Control" by
Employee for Good Reason or by the Company other than for Cause. A "Change in
Control" shall be deemed to have occurred if, at any time after the date hereof
during the Term:
(i) Any Person, as such term is used in section
3(a)(9) of the Securities Exchange Act of 1934 as amended from
time to time (the "Exchange Act"), as modified and used in
sections 13(d) and 14(d) thereof (other than (A) the Company or
any of its subsidiaries, (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its affiliates, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, (D) a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, or (E) a person or group as
used in Rule 13d-1(b) under the Exchange Act, that is or becomes
the Beneficial Owner, as such term is defined in Rule 13d-3 under
the Exchange Act, directly or indirectly, of securities of the
Company and is entitled to file on Schedule 13G or any successor
form with respect to such securities becomes the Beneficial Owner
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates
of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(ii) The following individuals cease for any
reason to constitute a majority of the number of directors then
serving: individuals who, as of immediately after August 18,
1998, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the
Board or nomination for election by the Company's stockholders
was approved or recommended by a vote of at least two-thirds of
the directors then still in office who either were directors as
of immediately after August 18, 1998 or whose appointment,
election or nomination for election was previously so approved or
recommended; or
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<PAGE>
(iii) There is consummated a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least 51% of the combined
voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates
of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(iv) The stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least
51% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company
immediately prior to such sale."
3. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes as of the date
first written above.
In Witness Whereof, the Employee and the Company have set their hands
hereto as of the date above.
Employee: Superior Services, Inc.
__________________________________ By:________________________________
John King G.W. "Bill" Dietrich
President and Chief Executive Officer
5
<PAGE>
Employee's name: John King
Date: November 24, 1998
Amendment No. 2
To
Employment Agreement
This Amendment ("Amendment"), dated as of the date set forth above, supplements
and amends the Employment Agreement, dated January 1, 1997 as amended
("Agreement"), by and among Superior Services, Inc., a Wisconsin corporation
("Company"), and the named key management employee set forth above ("Employee").
All defined terms used herein and not defined shall have the same meaning as in
the Agreement.
Whereas, pursuant to Section 8 of the Agreement, the Employee and the Company
desire to supplement and amend the Agreement as specifically set forth in this
amendment.
Now, Therefore, in consideration of the foregoing and of the mutual covenants
and agreements herein set forth, and for other valuable consideration, the
parties hereto covenant and agree as follows:
1. Section 4.4 (a) of the Agreement is amended and restated to read as
follows:
"(a) Definition of Severance Payment... provided, however,
that in the event that, following a Change in Control, the Company terminates
this Agreement without Cause pursuant to Paragraph 4.1(a) above or Employee
terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b) above,
the term "Severance Payment" shall mean an amount equal to two (2) times
Employee's Base Salary and annualized auto allowance then in effect." (amended
language is italicized for reference)
2. Section 4 of the Agreement is amended to add the following subsection
(e):
"(e) Acceleration of Stock Options. Immediately upon a Change
in Control of the Company, all awards granted to the Employee and then
outstanding under the Company's stock option and incentive compensation plans
("Options") that are not then exercisable by their terms automatically will
become immediately exercisable and fully vested for the remainder of their
stated terms. In addition, for a period of thirty (30) days following such
Change in Control of the Company, the Employee shall have the right to terminate
the Options and to receive a lump-sum payment, in cash, equal to the product of
(a) the excess of (x) the per-unit fair market value of the securities
underlying the Options, over (y) the per-unit exercise price of such Options,
and (b) the number of units of such securities covered by the Options. For
purposes of the preceding sentence, the "fair market value" of securities shall
be based on the highest of (i) the per-unit closing sale price of the securities
underlying the Options, as reported on a national securities exchange or by the
Nasdaq Stock Market, on the execution date of the agreement pursuant to which
the Change in Control of the Company is effected, (ii) the per-unit closing sale
price of the securities underlying the Options, as reported on a national
securities exchange or by the Nasdaq Stock Market, on the effective date of the
transaction constituting a Change in Control of the Company, and (iii) the
highest per-unit price for such securities actually paid in connection with such
Change in Control of the Company. Notwithstanding the foregoing, if the exercise
of any right granted pursuant to this Section 4(e) would make a transaction
constituting a Change in Control of the Company ineligible for pooling of
interests accounting under APB No. 16 which, but for this Section 4(e), would
otherwise be eligible for such accounting treatment, the Board of Directors of
the Company shall have the ability to substitute
6
<PAGE>
for the cash payable pursuant to this Section 4(e) securities of the Company (or
of the other entity surviving the transaction constituting the Change in Control
of the Company, or its parent corporation, if applicable) having a fair market
value equal to the cash that would otherwise be payable hereunder. For purposes
of the preceding sentence, the "fair market value" of securities shall be based
on the lower of (i) the average closing bid price of such securities for the ten
(10) trading days prior to the execution date of the agreement pursuant to which
the Change in Control of the Company is effected, and (ii) the average of the
closing bid price of such securities for the ten (10) trading days prior to the
effective date of the transaction constituting a Change in Control of the
Company, in each case as such closing bid prices are reported on a national
securities exchange or by the Nasdaq Stock Market".
3. Except as specifically set forth above, all other terms and conditions
of the Agreement shall continue in full force and effect, unaffected by this
Amendment. This Amendment shall be effective for all purposes as of the date
first written above.
In Witness Whereof, the Employee and the Company have set their hands
hereto as of the date above.
Employee: Superior Services, Inc.
_______________________________ By:________________________________
John King G.W. "Bill" Dietrich
President and Chief Executive Officer
EXHIBIT 10.32
September 14, 1998
Mr. James M. Dancy, Jr.
156 Cliveden Drive
Newton, PA 18940
Dear Jim:
I am pleased to offer you the Regional Vice President - South Region position
with Superior Services, Inc. (Superior). Your responsibilities will be assigned
by G.W. "Bill" Dietrich, President and Chief Executive Officer.
You must be a self-starter, effective communicator, with a winning attitude and
unwavering competitive spirit, performing to the highest of professional, moral,
ethical, legal, environmental, regulatory and safety standards. In this
position, you are responsible for the profitable growth and all around
performance of your Region.
You will be located in Florida at a site as yet to be determined by Bill
Dietrich. This will require you to relocate.
Superior Services, Inc. will:
- Be responsible for the costs associated with the movement of
your personal belongings, and reimburse you for the closing
costs, including commission expense on the sale of your home
in the Philadelphia area, should you own a home at the time of
your move. It is our understanding that your intention is to
sell your current home immediately.
- We will provide you with a temporary living allowance up to
$4,000 per month for a period not to exceed four (4) months to
be used toward temporary living expenses. You will be required
to submit to Bill Dietrich monthly expense reports to support
your request for reimbursement.
<PAGE>
James M. Dancy, Jr.
Offer Letter dated 9/14/98
Page 2
- Should you choose to voluntarily leave employment with
Superior Services during the first two (2) years of
employment, you promise to reimburse Superior for temporary
living expenses and all other relocation expenses for which
you were reimbursed for the period of time you did not
complete two years of employment. Superior may withhold these
amounts from any other compensation which may be due. Balances
to be paid within 14 days of term.
In your position, you will receive the following:
Base Salary: $11,250 per month (annualized to $135,000) payable in
accordance with Superior's payroll procedures for 1998.
Bonus: You will be eligible to earn a cash bonus up to $20,000
for 1998, of which $10,000 is guaranteed as a sign-on bonus,
payable in accordance with Superior's 1998 Incentive Bonus
Plan, provided that you are an employee at the time of bonus
payout and have performed in accordance with Superior's
Standard of Conduct. You will be granted Incentive Stock
Options (ISO) of 15,000 units (50% vesting on your first
anniversary, 6-1/4% per quarter thereafter) with the grant
date being your first date of employment (September 14, 1998),
and the grant price being the closing price on the grant date.
Both the Cash Bonus and Stock Options Bonus terms for 1998 are
subject to the terms of Superior's Plan.
Base Salary
Adjustment: Effective January 1, 1999, your base will be increased to
$152,000 and your cash and incentive stock options bonus will
be determined in accordance with the 1999 Incentive
Compensation Plan for Regional Vice Presidents.
Auto
Allowance: Auto allowance is $500.00 per month, plus reimbursement for
business gas, less applicable withholding taxes. Gas
reimbursements require receipts and are to be included on your
expense accounts. This is an all inclusive fixed sum to
compensate you for the business use of your personal vehicle
and is paid as a separate payroll check on the first pay date
of the month.
<PAGE>
James M. Dancy, Jr.
Offer Letter dated 9/14/98
Page 3
Expense
Reimbursement: You will be reimbursed for business-related expenses, in
accordance with generally accepted practices for eligible
business reimbursements.
You must provide receipts as support and file for
reimbursement on your expense report. Expense reports are to
be prepared and submitted monthly for the respective calendar
month. Submit your expense reports to Bill Dietrich.
Noncompetition
Agreement: As a condition of employment, you have agreed to sign the
Superior Services, Inc. Noncompetition Agreement and further
agree to fully honor the specifics referred therein (see
attached).
If this accurately describes your understanding of your prior discussions, and
you are in agreement with the terms of this offer, please acknowledge acceptance
below and return to my attention. Additionally, by acceptance of this offer, you
acknowledge you may freely accept this offer and you are not bound by any
employment agreement or noncompete agreement that would prohibit your acceptance
of this offer, and, as such, you agree to indemnify and hold harmless Superior
Services, Inc. regarding this offer of employment. Additionally, you acknowledge
you have never been a party or involved in any conduct or activity in violation
of law or ethical business practice and conduct. You affirm there are no
background issues that if Superior was knowledgeable about such events, would
otherwise preclude your employment by the Company.
We are excited about your joining Superior Services, Inc., and we are looking
forward to your contribution to the growth and development of the Company.
Welcome to the Superior team!
Sincerely,
G. W. "Bill" Dietrich
President and Chief Executive Officer
ACKNOWLEDGMENT:
------------------------------------ -------------------
(Signature) James M. Dancy, Jr. (Date)
EXHIBIT 10.33
G.W. "Bill" Dietrich
President and Chief Executive Officer
Offer of Employment
September 21, 1998
Mr. Paul Jenks
4668 Johnstown Road
Gahanna, OH 43230
Dear Paul:
I am pleased to offer you the position of Vice President, Special Projects. In
this position you will be initially responsible for the satisfactory completion
of special projects assigned by Bill Dietrich. These projects will vary in scope
and complexity and duration, and will potentially involve you in all aspects of
the Company from development, strategy formulation, to problem solving,
trouble-shooting assignments, transition/start-up on new acquisitions, cultural
development, and so on. The very nature of the role is to perform a variety of
tasks throughout the organization, on a project basis, as assigned from time to
time by Bill Dietrich. You will report directly to the President of Superior
Services, Inc. and be considered as a member of the Senior Management team.
This is expected to be a one year initial assignment, at the end of which you
and the Company will revisit your professional ambitions and the Company's needs
for a more definitive, high-level position. While the Company can provide no
assurances or guarantees, it is each party's intent to review the situation at
the end of one year on the basis of merit and contributions.
You are expected to make an immediate, value-added contribution to the growth
and development of Superior Services in your area of responsibility. This is a
local business that requires sound relationship building, effective time
management, personal discipline and individual drive to be successful. You must
be a self-starter, effective communicator, with a winning attitude, and an
unwavering competitive, team-oriented spirit. In essence, as a special assistant
to the president, you are expected to conduct yourself to the highest
professional, moral, ethical, and socially responsible standards as you perform
your special project duties.
<PAGE>
Offer Letter: Paul Jenks
September 21, 1998
Page Two
You will not be required to relocate during your first year. You will be
provided office space at Superior's Columbus, Ohio location, as well as in the
Company headquarters in Milwaukee. It is acknowledged that you will have a high
degree of flexibility and mobility as the position of Vice President, Special
Projects necessitates significant weekly travel. At the point in which
relocation is required, and that will most likely be the case after your first
year, Superior Services, Inc. will:
o Be responsible for the costs associated with the movement of
your personal belongings, and reimburse you for the commission
expense on the sale of your home, should you own a home at the
time of your employment move.
Prior to receiving reimbursement of moving expenses and any
relocation expenses, you will be required to sign Superior's
standard agreement, under which you will agree to reimburse
Superior a prorated amount of such expenses if you leave
Superior's employment at any time within two years after the
date you have been relocated.
o In your new location you and your spouse would be entitled to
house hunting trips, and temporary living expenses to be
customized to the particular circumstances of your move and
Superior's company policies at that point in time. You and I
will agree on the details of the number of house hunting
trips, the amount of temporary living expense allowance, etc.
prior to the time that relocation is required.
In your position of Vice President, Special Projects, you will receive the
following:
Base Salary: $11,250.00 per month (annualized this is $135,000/year)
payable in accordance with Superior's payroll procedures
(currently, bi- weekly). Effective 1/1/99, your compensation
will be $13,083 per month (annualized $157,000/year).
Management
Incentive Plan: You will be eligible for $30,000 in cash bonus for 1998, of
which $15,000 is guaranteed as a sign-on bonus, payable in
accordance with our standard company payroll practices and
Bill Dietrich's recommendation/evaluations. You must be
employed on the day of bonus payout (typically in March, 1999
for the 1998 calendar year), and you must perform to the
highest standard of personal professional conduct.
<PAGE>
Offer Letter: Paul Jenks
September 21, 1998
Page Three
Your eligible cash bonus and stock option bonus for 1999 will
be in accordance with the 1999 Management Incentive Plan and
at the same level as the Senior Vice President -
Administration and Chief Financial Officer.
Signing Incentive: As an inducement to you to join Superior Services,
Inc., the Company will grant you an incentive stock option
(ISO) to purchase thirty thousand (30,000) shares of common
stock. The exercise price will be the closing bid price for
the Company's stock on your start date. The ISO will vest 50%
on your first anniversary of employment, and 6-1/4% per
quarter thereafter.
Non-Competition
Agreement: As a condition of employment, you are required to sign the
standard Superior Services Non-Competition Agreement
(attached). You acknowledge you will abide by the terms
outlined therein.
Auto Allowance: Auto allowance is $500.00/month less applicable withholding
taxes. This is an all inclusive fixed sum to compensate you
for the business use of your personal vehicle and is paid in a
separate payroll check, typically on the 15th of each month.
You will also be reimbursed for gas expenses associated with
the business use of your personal automobile. You must provide
receipts as support and file for reimbursement on your expense
report. Expense reports are to be prepared and submitted
monthly for the respective calendar month. Send directly to
Bill Dietrich for approval.
Expense
Reimbursement: You will be reimbursed for business-related expenses, in
accordance with Superior's policies for eligible business
reimbursements.
Benefits Package: Coverage is in accordance with the benefits provided for
Management and Staff internally as Band I. Included is the
waiver of the waiting period for health, dental, and vision
coverage for you. You are covered beginning the first day of
your employment. Please note, Superior's current policy pays
90% of the monthly insurance premium; employees pay 10% which
is done through payroll deduction. Please refer to the various
benefit and employee handbooks. Your total health insurance
premium for family coverage is $30.00 at this time; dental is
$3.00 per bi-weekly pay period.
<PAGE>
Offer Letter: Paul Jenks
September 21, 1998
Page Four
Assuming you commence work on October 5, 1998, you would be
eligible for three days of vacation to be taken between
October 5, 1998 and December 31, 1998. Thereafter, you will be
eligible for fifteen days of vacation per calendar year for
your first four years.
Beginning in year five, your vacation will increase to twenty
days per year. Additionally, you are eligible for two floating
personal days annually to be taken at your discretion in
addition to the standard company holiday schedule observed
starting with the calendar year 1999. This is standard company
policy.
You will receive term life insurance paid by the Company in
accordance with the policy of the Company. At this time, that
policy provides coverage equal to two times your annual base
salary. You are eligible to purchase (payroll deduction)
additional coverage equal to two times your annual base
salary. The cost of that additional coverage is dependent upon
various factors including age. The Company also provides
short-term disability and long-term disability coverage.
You may participate in the Company's 401(k) plan once you meet
the eligibility requirements.
In the event that your employment is terminated due to a "change in control"
after six months employment, it is agreed Superior is responsible for providing
you with a severance payment equal to two times annual base salary and all
options granted will be fully vested. A "change in control" shall be deemed to
have occurred if:
(a) any person (other than any employee benefit plan of the
Company, any subsidiary of the Company or any person
organized, appointed, or established pursuant to the terms of
any such benefit plan) is or becomes the beneficial owner of
securities of the Company representing at least 50% of the
combined vesting power of the Company's then outstanding
securities; or
(b) there shall be consummated (x) any consolidation, merger,
share exchange or other business combination of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's
capital stock would be converted into cash, securities, or
other property, other than a merger of the
<PAGE>
Offer Letter: Paul Jenks
September 21, 1998
Page Five
Company in which the holders of the Company's capital stock
immediately prior to the merger have the same proportionate
ownership of capital stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange
or other transfer (in one transaction or a series of relaxed
transactions) of all or substantially all of the consolidated
assets of the Company.
Should a "change in control" occur during the first six months of employment,
you will receive a severance payment equal to one times annual base salary, and
one-half of your previously granted options will be fully vested.
This offer is contingent upon the fact you represented that you are not subject
to any noncompetition agreements, except for the one-year noncompetition
agreement between you and Waste Management, Inc., which covers only portions of
Ohio and Western Pennsylvania.
If this accurately describes your understanding of our prior discussions, and
you are in agreement with the terms of this offer, please acknowledge acceptance
below and return to my attention. Additionally, by acceptance of this offer, you
acknowledge you may freely accept this offer and you are not bound by any
employment agreement or non-compete agreement that would prohibit your
acceptance of this offer, except as noted; and, as such, you agree to indemnify
and hold harmless Superior Services, Inc. regarding this offer of employment.
Additionally, you acknowledge you have never been a party or involved in any
conduct or activity in violation of law or ethical business practice and
conduct. You affirm there are no background issues that if Superior was
knowledgeable about such events, would otherwise preclude your employment by the
Company.
This offer is good for an expected employment start date of October 5, 1998.
Should conditions preclude you from starting on or before that date, Superior
reserves the right to withdraw this offer.
<PAGE>
Offer Letter: Paul Jenks
September 21, 1998
Page Six
I am excited about your joining Superior Services, and we all are anxiously
looking forward to your contribution to the growth and development of Superior
Services, Inc. Welcome to the Superior family.
Sincerely,
G.W. "Bill" Dietrich
President and Chief Executive Officer
Attachment
ACKNOWLEDGED:
------------------------------------------
PAUL JENKS
This ________ day of September, 1998
EXHIBIT 10.34
G.W. "Bill" Dietrich
President and Chief Executive Officer
Offer of Employment
October 5, 1998
Mr. Philip Auld
(Via Fax) (718) 628-7089
Dear Phil:
I am pleased to offer you the position of Regional Vice President - Eastern
Region. In this position you will be responsible for all performance aspects of
the Eastern Region and report to the President. You will initially work in
Wilmington, Delaware and have available a fax machine and dedicated telephone
line for business communications. We will review this office arrangement
annually as the company is accommodating your personal family circumstances
relative to your current location. You may in the future be required to relocate
if it is determined over the course of time that a formal region office and
location may be better suited in another part of the Eastern Region.
The Eastern Region at least initially will comprise Ohio, West Virginia,
Pennsylvania, New York State, New Jersey, Delaware, Maryland, and New England.
Jim Dancy and you will work out what is best for Virginia as appropriate.
Kentucky needs to be resolved between the East, South, and Midwest RVP's. New
York City is specifically void of your responsibility as it is my understanding
you are prohibited for one year to compete in the Metro New York City market.
You have indicated to me there are no other non-compete issues and our
operations in New Jersey, are not included in your non-compete.
You are expected to make an immediate, value-added contribution to the growth
and development of Superior Services in your area of responsibility. This is a
local business that requires sound relationship building, effective time
management, personal discipline and individual drive to be successful. You must
be a self-starter, effective communicator, with a winning attitude and an
unwavering competitive, team-oriented spirit. In essence, as a Regional Vice
President, you are expected to conduct yourself to the highest professional,
moral, ethical, and socially responsible standards as you perform your duties.
You are expected to take care of our customers, take care of our people, control
costs, execute the growth plan and do so by performing to the highest of safety
standards in an environmentally sound and responsible way.
<PAGE>
Offer Letter: Philip Auld
October 5, 1998
Page Two
You acknowledge you can effectively conduct business from your Wilmington,
Delaware location and fully understand the importance of travel in your
responsibilities as a Regional Vice President. Should at some point the business
needs / performance require relocation after your first year of employment, but
not before, Superior Services, Inc. will:
* Be responsible for the costs associated with the movement of
your personal belongings, and reimburse you for the commission
expense On the sale of your home, should you own a home at the
time of your employment move.
Prior to receiving reimbursement of moving expenses and any
relocation expenses, you will be required to sign Superior's
standard agreement, under which you will agree to reimburse
Superior a prorated amount of such expenses if you leave
Superior's employment at any time within two years after the
date you have been relocated.
* In your new location you and your spouse would be entitled to
house hunting trips, and temporary living expenses to be
customized to the particular circumstances of your move and
Superior's company policies at that point in time. You and I
will agree on the details of the number of house hunting
trips, the amount of temporary living expense allowance, etc.
prior to the time that relocation is required.
In your position of Regional Vice President - Eastern Region, you will receive
the following:
Base Salary: $12,500 per month (annualized this is $150,000/year) payable
in accordance with Superior's payroll procedures (currently,
bi-weekly). Effective 1/1/99, your compensation will be
$14,166.66 per month (annualized $170,000/year).
Management
Incentive
Plan: You will be eligible for $40,000 in cash bonus for 1998,
assuming an October start date, of which $25,000 is guaranteed
as a sign-on bonus, payable in accordance with our standard
company payroll practices and Bill Dietrich's
recommendation/evaluations. You must be employed on the day of
bonus payout (typically in March, 1999 for the 1998 calendar
year),and you must perform to the highest standard of personal
professional conduct.
<PAGE>
Offer Letter: Philip Auld
October 5, 1998
Page Three
Your eligible cash bonus and stock option bonus for 1999 will
be in accordance with the 1999 Management Incentive Plan and
at the same percentage of base level as the other three (3)
Regional Vice Presidents. Although the 1999 plan is not yet
finalized, and requires November '98 Board of Directors
approval, you can assume your cash bonus eligibility will be
in the 60-100%of base compensation range. As a special sign-on
bonus given your current circumstances, you will be awarded an
extra 25 cents on the dollar for every bonus dollar earned for
the performance years 1999 and 2000, up to a maximum extra
award for the combined two years, not to exceed $100K. This is
being provided as an accommodation as a partial offset to what
you've indicated you will be forfeiting ($150,000 in '98
bonuses earned to date) to join Superior Services at this
time. To be eligible for this extra award, you must perform to
the highest of professional standards and conduct as reviewed
by the Executive Team of Bill Dietrich and Peter Ruud, and you
must achieve at least 95% evaluation of your Region's
financial growth and non-financial goals and objectives.
For greater than 120% of Regional performance objectives,
eligible extra award will be raised to 35 cents per one dollar
of earned cash bonus and $135K for two years in total. All
other terms of the Management Incentive Plan apply.
Calculations for Regional financial performance are net after
bonus expense is included.
Signing
Incentive: As an inducement to you to join Superior Services, Inc., the
Company will grant you an incentive stock option (ISO) to
purchase thirty thousand (30,000) shares of common stock. The
exercise price will be the closing bid price for the Company's
stock on your start date. The ISO will vest 50% on your first
anniversary of employment, and 6-1/4% per quarter thereafter.
Non-Competition
Agreement:
As a condition of employment, you are required to sign the
standard Superior Services Non-Competition Agreement
(attached). You acknowledge you will abide by the terms
outlined therein.
Auto
Allowance: Auto allowance is $500.00/month less applicable withholding
taxes. This is an all inclusive fixed sum to compensate you
for the business use of your personal vehicle and is paid in a
separate payroll check, typically on the 15th of each month.
<PAGE>
Offer Letter: Philip Auld
October 5, 1998
Page Four
You will also be reimbursed for gas expenses associated with
the business use of your personal automobile. You must provide
receipts as support and file for reimbursement on your expense
report. Expense reports are to be prepared and submitted
monthly for the respective calendar month. Send directly to
Bill Dietrich for approval.
Expense
Reimbursement:
You will be reimbursed for business-related expenses, in
accordance with Superior's policies for eligible business
reimbursements. Also including fax services and a dedicated
telephone line while you office from your home. Include
receipts/charges on your expense report.
Benefits
Package: Coverage is in accordance with the benefits provided for
Management and Staff internally as Band I. Included is the
waiver of the waiting period for health, dental, and vision
coverage for you. You are covered beginning the first day of
your employment. Please note, Superior's current policy pays
90% of the monthly insurance premium; employees pay 10% which
is done through payroll deduction. Please refer to the various
benefit and employee handbooks. Your total health insurance
premium for family coverage is $30.00 at this time; dental is
$3.00 per bi-weekly pay period.
You will be eligible for fifteen days of vacation per calendar
year for each of your first four years.
Beginning in year five, your vacation will increase to twenty
days per year. Additionally, you are eligible for two floating
personal days annually to be taken at your discretion in
addition to the standard company holiday schedule observed
starting with the calendar year 1999. This is standard company
policy.
You will receive term life insurance paid by the Company in
accordance with the policy of the Company. At this time, that
policy provides coverage equal to two times your annual base
salary. You are eligible to purchase (payroll deduction)
additional coverage equal to two times your annual base
salary. The cost of that additional coverage is dependent upon
various factors including age. The Company also provides
short-term disability and long-term disability coverage.
<PAGE>
Offer Letter: Philip Auld
October 5, 1998
Page Five
You may participate in the Company's 401(k) plan once you meet
the eligibility requirements.
In the event that your employment is terminated due to a "change in control", it
is agreed Superior is responsible for providing you with a severance payment
equal to two times annual base salary and all options granted will be fully
vested. A "change in control" shall be deemed to have occurred if:
(a) any person (other than any employee benefit plan of the
Company, any subsidiary of the Company or any person
organized, appointed, or established pursuant to the terms of
any such benefit plan) is or becomes the beneficial owner of
securities of the Company representing at least 50% of the
combined vesting power of the Company's then outstanding
securities; or
(b) there shall be consummated (x) any consolidation, merger,
share exchange or other business combination of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's
capital stock would be converted into cash, securities, or
other property, other than a merger of the
Company in which the holders of the Company's capital stock
immediately prior to the merger have the same proportionate
ownership of capital stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange
or other transfer (in one transaction or a series of relaxed
transactions) of all or substantially all of the consolidated
assets of the Company.
This offer is contingent upon the fact you represented that you are not subject
to any noncompetition agreements, except for the one-year noncompetition
agreement between you and Waste Management, Inc., which covers only Metro New
York City.
If this accurately describes your understanding of our prior discussions, and
you are in agreement with the terms of this offer, please acknowledge acceptance
below and return to my attention. Additionally, by acceptance of this offer, you
acknowledge you may freely accept this offer and you are not bound by any
employment agreement or non-compete agreement that would prohibit your
acceptance of this offer, except as noted; and, as such, you agree to indemnify
and hold harmless Superior Services, Inc. regarding this offer of employment.
Additionally, you acknowledge you have never been a party or involved in any
conduct or activity in violation of law or ethical business practice and
conduct. You affirm there are no background issues that if Superior was
knowledgeable about such events, would otherwise preclude your employment by the
Company.
<PAGE>
Offer Letter: Philip Auld
October 5, 1998
Page Six
This offer is good for an expected employment start date of idealy October 21,
1998, but not later than October 28. Should conditions preclude you from
starting as indicated, Superior reserves the right to withdraw this offer. You
may start earlier if possible.
You further acknowledge upon acceptance of this offer, Superior has your
permission to immediately publicly announce your joining Superior Services on
the date of acceptance. Should you chose not to join Superior after Superior has
made such an announcement, Superior could be subject to considerable
embarrassment, and other possible injury and you promise to immediately
reimburse Superior in an amount to be determined by Superior as being adequate
compensation for this inconvenience, not to exceed $100,000. This provision is
included in this offer of employment as a safe guard for Superior's commitment
to you, given the extended period of time you plan to remain with your current
employer after accepting this offer. This provision is not intended to be a
reflection of anything other than protecting the best interests of Superior
while you are working for a competitor.
I am excited about your joining Superior Services, and we all are anxiously
looking forward to your contribution to the growth and development of Superior
Services, Inc. Welcome to the Superior family and to this Superior Management
team as we focus on building a Superior Company, one step at a time, through the
pursuit as excellence.
Sincerely,
G.W. "Bill" Dietrich
President and Chief Executive Officer
Attachment
ACKNOWLEDGED and AGREED TO:
------------------------------------------
Philip Auld
This ________ day of October 1998
EXHIBIT 10.35
December 7, 1998
Mr. Larry E. Goswick
4905 Paces Trail, #625
Arlington, TX 76017
Dear Larry:
I am pleased to offer you the Regional Vice President - Midwest Region position
with Superior Services, Inc. (Superior). Your responsibilities will be assigned
by G. W. "Bill" Dietrich, President and Chief Executive Officer.
You must be a self-starter, effective communicator, with a winning attitude and
unwavering competitive spirit, performing to the highest of professional, moral,
ethical, legal, environmental, regulatory and safety standards. In this
position, you are responsible for the profitable growth and all around
performance of your Region.
You will be located in Wisconsin at a site as yet to be determined by you and
Bill Dietrich. This will require you to relocate.
Superior Services, Inc. will:
- Be responsible for the costs associated with the movement of your
personal belongings, and limited interim living expenses.
- We will provide you with a temporary living allowance up to $4,000
per month for a period not to exceed four (4) months to be used
toward temporary living expenses. You will be required to submit
to Bill Dietrich monthly expense reports to support your request
for reimbursement.
- Should you choose to voluntarily leave employment with Superior
Services during the first two (2) years of employment, you promise
to reimburse Superior for temporary living expenses and all other
relocation expenses for which you were reimbursed for the period
of time you did not complete two years of employment. Superior may
withhold these amounts from any other
Larry E. Goswick
<PAGE>
Offer Letter dated 12/07/98
Page 2
compensation which may be due. Balances to be paid within 14 days
of term.
In your position you will receive the following:
Base Salary: $12,083 per month (annualized to $145,000) payable in accordance
with Superior's payroll procedures for 1998.
Bonus: You will be eligible for a cash bonus in 1999 based on the
following criteria:
(a) 15% of your base salary for meeting targeted revenue for
the Midwest Region, 18% of base salary for meeting targeted
EBIT dollars for the Midwest Region, and 15% of base salary
for meeting targeted EBIT percentage for the Midwest
Region. In order to receive the 15% portion of the bonus
related to the targeted revenue goal, you must also meet
either the EBIT dollar or EBIT percentage goal.
(b) .6% of your base salary for each 1% increase in 1999
Earnings Per Share over actual 1998 Earnings Per Share.
(c) If you earn all three of the bonus measurements in a)
above, an additional bonus of .48% of your base salary will
be awarded for each 1% EBIT dollar performance over Midwest
Region targeted EBIT dollars, up to a maximum of 24% of
base salary.
You will be eligible to earn Incentive Stock Options (ISO) in the
amount of 1,500 options per 1% increase in Earnings Per Share in
1999 over 1998 actual Earnings Per Share.
Auto
Allowance: Auto allowance is $500.00 per month, plus reimbursement for
business gas, less applicable withholding taxes. Gas
reimbursements require receipts and are to be included on your
expense accounts. This is an all inclusive fixed sum to compensate
you for the business use of your personal vehicle and is paid as a
separate payroll check on the first pay date of the month.
Larry E. Goswick
Offer Letter dated 12/07/98
Page 3
<PAGE>
Expense
Reimbursement: You will be reimbursed for business-related expenses, in
accordance with generally accepted practices for eligible
business reimbursements.
You must provide receipts as support and file for
reimbursement on your expense report. Expense reports are
to be prepared and submitted monthly for the respective
calendar month. Submit your expense reports to Bill
Dietrich.
Signing Incentive: As an inducement to you to join Superior Services, Inc.,
the Company will grant you an incentive stock option (ISO)
to purchase thirty thousand (30,000) shares of common
stock. The exercise price will be the closing bid price for
the Company's stock on your start date. The ISO will vest
50% on your first anniversary of employment and 6-1/4% per
quarter thereafter.
Noncompetition
Agreement: As a condition of employment, you have agreed to sign the
Superior Services, Inc. Noncompetition Agreement and
further agree to fully honor the specifics referred therein
(see attached).
Severance
Payment: In the event that your employment is terminated due to a
"change in control," it is agreed Superior is responsible
for providing you with a severance payment equal to two
times annual base salary and all options granted will be
fully vested. Any severance shall be paid in thirty-six
equal monthly installments or in one total payment at the
direction of the employee. A "change in control" shall be
deemed to have occurred if:
(a) any person (other than any employee benefit plan of
the Company, any subsidiary of the Company or any
person organized, appointed, or established pursuant
to the terms of any such benefit plan) is or becomes
the beneficial owner of securities of the Company
representing at least 50% of the combined voting
power of the Company's then outstanding securities;
or
Larry E. Goswick
Offer Letter dated 12/07/98
Page 4
<PAGE>
(b) there shall be consummated (x) any consolidation,
merger, share exchange or other business combination
of the Company in which the Company is not the
continuing or surviving corporation or pursuant to
which shares of the Company's capital stock would be
converted into cash, securities, or other property,
other than a merger of the Company in which the
holders of the Company's capital stock immediately
prior to the merger have the same proportionate
ownership of capital stock of the surviving
corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one
transaction or a series of relaxed transactions) of
all or substantially all of the consolidated assets
of the Company.
If this accurately describes your understanding of our prior discussions, and
you are in agreement with the terms of this offer, please acknowledge acceptance
below and return to my attention. Additionally, by acceptance of this offer, you
acknowledge you may freely accept this offer and you are not bound by any
employment agreement or noncompete agreement that would prohibit your acceptance
of this offer, and, as such, you agree to indemnify and hold harmless Superior
Services, Inc. regarding this offer of employment. Additionally, you acknowledge
you have never been a party or involved in any conduct or activity in violation
of law or ethical business practice and conduct. You affirm there are no
background issues that if Superior was knowledgeable about such events, would
otherwise preclude your employment by the Company.
We are excited about your joining Superior Services, Inc., and we are looking
forward to your contribution to the growth and development of the Company.
Welcome to the Superior team!
Sincerely,
G. W. "Bill" Dietrich
President and Chief Executive Officer
ACKNOWLEDMENT:
------------------------------------------ -----------------
(Signature) Larry E. Goswick (Date)
EXHIBIT 10.36
<TABLE>
<CAPTION>
1999 Management Incentive Plan
CASH OPTIONS
-----------------------------------------------------------------------------
Options per
Per 1% 1% increase Estimated
EPS Base in Expected 1999
increase Bonus EPS over performance Estimated Options at
over 1998 for 1998 at 120% of 1999 120% of
actual(2) Field actual(2) 1998 EPS headcount 1998 EPS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chairman Board Discretion Up to 30,000 1 30,000
Pres/CEO 5.0% 5,000 100,000 1 100,000
CFO 5.0% 2,500 50,000 1 50,000
Senior VP 5.0% 2,500 50,000 1 50,000
VP Special 5.0% 2,500 50,000 1 50,000
Projects
General Counsel 3.0% 1,500 30,000 1 30,000
Regional VP (1) 60.0% 1,500 30,000 4 120,000
------------
Total: 430,000
============
Note: To be eligible for either the cash or the stock option bonuses detailed
above, there must be a satisfactory rating on Personal and Departmental Goals
and Objectives at the Company's headquarters for 1999.
Note: 100% of base bonus in all three categories MUST be earned before any of
the additional 50% bonus is earned.
(1) 60% base bonus will be paid based on targeted revenue (15%), targeted EBIT
$(18%), and targeted EBIT margin (15%) measured by operating region, and EPS
(12%). Target includes 1999 budget plus planned external growth from
acquisitions. For the EPS portion of the bonus, the RVPs will receive .6% of
base salary for every 1% increase in 1999 EPS over actual 1998 EPS. For the 80%
portion of the bonus which is based on region performance against targets, an
additional 1% of base bonus will be awarded for every 1% EBIT performance over
targeted EBIT, up to an additional 40% of base bonus.
Note: 100% of base bonus in all three region target categories MUST be earned
before any of the additional 40% bonus is earned.
(2) EPS calculation to exclude the effect of merger costs, if any.
</TABLE>
EXHIBIT 21
Subsidiary State of Incorporation
- ---------- ----------------------
Superior Cranberry Creek Landfill, Inc. Wisconsin
Superior Construction Services, Inc. Wisconsin
Hardrock, Inc. Wisconsin
Summit, Inc. Wisconsin
Superior Special Services, Inc. Wisconsin
d/b/a Chicago Underwater
d/b/a Superior Special Services-Twin Cities
Valley Sanitation Co., Inc. Wisconsin
d/b/a Superior Valley Meadows Landfill
d/b/a Superior Services-Fort Atkinson
d/b/a Superior Services-Madison Pallet
Superior Services of Elgin, Inc. Illinois
Sharps Incinerator of Fort, Inc. Wisconsin
Superior Glacier Ridge, Inc. Wisconsin
d/b/a Superior Glacier Ridge Landfill
d/b/a Superior Services-Horicon
Land & Gas Reclamation, Inc. Wisconsin
Superior of Wisconsin, Inc. Wisconsin
d/b/a Superior Services-Central Wisconsin
d/b/a Superior Services-MenomoneeFalls
d/b/a Superior Recycling
d/b/a Superior Services-Lake Geneva
d/b/a Superior Services-Omro
d/b/a Superior Services-Sheboygan Area Transfer
Station
d/b/a Superior Services-Sheboygan
d/b/a Superior Services-Hartland
d/b/a Superior Services-Door County
d/b/a Superior Services-Green Bay
Superior Emerald Park Landfill, Inc. Wisconsin
Superior FCR Landfill, Inc. Minnesota
d/b/a Superior Central Minnesota
d/b/a Superior Services-Wright County
Superior Seven Mile Creek Landfill, Inc. Wisconsin
Superior Oak Ridge Landfill, Inc. Missouri
Superior of Missouri, Inc. Missouri
d/b/a Superior Services-St. Louis
d/b/a Superior Services-Columbia
d/b/a Superior Services-Bethany
Superior of Ohio, Inc. Ohio
d/b/a Superior Services-Columbus
d/b/a Superior Services-Mansfield
<PAGE>
Superior Waste Services of Pennsylvania, Inc. Pennsylvania
d/b/a Superior Waste Services-DuBois
d/b/a Ray's Disposal
Santangelo Hauling, Inc. Pennsylvania
Superior Greentree Landfill, Inc. Pennsylvania
Superior Hickory Meadows Landfill, Inc. Wisconsin
Resource Recovery Transfer & Transportation, Inc. Georgia
Superior Eagle Bluff Landfill, Inc. Alabama
Superior Waste Services of Alabama, Inc. Alabama
Superior Cedar Hill Landfill, Inc. Alabama
Sanitation Enterprises, Inc. Alabama
Superior Maple Hill Landfill, Inc. Missouri
d/b/a Superior Services-Northern Missouri
Noble Road Landfill, Inc. Ohio
Love's Disposal Service Missouri
Ideal Disposal Service, Inc. Wisconsin
Johnson Disposal Service, Inc. Wisconsin
TWR, Inc. Alabama
Alabama Waste Services, Inc. Alabama
Superior Star Ridge Landfill, Inc. Alabama
Eggers Sanitation, Inc. Wisconsin
Superior Cypress Acres Landfill, Inc. Florida
CBF, Inc. Pennsylvania
Superior Waste Services of Florida, Inc. Florida
d/b/a Superior Services-Ocala
Superior Services of Michigan, Inc. Michigan
Superior Whispering Pines Landfill, Inc. Ohio
South Lake Refuse Service, Inc. Florida
Commercial Refuse, Inc. Florida
Gopher Disposal, Inc. Minnesota
Eagle Environmental, Inc. Minnesota
Materials Recovery, Ltd. Minnesota
Watson's Rochester Disposal, Inc. Minnesota
d/b/a Superior Services-St. Paul
d/b/a Superior Services-Rochester
Wilson Waste Systems, Inc. Missouri
Superior Services of Minnesota, Inc. Minnesota
Superior of Missouri Acquisition Corp. Missouri
Superior Services of New Jersey, Inc. New Jersey
PenPac, Inc. New Jersey
Nicholas Enterprises, Inc. New Jersey
Advanced Waste Technology, Inc. New Jersey
Baray, Inc. New Jersey
Iorio Carting, Inc. New Jersey
Heritage Recycling, Inc. New Jersey
<PAGE>
Recycling Techniques, Inc. New Jersey
ACS Services, Inc. New Jersey
Macon County Landfill Corporation Delaware
Superior-GeoWaste Incorporated Delaware
GeoWaste of GA, Inc. Delaware
d/b/a Pecan Row Landfill
d/b/a GeoWaste of GA
GeoWaste Transfer, Inc. Delaware
Spectrum Group, Inc. Florida
d/b/a United Sanitation
d/b/a Ocala Chemical Portables
d/b/a Industrial Recycling
GeoWaste of FL, Inc. Delaware
GeoWaste Acquisition Corp. Delaware
Low Brook Development, Inc. Delaware
Exhibit 23a
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statements (Form S-3 No. 333-33141, Form S-4 No. 333-06443 and Form
S-8 No. 333-53701), pertaining to (a) Superior Services, Inc.'s registration of
5,000,000 shares of its common stock and common stock purchase rights (b)
Superior Services, Inc.'s registration of 5,000,000 shares of its common stock
and common stock purchase rights and (c) the Superior Services, Inc. 1996 Equity
Incentive Plan, 1993 Incentive Stock Option Plan and various other individual
Employment, Stock Option and Stock Purchase Agreements, of our report dated
February 5, 1999, with respect to the consolidated financial statements and
schedule of Superior Services, Inc. included in the Annual Report (Form 10-K)
for the year ended December 31, 1998.
ERNST & YOUNG
Milwaukee, Wisconsin
March 24, 1999
Exhibit 23b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Superior Services, Inc.
Registration Statements (Form S-3 No. 333-33141, Form S-4 No. 333-06443, and
Form S-8 No. 333-53701) of our report dated March 24, 1998, on our audits of the
consolidated financial statements of GeoWaste Incorporated as of December 31,
1997 and for the years ended December 31, 1997 and 1996, which report is
included in the Superior Services, Inc. Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
Jacksonville, Florida
March 23, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 9,715
<SECURITIES> 0
<RECEIVABLES> 60,761
<ALLOWANCES> (2,639)
<INVENTORY> 2,032
<CURRENT-ASSETS> 73,444
<PP&E> 462,940
<DEPRECIATION> (150,443)
<TOTAL-ASSETS> 526,842
<CURRENT-LIABILITIES> 59,685
<BONDS> 66,284
0
0
<COMMON> 322
<OTHER-SE> 316,420
<TOTAL-LIABILITY-AND-EQUITY> 526,842
<SALES> 0
<TOTAL-REVENUES> 319,673
<CGS> 0
<TOTAL-COSTS> 224,085
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,954
<INTEREST-EXPENSE> 3,116
<INCOME-PRETAX> 42,561
<INCOME-TAX> 22,060
<INCOME-CONTINUING> 20,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,501
<EPS-PRIMARY> .62
<EPS-DILUTED> .61
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 14,575
<SECURITIES> 0
<RECEIVABLES> 61,800
<ALLOWANCES> (2,753)
<INVENTORY> 1,739
<CURRENT-ASSETS> 80,322
<PP&E> 428,776
<DEPRECIATION> (144,996)
<TOTAL-ASSETS> 480,920
<CURRENT-LIABILITIES> 54,484
<BONDS> 11,931
0
0
<COMMON> 322
<OTHER-SE> 308,417
<TOTAL-LIABILITY-AND-EQUITY> 480,920
<SALES> 0
<TOTAL-REVENUES> 233,880
<CGS> 0
<TOTAL-COSTS> 163,766
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 459
<INTEREST-EXPENSE> 2,297
<INCOME-PRETAX> 31,419
<INCOME-TAX> 16,630
<INCOME-CONTINUING> 14,789
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,789
<EPS-PRIMARY> .46
<EPS-DILUTED> .45
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 12,877
<SECURITIES> 0
<RECEIVABLES> 54,439
<ALLOWANCES> (2,656)
<INVENTORY> 1,722
<CURRENT-ASSETS> 71,991
<PP&E> 409,209
<DEPRECIATION> (137,125)
<TOTAL-ASSETS> 457,121
<CURRENT-LIABILITIES> 49,669
<BONDS> 23,397
0
0
<COMMON> 321
<OTHER-SE> 303,460
<TOTAL-LIABILITY-AND-EQUITY> 457,121
<SALES> 0
<TOTAL-REVENUES> 149,625
<CGS> 0
<TOTAL-COSTS> 106,019
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 479
<INTEREST-EXPENSE> 1,743
<INCOME-PRETAX> 21,329
<INCOME-TAX> 9,365
<INCOME-CONTINUING> 11,966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,966
<EPS-PRIMARY> .38
<EPS-DILUTED> .37
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 29,191
<SECURITIES> 0
<RECEIVABLES> 43,877
<ALLOWANCES> (2,284)
<INVENTORY> 1,503
<CURRENT-ASSETS> 77,219
<PP&E> 384,319
<DEPRECIATION> (128,893)
<TOTAL-ASSETS> 442,617
<CURRENT-LIABILITIES> 47,727
<BONDS> 24,874
0
0
<COMMON> 319
<OTHER-SE> 293,102
<TOTAL-LIABILITY-AND-EQUITY> 442,617
<SALES> 0
<TOTAL-REVENUES> 68,163
<CGS> 0
<TOTAL-COSTS> 49,217
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 440
<INTEREST-EXPENSE> 928
<INCOME-PRETAX> 7,006
<INCOME-TAX> 3,687
<INCOME-CONTINUING> 3,319
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,319
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 44,955
<SECURITIES> 0
<RECEIVABLES> 43,554
<ALLOWANCES> (2,524)
<INVENTORY> 1,367
<CURRENT-ASSETS> 93,754
<PP&E> 371,345
<DEPRECIATION> (119,931)
<TOTAL-ASSETS> 442,855
<CURRENT-LIABILITIES> 54,221
<BONDS> 27,215
0
0
<COMMON> 315
<OTHER-SE> 285,069
<TOTAL-LIABILITY-AND-EQUITY> 442,855
<SALES> 0
<TOTAL-REVENUES> 253,241
<CGS> 0
<TOTAL-COSTS> 176,774
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,507
<INTEREST-EXPENSE> 3,440
<INCOME-PRETAX> 32,549
<INCOME-TAX> 12,912
<INCOME-CONTINUING> 19,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,637
<EPS-PRIMARY> .70
<EPS-DILUTED> .69
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 60,738
<SECURITIES> 0
<RECEIVABLES> 43,779
<ALLOWANCES> (1,438)
<INVENTORY> 1,468
<CURRENT-ASSETS> 109,332
<PP&E> 324,838
<DEPRECIATION> (113,662)
<TOTAL-ASSETS> 410,798
<CURRENT-LIABILITIES> 45,779
<BONDS> 29,224
0
0
<COMMON> 306
<OTHER-SE> 260,830
<TOTAL-LIABILITY-AND-EQUITY> 410,798
<SALES> 0
<TOTAL-REVENUES> 183,501
<CGS> 0
<TOTAL-COSTS> 127,835
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 530
<INTEREST-EXPENSE> 2,648
<INCOME-PRETAX> 23,904
<INCOME-TAX> 8,787
<INCOME-CONTINUING> 15,117
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,117
<EPS-PRIMARY> .56
<EPS-DILUTED> .55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,207
<SECURITIES> 0
<RECEIVABLES> 35,485
<ALLOWANCES> (1,274)
<INVENTORY> 1,440
<CURRENT-ASSETS> 49,206
<PP&E> 306,851
<DEPRECIATION> (106,103)
<TOTAL-ASSETS> 339,173
<CURRENT-LIABILITIES> 41,739
<BONDS> 79,128
0
0
<COMMON> 266
<OTHER-SE> 147,277
<TOTAL-LIABILITY-AND-EQUITY> 339,173
<SALES> 0
<TOTAL-REVENUES> 111,817
<CGS> 0
<TOTAL-COSTS> 77,449
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 614
<INTEREST-EXPENSE> 1,567
<INCOME-PRETAX> 12,696
<INCOME-TAX> 4,749
<INCOME-CONTINUING> 7,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,947
<EPS-PRIMARY> .30
<EPS-DILUTED> .29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-30-1997
<CASH> 24,078
<SECURITIES> 0
<RECEIVABLES> 24,676
<ALLOWANCES> (1,119)
<INVENTORY> 1,203
<CURRENT-ASSETS> 52,844
<PP&E> 250,392
<DEPRECIATION> (99,362)
<TOTAL-ASSETS> 259,141
<CURRENT-LIABILITIES> 31,074
<BONDS> 22,384
0
0
<COMMON> 266
<OTHER-SE> 141,619
<TOTAL-LIABILITY-AND-EQUITY> 259,141
<SALES> 0
<TOTAL-REVENUES> 47,935
<CGS> 0
<TOTAL-COSTS> 33,516
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 344
<INTEREST-EXPENSE> 668
<INCOME-PRETAX> 4,395
<INCOME-TAX> 1,720
<INCOME-CONTINUING> 2,675
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,675
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,657
<SECURITIES> 0
<RECEIVABLES> 25,916
<ALLOWANCES> (1,223)
<INVENTORY> 800
<CURRENT-ASSETS> 52,943
<PP&E> 242,724
<DEPRECIATION> (93,499)
<TOTAL-ASSETS> 256,183
<CURRENT-LIABILITIES> 41,987
<BONDS> 18,814
0
0
<COMMON> 261
<OTHER-SE> 133,010
<TOTAL-LIABILITY-AND-EQUITY> 256,183
<SALES> 0
<TOTAL-REVENUES> 180,720
<CGS> 0
<TOTAL-COSTS> 123,539
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,655
<INTEREST-EXPENSE> 2,617
<INCOME-PRETAX> 26,217
<INCOME-TAX> 9,814
<INCOME-CONTINUING> 16,403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,403
<EPS-PRIMARY> .65
<EPS-DILUTED> .64
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
NINE MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 24,024
<SECURITIES> 0
<RECEIVABLES> 26,623
<ALLOWANCES> (887)
<INVENTORY> 782
<CURRENT-ASSETS> 54,630
<PP&E> 230,626
<DEPRECIATION> (87,957)
<TOTAL-ASSETS> 242,463
<CURRENT-LIABILITIES> 37,197
<BONDS> 16,868
0
0
<COMMON> 258
<OTHER-SE> 125,042
<TOTAL-LIABILITY-AND-EQUITY> 242,463
<SALES> 0
<TOTAL-REVENUES> 129,931
<CGS> 0
<TOTAL-COSTS> 88,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,142
<INTEREST-EXPENSE> 1,935
<INCOME-PRETAX> 19,297
<INCOME-TAX> 7,057
<INCOME-CONTINUING> 12,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,240
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 30,417
<SECURITIES> 0
<RECEIVABLES> 22,974
<ALLOWANCES> (823)
<INVENTORY> 770
<CURRENT-ASSETS> 57,334
<PP&E> 200,187
<DEPRECIATION> (83,042)
<TOTAL-ASSETS> 209,192
<CURRENT-LIABILITIES> 25,254
<BONDS> 16,304
0
0
<COMMON> 258
<OTHER-SE> 113,384
<TOTAL-LIABILITY-AND-EQUITY> 209,192
<SALES> 0
<TOTAL-REVENUES> 81,689
<CGS> 0
<TOTAL-COSTS> 56,380
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 746
<INTEREST-EXPENSE> 1,384
<INCOME-PRETAX> 11,100
<INCOME-TAX> 4,000
<INCOME-CONTINUING> 7,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,100
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 27,305
<SECURITIES> 0
<RECEIVABLES> 20,545
<ALLOWANCES> (847)
<INVENTORY> 718
<CURRENT-ASSETS> 52,942
<PP&E> 195,009
<DEPRECIATION> (77,938)
<TOTAL-ASSETS> 202,227
<CURRENT-LIABILITIES> 24,816
<BONDS> 10,423
0
0
<COMMON> 258
<OTHER-SE> 110,476
<TOTAL-LIABILITY-AND-EQUITY> 202,227
<SALES> 0
<TOTAL-REVENUES> 37,217
<CGS> 0
<TOTAL-COSTS> 26,360
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 190
<INTEREST-EXPENSE> 793
<INCOME-PRETAX> 3,950
<INCOME-TAX> 1,380
<INCOME-CONTINUING> 2,570
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,570
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>