<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
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 1-7327
WMX TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-2660763
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3003 BUTTERFIELD ROAD,
OAK BROOK, ILLINOIS 60521
(Address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (630) 572-8800
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT REGISTRANT WAS REQUIRED
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS.
YES X NO
--- ---
SHARES OF REGISTRANT'S COMMON STOCK, $1 PAR VALUE, ISSUED AND
OUTSTANDING, AT OCTOBER 31, 1996 -- 485,121,646
================================================================================
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
-----
PAGE
----
PART I. Financial Information:
Consolidated balance sheets as of December 31, 1995, and
September 30, 1996................................................ 3
Consolidated statements of income for the three months and nine months
ended September 30, 1995 and 1996................................. 5
Consolidated statements of stockholders' equity for the nine months
ended September 30, 1995 and 1996................................. 6
Consolidated statements of cash flows for the nine months
ended September 30, 1995 and 1996................................. 8
Notes to consolidated financial statements............................. 9
Management's discussion and analysis of results of operations
and financial condition........................................... 14
PART II. Other Information............................................ 21
******
2
<PAGE>
PART I. FINANCIAL INFORMATION
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's omitted)
ASSETS
<TABLE>
<CAPTION>
December 31, 1995 September 30, 1996
----------------- ------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 189,031 $ 270,836
Short-term investments 36,243 24,224
Accounts receivable, less reserve of $66,840 in 1995
and $64,051 in 1996 1,880,934 1,953,985
Employee receivables 8,787 10,768
Parts and supplies 210,864 190,026
Costs and estimated earnings in excess of billings
on uncompleted contracts 334,786 379,875
Prepaid expenses 360,404 352,395
----------- -----------
Total Current Assets $ 3,021,049 $ 3,182,109
----------- -----------
PROPERTY AND EQUIPMENT, at cost:
Land, primarily disposal sites $ 4,575,117 $ 4,950,951
Buildings 1,572,821 1,545,297
Vehicles and equipment 7,498,718 7,719,341
Leasehold improvements 87,986 94,362
----------- -----------
$13,734,642 $14,309,951
Less - Accumulated depreciation and amortization (3,968,943) (4,454,389)
----------- -----------
Total Property and Equipment, Net $ 9,765,699 $ 9,855,562
----------- -----------
OTHER ASSETS:
Intangible assets relating to acquired businesses, net $ 4,205,031 $ 4,557,113
Sundry, including other investments 1,572,977 1,747,154
Net assets of discontinued operations 130,552 -
----------- -----------
Total Other Assets $ 5,908,560 $ 6,304,267
----------- -----------
Total Assets $18,695,308 $19,341,938
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's omitted except per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1995 September 30, 1996
----------------- ------------------
<S> <C> <C>
CURRENT LIABILITIES:
Portion of long-term debt payable within one year $ 1,094,165 $ 765,957
Accounts payable 1,072,372 877,060
Accrued expenses 991,539 1,115,882
Unearned revenue 263,029 278,788
----------- -----------
Total Current Liabilities $ 3,421,105 $ 3,037,687
----------- -----------
DEFERRED ITEMS:
Income taxes $ 956,525 $ 1,059,362
Environmental liabilities 622,952 553,439
Other 684,452 659,854
----------- -----------
Total Deferred Items $ 2,263,929 $ 2,272,655
----------- -----------
LONG-TERM DEBT, less portion payable within one year $ 6,420,610 $ 7,226,448
----------- -----------
MINORITY INTEREST IN SUBSIDIARIES $ 1,385,366 $ 1,228,001
----------- -----------
COMMITMENTS AND CONTINGENCIES $ $
----------- -----------
PUT OPTIONS $ 261,959 $ 304,139
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $l par value (issuable in series);
50,000,000 shares authorized; none outstanding
during the periods $ - $ -
Common stock, $l par value; 1,500,000,000 shares
authorized; 498,817,093 shares issued in 1995
and 507,101,774 in 1996 498,817 507,102
Additional paid-in capital 422,801 659,388
Cumulative translation adjustment (102,943) (100,345)
Retained earnings 4,486,877 4,904,027
----------- -----------
$ 5,305,552 $ 5,970,172
Less: Treasury stock; 10,287,741 shares, at cost - 331,213
1988 Employee Stock Ownership Plan 13,062 8,062
Employee Stock Benefit Trust (11,769,788
shares in 1995 and 10,886,361 shares
in 1996, at market) 350,151 357,889
----------- -----------
Total Stockholders' Equity $ 4,942,339 $ 5,273,008
----------- -----------
Total Liabilities and Stockholders'
Equity $18,695,308 $19,341,938
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30
(Unaudited)
(000's omitted except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------------ ------------------------
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUE $2,619,227 $2,690,619 $7,700,077 $7,725,935
---------- ---------- ---------- ----------
Operating expenses $1,794,619 $1,851,478 $5,295,761 $5,346,675
Special charges - - 140,600 -
Goodwill amortization 29,667 34,205 88,721 98,575
Selling and administrative
expenses 291,421 288,429 879,273 864,583
Interest expense 104,733 94,887 323,103 293,805
Interest income (8,262) (5,711) (31,611) (19,410)
Minority interest 38,022 32,620 107,453 92,874
Sundry income, net (23,441) (23,771) (53,705) (62,539)
---------- ---------- ---------- ----------
Income from continuing operations
before income taxes $ 392,468 $ 418,482 $ 950,482 $1,111,372
Provision for income taxes 161,667 173,276 405,927 457,946
---------- ---------- ---------- ----------
Income from continuing operations $ 230,801 $ 245,206 $ 544,555 $ 653,426
Income from operations of
discontinued businesses, less
applicable income taxes and
minority interest of $3,456 and
$9,930 for the three months and
nine months ended September 30,
1995, respectively 3,047 - 9,665 -
---------- ---------- ---------- ----------
NET INCOME $ 233,848 $ 245,206 $ 554,220 $ 653,426
========== ========== ========== ==========
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 486,286 490,693 485,495 491,712
========== ========== ========== ==========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Continuing operations $ 0.47 $ 0.50 $ 1.12 $ 1.33
Discontinued operations 0.01 - 0.02 -
---------- ---------- ---------- ----------
NET INCOME $ 0.48 $ 0.50 $ 1.14 $ 1.33
========== ========== ========== ==========
DIVIDENDS DECLARED PER SHARE $ 0.15 $ 0.16 $ 0.45 $ 0.47
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
1988
Employee
Additional Cumulative Stock Employee
Common Paid-In Translation Retained Treasury Ownership Stock
Stock Capital Adjustment Earnings Stock Plan Benefit Trust
-------- -------- ----------- ---------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 $496,387 $357,150 $(150,832) $4,181,606 $ - $19,729 $323,601
Net income for the period - - - 554,220 - - -
Cash dividends ($.45 per share) - - - (218,350) - - -
Dividends paid to Employee
Stock Benefit Trust - 5,439 - (5,439) - - -
Stock issued upon exercise
of stock options 39 (2,705) - - (1,348) - (11,522)
Treasury stock received in
connection with exercise of
stock options - - - - 332 - -
Tax benefit of non-qualified
stock options exercised - 1,422 - - - - -
Contribution to 1988 Employee
Stock Ownership Plan - - - - - (5,000) -
Treasury stock received as
settlement for claims - - - - 1,016 - -
Common stock issued upon
conversion of Liquid Yield
Option Notes 127 2,060 - - - - -
Common stock issued for
acquisitions 1,964 8,984 - - - - -
Temporary equity related to
put options - (1,670) - - - - -
Proceeds from sale of put
options - 14,013 - - - - -
Settlement of expired put
options - (12,019) - - - - -
Adjustment of Employee Stock
Benefit Trust to market value - 29,087 - - - - 29,087
Transfer of equity interests
among controlled subsidiaries - 529 - - - - -
Cumulative translation adjust-
ment of foreign currency
statements - - 54,972 - - - -
-------- -------- --------- ---------- --------- ---------- --------
Balance, September 30, 1995 $498,517 $402,290 $ (95,860) $4,512,037 $ - $ 14,729 $341,166
======== ======== ========= ========== ========= ========== ========
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
1988
Employee
Additional Cumulative Stock Employee
Common Paid-In Translation Retained Treasury Ownership Stock
Stock Capital Adjustment Earnings Stock Plan Benefit Trust
-------- ---------- ---------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $498,817 $422,801 $(102,943) $4,486,877 $ - $13,062 $350,151
Net income for the period - - - 653,426 - - -
Cash dividends ($.47 per share) - - - (231,074) - - -
Dividends paid to Employee
Stock Benefit Trust - 5,202 - (5,202) - - -
Stock repurchase
(11,100,000 shares) - - - - 359,172 - -
Stock issued upon exercise
of stock options 217 (8,323) - - (31,149) - (28,622)
Treasury stock received in
connection with exercise of
stock options - - - - 791 - -
Tax benefit of non-qualified
stock options exercised - 5,378 - - - - -
Contribution to 1988 Employee
Stock Ownership Plan - - - - - (5,000) -
Treasury stock received as
settlement for claims - - - - 2,450 - -
Common stock issued upon conversion
of Liquid Yield Option Notes 111 1,968 - - - - -
Stock issued for acquisitions 7,957 221,820 - - (51) - -
Temporary equity related to
put options - (42,180) - - - - -
Proceeds from sale of
put options - 16,362 - - - - -
Adjustment of Employee Stock
Benefit Trust to market value - 36,360 - - - - 36,360
Cumulative translation adjust-
ment of foreign currency
statements - - 2,598 - - - -
-------- -------- --------- ---------- -------- ------- --------
Balance, September 30, 1996 $507,102 $659,388 $(100,345) $4,904,027 $331,213 $ 8,062 $357,889
======== ======== ========= ========== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
Increase (Decrease) in Cash
(Unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income for the period $ 554,220 $ 653,426
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 661,461 694,952
Provision for deferred income taxes 199,806 154,643
Minority interest in subsidiaries 109,604 92,874
Interest on Liquid Yield Option Notes (LYONs)
and WMX Subordinated Notes 20,173 8,422
Contribution to 1988 Employee Stock
Ownership Plan 5,000 5,000
Special charge, net of tax 91,400 -
Changes in assets and liabilities, excluding effects
of acquired companies:
Receivables, net (6,649) (54,980)
Other current assets (55,512) 6,694
Sundry other assets 25,707 (6,668)
Accounts payable (92,689) (205,074)
Accrued expenses and unearned revenue 10,582 89,060
Deferred items (53,053) (142,226)
Other, net (11,125) (8,102)
----------- -----------
Net cash provided by operating activities $ 1,458,925 $ 1,288,021
----------- -----------
Cash flows from investing activities:
Short-term investments $ (41,779) $ 12,046
Capital expenditures (964,826) (855,109)
Proceeds from sale of assets and businesses 132,524 317,997
Cost of acquisitions, net of cash acquired (175,658) (64,561)
Other investments (41,324) (180,000)
Acquisition of minority interests (80,243) (336,431)
----------- -----------
Net cash used for investing activities $(1,171,306) $(1,106,058)
----------- -----------
Cash flows from financing activities:
Cash dividends $ (218,350) $ (231,074)
Proceeds from issuance of indebtedness 1,332,696 2,151,705
Repayments of indebtedness (1,353,789) (1,732,553)
Proceeds from exercise of stock options, net 9,872 50,874
Contributions from minority interests 16,328 3,700
Stock repurchases - (359,172)
Proceeds from sale of put options 14,013 16,362
Settlement of put options (12,019) -
----------- -----------
Net cash used for financing activities $ (211,249) $ (100,158)
----------- -----------
Net increase in cash and cash equivalents $ 76,370 $ 81,805
Cash and cash equivalents at beginning of period 123,348 189,031
----------- -----------
Cash and cash equivalents at end of period $ 199,718 $ 270,836
=========== ===========
The Company considers cash and cash equivalents
to include currency on hand, demand deposits
with banks and short-term investments with
maturities of less than three months when
purchased.
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 307,047 $ 285,383
Income taxes, net of refunds received $ 221,457 $ 250,420
Supplemental schedule of noncash investing and
financing activities:
LYONs converted into common stock of the Company $ 2,187 $ 2,079
Liabilities assumed in acquisitions of
businesses $ 200,026 $ 102,982
Fair market value of Company stock issued for
acquired businesses $ 58,267 $ 229,828
WMX Subordinated Notes issued for acquisition of
CWM minority interest $ 436,830 $ -
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
($000's omitted in all tables)
The financial statements included herein have been prepared by WMX Technologies,
Inc. ("WMX" or the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The financial information
included herein reflects, in the opinion of the Company, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position and results of operations for the periods presented. The
results for interim periods are not necessarily indicative of results for the
entire year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets, liabilities, income and expenses and
disclosures of contingencies. Further events could alter such estimates in the
near term.
Certain amounts in previously issued financial statements have been restated to
conform to 1996 classifications.
Income Taxes -
The following table sets forth the provision for income taxes for continuing
operations for the three months and nine months ended September 30, 1995, and
1996:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------- --------------------
1995 1996 1995 1996
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Currently payable $ 78,707 $135,552 $208,587 $303,885
Deferred 83,230 37,918 198,152 154,643
Amortization of deferred
investment credit (270) (194) (812) (582)
-------- -------- -------- --------
$161,667 $173,276 $405,927 $457,946
======== ======== ======== ========
</TABLE>
Business Combinations -
During 1995, the Company and its principal subsidiaries acquired 136 businesses
for $224,304,000 in cash (net of cash acquired) and notes, $77,689,000 of debt
assumed, and 2,236,354 shares of the Company's common stock. Three of the
aforementioned 1995 acquisitions, which otherwise met pooling of interests
criteria, were not significant in the aggregate and, consequently, prior period
financial statements were not restated. The remaining acquisitions were
accounted for as purchases.
In January 1995, the Company acquired all of the approximately 21.4% of the
outstanding shares of Chemical Waste Managment, Inc. ("CWM") that it did not
already own, for $436.8 million of convertible subordinated notes. In July 1995,
the Company acquired all of the approximately 3.1 million shares of Rust
International Inc. ("Rust") held by the public, for $16.35 per share in cash.
9
<PAGE>
During the nine months ended September 30, 1996, the Company and its principal
subsidiaries acquired 74 businesses for $64,561,000 in cash (net of cash
acquired) and notes, $38,185,000 of debt assumed, and 7,958,163 shares of the
Company's stock. These acquisitions were accounted for as purchases. The pro
forma effect of the acquisitions made during 1995 and 1996 is not material.
During the third quarter, Wheelabrator Technologies Inc. ("WTI") announced an
agreement to sell its industrial water process and manufacturing businesses to
United States Filter Corporation ("U.S. Filter") for $370 million cash. Revenue
and operating income of the units to be sold were approximately $330 million and
$20 million, respectively, in the first nine months of 1996 and approximately
$338 million and $15 million in the comparable 1995 period. Separately, WTI and
U.S. Filter announced their intention to form a new, equally-owned joint venture
to develop, finance, own and operate water and wastewater infrastructure in
North America. Both transactions are expected to be completed during the fourth
quarter.
As of September 30, 1996, Rust sold its industrial scaffolding business for
approximately $190 million. Revenue and operating income from the scaffolding
business were not material to the consolidated financial statements.
Discontinued Operations -
In the fourth quarter of 1995, the Rust Board of Directors approved a plan to
sell or otherwise discontinue Rust's process engineering, construction,
specialty contracting and similar lines of business and have Rust focus on its
environmental and infrastructure consulting businesses. During the second
quarter of 1996, the sale of the industrial process engineering and construction
business, based in Birmingham, Alabama, was completed.
Revenue from the discontinued businesses was $206.8 million for the three-month
and $586.9 million for the nine-month periods in 1995 and $209.8 million for
1996 through the date of sale. Results of operations in 1996 were not material
and were included in the reserve for loss on disposition provided previously.
Accounting Principles -
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("FAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." The change did not have a material
impact on the Company's financial statements.
In October 1995, the Financial Accounting Standards Board issued FAS No. 123,
"Accounting for Stock-Based Compensation," which the Company also must adopt in
1996. FAS 123 provides an optional new method of accounting for employee stock
options and expands required disclosure about stock options. If the new method
of accounting is not adopted, the Company will be required to disclose pro forma
net income and earnings per share as if it were. The Company is studying FAS No.
123 and is gathering data necessary to calculate compensation in accordance with
its provisions, but has not decided whether to adopt the new method or
quantified its impact on the financial statements.
Derivative Financial Instruments -
From time to time, the Company uses derivatives to manage interest rate,
currency and commodity risk. The amount of such instruments outstanding at any
point in time and gains or losses from their use have not been and are not
expected to be material to the Company's financial statements.
10
<PAGE>
INTEREST RATE AGREEMENTS Certain of the Company's subsidiaries have entered into
interest rate swap agreements to balance fixed and floating rate debt in
accordance with management's criteria. The agreements are contracts to exchange
fixed and floating interest rate payments periodically over the term without the
exchange of the underlying notional amounts. The agreements provide only for the
exchange of interest on the notional amounts at the stated rates, with no
multipliers or leverage. Differences paid or received are recognized as a part
of interest expense on the underlying debt over the life of the agreements.
CURRENCY AGREEMENTS From time to time, the Company and certain of its
subsidiaries use foreign currency derivatives to mitigate the impact of
translation on foreign earnings and income from foreign investees. Typically
these have taken the form of purchased put options or offsetting put and call
options with different strike prices. The Company receives or pays, based on the
notional amount of the option, the difference between the average exchange rate
of the hedged currency against the base currency and the average (strike price)
contained in the option. Complex instruments involving multipliers or leverage
are not used. Although the purpose for using such derivatives is to mitigate
currency risk, they do not qualify for hedge accounting under generally accepted
accounting principles and accordingly, must be adjusted to market value at the
end of each accounting period.
COMMODITY AGREEMENTS The Company utilizes collars, calls and swaps to mitigate
the risk of price fluctuations on the fuel used by its vehicles. Quantities
hedged equate to committed fuel purchases or anticipated usage and accordingly,
gains and losses are deferred and recognized as fuel is purchased.
The Company is exposed to credit loss in the event of non-performance by
counterparties on interest rate, currency and commodity derivatives, but in all
cases such counterparties are highly rated financial institutions and the
Company does not anticipate non-performance. Maximum credit exposure is
represented by the fair value of contracts with a positive fair value at
September 30, 1996, which is not material.
Environmental Liabilities -
The majority of the businesses in which the Company is engaged are intrinsically
connected with the protection of the environment. As such, a significant portion
of the Company's operating costs and capital expenditures could be characterized
as costs of environmental protection. While the Company is faced, in the normal
course of business, with the need to expend funds for environmental protection
and remediation, it does not expect such expenditures to have a material adverse
effect on its financial condition or results of operations because its business
is based upon compliance with environmental laws and regulations and its
services are priced accordingly. Such costs may increase in the future as a
result of legislation or regulation; however, the Company believes that in
general it benefits from increased government regulation, which increases the
demand for its services, and that it has the resources and experience to manage
environmental risk.
As part of its ongoing operations, the Company provides for estimated closure
and post-closure monitoring costs over the operating life of disposal sites as
airspace is consumed. The Company has also established procedures to evaluate
its potential remedial liabilities at closed sites which it owns or operated or
to which it transported waste, including 105 sites listed on the Superfund
National Priority List ("NPL"). The majority of the situations involving NPL
sites relate to allegations that subsidiaries of the Company (or their
predecessors) transported waste to the facilities in question, often prior to
the acquisition of such subsidiaries by the Company. Where the Company concludes
that it is probable that a liability has been incurred, provision is made in the
financial statements.
11
<PAGE>
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies or other factors could necessitate the
recording of additional liabilities which could be material.
The Company and certain of its subsidiaries are named as defendants in personal
injury and property damage lawsuits, including purported class actions, on the
basis of a Company subsidiary's having owned, operated or transported waste to a
disposal facility which is alleged to have contaminated the environment or, in
certain cases, conducted environmental remediation activities at such sites.
While the Company believes it has meritorious defenses to these lawsuits, their
ultimate resolution is often substantially uncertain due to a number of factors,
and it is possible such matters could have a material adverse impact on the
Company's earnings for one or more quarters or years.
Stockholders' Equity -
The Boards of Directors of WMX and WTI have authorized their respective
companies to repurchase shares of their own common stock in the open market or
in privately negotiated transactions. The WMX authorization covers 25 million
shares and extends into 1997. WMX has repurchased 11.1 million shares during the
first nine months of 1996, including 6.1 million shares during the third
quarter. In August 1996, the WTI Board authorized a repurchase of 10 million
shares, replacing an existing 20 million share authorization under which WTI had
repurchased 19.7 million shares, including 0.5 million in the third quarter and
18.9 million in the first nine months of 1996. The new authorization extends to
August 1998.
In conjunction with its authorized repurchase program, WMX periodically sells
put options on its common stock. The put options give the holders the right at
maturity to require the Company to repurchase its shares at specified prices.
Proceeds from the sale of the options are credited to additional paid-in
capital. In the event the options are exercised, the Company may elect to pay
the holder in cash the difference between the strike price and the market price
of the Company's shares in lieu of repurchasing the stock. At September 30,
1996, put options were outstanding for 8.9 million shares. Subsequent to
September 30, 1996, options on 2.5 million shares were exercised and the Company
elected to repurchase the stock at a cost of $86.5 million. Additionally, 5.3
million options expired unexercised. The remaining outstanding options
(including 1.8 million sold in October 1996) expire in February 1997 with strike
prices of $32.04 to $34.125 per share.
Commitments and Contingencies -
Waste Management International plc ("WM International") has received an
assessment of approximately 417 million Krona (approximately $63 million) from
the Swedish Tax Authority, relating to a transaction completed in 1990. WM
International believes that all appropriate tax returns and disclosures were
filed at the time of the transaction and intends to vigorously contest the
assessment.
A subsidiary of WMI has been involved in litigation challenging a municipal
zoning ordinance which restricted the height of its New Milford, Connecticut
landfill to a level below that allowed by the permit previously issued by the
12
<PAGE>
Connecticut Department of Environmental Protection ("DEP"). WMI is presently
under an order of the Superior Court to apply to the DEP for permission to
remove all waste above the height allowed by the zoning ordinance. The Company
believes that the removal of such waste is an inappropriate remedy and has
appealed the Superior Court order to the state Supreme Court. The Company is
unable to predict the outcome of this appeal or the nature and extent of any
removal action that may ultimately be required. However, if the Superior Court
order is not modified, the subsidiary could incur substantial costs, which could
vary significantly depending upon the nature of any plan eventually approved by
the applicable regulatory authorities, the actual volume of waste to be moved,
and other factors, and which could have a material adverse effect on the
Company's financial condition and results of operations in the near term.
In July 1996, a Federal District Court permanently enjoined the State of New
Jersey from enforcing its comprehensive solid waste flow control system. Flow
control typically involves a governmental authority specifying the disposal site
for all solid waste generated within its borders. The New Jersey ruling is one
of a number of similar court rulings since a 1994 U.S. Supreme Court decision
that state and local governments may not constitutionally restrict the free
movement of trash in interstate commerce through the use of flow control laws.
Other subsequent court decisions have upheld nonregulatory means by which
municipalities may effectively control the flow of solid waste. Federal
legislation has been proposed, but not enacted, to essentially grandfather
existing flow control mandates.
WTI's Gloucester County, New Jersey, trash-to-energy facility relies on a
disposal franchise for substantially all of its supply of municipal solid waste.
The Federal District Court stayed its injunction for so long as its ruling is on
appeal plus an additional period of two years to enable the State to devise an
alternative nondiscriminatory approach. The State has filed an appeal of the
Federal District Court ruling and has indicated that it will continue to enforce
flow control during the transition period.
To date, court decisions with regard to flow control have not had a material
adverse effect on the Company's operations. However, given the uncertainty
surrounding the matter, it is not possible to predict what impact, if any, it
may have in the future on the Company's disposal facilities, particularly WTI's
trash-to-energy facilities.
In the ordinary course of conducting its business, the Company becomes involved
in lawsuits, administrative proceedings and governmental investigations,
including antitrust and environmental matters. Some of these proceedings may
result in fines, penalties or judgments being assessed against the Company
which, from time to time, may have an impact on earnings for a particular
quarter or year. The Company does not believe that these proceedings,
individually or in the aggregate, are material to its business or financial
condition.
Legal Matters -
See Part II of this Form 10-Q for a discussion of legal matters.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(all tables in millions)
RESULTS OF OPERATIONS:
- ----------------------
CONSOLIDATED -
- --------------
For the three months ended September 30, 1996, WMX Technologies, Inc. and
its subsidiaries ("WMX" or the "Company") had net income from continuing
operations of $245.2 million or $.50 per share, compared with $230.8 million or
$.47 per share in the same period in 1995. Net income was $.50 per share for the
1996 quarter compared with $.48 per share in 1995. Revenue was $2.69 billion for
the three months ended September 30, 1996, versus $2.62 billion (restated to
eliminate discontinued operations) in the year-earlier period.
For the nine months ended September 30, 1996, income from continuing
operations was $653.4 million or $1.33 per share, versus $544.6 million or $1.12
per share for the corresponding period in 1995. The 1995 results include charges
by the Company's Chemical Waste Management, Inc. ("CWM") subsidiary related to a
revaluation of investments in certain hazardous waste treatment and processing
technologies and facilities, which reduced consolidated earnings in the nine
months by $.19 per share, and $.01 per share for the write-off of deferred costs
related to debt securities which were put to the Company by the debtholders
prior to maturity. Excluding these charges, earnings per share from continuing
operations for the nine months ended September 30, 1995, were $1.32. Net income
per share was $1.33 for the first nine months of 1996 compared with $1.14 ($1.34
excluding the charges discussed above) for the first nine months of 1995.
Revenue for the periods was $7.73 billion in 1996 and $7.70 billion in 1995.
The Company provides environmental services internationally through five
principal operating subsidiaries: Waste Management, Inc. ("WMI"), CWM,
Wheelabrator Technologies Inc. ("WTI"), Waste Management International plc ("WM
International") and Rust International Inc. ("Rust"). However, operations are
managed on the basis of four global lines of business - waste services, clean
energy, clean water, and environmental and infrastructure
14
<PAGE>
consulting. The analysis which follows is presented on the basis of these four
lines of business.
Waste Services -
- -----------------
Operating results for the three months and nine months ended September 30
were as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $2,269.6 $2,209.2 $6,511.9 $6,459.0
Operating expenses 1,601.4 1,547.5 4,626.4 4,545.7
Selling and
admin. expenses 236.8 242.9 715.8 728.7
-------- -------- -------- --------
Margin $ 431.4 $ 418.8 $1,169.7 $1,184.6
======== ======== ======== ========
</TABLE>
Revenue by source for the three months and nine months ended September 30
is shown in the following table:
<TABLE>
<CAPTION>
Three Months Nine Months
-------------------------------- ------------------------------
Percentage Percentage
Increase/ Increase/
1996 1995 (Decrease) 1996 1995 (Decrease)
-------- --------- ----------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
North America
Residential $ 325.2 $ 308.7 5.3% $ 957.1 $ 906.1 5.6%
Commercial 430.4 415.1 3.7 1,254.6 1,217.6 3.0
Rolloff and
industrial 365.7 348.9 4.8 1,041.5 997.3 4.4
Disposal, transfer
and other* 558.1 555.0 0.6 1,542.8 1,543.9 (0.1)
Industrial services 119.9 122.3 (2.0) 341.3 443.6 (23.1)
International 470.3 459.2 2.4 1,374.6 1,350.5 1.8
-------- -------- -------- --------
Total $2,269.6 $2,209.2 2.7% $6,511.9 $6,459.0 0.8%
======== ======== === ======== ======== ===
</TABLE>
* Includes hazardous waste revenue of $145.4 million and $398.4 million,
respectively, for the three-month and nine-month periods of 1996 and $154.1
million and $446.1 million for the comparable 1995 periods.
North American solid waste revenue grew 4.1% for the third quarter of 1996
compared with the third quarter of 1995, and 4.2% for the 1996 nine months
compared with the same period in 1995. Revenue growth was inhibited by a
substantial decline in prices for recyclable commodities in 1996. Recycling
revenue declined 23.5% for the quarter and 14.8% for the nine months of 1996
compared with the same periods in 1995. The Company has responded by reducing
its processing of lower grades of paper, adjusting the capacity of its recycling
operations, and continually striving to reduce processing costs and improve the
marketing of commodities. Despite these efforts, the Company has been unable to
replace profits associated with the stronger 1995 commodity market.
For both the third quarter and nine months of 1996, volume caused revenue
growth of 2 to 2.5% and acquisitions 1.5 to 2%. Pricing was
15
<PAGE>
essentially flat as a revenue increase of 2.0 to 2.5% from price increases in
solid waste collection and disposal was offset by reduced commodity prices.
Industrial services revenue for the first nine months of 1995 included the
Rust environmental remediation business, which was exchanged in May 1995 for an
approximately 37% equity interest in OHM Corporation. The remediation business
had 1995 revenue of $62.2 million through the date of its sale.
Revenue from waste services outside North America increased 2.4% in the
third quarter of 1996 and 1.8% for the first nine months compared with the same
periods in 1995. Revenue growth in approximately equal proportions from price
increases and acquisitions was partially offset by volume declines of 0.6% for
the third quarter and 2.1% for the first nine months of 1996, primarily in
France and Germany. International operations were also negatively impacted by
lower commodity prices, although to a lesser extent than in North America,
because of higher disposal fees and taxes in Europe. Currency translation
resulted in revenue increases of approximately 1.0% for both the quarter and the
nine months.
Operating expenses were 70.6% of revenue for the 1996 quarter compared with
70.0% for the third quarter of 1995, and 71.3% for the second quarter of 1996.
Depressed commodity prices, higher fuel costs, low margin construction revenue
on the West Kowloon transfer station in Hong Kong, and volume declines in Europe
have increased 1996 operating expenses as a percentage of revenue compared with
1995. However, continuing productivity improvements have mitigated this impact
and have resulted in sequential reductions in operating expense percentages in
each 1996 quarter. Selling and administrative expenses declined from 11.0% in
the third quarter of 1995 and 11.0% in the second quarter of 1996 to 10.4% for
the quarter ended September 30, 1996. The improvement resulted from a
streamlining of the international organization and continuing productivity
enhancements on a global basis.
As of September 30, 1996, Rust sold its industrial scaffolding business for
approximately $190 million. Revenue and operating income from the scaffolding
business were not material to the consolidated financial statements.
Clean Energy -
- --------------
Operating results for the three months and nine months ended September 30
are set forth below:
<TABLE>
<CAPTION>
Three Months Nine Months
---------------- ---------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue $212.3 $210.9 $631.2 $683.2
Operating expenses 135.0 134.3 404.7 447.9
Selling and admin.
expenses 9.1 10.9 28.9 32.9
------ ------ ------ ------
Margin $ 68.2 $ 65.7 $197.6 $202.4
====== ====== ====== ======
</TABLE>
Revenue for this business line increased slightly to $212.3 million in the
third quarter of 1996 compared with $210.9 million in the comparable 1995
period. Operating revenue from the Lisbon, Connecticut trash-to-energy facility,
which began commercial operations in January 1996, the acquisition of a
cogeneration facility in California, higher trash deliveries at certain plants,
and less curtailment of electrical purchases from the Company's California
independent power facilities offset a continuing decline in air
16
<PAGE>
business revenue, which is included in this business line. The decline in air
business revenue reflects a continuing weakness in the industry in the face of
regulatory uncertainty. The revenue decline for the first nine months of 1996
compared with 1995 reflects the absence of construction revenue on the Lisbon
facility, which was $37.5 million in the prior year, as well as the air business
revenue decline. Operating expenses for the three months remained virtually flat
from the comparable period in 1995, and for the nine months declined in both
real terms and as a percentage of revenue in 1996 as a result of the absence of
Lisbon construction revenue, which had no margin, actions taken in 1995 to
downsize the air business to reflect existing market conditions, and lower
maintenance expenses. Selling and administrative expenses declined in both the
three-month and nine-month periods of 1996 compared with 1995 because of the air
business downsizing and reduced project development spending.
Clean Water -
- --------------
Operating results for the three months and nine months ended September 30
were as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
-------------- --------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue $158.6 $158.8 $471.9 $460.0
Operating expenses 124.9 124.1 372.8 363.2
Selling and
admin.expenses 22.3 21.4 67.5 65.8
------ ------ ------ ------
Margin $ 11.4 $ 13.3 $ 31.6 $ 31.0
====== ====== ====== ======
</TABLE>
Revenue for the third quarter of 1996 was flat compared with the prior year
as lower revenue from North American and European water process businesses
offset growth of $5.1 million from acquisitions. The decline in North American
water process revenue was a function of a large project being completed in 1995.
European revenue was negatively impacted by the weak German economy, contract
timing and the stronger dollar. Nine-month revenue grew $11.9 million or 2.6%,
in 1996 compared with 1995. Acquisitions accounted for $14.1 million of revenue
growth, while growth in existing biosolids and contract operations and in the
Asian market provided an additional $20.0 million. These increases were
partially offset by lower water process revenue in Europe and North America.
Operating income declined $1.9 million from the third quarter of 1995 to
$11.4 million in the three months ended September 30, 1996, as a result of lower
gross margins and higher selling and administrative expenses. The margin decline
resulted from acquisitions with lower margins than existing businesses, and wet
weather affecting land application of biosolids in certain regions of the United
States. Selling and administrative expenses increased slightly in both the
three-month and nine-month periods of 1996 as a result of acquisitions and the
growth of Asian operations.
During the third quarter of 1996, WTI announced an agreement to sell its
industrial water process and manufacturing businesses to United States Filter
Corporation ("U.S. Filter") for approximately $370 million cash. Revenue and
operating income of the units to be sold were approximately $330 million and $20
million in the first nine months of 1996 and $338 million and $15 million in the
comparable 1995 period. Separately, WTI and U.S. Filter announced their
intention to form a new, equally-owned joint venture to develop, finance, own
and operate water and wastewater infrastructure in North America. Both
transactions are expected to be completed in the fourth quarter.
17
<PAGE>
Environmental and Infrastructure Consulting -
- ---------------------------------------------
Operating results for the three months and nine months ended
September 30 are set forth in the following table:
<TABLE>
<CAPTION>
Three Months Nine Months
----------------- ----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue $124.8 $121.3 $358.1 $346.9
Operating expenses 99.1 97.5 288.5 273.7
Selling and
admin. expenses 20.3 16.2 52.4 51.9
------ ------ ------ ------
Margin $ 5.4 $ 7.6 $ 17.2 $ 21.3
====== ====== ====== ======
</TABLE>
Revenues grew 2.9% in the third quarter and 3.2% for the nine months of
1996 compared with the same periods in 1995. Operating expenses increased in
real terms but for the third quarter of 1996 declined slightly as a percentage
of revenue. For the nine months, such expenses increased to 80.6% of revenue
from 78.9% in 1995. Operating expense percentages are largely a function of the
revenue breakdown between labor-based revenue and subcontract and other pass-
through revenues which have little or no mark-up. For the first nine months of
1996, labor-based revenue declined compared with 1995. Selling and
administrative expenses had been declining for the first six months of 1996 as a
result of cost control programs and the consolidation of certain operating
units. However, during the third quarter, this business line absorbed certain
costs as a result of assuming responsibility for certain Rust corporate
functions previously handled by the discontinued operations discussed below.
Discontinued Operations -
- -------------------------
In the fourth quarter of 1995, the Rust Board of Directors approved a plan
to sell or otherwise discontinue Rust's process engineering, construction,
specialty contracting and similar lines of business, and have Rust focus on its
environmental and infrastructure consulting businesses. During the second
quarter of 1996, the sale of the industrial process engineering and construction
businesses, based in Birmingham, Alabama, was completed. The remaining
businesses are not material to the consolidated financial statements.
Revenue from the discontinued businesses was $206.8 million for the third
quarter and $586.9 million for the nine months of 1995 and $209.8 million for
1996 through the date of sale. Results of operations in 1996 were not material
and were included in the reserve for loss on disposition previously provided.
Interest -
- ----------
The following table sets forth the components of consolidated interest,
net, for the three months and nine months ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Nine Months
--------------- ---------------
1996 1995 1996 1995
------ ------ ------- ------
<S> <C> <C> <C> <C>
Interest expense $113.4 $125.5 $347.0 $382.8
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Interest income (5.7) (8.3) (19.4) (31.6)
Capitalized interest (18.5) (20.7) (53.2) (59.7)
----- ----- ----- ------
Interest expense, net $89.2 $96.5 $274.4 $291.5
===== ===== ====== ======
</TABLE>
Net interest expense has declined in 1996 compared with 1995 as a result of
lower rates, including the benefit of refinancing certain debt, offsetting a
reduction in capitalized interest and the impact of the buy-back of the public
ownership of CWM and Rust during 1995 and shares of WMX and WTI in 1996.
Capitalized interest has declined due to continuing management effort to reduce
capital expenditures.
Minority Interest -
- -------------------
Minority interest declined in the third quarter and first nine months of
1996 compared with the same periods in 1995 as a result of the purchase of the
public shares of CWM and Rust, and stock repurchases by WTI which have increased
the WMX ownership of WTI to approximately 65% at September 30, 1996.
Accounting Principles -
- -----------------------
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("FAS") No. 121 - Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of. The adoption of this
Standard did not have a material impact on the financial statements. The
Financial Accounting Standards Board has also issued FAS No. 123 - Accounting
for Stock-Based Compensation - which the Company must adopt in 1996. This
Statement provides an optional new method of accounting for employee stock
options and expands required disclosure about stock options. If the new method
of accounting is not adopted, the Company will be required to disclose pro forma
net income and earnings per share as if it were. The Company is studying FAS No.
123 and is gathering the data necessary to calculate compensation in accordance
with its provisions, but has not decided whether to adopt the new method or
quantified its impact on the financial statements.
Derivatives -
- -------------
From time to time, the Company and certain of its subsidiaries use
derivatives to manage currency, interest rate, and commodity (fuel) risk.
Derivatives used are simple agreements which provide for payments based on the
notional amount, with no multipliers or leverage. The Company's use of
derivatives has not been and is not expected to be material with respect to
financial condition or results of operations.
Environmental Liabilities -
- ---------------------------
The majority of the businesses in which the Company is engaged are
intrinsically connected with the protection of the environment. As such, a
significant portion of the Company's operating costs and capital expenditures
could be characterized as costs of environmental protection.
As part of its ongoing operations, the Company is required to provide
for closure and post-closure monitoring costs of its sites and has also
19
<PAGE>
established procedures to evaluate potential remedial liabilities at closed
sites which it owned or operated or to which it transported waste. From time to
time, the Company and certain of its subsidiaries are named as defendants in
personal injury and property damage lawsuits, including purported class actions,
on the basis of a Company subsidiary having owned, operated or transported waste
to a disposal facility which is alleged to have contaminated the environment,
or, in certain cases, conducted environmental remediation activities at such
sites.
The Company believes that it has adequately provided for its environmental
liabilities. However, because of the uncertainties surrounding this area, it is
reasonably possible that technological, regulatory or enforcement developments,
the result of environmental studies, the outcome of litigation or other factors
could require the Company to record additional liabilities which could be
material.
FINANCIAL CONDITION:
Liquidity and Capital Resources -
- ---------------------------------
The Company operates in a service industry with neither significant
inventory nor seasonal variation in receivables. Its primary source of liquidity
is cash flow from operations, and accordingly, minimizing working capital
typically does not adversely affect operations. The Company had working capital
of $144.4 million at September 30, 1996, compared with a working capital deficit
of $400.1 million at December 31, 1995. Cash and cash equivalents increased
$81.8 million, net receivables increased $75.0 million and costs and estimated
earnings in excess of billings on uncompleted contracts increased $45.1 million
during the first nine months of 1996. Other current assets declined an aggregate
of $40.8 million during the period. Accounts payable, accrued expenses and
unearned revenue decreased $55.2 million, while current debt declined $328.2
million as a result of refinancing, on a long-term basis, commercial paper and
debt maturing during 1996.
The Company has adopted a strategy of raising the level of "owners' cash
flow", which it defines as cash flow from operating activities less net capital
expenditures (other than acquisitions) and dividends. Such amounts are available
to make acquisitions, reduce debt, or repurchase common stock. Although behind
plan for nine months, owners' cash flow is still expected to approximate $700
million for 1996. In the second quarter of 1996, management also established a
goal of converting approximately $1 billion of non-core or under-performing
assets into cash by mid-1998.
Acquisitions and Capital Expenditures -
- ---------------------------------------
Capital expenditures, excluding property and equipment of purchased
businesses, were $855.1 million for the nine months ended September 30, 1996,
and $964.8 million for the comparable period in 1995. In addition, the Company
and its principal subsidiaries acquired 74 businesses for $102.7 million in cash
and debt (including debt assumed)and 8.0 million shares of WMX common stock
during the first nine months of 1996. For the comparable period in 1995, 103
businesses were acquired for $248.7 million in cash and debt (including debt
assumed) and 2.0 million shares of WMX common stock. The pro forma effect of
acquisitions during 1995 and 1996 is not material.
20
<PAGE>
Capital Structure -
- -------------------
The Boards of Directors of WMX and WTI have authorized their respective
companies to repurchase shares of their own common stock in the open market or
in privately negotiated transactions. The WMX authorization covers 25 million
shares (of which 11.1 million had been repurchased as of September 30) and
extends into 1997. In August 1996, the WTI Board authorized a repurchase of 10
million shares, replacing an existing 20 million share authorization under which
WTI had repurchased 19.7 million shares, including 18.9 million during the first
nine months of 1996. The new authorization extends to August 1998.
In conjunction with its authorized repurchase program, WMX periodically
sells put options on its own common stock. The put options give the holders the
right at maturity to require the Company to repurchase its shares at specified
prices. Proceeds from the sale of the options are credited to additional paid-in
capital. In the event the options are exercised, the Company may elect to pay
the holder in cash the difference between the strike price and the market price
of the Company's shares in lieu of repurchasing the stock. During September and
October of 1996, the Company sold put options on 2.9 million shares at strike
prices of $32.04 to $34.125 per share. Options on 7.8 million shares which were
outstanding at September 30, 1996, expired subsequently. The Company repurchased
2.5 million shares and the balance expired unexercised.
Excluding debt of acquired companies and the impact of currency
translation, net debt decreased $40.7 million in the third quarter of 1996 but
increased $395.5 million during the first nine months. The nine-month increase
was primarily a result of the share repurchases by the Company and WTI.
Contingencies -
- ---------------
The Company and its subsidiaries are involved in various matters which
involve contingent liabilities not currently reflected in the financial
statements. See "Notes to Consolidated Financial Statements." There were no
significant changes in any of these matters during the third quarter of 1996.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
-----------------
The majority of the businesses in which the Company is engaged are
intrinsically connected with the protection of the environment and the potential
for the unintended or unpermitted discharge of materials into the environment.
In the ordinary course of conducting its business activities, the Company
becomes involved in judicial and administrative proceedings involving
governmental authorities at the federal, state and local level, including, in
certain instances, proceedings instituted by citizens or local governmental
authorities seeking to overturn governmental action where governmental officials
or agencies are named as defendants together with the Company or one or more of
its subsidiaries, or both. In the majority of the situations where proceedings
are commenced by governmental authorities, the matters involved relate to
alleged technical violations of licenses or permits pursuant to which the
Company operates or is seeking to operate or laws or regulations to which its
operations are subject, or are the result of different interpretations of the
applicable requirements. From time to time
21
<PAGE>
the Company pays fines or penalties in environmental proceedings relating
primarily to waste treatment, storage or disposal or trash-to-energy facilities.
As of September 30, 1996, neither the Company nor any of its subsidiaries was
involved in any such proceeding where it is believed that sanctions involved may
exceed $100,000. Subject to the discussion below concerning the Company's New
Milford, Connecticut landfill, the Company believes that these matters will not
have a material adverse effect on its results of operation or financial
condition. However, the outcome of any particular proceeding cannot be predicted
with certainty, and the possibility remains that technological, regulatory or
enforcement developments, the results of environmental studies or other factors
could materially alter this expectation at any time.
A subsidiary of the Company has been involved in litigation challenging a
municipal zoning ordinance which restricted the height of its New Milford,
Connecticut landfill to a level below that allowed by the permit previously
issued by the Connecticut Department of Environmental Protection ("DEP").
Although a lower court had declared the zoning ordinance's height limitation
unconstitutional, the Connecticut Supreme Court reversed that ruling and
remanded the case for further proceedings in the Superior Court in the judicial
district of Litchfield. On November 8, 1995, the Superior Court ordered the
Company's subsidiary to apply to the DEP for permission to remove all waste
above the height allowed by the zoning ordinance. The Company believes that
removal of such waste is an inappropriate remedy and its subsidiary has appealed
the Superior Court order to the Connecticut Supreme Court. The Company is unable
to predict the outcome of the appeal or any removal action that may ultimately
be required following further appeals or as a result of the permitting process.
However, if the lower court order as to removal of the waste is not modified,
the subsidiary could incur substantial costs, which could vary significantly
depending upon the nature of any plan which is eventually approved by applicable
regulatory authorities for removing the waste, the actual volume of waste to be
moved and other currently unforeseeable factors and which could have a material
adverse effect on the Company's financial condition and results of operations in
one or more future periods.
ITEM 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
The exhibits to this report are listed in the Exhibit Index elsewhere
herein.
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K dated August 13, 1996 reporting (i)
that the Company's majority-owned subsidiary Wheelabrator Technologies Inc.
("WTI") and United States Filter Corporation ("U.S. Filter") had announced (A)
an agreement in principle to form a joint venture to pursue opportunities in the
municipal and industrial water and wastewater treatment operations,
privatization and outsourcing marketplace, and (B) a definitive agreement for
WTI to sell to U.S. Filter all of WTI's industrial water process, manufacturing
and custom-engineered systems business, and (ii) the amendment of the Company's
By-laws to change certain time periods applicable to stockholder nominations for
directors and proposals and otherwise to clarify certain related matters with
respect to stockholder meetings.
22
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WMX TECHNOLOGIES, INC.
/s/ JAMES E. KOENIG
---------------------------------------
James E. Koenig - Senior Vice President
and Chief Financial Officer
November 8, 1996
23
<PAGE>
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
Number and Description of Exhibit*
---------------------------------
2 None
3 None
4 None
10.1 Amended and Restated Employment Agreement dated as of
June 17, 1996 with Phillip B. Rooney
10.2 Employment Agreement dated as of August 15, 1996 with
James E. Koenig
10.3 Employment Agreement dated as of August 15, 1996 with
Herbert A. Getz
10.4 Restricted Stock Agreement dated as of August 15, 1996
with James E. Koenig
10.5 Restricted Stock Agreement dated as of August 15, 1996
with Herbert A. Getz
11 None
12 Computation of Ratios of Earnings to Fixed
Charges
15 None
18 None
19 None
22 None
23 None
24 None
27 Financial Data Schedule
99 None
- -----------------------
* Exhibits not listed are inapplicable.
24
<PAGE>
Exhibit 10.1
WMX TECHNOLOGIES, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") dated as
of this 7th day of June, 1996, between WMX TECHNOLOGIES, INC., a Delaware
corporation (hereinafter referred to as the "Company"), and PHILLIP B. ROONEY
(hereinafter referred to as the "Executive"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive has previously served and is serving as President of
the Company; and
WHEREAS, the Board of Directors of the Company has also elected the
Executive as Chief Executive Officer of the Company effective as of the date
hereof; and
WHEREAS, the Executive has developed extensive experience with respect to
the management and operations of the Company which it considers extremely
valuable to the continued prosperity of the Company; and
WHEREAS, the Company wishes to adequately compensate the Executive and to
ensure that the Company will continue to have the Executive available to perform
for the Company duties as President and Chief Executive Officer for the Company;
and
WHEREAS, the Company and the Executive have entered into a prior employment
agreement dated as of September 1, 1986 (the "Prior Agreement") and the parties
hereto desire to amend and restate the Prior Agreement in its entirety in order
to reflect the election of the Executive to the additional position of Chief
Executive Officer; and
WHEREAS, the Company and the Executive desire to set forth in this
Agreement the terms, conditions and obligations of the parties with respect to
such employment and this Agreement is intended by the parties to supersede all
previous agreements and understandings, whether written or oral, including the
Prior Agreement, concerning such employment.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive effective as of the
date of this Agreement and the Executive hereby accepts employment as President
and Chief Executive Officer of the Company upon the terms and conditions
hereinafter set forth. The Executive shall perform such duties and
responsibilities for the Company which are commensurate with his offices as may
be assigned him by the Company's Board of Directors.
1
<PAGE>
As President and Chief Executive Officer, the Executive shall be supervised by
the Chairman of the Board of the Company. Incident to the performance of such
duties, the Executive shall be provided by the Company with office space,
facilities and secretarial assistance commensurate with that currently being
provided to the Executive.
2. TERM. Subject only to the provisions hereof relating to "termination for
cause" hereinafter set forth in Subsection 6(b), or the Executive's voluntary
termination under Subsection 6(f) hereof, the term of the Executive's employment
hereunder (herein the "Term") shall be for a period beginning on the date hereof
and ending on June 6, 2001. Subject to the provisions of Subsection 6(c) hereof,
on June 7, 1997, and on each successive June 7, the Term of this Agreement shall
be extended for a term of five (5) years from such June 7.
3. COMPENSATION. (a) The Company agrees to pay the Executive during the
Term a minimum annual salary of One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00). The salary shall be payable at intervals not less often than
semi-monthly. All adjustments to the Executive's salary and all aspects of the
Employee's incentive or performance compensation shall be established by the
Company's Board of Directors or a duly authorized committee thereof (the
"Compensation Committee"). The Executive shall also receive such benefit and
perquisites (the "Benefits") which have been made available to executives of the
Company including, without limitation, incentive compensation, loans, awards,
insurance, stock options, stock purchase plans, benefits from qualified plans or
non-qualified plans or other benefit plans (including group life insurance and
severance pay plans or arrangements) now or hereafter existing which are adopted
by the Company for the benefit of its employees generally and for the benefit of
the Company's principal executive officers, all such Benefits to be provided in
such amounts as may be determined from time to time by the Board or the
Compensation Committee.
(b) Concurrently with the execution of this Agreement, the
Compensation and Stock Option Committee has granted to the Executive options to
purchase 350,000 shares of the Company's common stock under the Company's 1992
Stock Option Plan.
(c) In addition to all life insurance generally available to the
employees and executives of the Company, the Company and the Executive's
designated trustee shall enter into a split dollar life insurance arrangement
which shall provide the Executive's life insurance trust with a death benefit of
approximately Ten Million Dollars assuming an insurance dividend rate of 8.5%.
If the Executive is in the employ of the Company at age 60 or if the Executive
is disabled under Subsection 6(a) or is terminated by the Company pursuant to
Subsections 6(c) or 6(d) hereof, the Company covenants and agrees to pay all
premiums required to be paid by the Company on such split dollar life insurance
until the policy is fully paid up. In the event the Executive elects to
terminate service prior to age 60 under Subsections 6(c) or 6(f) or is
terminated by the Company prior to age 60 under Subsection 6(b), the Executive
shall only receive such paid up life insurance as may be purchased with the
Executive's cash value in the policy at the time of such termination. The
economic terms of such insurance are summarized on
2
<PAGE>
Exhibit A attached hereto. The assumed insurance dividend rate of 8.5% is not
guaranteed and may be higher or lower in future years. The Executive's life
insurance trust will be responsible for paying the annual premium attributable
to the economic benefit for the life insurance coverage provided to the trustee
of the Executive's life insurance trust. The Company shall pay to the Executive
an annual bonus equal to the premium cost paid by the trustee for such economic
benefit.
4. EXTENT OF SERVICE. Except as provided in Subsection 6(d) hereof, during
the Term the Executive shall devote such time, attention, and energy to the
business of the Company as the Company's Board of Directors shall reasonably
require and the Executive shall not be engaged in any other business activity
pursued for gain, profit, or other pecuniary advantage which activity interferes
with the Executive's duties and responsibilities provided for herein.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that in his
employment he is or will be making use of, acquiring or adding to the Company's
confidential information which includes, but is not limited to, memoranda and
other materials or records of a proprietary nature; records and policy matters
relating to finance, personnel, management, and operations. Therefore, in order
to protect the Company's confidential information and to protect other employees
who depend on the Company for regular employment, the Executive agrees that he
will not, in any way utilize any of said confidential information except in
connection with his employment by the Company, and except in connection with the
business of the Company he will not copy, reproduce, or take with him the
original or any copies of said confidential information and will not disclose
any of said confidential information to anyone.
6. TERMINATION.
(a) Death or Disability. If the Executive should become physically or
mentally disabled and unable to perform duties hereunder for a continuous period
in excess of ninety (90) days (in the reasonable opinion of the Board of
Directors of the Company), which event shall result in the termination of the
Executive's employment with the Company, or if the Executive should die while an
employee of the Company, the Company shall, as of the date of death or
disability, begin to pay an annual amount of $2,500,000 for the balance of the
then-current Term. Such amount shall be payable at intervals not less frequently
than monthly. The foregoing payments shall be made to the Executive, or in the
event of the Executive's death, to such beneficiary as the Executive may
designate in writing to the Company for that purpose, or if the Executive has
not so designated, then to the personal representative of the estate of the
Executive. In the event of the disability of the Executive during the Term, the
Company shall make such additional payments to the Executive as may be necessary
to ensure that at the earliest payment date under the Company's Supplemental
Executive Retirement Plan ("SERP") the Executive will receive an unreduced
benefit under the SERP based on credited service of the greater of 30 years or
actual service. In the event of the death of the Executive while an employee of
the Company, his surviving spouse, if any, will receive an unreduced surviving
3
<PAGE>
spouse's benefit from the SERP beginning at the earliest payment date under the
SERP based on the greater of 30 years of credited service or the Executive's
actual service prior to death. This subsection is not to be deemed a limitation
of the Executive's benefits under any death or disability plan currently in
effect.
(b) Termination for Cause. Except with respect to the provisions of
Subsections 6(a), 6(d), 6(e), and 6(f), it is the intention of the parties
hereto that the only other events which shall create in the Company any right to
terminate the Executive's employment under this Agreement prior to the
expiration of the Term shall be: (i) the commission of fraud, embezzlement or
theft by the Executive in connection with the Executive's duties; (ii)
intentional wrongful damage to property of the Company and/or its subsidiaries
by the Executive; (iii) intentional wrongful disclosure by the Executive of any
secret process or confidential information of the Company and/or its
subsidiaries; or (iv) intentional violation of the Executive's covenant not to
compete contained in Section 7 hereof. In the event of Termination for Cause,
all of the obligations of the Company shall terminate forthwith.
(c) Optional Termination. On or before June 7 of any year, either the
Company or Executive may give the other party hereto notice in writing stating
that the Term shall not be extended beyond a period of five (5) years from such
June 7, and upon the receipt of such notice the Term shall end on the June 6
five (5) years after such June 7.
(d) Termination by Company. If the Company terminates this agreement
for any reason other than those specified in Subsections 6(b) or 6(c), or in the
event that:
(i) the Company shall breach any of its obligations under this
Agreement;
(ii) the Executive is removed from the office of President and
Chief Executive Officer of the Company or is not
re-elected to the office of President and Chief Executive
Officer of the Company; or
(iii) the nature and scope of the Executive's authority, powers,
functions, duties or reporting obligations are materially
reduced or adversely changed without the Executive's prior
consent;
this Agreement may be terminated by either party by delivering written notice of
such termination to the other party, in which case the Term shall expire five
(5) years from the date of such written notice.
During the remainder of the Term, the Executive shall continue as an
employee but without regularly assigned duties. The Executive shall make himself
available for consultation and special projects at times mutually convenient to
the Company and the Executive. The Executive will not be required during the
remainder of the Term to work more than twenty (20)
4
<PAGE>
hours a month or more than ten (10) months a year and would not be required
without his consent to pursue such duties as would require overnight travel for
more than one day at a time. During the remainder of the Term, the Executive may
engage in other business opportunities except as are prohibited under Section 7
hereof.
During the remainder of the Term, the Executive (or in the event of his
death, the Executive's beneficiary) shall be entitled to an annual payment of
$2,500,000 payable at intervals not less frequently than monthly. Such amount
shall be in lieu of all salary, bonuses or incentive or performance based
compensation for the remainder of the Term. However, the Executive and his
family shall continue to participate in all employee welfare benefit plans
generally available to employees and executives of the Company in accordance
with the terms of such welfare benefit plans, and all service earned by such
Executive during the remainder of the Term shall be credited for participation,
vesting and benefit accrual under all employee pension benefit plans maintained
by the Company to which the Executive is entitled to participate in accordance
with their terms, including without limitation the SERP.
(e) Change of Control.
(i) For the purposes of this Subsection 6(e), "Change of
Control" shall mean the occurrence at any time during the
Term of any of the following events:
(A) The Company is merged or consolidated or reorganized
into or with another corporation or other legal
person and as a result of such merger, consolidation
or reorganization less than 75% of the outstanding
voting securities or other capital interests of the
surviving, resulting or acquiring corporation or
other legal person are owned in the aggregate by the
stockholders of the Company immediately prior to such
merger, consolidation or reorganization;
(B) The Company sells all or substantially all of its
business and/or assets to any other corporation or
other legal person, less than 75% of the outstanding
voting securities or other capital interests of which
are owned in the aggregate by the stockholders of the
Company, directly or indirectly, immediately prior to
or after such sale;
(C) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report)
each as promulgated pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") disclosing
that any person (as
5
<PAGE>
the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 25%
or more of the issued and outstanding shares of
voting securities of the Company; or
(D) During any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Directors of the Company cease for any
reason to constitute at least a majority thereof
unless the election, or the nomination for election
by the Company's stockholders, of each new Director
of the Company was approved by at least two-thirds of
such Directors of the Company then still in office
who were Directors of the Company at the beginning of
any such period.
(ii) In the event of a Change of Control, the Executive may
elect at any time during the Term to terminate this
Agreement and receive, in lieu of base compensation a lump
sum payment equal to three (3) times the average of the
Executive's annual compensation (including bonuses) from
the Company for the five (5) calendar years ending prior
to the date of the Change of Control. Such amount shall be
paid to the Executive within thirty (30) days after the
date the Executive notifies the Company in writing of his
election to terminate this Agreement pursuant to this
Subsection 6(e). In the event that the Executive does not
elect to terminate this Agreement and elect the lump sum
payment provided herein, the provisions of Subsection 6(d)
shall remain in effect.
(iii) If tax is imposed pursuant to Section 4999 of the Internal
Revenue Code, or successor provision of like import (the
"Excise Tax") on the payment due under Subsection 6(d)
hereof or this Subsection 6(e) (the "Payment"), the
Executive shall be paid an additional amount ("Gross Up")
no later then 30 days prior to the date such Excise Tax is
due such that the net amount retained by the Executive
after deduction of the Excise Tax on the Payment and any
federal or state income taxes on the Payments shall be
equal to the Payments. For the purpose of determining the
Gross Up, the Executive shall be deemed to pay federal and
state income taxes at the highest marginal rate of
taxation in the calendar year in which the Payment or
Gross Up is to be made. The opinion of whether such Excise
Tax is payable and the amount thereof shall be based
6
<PAGE>
upon a "substantial authority opinion" of tax counsel
selected by the Company and reasonably acceptable to the
Executive. If such opinion is not finally accepted by the
IRS upon audit, then appropriate adjustments shall be
computed (with Gross Up) by tax counsel based upon the
final amount of Excise Tax so determined. The amount shall
be paid by the appropriate party in one lump cash sum
within 30 days of such computation.
(iv) Upon electing to terminate this Agreement pursuant to this
Subsection 6(e), the Executive shall resign as an officer,
director and employee of the Company and shall not be
entitled to participate in any of the Benefits described
in Subsection 3(a) which terminates upon termination of
service with the Company. The Executive will be entitled
to all Benefits which by their terms, provide benefits
upon or after termination of employment, including but not
limited to, qualified and non-qualified pension benefit
plans, deferred compensation plans, severance pay plans
and retirement welfare benefit plans.
(f) Voluntary Termination. If during the Term the Executive should
voluntarily terminate his employment with the Company for reasons other than
described in Subsection 6(d) hereof, the obligations of the Company under this
Agreement shall terminate forthwith, other than to (i) pay base salary to the
date of termination, (ii) pay all bonuses or incentive compensation earned to
the date of termination and (iii) pay or make available to the Executive all
Benefits which by their terms or under applicable law survive the voluntary
termination of the Executive; and the Executive shall remain bound by his
covenant not to disclose confidential information under Section 5 hereof and his
covenant not to compete under Section 7 hereof.
7. Covenant Not to Compete. During the Term of this Agreement, and for a
period of three years after the end of the Term, the Executive shall not,
directly or indirectly, own, manage, operate, join, control or participate in or
be connected with, as an officer, employee, partner, joint venturer, stockholder
or otherwise, any business, individual, partnership, firm or corporation
(collectively "Entity") which is at the time engaged in a business which is,
directly or indirectly, at the time in competition with the business of the
Company or any subsidiary or affiliate (as defined in the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934) thereof.
Nothing herein, however, shall prohibit the Executive from acquiring any
securities listed on a national securities exchange or quoted in the daily
listing of over-the-counter market securities, provided that any one time he and
members of his immediate family do not own more than one percent (1%) of any
voting securities of any such Entity.
8. NOTICES. Any notice required or permitted to be given under this
Agreement
7
<PAGE>
shall be in writing and shall be deemed to have been given when deposited in the
U.S. mail in a registered, postage prepaid envelope addressed: If to the
Executive, at his address set forth below, and if to the Company, c/o Dean L.
Buntrock, Chairman of the Board, WMX Technologies, Inc., 3003 Butterfield Road,
Oak Brook, Illinois 60521.
9. ASSIGNMENT. The Executive may not assign his obligations hereunder. The
rights of the Executive and the rights and obligations of the Company hereunder
shall inure to the benefit of and shall be binding upon their respective heirs,
personal representatives, successors and assigns.
10. MISCELLANEOUS.
(a) This Agreement shall be subject to and governed by the laws of the
State of Illinois.
(b) Failure to insist upon strict compliance with any provisions
hereof shall not be deemed a waiver of such provisions or any other provision
hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other provision.
(e) This Agreement shall supersede prior employment agreements or
understandings, written or oral, with Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WMX TECHNOLOGIES, INC.
By /s/ Dean L. Buntrock
_________________________________
Chairman of the Board
/s/ Phillip B. Rooney
____________________________________
Phillip B. Rooney
Address:
8
<PAGE>
<TABLE>
EXHIBIT A
SPLIT DOLLAR PLAN
Prepared For
WMX TECHNOLOGIES INC.
PHILLIP B. ROONEY Age 52 Page 1
$10,364,507 Estate CompLife Plan (Quik Pay Plus) $322,275.00 Initial Annual Premium
$5,000,000 Basic Amount $146,000.00 Additional Premium
$5,000,000 Additional Protection
Dividends initially used to purchase paid-up additions
This Illustration assumes payment of all premiums when due. Policy paid-up at age 100.
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Corporate Cumulative
Annual Corporate Executive Cumulative
Split Split Corporate Corporate Annual Executive Executive Executive
Dollar Dollar Death Cash Total After Tax After Tax Death Cash
Year Age Payment Payment Benefit Value Bonus Cost Cost Benefit Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 52 306,887 306,887 306,887 153,146 15,388 6,155 6,155 10,057,620 0
2 53 305,804 612,691 612,691 423,754 16,471 6,588 12,744 10,104,851 0
3 54 304,424 917,115 917,115 716,717 17,851 7,140 19,884 10,142,499 0
4 55 302,746 1,219,861 1,219,861 1,034,775 19,529 7,812 27,696 10,171,359 0
5 56 300,769 1,520,631 1,520,631 1,374,115 21,506 8,602 36,298 10,192,206 0
6 57 298,598 1,819,228 1,819,228 1,738,405 23,677 9,471 45,769 10,205,683 0
7 58 295,926 2,115,155 2,115,155 2,115,155 26,349 10,540 56,308 10,212,688 14,232
8 59 292,859 2,408,013 2,408,013 2,408,013 29,416 11,767 68,075 10,213,999 141,787
9 60 289,090 2,697,104 2,697,104 2,697,104 33,185 13,274 81,349 10,210,674 304,840
10 61 286,876 2,983,979 2,983,979 2,983,979 35,399 14,160 95,508 10,201,514 504,214
11 62 284,788 3,268,767 3,268,767 3,268,767 37,487 14,995 110,503 10,186,729 744,566
12 63 282,625 3,551,392 3,551,392 3,551,392 39,650 15,860 126,363 10,166,745 1,026,478
13 64 280,287 3,831,679 3,831,679 3,831,679 41,988 16,795 143,159 10,142,089 1,351,170
14 65 277,777 4,109,455 4,109,455 4,109,455 44,498 17,799 160,958 10,113,276 1,720,957
15 66 274,996 4,384,451 4,384,451 4,384,451 47,279 18,912 179,870 10,080,909 2,140,325
16 67 271,644 4,656,095 4,656,095 4,656,095 50,631 20,252 200,122 10,045,863 2,614,549
17 68 267,424 4,923,519 4,923,519 4,923,519 54,851 21,940 222,062 10,009,282 3,149,677
18 69 258,342 5,181,860 5,181,860 5,181,860 63,933 25,573 247,636 10,585,002 3,742,842
19 70 246,100 5,427,961 5,427,961 5,427,961 76,175 30,470 278,106 11,285,150 4,396,177
20 71 230,339 5,658,300 5,658,300 5,658,300 91,936 36,774 314,880 12,033,505 5,113,755
21 72 210,097 5,868,396 5,868,396 5,868,396 112,178 44,871 359,751 12,835,047 5,723,482
22 73 -5,868,396 0 0 0 0 0 359,751 10,337,326 6,052,675
23 74 0 0 0 0 0 0 359,751 10,548,625 6,397,460
24 75 0 0 0 0 0 0 359,751 10,780,669 6,758,549
25 76 0 0 0 0 0 0 359,751 11,033,964 7,136,457
- ------------------------------------------------------------------------------------------------------------------------------------
(See Specifications Pages for pertinent information)
*Illustrated values and benefits include dividends. Illustrated dividends reflect current (1996 scale) claim, expense and
investment experience and are not estimates or guarantees of future results. Dividends actually paid may be larger or smaller than
those illustrated. This illustration does not reflect that money is paid and received at different times. 7.39% 1996 variable rate
loan provision.
NP S/N Standard Plus Prepared by Joseph R. Burden, CLU, ChFC 7/03/96
Illustration No. 1200-LRSHD-105847 The Northwestern Mutual Life - Milwaukee (12.0)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
SPLIT DOLLAR PLAN
Prepared For
WMX TECHNOLOGIES Inc.
PHILLIP B. ROONEY. Age 52 Page 2
$10,364,507 Estate CompLife Plan (Quik Pay Plus) $322,275.00 Initial Annual Premium
$ 5,000,000 Basic Amount $ 146,000.00 Additional Premium
$ 5,000,000 Additional Protection
Dividends initially used to purchase paid-up additions
This illustration assumes payment of all premiums when due. Policy paid-up at age 100.
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Corporate Cumulative
Annual Corporate Executive Cumulative
Split Split Corporate Corporate Annual Executive Executive Executive
Dollar Dollar Death Cash Total After Tax After Tax Death Cash
Year Age Payment Payment Benefit Value Bonus Cost Cost Benefit Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
26 77 0 0 0 0 0 0 359,751 11,308,269 7,532,052
27 78 0 0 0 0 0 0 359,751 11,602,937 7,945,982
28 79 0 0 0 0 0 0 359,751 11,916,893 8,379,287
29 80 0 0 0 0 0 0 359,751 12,249,819 8,833,002
30 81 0 0 0 0 0 0 359,751 12,602,879 9,308,647
31 82 0 0 0 0 0 0 359,751 12,978,369 9,807,667
32 83 0 0 0 0 0 0 359,751 13,379,596 10,331,612
33 84 0 0 0 0 0 0 359,751 13,810,228 10,882,024
34 85 0 0 0 0 0 0 359,751 14,272,706 11,460,853
35 86 0 0 0 0 0 0 359,751 14,769,038 12,070,134
36 87 0 0 0 0 0 0 359,751 15,299,877 12,712,211
37 88 0 0 0 0 0 0 359,751 15,866,102 13,390,887
38 89 0 0 0 0 0 0 359,751 16,468,716 14,110,625
39 90 0 0 0 0 0 0 359,751 17,109,353 14,878,315
40 91 0 0 0 0 0 0 359,751 18,790,842 15,703,208
41 92 0 0 0 0 0 0 359,751 18,517,484 16,598,858
42 93 0 0 0 0 0 0 359,751 19,296,679 17,584,862
43 94 0 0 0 0 0 0 359,751 20,138,763 18,689,034
44 95 0 0 0 0 0 0 359,751 21,064,139 19,950,682
45 96 0 0 0 0 0 0 359,751 22,105,557 21,422,576
46 97 0 0 0 0 0 0 359,751 23,314,798 23,173,965
47 98 0 0 0 0 0 0 359,751 24,767,310 25,291,785
48 99 0 0 0 0 0 0 359,751 26,569,257 27,624,591
- ---------------------------------------------------------------------------------------------------------------------------------
(See Specifications Pages for pertinent information)
* Illustrated values and benefits include dividends. Illustrated dividends reflect current (1996 scale) claim, expense and
investment experience and are not estimates or guarantees of future results. Dividends actually paid may be larger or smaller than
those illustrated. This illustration does not reflect that money is paid and received at different times. 7.39% 1996 variable rate
loan provision.
NP S/N Standard Plus Prepared by Joseph R. Durden, CLU, ChFC 7/30/96
Illustration No. 1200-LRSHD-105847 The Northwestern Mutual Life - Milwaukee (12.0)
</TABLE>
<PAGE>
EXHIBIT 10.2
WMX TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of this 15th day of
August, 1996, between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter referred to as the "Company"), and JAMES E. KOENIG (hereinafter
referred to as the "Executive"):
W I T N E S S E T H:
--------------------
WHEREAS, the Executive has previously served and is serving as Senior Vice
President and Chief Financial Officer of the Company; and
WHEREAS, the Executive has developed extensive experience with respect to
the management and operations of the Company which it considers extremely
valuable to the continued prosperity of the Company; and
WHEREAS, the Company wishes to adequately compensate the Executive and to
ensure that the Company will continue to have the Executive available to perform
for the Company duties as Senior Vice President and Chief Financial Officer of
the Company; and
WHEREAS, the Company and the Executive desire to set forth in this
Agreement the terms, conditions and obligations of the parties with respect to
such employment and this Agreement is intended by the parties to supersede all
previous agreements and understandings, whether written or oral, concerning such
employment, except for the Executive's Agreement dated November 15, 1978, a copy
of which is attached hereto as Exhibit B (the "Employee Agreement").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive effective as of
the date of this Agreement and the Executive hereby accepts employment as Senior
Vice President and Chief Financial Officer of the Company upon the terms and
conditions hereinafter set forth. The Executive shall perform such duties and
responsibilities for the Company which are commensurate with his offices as may
be assigned him by the Company's Board of Directors and shall serve as a member
of the Company's Executive Committee. As Senior Vice President and Chief
Financial Officer, the Executive shall report to the Chief Executive Officer of
the Company. Incident to the performance of such duties, the Executive shall be
provided by the Company with office space, facilities and secretarial assistance
commensurate with that currently being provided to the Executive.
2. TERM. Subject only to the provisions hereof relating to "termination
for cause" hereinafter set forth in Subsection 6(b), or the Executive's
voluntary termination under Subsection 6(e) hereof, the term of the Executive's
employment hereunder (herein the "Term") shall be for a period beginning on the
date hereof and ending on August 14, 1999. Subject to the provisions of
Subsection 6 hereof, on August 15, 1997, and on each successive August 15, the
Term of this Agreement shall be extended for a term of three (3) years from such
August 15.
<PAGE>
3. COMPENSATION.
(a) The Company agrees to pay the Executive during the Term a minimum
annual salary of Six Hundred Thousand Dollars ($600,000.00). The salary shall
be payable at intervals not less often than semi-monthly. All adjustments to
the Executive's salary and all aspects of the Executive's incentive or
performance compensation shall be established by the Company's Board of
Directors or a duly authorized committee thereof (the "Compensation Committee").
The Executive shall also receive such benefits and perquisites (the "Benefits")
which have been made available to executives of the Company including, without
limitation, incentive compensation, loans, awards, insurance, stock options,
stock purchase plans, benefits from qualified plans or non-qualified plans or
other benefit plans (including group life insurance and severance pay plans or
arrangements) now or hereafter existing which are adopted by the Company for the
benefit of its employees generally and for the benefit of the Company's
principal executive officers, all such Benefits to be provided in such amounts
as may be determined from time to time by the Board or the Compensation
Committee.
(b) Restricted Stock. Concurrently with execution of this Agreement, the
Company shall grant to the Executive 45,000 shares of its $1.00 par value common
stock pursuant to the terms and conditions of a Restricted Stock Agreement
between the Company and Executive in the form attached hereto as Exhibit A.
4. EXTENT OF SERVICE. Except as provided in Subsection 6(c) hereof,
during the Term the Executive shall devote such time, attention, and energy to
the business of the Company as the Chief Executive Officer or the Company's
Board of Directors shall reasonably require and the Executive shall not be
engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage which activity interferes with the Executive's duties and
responsibilities provided for herein.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that in his
employment he is or will be making use of, acquiring or adding to the Company's
confidential information which includes, but is not limited to, memoranda and
other materials or records of a proprietary nature; records and policy matters
relating to finance, personnel, management, and operations. Therefore, in order
to protect the Company's confidential information and to protect other employees
who depend on the Company for regular employment, the Executive agrees that he
will not, in any way utilize any of said confidential information except in
connection with his employment by the Company, and except in connection with the
business of the Company he will not copy, reproduce, or take with him the
original or any copies of said confidential information and will not disclose
any of said confidential information to anyone.
6. TERMINATION.
(a) Death or Disability. If the Executive should become physically or
mentally disabled and unable to perform duties hereunder for a continuous period
in excess of ninety (90) days (in the reasonable opinion of the Board of
Directors of the Company), which event shall result in the termination of the
Executive's employment with the Company, or if the Executive should die while
an employee of the Company, the Company shall, as of the date of death or
disability, continue to pay the Executive's then current base salary for thirty-
six months beginning with the month immediately following the date of the
Executive's death or disability. Such amount shall be payable at intervals not
less frequently than monthly. The foregoing payments shall be made to the
Executive, or in the event of the Executive's death, to such beneficiary as the
Executive may
2
<PAGE>
designate in writing to the Company for that purpose, or if the Executive has
not so designated, then to the personal representative of the estate of the
Executive. In the event of the disability of the Executive during the Term and
prior to earning at least 30 years of credited service for the purposes of the
Company's Supplemental Executive Retirement Plan ("SERP"), the Company shall
make such additional payments to the Executive as may be necessary to ensure
that at the earliest payment date under the SERP, the Executive will receive a
benefit based upon the lesser of (i) the Executive's actual credited service
under the SERP plus five additional years of credited service; or (ii) 30 years
of credited service under the SERP. In the event of the death of the Executive
while an employee of the Company and prior to earning at least 30 years of
credited service for the purposes of the SERP, his surviving spouse, if any,
will receive a surviving spouse benefit based upon credited service equal to the
lesser of Subsections 6(a)(i) or (ii) above. Nothing herein shall be deemed to
reduce the actual credited service of the Executive or modify the calculation of
the Executive's SERP benefit or the calculation of the surviving spouse's
benefit under the SERP if the Executive has earned 30 or more years of service
for the purposes of the SERP at the time of his disability or death. In
addition, this Subsection (a) is not to be deemed a limitation of the
Executive's benefits under any death or disability plan currently in effect.
(b) Termination for Cause. Except with respect to the provisions of
Subsection 6(a), it is the intention of the parties hereto that the only other
events which shall create in the Company any right to terminate the Executive's
employment under this Agreement prior to the expiration of the Term shall be:
(i) the commission of fraud, embezzlement or theft by the Executive in
connection with the Executive's duties; (ii) the intentional wrongful damage to
property of the Company and/or its subsidiaries by the Executive; (iii) the
intentional wrongful disclosure by the Executive of any secret process or
confidential information of the Company and/or its subsidiaries; or (iv) the
violation of the Executive's covenant not to compete contained in the Employee
Agreement. In the event of Termination for Cause, all of the obligations of the
Company shall terminate forthwith.
(c) Termination by Company. If the Company desires to terminate this
Agreement for any reason other than those specified in Subsections 6(b), or in
the event that there occurs without the written consent of the Executive:
(i) a change in the Executive's duties or responsibilities, or
a change in Executive's reporting relationships, either of
which results in or reflects a diminution of the scope or
importance of Executive's duties and responsibilities;
(ii) a reduction in Executive's then current base annual salary
(other than as part of across-the-board reductions in base
annual salary affecting the Corporation's executive
officers generally);
(iii) a reduction in the level of benefits available or awarded
under employee and executive officer benefit plans and
programs, including, but not limited to annual and long-
term incentive and stock-based plans and programs (other
than as part of across-the-board reductions in such benefit
plans or programs affecting the Corporation's executive
officers generally); or
(iv) a relocation of Executive's primary employment location to
a location which is more than 50 miles from his current
location
3
<PAGE>
then either party may deliver written notice of such termination to the other
party, in which case the Term shall be automatically extended and expire three
(3) years from the date of such written notice.
During the remainder of the Term, the Executive shall continue as an employee
but without regularly assigned duties. The Executive shall make himself
available for consultation and special projects at times mutually convenient to
the Company and the Executive. The Executive will not be required during the
remainder of the Term to work more than twenty (20) hours a month or more than
ten (10) months a year and would not be required without his consent to pursue
such duties as would require overnight travel for more than one day at a time.
During the remainder of the Term, the Executive may engage in other business
opportunities except as are prohibited by Executive's covenant not to compete
contained in the Employee Agreement.
During the remainder of the Term, the Executive (or in the event of his death,
the Executive's beneficiary) shall be entitled to receive his then current base
salary payable at intervals not less frequently than monthly and his prorated
annual bonus and long term bonus payable at such times as such bonuses are
payable to other executives of the Company. The prorated bonus amount shall be
determined by dividing the number of whole or partial months the Executive is
employed during the bonus performance period by the total number of months in
the bonus performance period. In addition, the Executive's outstanding stock
options shall be accelerated and shall be 100% vested and the Executive shall be
treated as having retired on the last day of the Term for the purposes of the
Company's stock option plans applicable to such stock options. Such amounts
shall be in lieu of all salary, bonuses or incentive or performance based
compensation for the remainder of the Term. However, the Executive and his
family shall continue to participate in all employee welfare benefit plans
generally available to employees and executives of the Company in accordance
with the terms of such welfare benefit plans, and all service earned by such
Executive during the remainder of the Term shall be credited for participation,
vesting and benefit accrual under all employee pension benefit plans maintained
by the Company to which the Executive is entitled to participate in accordance
with their terms, including without limitation the Company's SERP.
(d) Change of Control.
(i) For the purposes of this Subsection 6(d), "Change of
Control" shall mean the occurrence at any time during the
Term of any of the following events:
(A) The Company is merged or consolidated or reorganized
into or with another corporation or other legal person
and as a result of such merger, consolidation or
reorganization less than 75% of the outstanding voting
securities or other capital interests of the surviving,
resulting or acquiring corporation or other legal
person are owned in the aggregate by the stockholders
of the Company immediately prior to such merger,
consolidation or reorganization;
(B) The Company sells all or substantially all of its
business and/or assets to any other corporation or
other legal person, less than 75% of the outstanding
voting securities or other
4
<PAGE>
capital interests of which are owned in the aggregate
by the stockholders of the Company, directly or
indirectly, immediately prior to or after such sale;
(C) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report) each
as promulgated pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act") disclosing that any person
(as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 25%
or more of the issued and outstanding shares of voting
securities of the Company; or
(D) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the
Directors of the Company cease for any reason to
constitute at least a majority thereof unless the
election, or the nomination for election by the
Company's stockholders, of each new Director of the
Company was approved by at least two-thirds of such
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such
period.
(ii) In the event of a Change of Control, the Executive may elect
at any time during the Term to terminate this Agreement and
receive, in lieu of base compensation a lump sum payment
equal to three (3) times the average of the Executive's
annual compensation (including annual and long term bonuses)
from the Company for the five (5) calendar years ending
prior to the date of the Change of Control. Such amount
shall be paid to the Executive within thirty (30) days after
the date the Executive notifies the Company in writing of
his election to terminate this Agreement pursuant to this
Subsection 6(d). In the event that the Executive does not
elect to terminate this Agreement and elect the lump sum
payment provided herein, the provisions of Subsection 6(c)
shall remain in effect.
(iii) If tax is imposed pursuant to Section 4999 of the Internal
Revenue Code, or successor provision of like import (the
"Excise Tax") on the payment due under Subsection 6(c)
hereof or this Subsection 6(d) (the "Payment"), the
Executive shall be paid an additional amount ("Gross Up") no
later than 30 days prior to the date such Excise Tax is due
such that the net amount retained by the Executive after
deduction of the Excise Tax on the Payment and any federal
or state income taxes on the Payments shall be equal to the
Payments. For the purpose of determining the Gross Up, the
Executive shall be deemed to pay federal and state income
taxes at the highest marginal rate of taxation in the
calendar year in which the Payment or Gross Up is to be
made. The opinion of whether
5
<PAGE>
such Excise Tax is payable and the amount thereof shall be
based upon a "substantial authority opinion" of tax counsel
selected by the Company and reasonably acceptable to the
Executive. If such opinion is not finally accepted by the
IRS upon audit, then appropriate adjustments shall be
computed (with Gross Up) by tax counsel based upon the final
amount of Excise Tax so determined. The amount shall be paid
by the appropriate party in one lump cash sum within 30 days
of such computation.
(iv) Upon electing to terminate this Agreement pursuant to this
Subsection 6(d), the Executive shall resign as an officer,
director and employee of the Company and shall not be
entitled to participate in any of the Benefits described in
Subsection 3(a) which terminates upon termination of service
with the Company. The Executive will be entitled to all
Benefits which by their terms, provide benefits upon or
after termination of employment, including but not limited
to, qualified and non-qualified pension benefit plans,
deferred compensation plans, severance pay plans and
retirement welfare benefit plans.
(e) Voluntary Termination. If during the Term the Executive should
voluntarily terminate his employment with the Company for reasons other than
described in Subsection 6(c) hereof, the obligations of the Company under this
Agreement shall terminate forthwith, other than to (i) pay base salary to the
date of termination, (ii) pay all bonuses or incentive compensation earned to
the date of termination and (iii) pay or make available to the Executive all
Benefits which by their terms or under applicable law survive the voluntary
termination of the Executive; and the Executive shall remain bound by his
covenant not to disclose confidential information and his covenant not to
compete under the Employee Agreement.
7. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
deposited in the U.S. mail in a registered, postage prepaid envelope addressed:
If to the Executive, at his address set forth below, and if to the Company, c/o
Phillip B. Rooney, President and Chief Executive Officer, WMX Technologies,
Inc., 3003 Butterfield Road, Oak Brook, Illinois 60521.
8. ASSIGNMENT. The Executive may not assign his obligations hereunder.
The rights of the Executive and the rights and obligations of the Company
hereunder shall inure to the benefit of and shall be binding upon their
respective heirs, personal representatives, successors and assigns.
9. MISCELLANEOUS.
(a) This Agreement shall be subject to and governed by the laws of the
State of Illinois.
(b) Failure to insist upon strict compliance with any provisions
hereof shall not be deemed a waiver of such provisions or any other provision
hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
6
<PAGE>
(d) The invalidity or unenforceability of any provision hereof shall not affect
the validity or enforceability of any other provision.
(e) This Agreement shall supersede prior employment agreements or
understandings, written or oral, with Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WMX TECHNOLOGIES, INC.
By: /s/ Phillip B. Rooney
--------------------------------------
President and Chief Executive Officer
/s/ James E. Koenig
--------------------------------------
James E. Koenig
Address:
<PAGE>
EXHIBIT A
WMX TECHNOLOGIES, INC.
RESTRICTED STOCK AGREEMENT
--------------------------
This Restricted Stock Agreement (the "Agreement"), made this 15th of August,
1996, by and between WMX TECHNOLOGIES, INC., a Delaware corporation (hereinafter
called the "Corporation") and JAMES E. KOENIG, an employee of the Corporation
(hereinafter called the "Employee");
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined it to be
in the best interests of the Corporation to grant restricted stock awards to
certain key executives of the Corporation in order to provide such executives
with an additional stake in the growth and prosperity of the Corporation to
encourage them to continue serving the Corporation, and to obtain from such
executives reaffirmation of certain restrictive covenants; and
WHEREAS, the Board of Directors has made such an award to the Employee and
the Employee has agreed to the terms and conditions thereof as set forth in this
Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements of the parties hereto, it is agreed as follows:
1. Grant. The Corporation hereby grants to Employee and Employee accepts
45,000 shares (the "Restricted Shares") of common stock, $1.00 par value per
share, of the Corporation (the "Common Stock"), subject to the restrictions,
terms and conditions set forth in this Agreement.
2. Restrictions. During the Restricted Period described in Paragraph 4
below, the employee may not, directly or indirectly, by operation of law or
otherwise, voluntary or involuntarily, anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer any of the Restricted
Shares (the "Restrictions"). Upon the expiration of the Restricted Period, all
Restrictions shall lapse.
3. Award Date. The effective date of grant of the Restricted Shares to
Employee (the "Award Date") shall be August 15, 1996.
4. Restricted Period. The Restricted Period shall commence on the Award
Date and shall expire on the expiration of the period of the covenant not to
compete (the "Restrictive Covenant") contained in the Employee Agreement
attached as Appendix A to this Agreement (the "Employee Agreement") or, if
earlier, the first to occur of the following dates:
(a) the Employee's death; or
(b) the Employee's Total Disability (as defined in the Corporation's
1992 Stock Option Plan, such Plan and any successor thereto hereinafter
referred to as the "Stock Option Plan").
<PAGE>
5. (a) Effect of Termination of Employment and Other Events. Subject to
the provisions of Section 5(b) hereof, in the event of the voluntary termination
by Employee of his employment with the Corporation and all "Related Companies"
(as defined under the Stock Option Plan) prior to the 10th anniversary of the
Award Date, 100% of the Restricted Shares shall be forfeited. In the event of
the termination of the Employee's employment with the Corporation after the 10th
anniversary of the Award Date, 100% of the Restricted Shares shall become
"Vested Restricted Shares;" provided, however, that Vested Restricted Shares
shall continue to be subject to the Restrictions until the expiration of the
Restricted Period pursuant to Paragraph 4 above. However, and notwithstanding
the foregoing, to the extent provided in Paragraph 5(b), all Restricted Shares
shall be considered Vested Restricted Shares.
(b) Accelerated Vesting. Upon the occurrence of any event described
in this Paragraph 5(b), the forfeited percentage shall be zero and 100% of
the Restricted Shares shall become Vested Restricted Shares:
(i) the date of an employer-initiated termination of the
Employee's employment with the Corporation and all Related Companies
for reasons other than Cause;
(ii) the Employee's retirement on or after attaining age 60;
(iii) the effective date of any of the following employer-
initiated actions taken without the Employee's written consent: (A) a
change in the Employee's duties or responsibilities, or a change in
Employee's reporting relationships, either of which results in or
reflects a diminution of the scope or importance of Employee's duties
and responsibilities, (B) a reduction in Employee's base annual salary
(other than as part of across-the-board reductions in base annual
salary affecting the Corporation's or Related Company's executives
officers generally), (C) a reduction in the level of benefits
available or awarded under employee and executive officer benefit
plans and programs, including, but not limited to annual and long-term
incentive and stock-based plans and programs (other than as part of
across-the-board reductions in such benefit plans or programs
affecting the Corporation's or Related Company's executive officers
generally), or (D) a relocation of Employee's primary employment
location to a location which is more than 50 miles from his current
location; or
(iv) any event described in Paragraph 4(a) or (b).
For purposes of this Agreement, "Cause" shall mean (i) the commission of fraud,
embezzlement or theft by the Employee in connection with the Employee's duties;
(ii) the intentional wrongful damage to property of the Company and/or its
subsidiaries by the Employee; (iii) the intentional wrongful disclosure by the
Employee of any secret process or confidential information of the Company and/or
its subsidiaries; or (iv) the violation of the Employee's covenant not to
compete contained in the Employee Agreement.
6. Forfeiture. In the event of:
----------
(a) a breach of the Restrictive Covenant; or
<PAGE>
(b) an employer-initiated termination of the Employee's employment
with the Corporation or any Related Company for "Cause" ;
then all Restricted Shares subject to this Agreement, whether or not Vested
Restricted Shares, as of the date of such breach or termination of employment
for Cause shall be forfeited.
7. Remedies. Employee reaffirms that the Restrictive Covenant is fair
and reasonable, enforcement of the provisions of such Restrictive Covenant will
not cause him undue hardship, and said provisions are reasonably necessary and
commensurate with the need to protect the Corporation and Related Companies and
their respective businesses and proprietary business interests and property from
irreparable harm. Employee acknowledges that failure to comply with the terms
of the Restrictive Covenant will cause irreparable damage to the Corporation and
Related Companies. Therefore, Employee agrees that in addition to the
forfeiture of the Restricted Shares and any other remedies at law or in equity
available to the Corporation or Related Companies for Employee's breach of the
Employee Agreement, the Corporation and Related Companies will be entitled to
specific performance and injunctive relief, without bond, against Employee to
prevent such damage or breach, and the existence of any claim or cause of action
Employee may have against the Corporation will not constitute a defense thereto.
8. Employment Rights. Nothing contained in this Agreement shall confer
upon Employee any right with respect to continuance of employment by the
Corporation or any Related Company, nor interfere in any way with the right of
the Corporation or any Related Company to terminate the Employee's employment at
any time for any reason.
9. Custody of Restricted Shares, Tax Withholding: Voting and Dividends.
(a) Certificates Representing Restricted Shares. The Restricted
Shares will be registered in the name of the Employee and the certificates
evidencing such shares shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to the Restricted Shares.
All certificates representing Restricted Shares shall be retained by the
Corporation, together with a stock power executed by the Employee in proper
form for transfer into the Corporation's name of all certificates
representing Restricted Shares which are forfeited to the Corporation in
accordance with Paragraph 5 or 6.
(b) Delivery to Employee; Tax Withholding. Certificates representing
Restricted Shares with respect to which all Restrictions have lapsed shall
be delivered by the Corporation to the Employee (or in the event of
Employee's death, to the Employee's designated beneficiary or, of no
beneficiary has been designated, to the Employee's estate) promptly after
the expiration of the Restricted Period. Notwithstanding the foregoing,
such delivery need not be made until the Employee or other recipient has
paid to the Corporation cash in the amount necessary to satisfy any income
and other tax withholding applicable to the Restricted Shares. In lieu of
making such payment, the Employee or other recipient may direct the
Corporation to withhold from the distribution Restricted Shares having a
fair market value equal to the amount of such required tax withholding.
(c) Voting Rights. Employee will have all rights of a stockholder
with respect to voting of the Restricted Shares.
(d) Dividends and Other Distributions. All dividends paid with
respect to the Restricted Shares, shall automatically be, or shall be
deemed to be, reinvested in additional
<PAGE>
Common Stock which, shall be deemed to be part of the Restricted Shares to
which such dividends, shares and other property relate and, as such, shall
be held subject to the Restrictions hereunder.
10. Source of Common Stock. All Restricted Shares granted under this
Agreement will be issued from treasury shares held by the Corporation. The
Corporation agrees to maintain a sufficient number of treasury shares to fulfill
its obligations hereunder.
11. Entire Understanding. This Agreement constitutes the entire
understanding between the parties relating to the matters described herein and
supersedes and cancels all prior written and oral understandings and agreements
with respect to such matters, except for the Employee Agreement to which
Employee continues to be bound and the Employment Agreement, dated as of even
date herewith between the Company and the Employee.
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Employee's executors, administrators, legal representatives, heirs
and legatees and the successors and assigns of the Corporation.
13. Partial Invalidity. The various provisions of this Agreement are
intended to be severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be determined to be void
and unenforceable, in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision or part thereof, and such provision
or part thereof shall be deemed modified to the extent required to permit
enforcement. Without limiting the generality of the foregoing, if the scope of
any provision contained in this Agreement is too broad to permit enforcement to
its full extent, but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by law, and Employee
hereby agrees that such scope may be judicially modified accordingly.
14. Waiver. The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
15. Governing Law. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Illinois.
IN WITNESS WHEREOF, the Corporation has caused this Restricted Stock
Agreement to be signed and the Employee has executed the same the day and year
first above written.
WMX TECHNOLOGIES, INC.
By: __________________________________
Peer Pedersen,
Chairman of the Compensation and
Stock Option Committee
__________________________________
James E. Koenig
<PAGE>
[logo]
- ------
EXHIBIT B
---------
AGREEMENT
I, James E. Koenig, residing at 439 W. Lakeview, Wauconda, Illinois in
consideration of my employment by Waste Management, Inc., or
, a company of Waste Management, Inc. (WASTE MANAGEMENT) and the compensation
paid or to be paid to me, agree as follows:
1. The term WASTE MANAGEMENT as used in this agreement includes Waste
Management, Inc. and all of its divisions, subsidiaries or affiliates, as well
as the above-named employer. The provisions of this agreement shall be binding
upon me whether I am employed by the above-named employer or any other WASTE
MANAGEMENT company, or any successor thereto.
2. I will disclose and assign to WASTE MANAGEMENT any and all material of
a proprietary nature, particularly including, but not limited to, material
subject to protection as trade secrets or as patentable or copyrightable ideas,
which I may conceive, invent, or discover, either solely or jointly with another
or others during my employment, and which relates to or is capable of use in
connection with the business of WASTE MANAGEMENT or any services or products
offered, manufactured, used, sold or being developed by WASTE MANAGEMENT at the
time said material is developed.
3. I will, upon request of WASTE MANAGEMENT, either during or at any time
after the termination of my employment by WASTE MANAGEMENT, execute and deliver
all papers, including applications for patents, and do such other legal acts
(entirely at WASTE MANAGEMENT's expense) as may be necessary to obtain and
maintain proprietary rights in any and all countries and to vest title thereto
in WASTE MANAGEMENT.
4. I acknowledge that in my employment I am or will be making use of,
acquiring or adding to WASTE MANAGEMENT's Confidential Information which
includes, but is not limited to models, drawings, memoranda, and other materials
or records of a proprietary nature; engineering or technical data; records and
policy matters relating to research, finance, accounting, sales, personnel,
management, and operations; matters particularly relating to operations such as
customer lists, price lists, customer service requirements, costs of providing
service and equipment, and equipment maintenance costs. Therefore, in order to
protect WASTE MANAGEMENT's Confidential information and to protect other
employees who depend on WASTE MANAGEMENT for regular employment, I agree as
follows:
(a) I will not during or after the term of my employment in any way
utilize any of said Confidential Information, except in connection with my
employment by WASTE MANAGEMENT, and I will not copy, reproduce, or take with
me the original or any copies of said Confidential Information and I will not
disclose any of said Confidential Information to anyone.
(b) During the term of my employment, or within one year thereafter, I
will not directly or indirectly engage in, or become interested in (as an
individual, partner, stockholder, director, officer, principal, agent,
employee, trustee, lender of money or in any other relation or capacity
whatsoever, except that I may acquire and hold shares of Waste Management,
Inc. and not to exceed 2% of the outstanding shares of stock of any other
corporation if such shares of stock are publicly traded in the over-the-
counter market or listed on a national securities exchange) any business which
renders services that compete with the services provided by WASTE MANAGEMENT
to any customer or account which was serviced by WASTE MANAGEMENT during the
period that I was employed by WASTE MANAGEMENT and which customer or account
is located in any area in which duties were at any time assigned to me during
employment.
5. In the event of a breach of this agreement, I acknowledge that the
remedy at law would be inadequate and that WASTE MANAGEMENT shall be entitled to
an injunction restraining such breach, in addition to any other remedy provided
by law.
6. This agreement may be modified or waived only by a written instrument
signed by an authorized representative of WASTE MANAGEMENT.
7. The provisions of this agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any provision of this
agreement is unenforceable for any reason whatever, such provision shall be
appropriately limited and given effect to the extent that it may be enforceable.
I HAVE READ THIS ENTIRE AGREEMENT AND FULLY UNDERSTAND THE LIMITATIONS
WHICH IT IMPOSES UPON ME.
Signed at __________________________ , this ______day of __________, 19_____.
__________________________ /s/ James E. Koenig
Present Employee Job Title Signature of Employee
Accepted this 15 day of November, 1978
WASTE MANAGEMENT
By: /s/ Brian Oetzel
Title: Manager -Corporate Office Personnel
<PAGE>
EXHIBIT 10.3
WMX TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of this 15th day of
August, 1996, between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter referred to as the "Company"), and HERBERT A. GETZ (hereinafter
referred to as the "Executive"):
W I T N E S S E T H:
--------------------
WHEREAS, the Executive has previously served and is serving as Senior Vice
President, General Counsel and Secretary of the Company; and
WHEREAS, the Executive has developed extensive experience with respect to
the management and operations of the Company which it considers extremely
valuable to the continued prosperity of the Company; and
WHEREAS, the Company wishes to adequately compensate the Executive and to
ensure that the Company will continue to have the Executive available to perform
for the Company duties as Senior Vice President, General Counsel and Secretary
of the Company; and
WHEREAS, the Company and the Executive desire to set forth in this
Agreement the terms, conditions and obligations of the parties with respect to
such employment and this Agreement is intended by the parties to supersede all
previous agreements and understandings, whether written or oral, concerning such
employment, except for the Executive's Agreement, a copy of which is attached
hereto as Exhibit B (the "Employee Agreement").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive
effective as of the date of this Agreement and the Executive hereby accepts
employment as Senior Vice President, General Counsel and Secretary of the
Company upon the terms and conditions hereinafter set forth. The Executive
shall perform such duties and responsibilities for the Company which are
commensurate with his offices as may be assigned him by the Company's Board of
Directors and shall serve as a member of the Company's Executive Committee. As
Senior Vice President and General Counsel, the Executive shall report to the
Chief Executive Officer of the Company. As Secretary, the Executive shall
report to the Chairman of the Board. Incident to the performance of such
duties, the Executive shall be provided by the Company with office space,
facilities and secretarial assistance commensurate with that currently being
provided to the Executive.
2. TERM. Subject only to the provisions hereof relating to "termination
for cause" hereinafter set forth in Subsection 6(b), or the Executive's
voluntary termination under Subsection 6(e) hereof, the term of the Executive's
employment hereunder (herein the "Term")
<PAGE>
shall be for a period beginning on the date hereof and ending on August 14,
1999. Subject to the provisions of Subsection 6 hereof, on August 15, 1997, and
on each successive August 15, the Term of this Agreement shall be extended for a
term of three (3) years from such August 15.
3. COMPENSATION.
(a) The Company agrees to pay the Executive during the Term a minimum
annual salary of Four Hundred Fifty Thousand Dollars ($450,000.00). The salary
shall be payable at intervals not less often than semi-monthly. All adjustments
to the Executive's salary and all aspects of the Executive's incentive or
performance compensation shall be established by the Company's Board of
Directors or a duly authorized committee thereof (the "Compensation Committee").
The Executive shall also receive such benefits and perquisites (the "Benefits")
which have been made available to executives of the Company including, without
limitation, incentive compensation, loans, awards, insurance, stock options,
stock purchase plans, benefits from qualified plans or non-qualified plans or
other benefit plans (including group life insurance and severance pay plans or
arrangements) now or hereafter existing which are adopted by the Company for the
benefit of its employees generally and for the benefit of the Company's
principal executive officers, all such Benefits to be provided in such amounts
as may be determined from time to time by the Board or the Compensation
Committee.
(b) Restricted Stock. Concurrently with execution of this Agreement, the
Company shall grant to the Executive 35,000 shares of its $1.00 par value common
stock pursuant to the terms and conditions of a Restricted Stock Agreement
between the Company and Executive in the form attached hereto as Exhibit A.
4. EXTENT OF SERVICE. Except as provided in Subsection 6(c) hereof,
during the Term the Executive shall devote such time, attention, and energy to
the business of the Company as the Chief Executive Officer or the Company's
Board of Directors shall reasonably require and the Executive shall not be
engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage which activity interferes with the Executive's duties and
responsibilities provided for herein.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that in his
employment he is or will be making use of, acquiring or adding to the Company's
confidential information which includes, but is not limited to, memoranda and
other materials or records of a proprietary nature; records and policy matters
relating to finance, personnel, management, and operations. Therefore, in order
to protect the Company's confidential information and to protect other employees
who depend on the Company for regular employment, the Executive agrees that he
will not, in any way utilize any of said confidential information except in
connection with his employment by the Company, and except in connection with the
business of the Company he will not copy, reproduce, or take with him the
original or any copies of said confidential information and will not disclose
any of said confidential information to anyone.
<PAGE>
6. TERMINATION.
(a) Death or Disability. If the Executive should become physically or
mentally disabled and unable to perform duties hereunder for a continuous period
in excess of ninety (90) days (in the reasonable opinion of the Board of
Directors of the Company), which event shall result in the termination of the
Executive's employment with the Company, or if the Executive should die while
an employee of the Company, the Company shall, as of the date of death or
disability, continue to pay the Executive's then current base salary for thirty-
six months beginning with the month immediately following the date of the
Executive's death or disability. Such amount shall be payable at intervals not
less frequently than monthly. The foregoing payments shall be made to the
Executive, or in the event of the Executive's death, to such beneficiary as the
Executive may designate in writing to the Company for that purpose, or if the
Executive has not so designated, then to the personal representative of the
estate of the Executive. In the event of the disability of the Executive during
the Term and prior to earning at least 30 years of credited service for the
purposes of the Company's Supplemental Executive Retirement Plan ("SERP"), the
Company shall make such additional payments to the Executive as may be necessary
to ensure that at the earliest payment date under the SERP, the Executive will
receive a benefit based upon the lesser of (i) the Executive's actual credited
service under the SERP plus five additional years of credited service; or (ii)
30 years of credited service under the SERP. In the event of the death of the
Executive while an employee of the Company and prior to earning at least 30
years of credited service for the purposes of the SERP, his surviving spouse, if
any, will receive a surviving spouse benefit based upon credited service equal
to the lesser of Subsections 6(a)(i) or (ii) above. Nothing herein shall be
deemed to reduce the actual credited service of the Executive or modify the
calculation of the Executive's SERP benefit or the calculation of the surviving
spouse's benefit under the SERP if the Executive has earned 30 or more years of
service for the purposes of the SERP at the time of his disability or death. In
addition, this Subsection (a) is not to be deemed a limitation of the
Executive's benefits under any death or disability plan currently in effect.
(b) Termination for Cause. Except with respect to the provisions of
Subsection 6(a), it is the intention of the parties hereto that the only other
events which shall create in the Company any right to terminate the Executive's
employment under this Agreement prior to the expiration of the Term shall be:
(i) the commission of fraud, embezzlement or theft by the Executive in
connection with the Executive's duties; (ii) the intentional wrongful damage to
property of the Company and/or its subsidiaries by the Executive; (iii) the
intentional wrongful disclosure by the Executive of any secret process or
confidential information of the Company and/or its subsidiaries; or (iv) the
violation of the Executive's covenant not to compete contained in the Employee
Agreement. In the event of Termination for Cause, all of the obligations of the
Company shall terminate forthwith.
(c) Termination by Company. If the Company desires to terminate this
Agreement for any reason other than those specified in Subsections 6(b), or in
the event that there occurs without the written consent of the Executive:
(i) a change in the Executive's duties or responsibilities, or a
change in Executive's reporting relationships, either of
which results in or
<PAGE>
reflects a diminution of the scope or importance of
Executive's duties and responsibilities;
(ii) a reduction in Executive's then current base annual salary
(other than as part of across-the-board reductions in base
annual salary affecting the Corporation's executive officers
generally);
(iii) a reduction in the level of benefits available or awarded
under employee and executive officer benefit plans and
programs, including, but not limited to annual and long-term
incentive and stock-based plans and programs (other than as
part of across-the-board reductions in such benefit plans or
programs affecting the Corporation's executive officers
generally); or
(iv) a relocation of Executive's primary employment location to a
location which is more than 50 miles from his current
location
then either party may deliver written notice of such termination to the other
party, in which case the Term shall be automatically extended and expire three
(3) years from the date of such written notice.
During the remainder of the Term, the Executive shall continue as an employee
but without regularly assigned duties. The Executive shall make himself
available for consultation and special projects at times mutually convenient to
the Company and the Executive. The Executive will not be required during the
remainder of the Term to work more than twenty (20) hours a month or more than
ten (10) months a year and would not be required without his consent to pursue
such duties as would require overnight travel for more than one day at a time.
During the remainder of the Term, the Executive may engage in other business
opportunities except as are prohibited by Executive's covenant not to compete
contained in the Employee Agreement.
During the remainder of the Term, the Executive (or in the event of his death,
the Executive's beneficiary) shall be entitled to receive his then current base
salary payable at intervals not less frequently than monthly and his prorated
annual bonus and long term bonus payable at such times as such bonuses are
payable to other executives of the Company. The prorated bonus amount shall be
determined by dividing the number of whole or partial months the Executive is
employed during the bonus performance period by the total number of months in
the bonus performance period. In addition, the Executive's outstanding stock
options shall be accelerated and shall be 100% vested and the Executive shall be
treated as having retired on the last day of the Term for the purposes of the
Company's stock option plans applicable to such stock options. Such amounts
shall be in lieu of all salary, bonuses or incentive or performance based
compensation for the remainder of the Term. However, the Executive and his
family shall continue to participate in all employee welfare benefit plans
generally available to employees and executives of the Company in accordance
with the terms of such welfare benefit plans, and all service earned by such
Executive during the remainder of the Term shall be credited for participation,
vesting and benefit accrual under all employee pension benefit plans maintained
by the Company to which the Executive is entitled to participate in accordance
with their terms, including without limitation the Company's SERP.
<PAGE>
(d) Change of Control.
(i) For the purposes of this Subsection 6(d), "Change of
Control" shall mean the occurrence at any time during the
Term of any of the following events:
(A) The Company is merged or consolidated or reorganized
into or with another corporation or other legal person
and as a result of such merger, consolidation or
reorganization less than 75% of the outstanding voting
securities or other capital interests of the surviving,
resulting or acquiring corporation or other legal
person are owned in the aggregate by the stockholders
of the Company immediately prior to such merger,
consolidation or reorganization;
(B) The Company sells all or substantially all of its
business and/or assets to any other corporation or
other legal person, less than 75% of the outstanding
voting securities or other capital interests of which
are owned in the aggregate by the stockholders of the
Company, directly or indirectly, immediately prior to
or after such sale;
(C) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report) each
as promulgated pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act") disclosing that any person
(as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 25%
or more of the issued and outstanding shares of voting
securities of the Company; or
(D) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the
Directors of the Company cease for any reason to
constitute at least a majority thereof unless the
election, or the nomination for election by the
Company's stockholders, of each new Director of the
Company was approved by at least two-thirds of such
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such
period.
(ii) In the event of a Change of Control, the Executive may
elect at any time during the Term to terminate this
Agreement and receive, in lieu of base compensation a
lump sum payment equal to three (3)
<PAGE>
times the average of the Executive's annual compensation
(including annual and long term bonuses) from the Company
for the five (5) calendar years ending prior to the date of
the Change of Control. Such amount shall be paid to the
Executive within thirty (30) days after the date the
Executive notifies the Company in writing of his election to
terminate this Agreement pursuant to this Subsection 6(c).
In the event that the Executive does not elect to terminate
this Agreement and elect the lump sum payment provided
herein, the provisions of Subsection 6(c) shall remain in
effect.
(iii) If tax is imposed pursuant to Section 4999 of the Internal
Revenue Code, or successor provision of like import (the
"Excise Tax") on the payment due under Subsection 6(c)
hereof or this Subsection 6(d) (the "Payment"), the
Executive shall be paid an additional amount ("Gross Up") no
later than 30 days prior to the date such Excise Tax is due
such that the net amount retained by the Executive after
deduction of the Excise Tax on the Payment and any federal
or state income taxes on the Payments shall be equal to the
Payments. For the purpose of determining the Gross Up, the
Executive shall be deemed to pay federal and state income
taxes at the highest marginal rate of taxation in the
calendar year in which the Payment or Gross Up is to be
made. The opinion of whether such Excise Tax is payable and
the amount thereof shall be based upon a "substantial
authority opinion" of tax counsel selected by the Company
and reasonably acceptable to the Executive. If such opinion
is not finally accepted by the IRS upon audit, then
appropriate adjustments shall be computed (with Gross Up) by
tax counsel based upon the final amount of Excise Tax so
determined. The amount shall be paid by the appropriate
party in one lump cash sum within 30 days of such
computation.
(iv) Upon electing to terminate this Agreement pursuant to this
Subsection 6(d), the Executive shall resign as an officer,
director and employee of the Company and shall not be
entitled to participate in any of the Benefits described in
Subsection 3(a) which terminates upon termination of service
with the Company. The Executive will be entitled to all
Benefits which by their terms, provide benefits upon or
after termination of employment, including but not limited
to, qualified and non-qualified pension benefit plans,
deferred compensation plans, severance pay plans and
retirement welfare benefit plans.
(e) Voluntary Termination. If during the Term the Executive should
voluntarily terminate his employment with the Company for reasons other than
described in Subsection 6(c) hereof, the obligations of the Company under this
Agreement shall terminate forthwith, other than to (i) pay base salary to the
date of termination, (ii) pay all bonuses or incentive compensation earned to
the date of termination and (iii) pay or make available to the
<PAGE>
Executive all Benefits which by their terms or under applicable law survive the
voluntary termination of the Executive; and the Executive shall remain bound by
his covenant not to disclose confidential information and his covenant not to
compete under the Employee Agreement.
7. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
deposited in the U.S. mail in a registered, postage prepaid envelope addressed:
If to the Executive, at his address set forth below, and if to the Company, c/o
Phillip B. Rooney, President and Chief Executive Officer, WMX Technologies,
Inc., 3003 Butterfield Road, Oak Brook, Illinois 60521.
8. ASSIGNMENT. The Executive may not assign his obligations hereunder.
The rights of the Executive and the rights and obligations of the Company
hereunder shall inure to the benefit of and shall be binding upon their
respective heirs, personal representatives, successors and assigns.
<PAGE>
9. MISCELLANEOUS.
--------------
(a) This Agreement shall be subject to and governed by the laws of the
State of Illinois.
(b) Failure to insist upon strict compliance with any provisions
hereof shall not be deemed a waiver of such provisions or any other provision
hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other provision.
(e) This Agreement shall supersede prior employment agreements or
understandings, written or oral, with Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WMX TECHNOLOGIES, INC.
By: /s/ Phillip B. Rooney
-------------------------------------
President and Chief Executive Officer
/s/ Herbert A. Getz
-------------------------------------
Herbert A. Getz
Address:
<PAGE>
EXHIBIT A
---------
WMX TECHNOLOGIES, INC.
RESTRICTED STOCK AGREEMENT
--------------------------
This Restricted Stock Agreement (the "Agreement"), made this 15th of
August, 1996, by and between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter called the "Corporation") and HERBERT A. GETZ, an employee of the
Corporation (hereinafter called the "Employee" );
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined it to be
in the best interests of the Corporation to grant restricted stock awards to
certain key executives of the Corporation in order to provide such executives
with an additional stake in the growth and prosperity of the Corporation to
encourage them to continue serving the Corporation, and to obtain from such
executives reaffirmation of certain restrictive covenants; and
WHEREAS, the Board of Directors has made such an award to the Employee and
the Employee has agreed to the terms and conditions thereof as set forth in this
Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements of the parties hereto, it is agreed as follows:
1. Grant. The Corporation hereby grants to Employee and Employee
accepts 35,000 shares (the "Restricted Shares") of common stock, $1.00 par value
per share, of the Corporation (the "Common Stock"), subject to the restrictions,
terms and conditions set forth in this Agreement.
2. Restrictions. During the Restricted Period described in Paragraph 4
below, the employee may not, directly or indirectly, by operation of law or
otherwise, voluntary or involuntarily, anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer any of the Restricted
Shares (the "Restrictions"). Upon the expiration of the Restricted Period, all
Restrictions shall lapse.
3. Award Date. The effective date of grant of the Restricted Shares to
Employee (the "Award Date") shall be August 15, 1996.
4. Restricted Period. The Restricted Period shall commence on the Award
Date and shall expire on the expiration of the period of the covenant not to
compete (the "Restrictive Covenant") contained in the Employee Agreement
attached as Appendix A to this Agreement (the "Employee Agreement") or, if
earlier, the first to occur of the following dates:
(a) the Employee's death; or
<PAGE>
(b) the Employee's Total Disability (as defined in the Corporation's
1992 Stock Option Plan, such Plan and any successor thereto hereinafter
referred to as the "Stock Option Plan").
5. (a) Effect of Termination of Employment and Other Events. Subject to
the provisions of Section 5(b) hereof, in the event of the voluntary termination
by Employee of his employment with the Corporation and all "Related Companies"
(as defined under the Stock Option Plan) prior to the 10th anniversary of the
Award Date, 100% of the Restricted Shares shall be forfeited. In the event of
the termination of the Employee's employment with the Corporation after the 10th
anniversary of the Award Date, 100% of the Restricted Shares shall become
"Vested Restricted Shares;" provided, however, that Vested Restricted Shares
shall continue to be subject to the Restrictions until the expiration of the
Restricted Period pursuant to Paragraph 4 above. However, and notwithstanding
the foregoing, to the extent provided in Paragraph 5(b), all Restricted Shares
shall be considered Vested Restricted Shares.
(b) Accelerated Vesting. Upon the occurrence of any event described
in this Paragraph 5(b), the forfeited percentage shall be zero and 100% of
the Restricted Shares shall become Vested Restricted Shares:
(i) the date of an employer-initiated termination of the
Employee's employment with the Corporation and all Related Companies
for reasons other than Cause;
(ii) the Employee's retirement on or after attaining age 60;
(iii) the effective date of any of the following employer-
initiated actions taken without the Employee's written consent: (A) a
change in the Employee's duties or responsibilities, or a change in
Employee's reporting relationships, either of which results in or
reflects a diminution of the scope or importance of Employee's duties
and responsibilities, (B) a reduction in Employee's base annual salary
(other than as part of across-the-board reductions in base annual
salary affecting the Corporation's or Related Company's executives
officers generally), (C) a reduction in the level of benefits
available or awarded under employee and executive officer benefit
plans and programs, including, but not limited to annual and long-term
incentive and stock-based plans and programs (other than as part of
across-the-board reductions in such benefit plans or programs
affecting the Corporation's or Related Company's executive officers
generally), or (D) a relocation of Employee's primary employment
location to a location which is more than 50 miles from his current
location; or
(iv) any event described in Paragraph 4(a) or (b).
For purposes of this Agreement, "Cause" shall mean (i) the commission of fraud,
embezzlement or theft by the Employee in connection with the Employee's duties;
(ii) the intentional wrongful damage to property of the Company and/or its
subsidiaries by the Employee; (iii) the intentional wrongful disclosure by the
Employee of any secret process or confidential information of the Company and/or
its
<PAGE>
subsidiaries; or (iv) the violation of the Employee's covenant not to
compete contained in the Employee Agreement.
6. Forfeiture. In the event of:
(a) a breach of the Restrictive Covenant; or
(b) an employer-initiated termination of the Employee's employment
with the Corporation or any Related Company for "Cause";
then all Restricted Shares subject to this Agreement, whether or not Vested
Restricted Shares, as of the date of such breach or termination of employment
for Cause shall be forfeited.
7. Remedies. Employee reaffirms that the Restrictive Covenant is fair
and reasonable, enforcement of the provisions of such Restrictive Covenant will
not cause him undue hardship, and said provisions are reasonably necessary and
commensurate with the need to protect the Corporation and Related Companies and
their respective businesses and proprietary business interests and property from
irreparable harm. Employee acknowledges that failure to comply with the terms
of the Restrictive Covenant will cause irreparable damage to the Corporation and
Related Companies. Therefore, Employee agrees that in addition to the
forfeiture of the Restricted Shares and any other remedies at law or in equity
available to the Corporation or Related Companies for Employee's breach of the
Employee Agreement, the Corporation and Related Companies will be entitled to
specific performance and injunctive relief, without bond, against Employee to
prevent such damage or breach, and the existence of any claim or cause of action
Employee may have against the Corporation will not constitute a defense thereto.
8. Employment Rights. Nothing contained in this Agreement shall confer
upon Employee any right with respect to continuance of employment by the
Corporation or any Related Company, nor interfere in any way with the right of
the Corporation or any Related Company to terminate the Employee's employment at
any time for any reason.
9. Custody of Restricted Shares, Tax Withholding: Voting and Dividends.
(a) Certificates Representing Restricted Shares. The Restricted
Shares will be registered in the name of the Employee and the certificates
evidencing such shares shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to the Restricted Shares.
All certificates representing Restricted Shares shall be retained by the
Corporation, together with a stock power executed by the Employee in proper
form for transfer into the Corporation's name of all certificates
representing Restricted Shares which are forfeited to the Corporation in
accordance with Paragraph 5 or 6.
(b) Delivery to Employee; Tax Withholding. Certificates representing
Restricted Shares with respect to which all Restrictions have lapsed shall
be delivered by the Corporation to the Employee (or in the event of
Employee's death, to the Employee's designated beneficiary or, of no
beneficiary has been designated, to the Employee's estate) promptly after
the expiration of the Restricted Period. Notwithstanding the foregoing,
such delivery need not be made until the Employee or other recipient has
paid to the Corporation cash in the amount
<PAGE>
necessary to satisfy any income and other tax withholding applicable to the
Restricted Shares. In lieu of making such payment, the Employee or other
recipient may direct the Corporation to withhold from the distribution
Restricted Shares having a fair market value equal to the amount of such
required tax withholding.
(c) Voting Rights. Employee will have all rights of a stockholder
with respect to voting of the Restricted Shares.
(d) Dividends and Other Distributions. All dividends paid with
respect to the Restricted Shares, shall automatically be, or shall be
deemed to be, reinvested in additional Common Stock which, shall be deemed
to be part of the Restricted Shares to which such dividends, shares and
other property relate and, as such, shall be held subject to the
Restrictions hereunder.
10. Source of Common Stock. All Restricted Shares granted under this
Agreement will be issued from treasury shares held by the Corporation. The
Corporation agrees to maintain a sufficient number of treasury shares to fulfill
its obligations hereunder.
11. Entire Understanding. This Agreement constitutes the entire
understanding between the parties relating to the matters described herein and
supersedes and cancels all prior written and oral understandings and agreements
with respect to such matters, except for the Employee Agreement to which
Employee continues to be bound and the Employment Agreement dated as of even
date herewith between the Company and the Employee.
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Employee's executors, administrators, legal representatives, heirs
and legatees and the successors and assigns of the Corporation.
13. Partial Invalidity. The various provisions of this Agreement are
intended to be severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be determined to be void
and unenforceable, in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision or part thereof, and such provision
or part thereof shall be deemed modified to the extent required to permit
enforcement. Without limiting the generality of the foregoing, if the scope of
any provision contained in this Agreement is too broad to permit enforcement to
its full extent, but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by law, and Employee
hereby agrees that such scope may be judicially modified accordingly.
14. Waiver. The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
15. Governing Law. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Illinois.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restricted Stock
Agreement to be signed and the Employee has executed the same the day and year
first above written.
WMX TECHNOLOGIES, INC.
By:_________________________________
Peer Pedersen,
Chairman of the Compensation and
Stock Option Committee
____________________________________
Herbert A. Getz
<PAGE>
[logo]
EXHIBIT B
---------
AGREEMENT
I, Herbert A. Getz, residing at 5415 N. Sheridan Road, Chicago, Illinois
60640 in consideration of my employment by Waste Management, Inc., or
, a company of Waste Management, Inc. (WASTE
MANAGEMENT) and the compensation paid or to be paid to me, agree as follows:
1. The term WASTE MANAGEMENT as used in this agreement includes Waste
Management, Inc. and all of its divisions, subsidiaries or affiliates, as well
as the above-named employer. The provisions of this agreement shall be binding
upon me whether I am employed by the above-named employer or any other WASTE
MANAGEMENT company, or any successor thereto.
2. I will disclose and assign to WASTE MANAGEMENT any and all material of
a proprietary nature, particularly including, but not limited to, material
subject to protection as trade secrets or as patentable or copyrightable ideas,
which I may conceive, invent, or discover, either solely or jointly with another
or others during my employment, and which relates to or is capable of use in
connection with the business of WASTE MANAGEMENT or any services or products
offered, manufactured, used, sold or being developed by WASTE MANAGEMENT at the
time said material is developed.
3. I will, upon request of WASTE MANAGEMENT, either during or at any time
after the termination of my employment by WASTE MANAGEMENT, execute and deliver
all papers, including applications for patents, and do such other legal acts
(entirely at WASTE MANAGEMENT's expense) as may be necessary to obtain and
maintain proprietary rights in any and all countries and to vest title thereto
in WASTE MANAGEMENT.
4. I acknowledge that in my employment I am or will be making use of,
acquiring or adding to WASTE MANAGEMENT's Confidential Information which
includes, but is not limited to models, drawings, memoranda, and other materials
or records of a proprietary nature; engineering or technical data; records and
policy matters relating to research, finance, accounting, sales, personnel,
management, and operations; matters particularly relating to operations such as
customer lists, price lists, customer service requirements, costs of providing
service and equipment, and equipment maintenance costs. Therefore, in order to
protect WASTE MANAGEMENT's Confidential information and to protect other
employees who depend on WASTE MANAGEMENT for regular employment, I agree as
follows:
(a) I will not during or after the term of my employment in any way utilize
any of said Confidential Information, except in connection with my employment
by WASTE MANAGEMENT, and I will not copy, reproduce, or take with me the
original or any copies of said Confidential Information and I will not
disclose any of said Confidential Information to anyone.
(b) During the term of my employment, or within one year thereafter, I will
not directly or indirectly engage in, or become interested in (as an
individual, partner, stockholder, director, officer, principal, agent,
employee, trustee, lender of money or in any other relation or capacity
whatsoever, except that I may acquire and hold shares of Waste Management,
Inc. and not to exceed 2% of the outstanding shares of stock of any other
corporation if such shares of stock are publicly traded in the over-the-
counter market or listed on a national securities exchange) any business
which renders services that compete with services provided by the company of
WASTE MANAGEMENT by which I was employed to any customer or account which was
serviced by WASTE MANAGEMENT during the period that I was employed by WASTE
MANAGEMENT and which customer or account is located in any area in which
duties were assigned to me during the last two years of my employment.
5. In the event of a breach of this agreement, I acknowledge that the
remedy at law would be inadequate and that WASTE MANAGEMENT shall be entitled to
an injunction restraining such breach, in addition to any other remedy provided
by law.
6. This agreement may be modified or waived only by a written instrument
signed by an authorized representative of WASTE MANAGEMENT.
7. The provisions of this agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any provision of this
agreement is unenforceable for any reason whatever, such provision shall be
appropriately limited and given effect to the extent that it may be enforceable.
I HAVE READ THIS ENTIRE AGREEMENT AND FULLY UNDERSTAND THE LIMITATIONS
WHICH IT IMPOSES UPON ME.
Signed at Oak Brook, Illinois, this 1 day of April, 1983.
GENERAL COUNSEL /s/ Herbert A. Getz
Present Employee Job Title Signature of Employee
Accepted this 1 day of April, 1983
WASTE MANAGEMENT
By: /s/ John Machota
Title: Manager - Human Resources
<PAGE>
EXHIBIT 10.4
WMX TECHNOLOGIES, INC.
RESTRICTED STOCK AGREEMENT
--------------------------
This Restricted Stock Agreement (the "Agreement"), made this 15th of
August, 1996, by and between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter called the "Corporation") and JAMES E. KOENIG, an employee of the
Corporation (hereinafter called the "Employee" );
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined it to be
in the best interests of the Corporation to grant restricted stock awards to
certain key executives of the Corporation in order to provide such executives
with an additional stake in the growth and prosperity of the Corporation to
encourage them to continue serving the Corporation, and to obtain from such
executives reaffirmation of certain restrictive covenants; and
WHEREAS, the Board of Directors has made such an award to the Employee and
the Employee has agreed to the terms and conditions thereof as set forth in this
Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements of the parties hereto, it is agreed as follows:
1. Grant. The Corporation hereby grants to Employee and Employee
accepts 45,000 shares (the "Restricted Shares") of common stock, $1.00 par value
per share, of the Corporation (the "Common Stock"), subject to the restrictions,
terms and conditions set forth in this Agreement.
2. Restrictions. During the Restricted Period described in Paragraph 4
below, the employee may not, directly or indirectly, by operation of law or
otherwise, voluntary or involuntarily, anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer any of the Restricted
Shares (the "Restrictions"). Upon the expiration of the Restricted Period, all
Restrictions shall lapse.
3. Award Date. The effective date of grant of the Restricted Shares to
Employee (the "Award Date") shall be August 15, 1996.
4. Restricted Period. The Restricted Period shall commence on the Award
Date and shall expire on the expiration of the period of the covenant not to
compete (the "Restrictive Covenant") contained in the Employee Agreement
attached as Appendix A to this Agreement (the "Employee Agreement") or, if
earlier, the first to occur of the following dates:
(a) the Employee's death; or
(b) the Employee's Total Disability (as defined in the Corporation's
1992 Stock Option Plan, such Plan and any successor thereto hereinafter
referred to as the "Stock Option Plan").
5. (a) Effect of Termination of Employment and Other Events. Subject to
the provisions of Section 5(b) hereof, in the event of the voluntary termination
by Employee of his
<PAGE>
employment with the Corporation and all "Related Companies" (as defined under
the Stock Option Plan) prior to the 10th anniversary of the Award Date, 100% of
the Restricted Shares shall be forfeited. In the event of the termination of the
Employee's employment with the Corporation after the 10th anniversary of the
Award Date, 100% of the Restricted Shares shall become "Vested Restricted
Shares;" provided, however, that Vested Restricted Shares shall continue to be
subject to the Restrictions until the expiration of the Restricted Period
pursuant to Paragraph 4 above. However, and notwithstanding the foregoing, to
the extent provided in Paragraph 5(b), all Restricted Shares shall be considered
Vested Restricted Shares.
(b) Accelerated Vesting. Upon the occurrence of any event described
in this Paragraph 5(b), the forfeited percentage shall be zero and 100% of
the Restricted Shares shall become Vested Restricted Shares:
(i) the date of an employer-initiated termination of the
Employee's employment with the Corporation and all Related Companies
for reasons other than Cause;
(ii) the Employee's retirement on or after attaining age 60;
(iii) the effective date of any of the following employer-initiated
actions taken without the Employee's written consent: (A) a change in
the Employee's duties or responsibilities, or a change in Employee's
reporting relationships, either of which results in or reflects a
diminution of the scope or importance of Employee's duties and
responsibilities, (B) a reduction in Employee's base annual salary
(other than as part of across-the-board reductions in base annual
salary affecting the Corporation's or Related Company's executives
officers generally), (C) a reduction in the level of benefits
available or awarded under employee and executive officer benefit
plans and programs, including, but not limited to annual and long-term
incentive and stock-based plans and programs (other than as part of
across-the-board reductions in such benefit plans or programs
affecting the Corporation's or Related Company's executive officers
generally), or (D) a relocation of Employee's primary employment
location to a location which is more than 50 miles from his current
location; or
(iv) any event described in Paragraph 4(a) or (b).
For purposes of this Agreement, "Cause" shall mean (i) the commission of fraud,
embezzlement or theft by the Employee in connection with the Employee's duties;
(ii) the intentional wrongful damage to property of the Company and/or its
subsidiaries by the Employee; (iii) the intentional wrongful disclosure by the
Employee of any secret process or confidential information of the Company and/or
its subsidiaries; or (iv) the violation of the Employee's covenant not to
compete contained in the Employee Agreement.
6. Forfeiture. In the event of:
(a) a breach of the Restrictive Covenant; or
(b) an employer-initiated termination of the Employee's employment
with the Corporation or any Related Company for "Cause" ;
2
<PAGE>
then all Restricted Shares subject to this Agreement, whether or not Vested
Restricted Shares, as of the date of such breach or termination of employment
for Cause shall be forfeited.
7. Remedies. Employee reaffirms that the Restrictive Covenant is fair
and reasonable, enforcement of the provisions of such Restrictive Covenant will
not cause him undue hardship, and said provisions are reasonably necessary and
commensurate with the need to protect the Corporation and Related Companies and
their respective businesses and proprietary business interests and property from
irreparable harm. Employee acknowledges that failure to comply with the terms
of the Restrictive Covenant will cause irreparable damage to the Corporation and
Related Companies. Therefore, Employee agrees that in addition to the
forfeiture of the Restricted Shares and any other remedies at law or in equity
available to the Corporation or Related Companies for Employee's breach of the
Employee Agreement, the Corporation and Related Companies will be entitled to
specific performance and injunctive relief, without bond, against Employee to
prevent such damage or breach, and the existence of any claim or cause of action
Employee may have against the Corporation will not constitute a defense thereto.
8. Employment Rights. Nothing contained in this Agreement shall confer
upon Employee any right with respect to continuance of employment by the
Corporation or any Related Company, nor interfere in any way with the right of
the Corporation or any Related Company to terminate the Employee's employment at
any time for any reason.
9. Custody of Restricted Shares, Tax Withholding: Voting and Dividends.
(a) Certificates Representing Restricted Shares. The Restricted
Shares will be registered in the name of the Employee and the certificates
evidencing such shares shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to the Restricted Shares.
All certificates representing Restricted Shares shall be retained by the
Corporation, together with a stock power executed by the Employee in proper
form for transfer into the Corporation's name of all certificates
representing Restricted Shares which are forfeited to the Corporation in
accordance with Paragraph 5 or 6.
(b) Delivery to Employee; Tax Withholding. Certificates representing
Restricted Shares with respect to which all Restrictions have lapsed shall
be delivered by the Corporation to the Employee (or in the event of
Employee's death, to the Employee's designated beneficiary or, of no
beneficiary has been designated, to the Employee's estate) promptly after
the expiration of the Restricted Period. Notwithstanding the foregoing,
such delivery need not be made until the Employee or other recipient has
paid to the Corporation cash in the amount necessary to satisfy any income
and other tax withholding applicable to the Restricted Shares. In lieu of
making such payment, the Employee or other recipient may direct the
Corporation to withhold from the distribution Restricted Shares having a
fair market value equal to the amount of such required tax withholding.
(c) Voting Rights. Employee will have all rights of a stockholder
with respect to voting of the Restricted Shares.
(d) Dividends and Other Distributions. All dividends paid with
respect to the Restricted Shares, shall automatically be, or shall be
deemed to be, reinvested in additional Common Stock which, shall be deemed
to be part of the Restricted Shares to which such dividends, shares and
other property relate and, as such, shall be held subject to the
Restrictions hereunder.
3
<PAGE>
10. Source of Common Stock. All Restricted Shares granted under this
Agreement will be issued from treasury shares held by the Corporation. The
Corporation agrees to maintain a sufficient number of treasury shares to fulfill
its obligations hereunder.
11. Entire Understanding. This Agreement constitutes the entire
understanding between the parties relating to the matters described herein and
supersedes and cancels all prior written and oral understandings and agreements
with respect to such matters, except for the Employee Agreement to which
Employee continues to be bound and the Employment Agreement, dated as of even
date herewith between the Company and the Employee.
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Employee's executors, administrators, legal representatives, heirs
and legatees and the successors and assigns of the Corporation.
13. Partial Invalidity. The various provisions of this Agreement are
intended to be severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be determined to be void
and unenforceable, in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision or part thereof, and such provision
or part thereof shall be deemed modified to the extent required to permit
enforcement. Without limiting the generality of the foregoing, if the scope of
any provision contained in this Agreement is too broad to permit enforcement to
its full extent, but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by law, and Employee
hereby agrees that such scope may be judicially modified accordingly.
14. Waiver. The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
15. Governing Law. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Illinois.
IN WITNESS WHEREOF, the Corporation has caused this Restricted Stock
Agreement to be signed and the Employee has executed the same the day and year
first above written.
WMX TECHNOLOGIES, INC.
By: /s/ Peer Pedersen
----------------------------
Peer Pedersen,
Chairman of the Compensation
and Stock Option Committee
/s/ James E. Koenig
----------------------------
James E. Koenig
4
<PAGE>
EXHIBIT A
----------
WMX TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of this 15th day of
August, 1996, between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter referred to as the "Company"), and JAMES E. KOENIG (hereinafter
referred to as the "Executive"):
W I T N E S S E T H:
--------------------
WHEREAS, the Executive has previously served and is serving as Senior Vice
President and Chief Financial Officer of the Company; and
WHEREAS, the Executive has developed extensive experience with respect to
the management and operations of the Company which it considers extremely
valuable to the continued prosperity of the Company; and
WHEREAS, the Company wishes to adequately compensate the Executive and to
ensure that the Company will continue to have the Executive available to perform
for the Company duties as Senior Vice President and Chief Financial Officer of
the Company; and
WHEREAS, the Company and the Executive desire to set forth in this
Agreement the terms, conditions and obligations of the parties with respect to
such employment and this Agreement is intended by the parties to supersede all
previous agreements and understandings, whether written or oral, concerning such
employment, except for the Executive's Agreement dated November 15, 1978, a copy
of which is attached hereto as Exhibit B (the "Employee Agreement").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive
effective as of the date of this Agreement and the Executive hereby accepts
employment as Senior Vice President and Chief Financial Officer of the Company
upon the terms and conditions hereinafter set forth. The Executive shall
perform such duties and responsibilities for the Company which are commensurate
with his offices as may be assigned him by the Company's Board of Directors and
shall serve as a member of the Company's Executive Committee. As Senior Vice
President and Chief Financial Officer, the Executive shall report to the Chief
Executive Officer of the Company. Incident to the performance of such duties,
the Executive shall be provided by the Company with office space, facilities and
secretarial assistance commensurate with that currently being provided to the
Executive.
2. TERM. Subject only to the provisions hereof relating to "termination
for cause" hereinafter set forth in Subsection 6(b), or the Executive's
voluntary termination under Subsection 6(e) hereof, the term of the Executive's
employment hereunder (herein the "Term") shall be for a period beginning on the
date hereof and ending on August 14, 1999. Subject to the provisions of
<PAGE>
Subsection 6 hereof, on August 15, 1997, and on each successive August 15, the
Term of this Agreement shall be extended for a term of three (3) years from such
August 15.
3. COMPENSATION.
(a) The Company agrees to pay the Executive during the Term a minimum
annual salary of Six Hundred Thousand Dollars ($600,000.00). The salary shall
be payable at intervals not less often than semi-monthly. All adjustments to
the Executive's salary and all aspects of the Executive's incentive or
performance compensation shall be established by the Company's Board of
Directors or a duly authorized committee thereof (the "Compensation Committee").
The Executive shall also receive such benefits and perquisites (the "Benefits")
which have been made available to executives of the Company including, without
limitation, incentive compensation, loans, awards, insurance, stock options,
stock purchase plans, benefits from qualified plans or non-qualified plans or
other benefit plans (including group life insurance and severance pay plans or
arrangements) now or hereafter existing which are adopted by the Company for the
benefit of its employees generally and for the benefit of the Company's
principal executive officers, all such Benefits to be provided in such amounts
as may be determined from time to time by the Board or the Compensation
Committee.
(b) Restricted Stock. Concurrently with execution of this Agreement,
the Company shall grant to the Executive 45,000 shares of its $1.00 par value
common stock pursuant to the terms and conditions of a Restricted Stock
Agreement between the Company and Executive in the form attached hereto as
Exhibit A.
4. EXTENT OF SERVICE. Except as provided in Subsection 6(c) hereof,
during the Term the Executive shall devote such time, attention, and energy to
the business of the Company as the Chief Executive Officer or the Company's
Board of Directors shall reasonably require and the Executive shall not be
engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage which activity interferes with the Executive's duties and
responsibilities provided for herein.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that in his
employment he is or will be making use of, acquiring or adding to the Company's
confidential information which includes, but is not limited to, memoranda and
other materials or records of a proprietary nature; records and policy matters
relating to finance, personnel, management, and operations. Therefore, in order
to protect the Company's confidential information and to protect other employees
who depend on the Company for regular employment, the Executive agrees that he
will not, in any way utilize any of said confidential information except in
connection with his employment by the Company, and except in connection with the
business of the Company he will not copy, reproduce, or take with him the
original or any copies of said confidential information and will not disclose
any of said confidential information to anyone.
6. TERMINATION.
(a) Death or Disability. If the Executive should become physically
or mentally disabled and unable to perform duties hereunder for a continuous
period in excess of ninety (90) days (in the reasonable opinion of the Board of
Directors of the Company), which event shall result in the termination of the
Executive's employment with the Company, or if the Executive should die while
an employee of the Company, the Company shall, as of the date of death or
disability, continue to pay the Executive's then current base salary for thirty-
six months beginning with the
<PAGE>
month immediately following the date of the Executive's death or disability.
Such amount shall be payable at intervals not less frequently than monthly. The
foregoing payments shall be made to the Executive, or in the event of the
Executive's death, to such beneficiary as the Executive may designate in writing
to the Company for that purpose, or if the Executive has not so designated, then
to the personal representative of the estate of the Executive. In the event of
the disability of the Executive during the Term and prior to earning at least 30
years of credited service for the purposes of the Company's Supplemental
Executive Retirement Plan ("SERP"), the Company shall make such additional
payments to the Executive as may be necessary to ensure that at the earliest
payment date under the SERP, the Executive will receive a benefit based upon the
lesser of (i) the Executive's actual credited service under the SERP plus five
additional years of credited service; or (ii) 30 years of credited service under
the SERP. In the event of the death of the Executive while an employee of the
Company and prior to earning at least 30 years of credited service for the
purposes of the SERP, his surviving spouse, if any, will receive a surviving
spouse benefit based upon credited service equal to the lesser of Subsections
6(a)(i) or (ii) above. Nothing herein shall be deemed to reduce the actual
credited service of the Excutive or modify the calculation of the Executive's
SERP benefit or the calculation of the surviving spouse's benefit under the SERP
if the Executive has earned 30 or more years of service for the purposes of the
SERP at the time of his disability or death. In addition, this Subsection (a) is
not to be deemed a limitation of the Executive's benefits under any death or
disability plan currently in effect.
(b) Termination for Cause. Except with respect to the provisions of
Subsection 6(a), it is the intention of the parties hereto that the only other
events which shall create in the Company any right to terminate the Executive's
employment under this Agreement prior to the expiration of the Term shall be:
(i) the commission of fraud, embezzlement or theft by the Executive in
connection with the Executive's duties; (ii) the intentional wrongful damage to
property of the Company and/or its subsidiaries by the Executive; (iii) the
intentional wrongful disclosure by the Executive of any secret process or
confidential information of the Company and/or its subsidiaries; or (iv) the
violation of the Executive's covenant not to compete contained in the Employee
Agreement. In the event of Termination for Cause, all of the obligations of the
Company shall terminate forthwith.
(c) Termination by Company. If the Company desires to terminate this
Agreement for any reason other than those specified in Subsections 6(b), or in
the event that there occurs without the written consent of the Executive:
(i) a change in the Executive's duties or responsibilities, or a
change in Executive's reporting relationships, either of
which results in or reflects a diminution of the scope or
importance of Executive's duties and responsibilities;
(ii) a reduction in Executive's then current base annual salary
(other than as part of across-the-board reductions in base
annual salary affecting the Corporation's executive officers
generally);
(iii) a reduction in the level of benefits available or awarded
under employee and executive officer benefit plans and
programs, including, but not limited to annual and long-term
incentive and stock-based plans and programs (other than as
part of across-the-board reductions in such benefit plans or
programs affecting the Corporation's executive officers
generally); or
<PAGE>
(iv) a relocation of Executive's primary employment location to
a location which is more than 50 miles from his current
location
then either party may deliver written notice of such termination to the other
party, in which case the Term shall be automatically extended and expire three
(3) years from the date of such written notice.
During the remainder of the Term, the Executive shall continue as an
employee but without regularly assigned duties. The Executive shall make himself
available for consultation and special projects at times mutually convenient to
the Company and the Executive. The Executive will not be required during the
remainder of the Term to work more than twenty (20) hours a month or more than
ten (10) months a year and would not be required without his consent to pursue
such duties as would require overnight travel for more than one day at a time.
During the remainder of the Term, the Executive may engage in other business
opportunities except as are prohibited by Executive's covenant not to compete
contained in the Employee Agreement.
During the remainder of the Term, the Executive (or in the event of his
death, the Executive's beneficiary) shall be entitled to receive his then
current base salary payable at intervals not less frequently than monthly and
his prorated annual bonus and long term bonus payable at such times as such
bonuses are payable to other executives of the Company. The prorated bonus
amount shall be determined by dividing the number of whole or partial months the
Executive is employed during the bonus performance period by the total number of
months in the bonus performance period. In addition, the Executive's outstanding
stock options shall be accelerated and shall be 100% vested and the Executive
shall be treated as having retired on the last day of the Term for the purposes
of the Company's stock option plans applicable to such stock options. Such
amounts shall be in lieu of all salary, bonuses or incentive or performance
based compensation for the remainder of the Term. However, the Executive and his
family shall continue to participate in all employee welfare benefit plans
generally available to employees and executives of the Company in accordance
with the terms of such welfare benefit plans, and all service earned by such
Executive during the remainder of the Term shall be credited for participation,
vesting and benefit accrual under all employee pension benefit plans maintained
by the Company to which the Executive is entitled to participate in accordance
with their terms, including without limitation the Company's SERP.
(d) Change of Control.
(i) For the purposes of this Subsection 6(d), "Change of
Control" shall mean the occurrence at any time during the
Term of any of the following events:
(A) The Company is merged or consolidated or reorganized
into or with another corporation or other legal person
and as a result of such merger, consolidation or
reorganization less than 75% of the outstanding voting
securities or other capital interests of the surviving,
resulting or acquiring corporation or other legal
person are owned in the aggregate by the stockholders
of the Company immediately prior to such merger,
consolidation or reorganization;
<PAGE>
(B) The Company sells all or substantially all of its
business and/or assets to any other corporation or
other legal person, less than 75% of the outstanding
voting securities or other capital interests of which
are owned in the aggregate by the stockholders of the
Company, directly or indirectly, immediately prior to
or after such sale;
(C) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report) each
as promulgated pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act") disclosing that any person
(as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 25%
or more of the issued and outstanding shares of voting
securities of the Company; or
(D) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the
Directors of the Company cease for any reason to
constitute at least a majority thereof unless the
election, or the nomination for election by the
Company's stockholders, of each new Director of the
Company was approved by at least two-thirds of such
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such
period.
(ii) In the event of a Change of Control, the Executive may elect
at any time during the Term to terminate this Agreement and
receive, in lieu of base compensation a lump sum payment
equal to three (3) times the average of the Executive's
annual compensation (including annual and long term bonuses)
from the Company for the five (5) calendar years ending
prior to the date of the Change of Control. Such amount
shall be paid to the Executive within thirty (30) days after
the date the Executive notifies the Company in writing of
his election to terminate this Agreement pursuant to this
Subsection 6(d). In the event that the Executive does not
elect to terminate this Agreement and elect the lump sum
payment provided herein, the provisions of Subsection 6(c)
shall remain in effect.
(iii) If tax is imposed pursuant to Section 4999 of the Internal
Revenue Code, or successor provision of like import (the
"Excise Tax") on the payment due under Subsection 6(c)
hereof or this Subsection 6(d) (the "Payment"), the
Executive shall be paid an additional amount ("Gross Up") no
later than 30 days prior to the date such Excise Tax is due
such that the net amount retained by the Executive after
deduction of the Excise Tax on the Payment and any federal
or state income taxes on the Payments shall be equal to the
Payments. For the purpose of determining the Gross Up, the
<PAGE>
Executive shall be deemed to pay federal and state income
taxes at the highest marginal rate of taxation in the
calendar year in which the Payment or Gross Up is to be
made. The opinion of whether such Excise Tax is payable and
the amount thereof shall be based upon a "substantial
authority opinion" of tax counsel selected by the Company
and reasonably acceptable to the Executive. If such opinion
is not finally accepted by the IRS upon audit, then
appropriate adjustments shall be computed (with Gross Up) by
tax counsel based upon the final amount of Excise Tax so
determined. The amount shall be paid by the appropriate
party in one lump cash sum within 30 days of such
computation.
(iv) Upon electing to terminate this Agreement pursuant to this
Subsection 6(d), the Executive shall resign as an officer,
director and employee of the Company and shall not be
entitled to participate in any of the Benefits described in
Subsection 3(a) which terminates upon termination of service
with the Company. The Executive will be entitled to all
Benefits which by their terms, provide benefits upon or
after termination of employment, including but not limited
to, qualified and non-qualified pension benefit plans,
deferred compensation plans, severance pay plans and
retirement welfare benefit plans.
(e) Voluntary Termination. If during the Term the Executive should
voluntarily terminate his employment with the Company for reasons other than
described in Subsection 6(c) hereof, the obligations of the Company under this
Agreement shall terminate forthwith, other than to (i) pay base salary to the
date of termination, (ii) pay all bonuses or incentive compensation earned to
the date of termination and (iii) pay or make available to the Executive all
Benefits which by their terms or under applicable law survive the voluntary
termination of the Executive; and the Executive shall remain bound by his
covenant not to disclose confidential information and his covenant not to
compete under the Employee Agreement.
7. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
deposited in the U.S. mail in a registered, postage prepaid envelope addressed:
If to the Executive, at his address set forth below, and if to the Company, c/o
Phillip B. Rooney, President and Chief Executive Officer, WMX Technologies,
Inc., 3003 Butterfield Road, Oak Brook, Illinois 60521.
8. ASSIGNMENT. The Executive may not assign his obligations hereunder.
The rights of the Executive and the rights and obligations of the Company
hereunder shall inure to the benefit of and shall be binding upon their
respective heirs, personal representatives, successors and assigns.
9. MISCELLANEOUS.
(a) This Agreement shall be subject to and governed by the laws of the
State of Illinois.
(b) Failure to insist upon strict compliance with any provisions hereof
shall not be deemed a waiver of such provisions or any other provision hereof.
<PAGE>
(c) This Agreement may not be modified except by an agreement in writing
executed by the parties hereto.
(d) The invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of any other provision.
(e) This Agreement shall supersede prior employment agreements or
understandings, written or oral, with Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WMX TECHNOLOGIES, INC.
By:
--------------------------------------
President and Chief Executive Officer
--------------------------------------
James E. Koenig
Address:
<PAGE>
[logo]
EXHIBIT B
---------
AGREEMENT
I, James E. Koenig, residing at 439 W. Lakeview, Wauconda, Illinois in
consideration of my employment by Waste Management, Inc., or ,
a company of Waste Management, Inc. (WASTE MANAGEMENT) and the compensation paid
or to be paid to me, agree as follows:
1. The term WASTE MANAGEMENT as used in this agreement includes Waste
Management, Inc. and all of its divisions, subsidiaries or affiliates, as well
as the above-named employer. The provisions of this agreement shall be binding
upon me whether I am employed by the above-named employer or any other WASTE
MANAGEMENT company, or any successor thereto.
2. I will disclose and assign to WASTE MANAGEMENT any and all material of a
proprietary nature, particularly including, but not limited to, material subject
to protection as trade secrets or as patentable or copyrightable ideas, which I
may conceive, invent, or discover, either solely or jointly with another or
others during my employment, and which relates to or is capable of use in
connection with the business of WASTE MANAGEMENT or any services or products
offered, manufactured, used, sold or being developed by WASTE MANAGEMENT at the
time said material is developed.
3. I will, upon request of WASTE MANAGEMENT, either during or at any time
after the termination of my employment by WASTE MANAGEMENT, execute and deliver
all papers, including applications for patents, and do such other legal acts
(entirely at WASTE MANAGEMENT's expense) as may be necessary to obtain and
maintain proprietary rights in any and all countries and to vest title thereto
in WASTE MANAGEMENT.
4. I acknowledge that in my employment I am or will be making use of,
acquiring or adding to WASTE MANAGEMENT's Confidential Information which
includes, but is not limited to models, drawings, memoranda, and other materials
or records of a proprietary nature; engineering or technical data; records and
policy matters relating to research, finance, accounting, sales, personnel,
management, and operations; matters particularly relating to operations such as
customer lists, price lists, customer service requirements, costs of providing
service and equipment, and equipment maintenance costs. Therefore, in order to
protect WASTE MANAGEMENT's Confidential information and to protect other
employees who depend on WASTE MANAGEMENT for regular employment, I agree as
follows:
(a) I will not during or after the term of my employment in any way
utilize any of said Confidential Information, except in connection with my
employment by WASTE MANAGEMENT, and I will not copy, reproduce, or take with
me the original or any copies of said Confidential Information and I will not
disclose any of said Confidential Information to anyone.
(b) During the term of my employment, or within one year thereafter, I
will not directly or indirectly engage in, or become interested in (as an
individual, partner, stockholder, director, officer, principal, agent,
employee, trustee, lender of money or in any other relation or capacity
whatsoever, except that I may acquire and hold shares of Waste Management,
Inc. and not to exceed 2% of the outstanding shares of stock of any other
corporation if such shares of stock are publicly traded in the over-the-
counter market or listed on a national securities exchange) any business which
renders services that compete with the services provided by WASTE MANAGEMENT
to any customer or account which was serviced by WASTE MANAGEMENT during the
period that I was employed by WASTE MANAGEMENT and which customer or account
is located in any area in which duties were at any time assigned to me during
employment.
5. In the event of a breach of this agreement, I acknowledge that the
remedy at law would be inadequate and that WASTE MANAGEMENT shall be entitled to
an injunction restraining such breach, in addition to any other remedy provided
by law.
6. This agreement may be modified or waived only by a written instrument
signed by an authorized representative of WASTE MANAGEMENT.
7. The provisions of this agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any provision of this
agreement is unenforceable for any reason whatever, such provision shall be
appropriately limited and given effect to the extent that it may be enforceable.
I HAVE READ THIS ENTIRE AGREEMENT AND FULLY UNDERSTAND THE LIMITATIONS
WHICH IT IMPOSES UPON ME.
Signed at ______________________________, this ______ day of __________, 19____.
__________________ /s/ James E. Koenig
Present Employee Job Title Signature of Employee
Accepted this 15 day of November, 1978
WASTE MANAGEMENT
By: /s/ Brian Oetzel
Title: Manager - Corporate Office Personnel
<PAGE>
EXHIBIT 10.5
WMX TECHNOLOGIES, INC.
RESTRICTED STOCK AGREEMENT
--------------------------
This Restricted Stock Agreement (the "Agreement"), made this 15th of
August, 1996, by and between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter called the "Corporation") and HERBERT A. GETZ, an employee of the
Corporation (hereinafter called the "Employee" );
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined it to be
in the best interests of the Corporation to grant restricted stock awards to
certain key executives of the Corporation in order to provide such executives
with an additional stake in the growth and prosperity of the Corporation to
encourage them to continue serving the Corporation, and to obtain from such
executives reaffirmation of certain restrictive covenants; and
WHEREAS, the Board of Directors has made such an award to the Employee and
the Employee has agreed to the terms and conditions thereof as set forth in this
Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements of the parties hereto, it is agreed as follows:
1. Grant. The Corporation hereby grants to Employee and Employee
accepts 35,000 shares (the "Restricted Shares") of common stock, $1.00 par value
per share, of the Corporation (the "Common Stock"), subject to the restrictions,
terms and conditions set forth in this Agreement.
2. Restrictions. During the Restricted Period described in Paragraph 4
below, the employee may not, directly or indirectly, by operation of law or
otherwise, voluntary or involuntarily, anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer any of the Restricted
Shares (the "Restrictions"). Upon the expiration of the Restricted Period, all
Restrictions shall lapse.
3. Award Date. The effective date of grant of the Restricted Shares to
Employee (the "Award Date") shall be August 15, 1996.
4. Restricted Period. The Restricted Period shall commence on the Award
Date and shall expire on the expiration of the period of the covenant not to
compete (the "Restrictive Covenant") contained in the Employee Agreement
attached as Appendix A to this Agreement (the "Employee Agreement") or, if
earlier, the first to occur of the following dates:
(a) the Employee's death; or
(b) the Employee's Total Disability (as defined in the Corporation's
1992 Stock Option Plan, such Plan and any successor thereto hereinafter
referred to as the "Stock Option Plan").
<PAGE>
5. (a) Effect of Termination of Employment and Other Events. Subject to
the provisions of Section 5(b) hereof, in the event of the voluntary termination
by Employee of his employment with the Corporation and all "Related Companies"
(as defined under the Stock Option Plan) prior to the 10th anniversary of the
Award Date, 100% of the Restricted Shares shall be forfeited. In the event of
the termination of the Employee's employment with the Corporation after the 10th
anniversary of the Award Date, 100% of the Restricted Shares shall become
"Vested Restricted Shares;" provided, however, that Vested Restricted Shares
shall continue to be subject to the Restrictions until the expiration of the
Restricted Period pursuant to Paragraph 4 above. However, and notwithstanding
the foregoing, to the extent provided in Paragraph 5(b), all Restricted Shares
shall be considered Vested Restricted Shares.
(b) Accelerated Vesting. Upon the occurrence of any event described
in this Paragraph 5(b), the forfeited percentage shall be zero and 100% of
the Restricted Shares shall become Vested Restricted Shares:
(i) the date of an employer-initiated termination of the
Employee's employment with the Corporation and all Related Companies
for reasons other than Cause;
(ii) the Employee's retirement on or after attaining age 60;
(iii) the effective date of any of the following employer-initiated
actions taken without the Employee's written consent: (A) a change in
the Employee's duties or responsibilities, or a change in Employee's
reporting relationships, either of which results in or reflects a
diminution of the scope or importance of Employee's duties and
responsibilities, (B) a reduction in Employee's base annual salary
(other than as part of across-the-board reductions in base annual
salary affecting the Corporation's or Related Company's executives
officers generally), (C) a reduction in the level of benefits
available or awarded under employee and executive officer benefit
plans and programs, including, but not limited to annual and long-term
incentive and stock-based plans and programs (other than as part of
across-the-board reductions in such benefit plans or programs
affecting the Corporation's or Related Company's executive officers
generally), or (D) a relocation of Employee's primary employment
location to a location which is more than 50 miles from his current
location; or
(iv) any event described in Paragraph 4(a) or (b).
For purposes of this Agreement, "Cause" shall mean (i) the commission of fraud,
embezzlement or theft by the Employee in connection with the Employee's duties;
(ii) the intentional wrongful damage to property of the Company and/or its
subsidiaries by the Employee; (iii) the intentional wrongful disclosure by the
Employee of any secret process or confidential information of the Company and/or
its subsidiaries; or (iv) the violation of the Employee's covenant not to
compete contained in the Employee Agreement.
2
<PAGE>
6. Forfeiture. In the event of:
(a) a breach of the Restrictive Covenant; or
(b) an employer-initiated termination of the Employee's employment
with the Corporation or any Related Company for "Cause" ;
then all Restricted Shares subject to this Agreement, whether or not Vested
Restricted Shares, as of the date of such breach or termination of employment
for Cause shall be forfeited.
7. Remedies. Employee reaffirms that the Restrictive Covenant is fair
and reasonable, enforcement of the provisions of such Restrictive Covenant will
not cause him undue hardship, and said provisions are reasonably necessary and
commensurate with the need to protect the Corporation and Related Companies and
their respective businesses and proprietary business interests and property from
irreparable harm. Employee acknowledges that failure to comply with the terms
of the Restrictive Covenant will cause irreparable damage to the Corporation and
Related Companies. Therefore, Employee agrees that in addition to the
forfeiture of the Restricted Shares and any other remedies at law or in equity
available to the Corporation or Related Companies for Employee's breach of the
Employee Agreement, the Corporation and Related Companies will be entitled to
specific performance and injunctive relief, without bond, against Employee to
prevent such damage or breach, and the existence of any claim or cause of action
Employee may have against the Corporation will not constitute a defense thereto.
8. Employment Rights. Nothing contained in this Agreement shall confer
upon Employee any right with respect to continuance of employment by the
Corporation or any Related Company, nor interfere in any way with the right of
the Corporation or any Related Company to terminate the Employee's employment at
any time for any reason.
9. Custody of Restricted Shares, Tax Withholding: Voting and Dividends.
(a) Certificates Representing Restricted Shares. The Restricted
Shares will be registered in the name of the Employee and the certificates
evidencing such shares shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to the Restricted Shares.
All certificates representing Restricted Shares shall be retained by the
Corporation, together with a stock power executed by the Employee in proper
form for transfer into the Corporation's name of all certificates
representing Restricted Shares which are forfeited to the Corporation in
accordance with Paragraph 5 or 6.
(b) Delivery to Employee; Tax Withholding. Certificates representing
Restricted Shares with respect to which all Restrictions have lapsed shall
be delivered by the Corporation to the Employee (or in the event of
Employee's death, to the Employee's designated beneficiary or, of no
beneficiary has been designated, to the Employee's estate) promptly after
the expiration of the Restricted Period. Notwithstanding the foregoing,
such delivery need not be made until the Employee or other recipient has
paid to the Corporation cash in the amount necessary to satisfy any income
and other tax withholding applicable to the Restricted Shares. In lieu of
making such payment, the Employee or other recipient may direct the
Corporation to
3
<PAGE>
withhold from the distribution Restricted Shares having a fair market value
equal to the amount of such required tax withholding.
(c) Voting Rights. Employee will have all rights of a stockholder
with respect to voting of the Restricted Shares.
(d) Dividends and Other Distributions. All dividends paid with
respect to the Restricted Shares, shall automatically be, or shall be
deemed to be, reinvested in additional Common Stock which, shall be deemed
to be part of the Restricted Shares to which such dividends, shares and
other property relate and, as such, shall be held subject to the
Restrictions hereunder.
10. Source of Common Stock. All Restricted Shares granted under this
Agreement will be issued from treasury shares held by the Corporation. The
Corporation agrees to maintain a sufficient number of treasury shares to fulfill
its obligations hereunder.
11. Entire Understanding. This Agreement constitutes the entire
understanding between the parties relating to the matters described herein and
supersedes and cancels all prior written and oral understandings and agreements
with respect to such matters, except for the Employee Agreement to which
Employee continues to be bound and the Employment Agreement dated as of even
date herewith between the Company and the Employee.
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Employee's executors, administrators, legal representatives, heirs
and legatees and the successors and assigns of the Corporation.
13. Partial Invalidity. The various provisions of this Agreement are
intended to be severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be determined to be void
and unenforceable, in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision or part thereof, and such provision
or part thereof shall be deemed modified to the extent required to permit
enforcement. Without limiting the generality of the foregoing, if the scope of
any provision contained in this Agreement is too broad to permit enforcement to
its full extent, but may be made enforceable by limitations thereon, such
provision shall be enforced to the maximum extent permitted by law, and Employee
hereby agrees that such scope may be judicially modified accordingly.
14. Waiver. The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
15. Governing Law. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Illinois.
4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restricted Stock
Agreement to be signed and the Employee has executed the same the day and year
first above written.
WMX TECHNOLOGIES, INC.
By: /s/ Peer Pedersen
--------------------------------
Peer Pedersen,
Chairman of the Compensation and
Stock Option Committee
/s/ Herbert A. Getz
--------------------
Herbert A. Getz
5
<PAGE>
EXHIBIT A
---------
WMX TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of this 15th day of
August, 1996, between WMX TECHNOLOGIES, INC., a Delaware corporation
(hereinafter referred to as the "Company"), and HERBERT A. GETZ (hereinafter
referred to as the "Executive"):
W I T N E S S E T H:
--------------------
WHEREAS, the Executive has previously served and is serving as Senior Vice
President, General Counsel and Secretary of the Company; and
WHEREAS, the Executive has developed extensive experience with respect to
the management and operations of the Company which it considers extremely
valuable to the continued prosperity of the Company; and
WHEREAS, the Company wishes to adequately compensate the Executive and to
ensure that the Company will continue to have the Executive available to perform
for the Company duties as Senior Vice President, General Counsel and Secretary
of the Company; and
WHEREAS, the Company and the Executive desire to set forth in this
Agreement the terms, conditions and obligations of the parties with respect to
such employment and this Agreement is intended by the parties to supersede all
previous agreements and understandings, whether written or oral, concerning such
employment, except for the Executive's Agreement, a copy of which is attached
hereto as Exhibit B (the "Employee Agreement").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive
effective as of the date of this Agreement and the Executive hereby accepts
employment as Senior Vice President, General Counsel and Secretary of the
Company upon the terms and conditions hereinafter set forth. The Executive
shall perform such duties and responsibilities for the Company which are
commensurate with his offices as may be assigned him by the Company's Board of
Directors and shall serve as a member of the Company's Executive Committee. As
Senior Vice President and General Counsel, the Executive shall report to the
Chief Executive Officer of the Company. As Secretary, the Executive shall
report to the Chairman of the Board. Incident to the performance of such
duties, the Executive shall be provided by the Company with office space,
facilities and secretarial assistance commensurate with that currently being
provided to the Executive.
2. TERM. Subject only to the provisions hereof relating to "termination
for cause" hereinafter set forth in Subsection 6(b), or the Executive's
voluntary termination under Subsection 6(e) hereof, the term of the Executive's
employment hereunder (herein the "Term")
<PAGE>
shall be for a period beginning on the date hereof and ending on August 14,
1999. Subject to the provisions of Subsection 6 hereof, on August 15, 1997, and
on each successive August 15, the Term of this Agreement shall be extended for a
term of three (3) years from such August 15.
3. COMPENSATION.
------------
(a) The Company agrees to pay the Executive during the Term a minimum
annual salary of Four Hundred Fifty Thousand Dollars ($450,000.00). The salary
shall be payable at intervals not less often than semi-monthly. All adjustments
to the Executive's salary and all aspects of the Executive's incentive or
performance compensation shall be established by the Company's Board of
Directors or a duly authorized committee thereof (the "Compensation Committee").
The Executive shall also receive such benefits and perquisites (the "Benefits")
which have been made available to executives of the Company including, without
limitation, incentive compensation, loans, awards, insurance, stock options,
stock purchase plans, benefits from qualified plans or non-qualified plans or
other benefit plans (including group life insurance and severance pay plans or
arrangements) now or hereafter existing which are adopted by the Company for the
benefit of its employees generally and for the benefit of the Company's
principal executive officers, all such Benefits to be provided in such amounts
as may be determined from time to time by the Board or the Compensation
Committee.
(b) Restricted Stock. Concurrently with execution of this Agreement,
the Company shall grant to the Executive 35,000 shares of its $1.00 par value
common stock pursuant to the terms and conditions of a Restricted Stock
Agreement between the Company and Executive in the form attached hereto as
Exhibit A.
4. EXTENT OF SERVICE. Except as provided in Subsection 6(c) hereof,
during the Term the Executive shall devote such time, attention, and energy to
the business of the Company as the Chief Executive Officer or the Company's
Board of Directors shall reasonably require and the Executive shall not be
engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage which activity interferes with the Executive's duties and
responsibilities provided for herein.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that in his
employment he is or will be making use of, acquiring or adding to the Company's
confidential information which includes, but is not limited to, memoranda and
other materials or records of a proprietary nature; records and policy matters
relating to finance, personnel, management, and operations. Therefore, in order
to protect the Company's confidential information and to protect other employees
who depend on the Company for regular employment, the Executive agrees that he
will not, in any way utilize any of said confidential information except in
connection with his employment by the Company, and except in connection with the
business of the Company he will not copy, reproduce, or take with him the
original or any copies of said confidential information and will not disclose
any of said confidential information to anyone.
6. TERMINATION.
------------
(a) Death or Disability. If the Executive should become physically
or mentally disabled and unable to perform duties hereunder for a continuous
period in excess of ninety (90) days (in the reasonable opinion of the Board of
Directors of the Company), which event shall
<PAGE>
result in the termination of the Executive's employment with the Company, or if
the Executive should die while an employee of the Company, the Company shall, as
of the date of death or disability, continue to pay the Executive's then current
base salary for thirty-six months beginning with the month immediately following
the date of the Executive's death or disability. Such amount shall be payable at
intervals not less frequently than monthly. The foregoing payments shall be made
to the Executive, or in the event of the Executive's death, to such beneficiary
as the Executive may designate in writing to the Company for that purpose, or if
the Executive has not so designated, then to the personal representative of the
estate of the Executive. In the event of the disability of the Executive during
the Term and prior to earning at least 30 years of credited service for the
purposes of the Company's Supplemental Executive Retirement Plan ("SERP"), the
Company shall make such additional payments to the Executive as may be necessary
to ensure that at the earliest payment date under the SERP, the Executive will
receive a benefit based upon the lesser of (i) the Executive's actual credited
service under the SERP plus five additional years of credited service; or (ii)
30 years of credited service under the SERP. In the event of the death of the
Executive while an employee of the Company and prior to earning at least 30
years of credited service for the purposes of the SERP, his surviving spouse, if
any, will receive a surviving spouse benefit based upon credited service equal
to the lesser of Subsections 6(a)(i) or (ii) above. Nothing herein shall be
deemed to reduce the actual credited service of the Executive or modify the
calculation of the Executive's SERP benefit or the calculation of the surviving
spouse's benefit under the SERP if the Executive has earned 30 or more years of
service for the purposes of the SERP at the time of his disability or death. In
addition, this Subsection (a) is not to be deemed a limitation of the
Executive's benefits under any death or disability plan currently in effect.
(b) Termination for Cause. Except with respect to the provisions of
Subsection 6(a), it is the intention of the parties hereto that the only other
events which shall create in the Company any right to terminate the Executive's
employment under this Agreement prior to the expiration of the Term shall be:
(i) the commission of fraud, embezzlement or theft by the Executive in
connection with the Executive's duties; (ii) the intentional wrongful damage to
property of the Company and/or its subsidiaries by the Executive; (iii) the
intentional wrongful disclosure by the Executive of any secret process or
confidential information of the Company and/or its subsidiaries; or (iv) the
violation of the Executive's covenant not to compete contained in the Employee
Agreement. In the event of Termination for Cause, all of the obligations of the
Company shall terminate forthwith.
(c) Termination by Company. If the Company desires to terminate this
Agreement for any reason other than those specified in Subsections 6(b), or in
the event that there occurs without the written consent of the Executive:
(i) a change in the Executive's duties or responsibilities, or a
change in Executive's reporting relationships, either of
which results in or reflects a diminution of the scope or
importance of Executive's duties and responsibilities;
<PAGE>
(ii) a reduction in Executive's then current base annual salary
(other than as part of across-the-board reductions in base
annual salary affecting the Corporation's executive
officers generally);
(iii) a reduction in the level of benefits available or awarded
under employee and executive officer benefit plans and
programs, including, but not limited to annual and long-
term incentive and stock-based plans and programs (other
than as part of across-the-board reductions in such benefit
plans or programs affecting the Corporation's executive
officers generally); or
(iv) a relocation of Executive's primary employment location to
a location which is more than 50 miles from his current
location
then either party may deliver written notice of such termination to the other
party, in which case the Term shall be automatically extended and expire three
(3) years from the date of such written notice.
During the remainder of the Term, the Executive shall continue as an
employee but without regularly assigned duties. The Executive shall make himself
available for consultation and special projects at times mutually convenient to
the Company and the Executive. The Executive will not be required during the
remainder of the Term to work more than twenty (20) hours a month or more than
ten (10) months a year and would not be required without his consent to pursue
such duties as would require overnight travel for more than one day at a time.
During the remainder of the Term, the Executive may engage in other business
opportunities except as are prohibited by Executive's covenant not to compete
contained in the Employee Agreement.
During the remainder of the Term, the Executive (or in the event of his
death, the Executive's beneficiary) shall be entitled to receive his then
current base salary payable at intervals not less frequently than monthly and
his prorated annual bonus and long term bonus payable at such times as such
bonuses are payable to other executives of the Company. The prorated bonus
amount shall be determined by dividing the number of whole or partial months the
Executive is employed during the bonus performance period by the total number of
months in the bonus performance period. In addition, the Executive's outstanding
stock options shall be accelerated and shall be 100% vested and the Executive
shall be treated as having retired on the last day of the Term for the purposes
of the Company's stock option plans applicable to such stock options. Such
amounts shall be in lieu of all salary, bonuses or incentive or performance
based compensation for the remainder of the Term. However, the Executive and his
family shall continue to participate in all employee welfare benefit plans
generally available to employees and executives of the Company in accordance
with the terms of such welfare benefit plans, and all service earned by such
Executive during the remainder of the Term shall be credited for participation,
vesting and benefit accrual under all employee pension benefit plans maintained
by the Company to which the Executive is entitled to participate in accordance
with their terms, including without limitation the Company's SERP.
<PAGE>
(d) Change of Control.
------------------
(i) For the purposes of this Subsection 6(d), "Change of
Control" shall mean the occurrence at any time during the
Term of any of the following events:
(A) The Company is merged or consolidated or reorganized into or
with another corporation or other legal person and as a
result of such merger, consolidation or reorganization less
than 75% of the outstanding voting securities or other
capital interests of the surviving, resulting or acquiring
corporation or other legal person are owned in the aggregate
by the stockholders of the Company immediately prior to such
merger, consolidation or reorganization;
(B) The Company sells all or substantially all of its business
and/or assets to any other corporation or other legal
person, less than 75% of the outstanding voting securities
or other capital interests of which are owned in the
aggregate by the stockholders of the Company, directly or
indirectly, immediately prior to or after such sale;
(C) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report) each as
promulgated pursuant to the Securities Exchange Act of 1934
(the "Exchange Act") disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of 25% or more of the issued and outstanding shares of
voting securities of the Company; or
(D) During any period of two consecutive years, individuals who
at the beginning of any such period constitute the Directors
of the Company cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new Director
of the Company was approved by at least two-thirds of such
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such
period.
(ii) In the event of a Change of Control, the Executive may elect at
any time during the Term to terminate this Agreement and receive,
in lieu of base compensation a lump sum payment equal to three
(3) times the average of the Executive's annual compensation
(including annual and long term bonuses) from the Company for the
<PAGE>
five (5) calendar years ending prior to the date of the
Change of Control. Such amount shall be paid to the
Executive within thirty (30) days after the date the
Executive notifies the Company in writing of his election to
terminate this Agreement pursuant to this Subsection 6(c).
In the event that the Executive does not elect to terminate
this Agreement and elect the lump sum payment provided
herein, the provisions of Subsection 6(c) shall remain in
effect.
(iii) If tax is imposed pursuant to Section 4999 of the
Internal Revenue Code, or successor provision of like import
(the "Excise Tax") on the payment due under Subsection 6(c)
hereof or this Subsection 6(d) (the "Payment"), the
Executive shall be paid an additional amount ("Gross Up") no
later than 30 days prior to the date such Excise Tax is due
such that the net amount retained by the Executive after
deduction of the Excise Tax on the Payment and any federal
or state income taxes on the Payments shall be equal to the
Payments. For the purpose of determining the Gross Up, the
Executive shall be deemed to pay federal and state income
taxes at the highest marginal rate of taxation in the
calendar year in which the Payment or Gross Up is to be
made. The opinion of whether such Excise Tax is payable and
the amount thereof shall be based upon a "substantial
authority opinion" of tax counsel selected by the Company
and reasonably acceptable to the Executive. If such opinion
is not finally accepted by the IRS upon audit, then
appropriate adjustments shall be computed (with Gross Up) by
tax counsel based upon the final amount of Excise Tax so
determined. The amount shall be paid by the appropriate
party in one lump cash sum within 30 days of such
computation.
(iv) Upon electing to terminate this Agreement pursuant to
this Subsection 6(d), the Executive shall resign as an
officer, director and employee of the Company and shall not
be entitled to participate in any of the Benefits described
in Subsection 3(a) which terminates upon termination of
service with the Company. The Executive will be entitled to
all Benefits which by their terms, provide benefits upon or
after termination of employment, including but not limited
to, qualified and non-qualified pension benefit plans,
deferred compensation plans, severance pay plans and
retirement welfare benefit plans.
(e) Voluntary Termination. If during the Term the Executive should
voluntarily terminate his employment with the Company for reasons other than
described in Subsection 6(c) hereof, the obligations of the Company under this
Agreement shall terminate forthwith, other than to (i) pay base salary to the
date of termination, (ii) pay all bonuses or incentive compensation earned to
the date of termination and (iii) pay or make available to the Executive all
Benefits which by their terms or under applicable law survive the voluntary
termination of the Executive; and the Executive shall remain bound by his
covenant not to
<PAGE>
disclose confidential information and his covenant not to compete under the
Employee Agreement.
7. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
deposited in the U.S. mail in a registered, postage prepaid envelope addressed:
If to the Executive, at his address set forth below, and if to the Company, c/o
Phillip B. Rooney, President and Chief Executive Officer, WMX Technologies,
Inc., 3003 Butterfield Road, Oak Brook, Illinois 60521.
8. ASSIGNMENT. The Executive may not assign his obligations hereunder.
The rights of the Executive and the rights and obligations of the Company
hereunder shall inure to the benefit of and shall be binding upon their
respective heirs, personal representatives, successors and assigns.
<PAGE>
9. MISCELLANEOUS.
-------------
(a) This Agreement shall be subject to and governed by the laws of the
State of Illinois.
(b) Failure to insist upon strict compliance with any provisions hereof
shall not be deemed a waiver of such provisions or any other provision hereof.
(c) This Agreement may not be modified except by an agreement in writing
executed by the parties hereto.
(d) The invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of any other provision.
(e) This Agreement shall supersede prior employment agreements or
understandings, written or oral, with Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WMX TECHNOLOGIES, INC.
By
-------------------------------------
President and Chief Executive Officer
-------------------------------------
Herbert A. Getz
Address:
<PAGE>
[logo]
EXHIBIT B
---------
AGREEMENT
I, Herbert A. Getz, residing at 5415 N. Sheridan Road, Chicago, Illinois
60640 in consideration of my employment by Waste Management, Inc., or
, a company of Waste Management, Inc. (WASTE MANAGEMENT) and the compensation
paid or to be paid to me, agree as follows:
1. The term WASTE MANAGEMENT as used in this agreement includes Waste
Management, Inc. and all of its divisions, subsidiaries or affiliates, as well
as the above-named employer. The provisions of this agreement shall be binding
upon me whether I am employed by the above-named employer or any other we above-
named employer or any other WASTE MANAGEMENT company, or any successor thereto.
2. I will disclose and assign to WASTE MANAGEMENT any and all material of
a proprietary nature, particularly including, but not limited to, material
subject to protection as trade secrets or as patentable or copyrightable ideas,
which I may conceive, invent, or discover, either solely or jointly with another
or others during my employment, and which relates to or is capable of use in
connection with the business of WASTE MANAGEMENT or any services or products
offered, manufactured, used, sold or being developed by WASTE MANAGEMENT at the
time said material is developed.
3. I will, upon request of WASTE MANAGEMENT, either during or at any time
after the termination of my employment by WASTE MANAGEMENT, execute and deliver
all papers, including applications for patents, and do such other legal acts
(entirely at WASTE MANAGEMENT's expense) as may be necessary to obtain and
maintain proprietary rights in any and all countries and to vest title thereto
in WASTE MANAGEMENT.
4. I acknowledge that in my employment I am or will be making use of,
acquiring or adding to WASTE MANAGEMENT's Confidential Information which
includes, but is not limited to models, drawings, memoranda, and other materials
or records of a proprietary nature; engineering or technical data; records and
policy matters relating to research, finance, accounting, sales, personnel,
management, and operations; matters particularly relating to operations such as
customer lists, price lists, customer service requirements, costs of providing
service and equipment, and equipment maintenance costs. Therefore, in order to
protect WASTE MANAGEMENT's Confidential information and to protect other
employees who depend on WASTE MANAGEMENT for regular employment, I agree as
follows:
(a) I will not during or after the term of my employment in any way utilize
any of said Confidential Information, except in connection with my employment
by WASTE MANAGEMENT, and I will not copy, reproduce, or take with me the
original or any copies of said Confidential Information and I will not
disclose any of said Confidential Information to anyone.
(b) During the term of my employment, or within one year thereafter, I will
not directly or indirectly engage in, or become interested in (as an
individual, partner, stockholder, director, officer, principal, agent,
employee, trustee, lender of money or in any other relation or capacity
whatsoever, except that I may acquire and hold shares of Waste Management,
Inc. and not to exceed 2% of the outstanding shares of stock of any other
corporation if such shares of stock are publicly traded in the over-the-
counter market or listed on a national securities exchange) any business
which renders services that compete with services provided by the company of
WASTE MANAGEMENT by which I was employed to any customer or account which was
serviced by WASTE MANAGEMENT during the period that I was employed by WASTE
MANAGEMENT and which customer or account is located in any area in which
duties were assigned to me during the last two years of my employment.
5. In the event of a breach of this agreement, I acknowledge that the
remedy at law would be inadequate and that WASTE MANAGEMENT shall be entitled to
an injunction restraining such breach, in addition to any other remedy provided
by law.
6. This agreement may be modified or waived only by a written instrument
signed by an authorized representative of WASTE MANAGEMENT.
7. The provisions of this agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any provision of this
agreement is unenforceable for any reason whatever, such provision shall be
appropriately limited and given effect to the extent that it may be enforceable.
I HAVE READ THIS ENTIRE AGREEMENT AND FULLY UNDERSTAND THE LIMITATIONS
WHICH IT IMPOSES UPON ME.
Signed at Oak Brook, Illinois, this 1 day of April, 1983.
GENERAL COUNSEL /s/ Herbert A. Getz
Present Employee Job Title Signature of Employee
Accepted this 1 day of April, 1983
WASTE MANAGEMENT
By: /s/ John Machota
Title: Manager - Human Resources
<PAGE>
EXHIBIT 12
WMX TECHNOLOGIES, INC.
Ratio of Earnings to Fixed Charges
(Unaudited)
(millions of dollars, except ratio)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
---------------------
1995(1) 1996
-------- --------
<S> <C> <C>
Income From Continuing Operations Before Income
Taxes, Undistributed Earnings from Affiliated
Companies and Minority Interest................ $1,063.8 $1,178.2
Interest Expense................................. 382.8 347.0
Capitalized Interest............................. (59.7) (53.2)
One-Third of Rents Payable in the Next Year...... 37.4 39.3
-------- --------
Income From Continuing Operations Before Income
Taxes, Undistributed Earnings from Affiliated
Companies, Minority Interest, Interest and
One-Third of Rents............................. $1,424.3 $1,511.3
======== ========
Interest Expense................................. $ 382.8 $ 347.0
One-Third of Rents Payable in the Next Year...... 37.4 39.3
-------- --------
Interest Expense plus One-Third of Rents......... $ 420.2 $ 386.3
======== ========
Ratio of Earnings to Fixed Charges............... 3.39 to 1 3.91 to 1
</TABLE>
(1) The results for 1995 include a special charge ($140.6 million before income
taxes), recorded by the Company's Chemical Waste Management, Inc. subsidiary,
primarily related to a writeoff of certain investments in hazardous waste
treatment and processing technologies and facilities. Excluding the effect of
this charge, the ratio of earnings to fixed charges would be 3.72 to 1.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the September 30, 1996 Consolidated Balance Sheet and the Consolidated Statement
of Income for the nine-month period ended September 30, 1996, and is qualified
in its entirety by reference to such financial statements and the footnotes
thereto.
</LEGEND>
<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> 270,836
<SECURITIES> 24,224
<RECEIVABLES> 2,018,036
<ALLOWANCES> 64,051
<INVENTORY> 0
<CURRENT-ASSETS> 3,182,109
<PP&E> 14,309,951
<DEPRECIATION> 4,454,389
<TOTAL-ASSETS> 19,341,938
<CURRENT-LIABILITIES> 3,037,687
<BONDS> 7,226,448
<COMMON> 507,102
0
0
<OTHER-SE> 4,765,906
<TOTAL-LIABILITY-AND-EQUITY> 19,341,938
<SALES> 0
<TOTAL-REVENUES> 7,725,935
<CGS> 0
<TOTAL-COSTS> 5,445,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 25,275
<INTEREST-EXPENSE> 293,805
<INCOME-PRETAX> 1,111,372
<INCOME-TAX> 457,946
<INCOME-CONTINUING> 653,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 653,426
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 0.00
</TABLE>
