<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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-1363
ENVIROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 34-0617390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1155 Business Center Drive, Horsham, Pennsylvania 19044-3454
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 956-5500
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 the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares outstanding of the Registrant's Common
Stock as of the close of business on November 8, 1996 was
40,351,446.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
---------------------
<TABLE>
<CAPTION>
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
September 30, December 31,
1996 1995
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,560 $ 8,367
Accounts receivable, less allowance
for doubtful accounts of $990
and $729 37,853 37,208
Other current assets 8,915 8,252
----- -----
Total current assets 56,328 53,827
Property, plant and equipment, at cost 311,818 287,198
Less allowance for depreciation (144,590) (124,636)
-------- --------
167,228 162,562
Goodwill, less amortization 160,220 155,255
Landfill permits, less amortization 22,872 22,549
Closure trust funds and deferred
charges, less amortization 33,569 33,867
Debt issuance costs, less amortization 8,750 9,625
Other assets 12,893 11,997
------ ------
$ 461,860 $ 449,682
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET -- Continued
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Trade payables $ 10,264 $ 13,125
Salaries, wages and related benefits 8,728 10,161
Insurance obligations 6,955 6,257
Reorganization and restructuring costs 3,066 1,779
Accrued interest 7,824 1,279
Current portion of debt 11,101 9,397
Class G redeemable preferred stock 33,092
Other current liabilities 13,266 12,836
------ ------
Total current liabilities 61,204 87,926
Long-term debt 321,276 275,158
Other liabilities 51,608 53,994
Commitments and contingencies (Note E)
Stockholder equity:
Common stock, par value $.05 per
share, authorized-60,000,000 shares,
issued and outstanding-40,326,006
shares in 1996 and 40,194,244 shares
in 1995 2,016 2,010
Capital in excess of par value 162,729 162,580
Accumulated deficit (135,217) (130,189)
Stock purchase loans receivable from
officers (810) (840)
Canadian translation adjustment (946) (957)
---- ----
Total stockholders' equity 27,772 32,604
------ ------
$ 461,860 $ 449,682
========= =========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 63,374 $ 64,822 $187,757 $202,178
Cost of revenues 49,472 47,529 145,136 150,675
Selling, general and
administrative expenses 5,713 7,147 19,025 21,363
Unusual items, net 960 (1,150) 5,600 (1,950)
--- ------ ----- ------
Operating income 7,229 11,296 17,996 32,090
Interest income 588 293 1,102 870
Interest expense (8,224) (6,880) (23,271) (20,655)
------ ------ ------- -------
(Loss) income before
income taxes (407) 4,709 (4,173) 12,305
Income tax expense:
Taxes payable (215) (438) (704) (1,127)
Federal taxes not
payable in cash (1,187) (1,133) (3,152)
------ ------ ---- ------
Net (loss) income (1,809) 3,138 (4,877) 8,026
Preferred stock dividend
requirements, reduced by a
retirement gain of $250
in the nine months of 1996 (1) (453) (151) (1,355)
-- ---- ---- ------
Net (loss) income applicable to
common shares and equivalents $ (1,810) $ 2,685 $ (5,028) $ 6,671
======== ======= ======== =======
Net (loss) income per share $ (.04) $ .07 $ (.12) $ .16
======== ======= ======== =======
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income ($ 4,877) $ 8,026
Adjustments to reconcile net (loss) income
to cash provided by operations:
Income tax expense not payable in cash 3,152
Depreciation 19,742 18,871
Amortization 6,908 6,778
Reorganization and restructuring costs 2,080 (3,946)
Changes in working capital 584 3,050
Other 584 490
--- ---
Cash provided by operating activities 25,021 36,421
INVESTING ACTIVITIES
Property, plant and equipment additions (19,088) (22,393)
Purchase of Alexander Mill Services, Inc.
(net of cash acquired) (5,934)
Landfill permit additions and closure
expenditures (2,442) (542)
Closure trust fund payments (588) (487)
Ongoing net cash flows related to
IU acquisition (2,156) (8,801)
Other 1,879 (1,479)
----- ------
Cash used by investing activities (28,329) (33,702)
FINANCING ACTIVITIES
Issuance of debt 54,000 12,100
Debt repayment (16,229) (19,847)
Retirement of preferred stock (33,242) (42)
Sale of common stock 155 12
Other (183) (24)
---- ---
Cash provided (used) by financing activities 4,501 (7,801)
Cash and cash equivalents
Increase (decrease) during the period 1,193 (5,082)
Balance at beginning of year 8,367 8,389
----- -----
Balance at end of period $ 9,560 $ 3,307
======== ========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTE A. BASIS OF PRESENTATION
- - ------- ---------------------
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information.
In the opinion of management, all adjustments (consisting of
normal recurring accruals and the unusual items discussed in Note
C) necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended
September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. The
condensed consolidated balance sheet at December 31, 1995 has
been derived from audited financial statements at that date. For
further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
NOTE B. ALEXANDER ACQUISITION
- - ------- ---------------------
The Company purchased Alexander Mill Services, Inc.("Alexander"),
a metal reclamation company serving the mini-mill sector of the
steel industry, on May 20, 1996. The results of Alexander's
operations are included in the condensed consolidated statement
of operations from that date. Pro forma results of operations,
as if this transaction occurred at the beginning of each period,
are as follows (in millions, except per share amounts):
Nine months ended
September 30,
-------------
1996 1995
---- ----
Pro forma revenues $192.2 $210.1
Pro forma net (loss) income ($ 4.4) $ 8.6
Pro forma net (loss) income per share ($ .11) $ .18
The pro forma information is not necessarily indicative of the
results that would have occurred had the transaction taken place
at the beginning of the respective periods.
The cost of the acquisition was $9 million (including $2.8
million that is payable to the former owner over three and one-half
years with interest) plus the assumption of $7.2 million of
debt. The Alexander business has been included in the condensed
consolidated financial statements based on a preliminary
allocation of the purchase price, including $8.7 million of
goodwill.
<PAGE>
NOTE C. UNUSUAL ITEMS, NET
- - ------- ------------------
In the first quarter of 1996, the Company initiated a
reorganization to improve productivity and reduce costs. The
reorganization consisted principally of consolidating the
Company's headquarters functions in a single location. The
Company's corporate headquarters in Stamford, Connecticut and the
Treatment & Disposal Services segment's headquarters in Horsham,
Pennsylvania were closed and their activities moved to the
International Mill Service headquarters building, also in
Horsham. Early in the second quarter, the Company decided to
close IMSAMET's Phoenix, Arizona headquarters as well.
Approximately 55 positions have been eliminated as a result of
the reorganization, mostly in the Treatment & Disposal Services
segment.
To cover the cost of these and related changes, the Company
recorded $4.4 million of restructuring and relocation charges
during 1996, including $.7 million in the third quarter. Through
the third quarter, $2.1 million has been spent for office
closures and related employee termination costs. As a result of
the reorganization, the Company expects to realize annual cost
savings of approximately $5 million. Savings of approximately
$2.6 million were achieved in the nine month period and a total
of $4 million is expected for the year.
In the first quarter of 1996, the Company recorded a $.9 million
charge resulting from the settlement of the last disputed matter
remaining from the Company's 1993 restructuring, and in the third
quarter of 1996, a $.3 million charge for additional related
expenses.
After taxes, the 1996 unusual charges contributed $.02 to the
loss per share in the quarter and together with the gain from
retiring 236,l20 shares of Class G preferred stock a net $.09 to
the loss per share in the nine months.
In 1995, the Company favorably resolved a number of liabilities
resulting from its 1988 acquisition of IU International
Corporation. The benefit of these developments was partially
offset by additional charges for other matters arising from that
acquisition. The resulting net unusual item credits totaled $1.2
million in the third quarter and $2 million in the nine month
period. Due to disproportionate tax effects, the net credits
contributed $.01 to net income per share in the nine month
period, but had no effect on net income per share in the 1995
quarter.
<PAGE>
NOTE D. OTHER INFORMATION
- - ------- -----------------
At September 30, 1996, $87 million of revolving credit borrowings
and $7.3 million of standby letters of credit were outstanding
under the Company's $100 million bank credit facility. The
current portion of long-term debt includes $4 million of
revolving credit borrowings that was repaid after September 30.
At September 30, 1996, the Company was in compliance with all the
covenants contained in its bank credit agreement, including the
financial covenants that require it to meet certain financial
ratios and tests. However, it is likely that the Company will
need to obtain modifications to some of the required financial
ratios to remain in compliance. The Company believes it will be
able to obtain any needed modifications.
The Company paid interest of $15.7 million and $14.2 million
during the nine months of 1996 and 1995.
Income tax expense payable consists of state and foreign income
taxes. The Company made cash income tax payments, net of
refunds, of $.6 million and $1.1 million during the nine month
periods of 1996 and 1995. In the three months ended September
30, 1996, the Company recorded $1.2 million of federal income tax
expense (which contributed $.03 to the loss per share in the quarter) to
eliminate all of the federal income tax benefit recorded in the first six
months, due to lower expected earnings from operations for the year.
Per share amounts are based on the weighted average number of
common shares outstanding and the dilutive effect of stock
options and warrants: 40,479,000 and 40,508,000 for the three
months ended September 30, 1996 and 1995; 40,459,000 and
40,547,000 for the nine months then ended.
NOTE E. COMMITMENTS AND CONTINGENCIES
- - ------- -----------------------------
As of September 30, 1996, the Company has commitments to spend $5
million for equipment additions.
To secure its obligations to close its Idaho landfill and perform
post-closure monitoring and maintenance procedures, the Company
must deposit into a closure trust fund approximately $1 million
annually through 1998. The Company believes these payments
together with those previously made will satisfy substantially
all of its landfill closure and post-closure obligations, based
on current regulations and permitted capacity.
<PAGE>
NOTE E. COMMITMENTS AND CONTINGENCIES -- Continued
- - ------- ------------------------------------------
At September 30, 1996, the Company was contingently liable for
$7.3 million of letters of credit outstanding under its bank
credit agreement, including approximately $5 million that secure
liabilities already reflected in the condensed consolidated
balance sheet.
IU International Corporation ("IU International") sold P-I-E
Nationwide, Inc. ("PIE") in 1985. PIE commenced bankruptcy
proceedings in 1990 and ceased operations, which triggered
withdrawal liabilities to certain multiemployer pension plans,
estimated by PIE in 1990 to aggregate $58 million. In 1991 the
trustees of the largest plan sought information from the Company
for the stated purpose of determining whether the circumstances
of IU International's 1985 sale of PIE would justify a claim
against the Company for any deficiencies in PIE's payment of
withdrawal liabilities to such plan. Such plan did not again
contact the Company concerning this matter until early in 1995,
when the Company was advised that such plan's consideration as to
whether it would assert a claim is ongoing. In early 1996, such
plan sent a letter to the Company indicating its intention to
initiate a claim under the Multiemployer Pension Plan Amendments
Act of 1980 ("MPPAA") if the plan and the Company are unable to
resolve the matter. The Company believes any such claim is
unwarranted and, if asserted, would contest any such claim
vigorously. The Company also believes it will ultimately prevail
on the merits. However, under MPPAA, the plan trustees could
require the Company to make substantial monthly payments before
any issues are arbitrated or litigated. If onerous monthly
payments are imposed by the plan, the Company will take any and
all actions it deems necessary and appropriate to protect itself
until the matter can be arbitrated and/or litigated on its
merits. The Company and the plan have met to discuss the issues
raised in the plan's letter and they are continuing their efforts
to resolve this matter. The Company continues to believe that
the underlying facts and circumstances support a conclusion that
this matter will be resolved with no material adverse effect on
its financial condition. However, resolution of this matter,
which is likely to take place in the near term, could result in a
charge that is material to results of operations and cash flows
in a single accounting period.
The Company's Ohio and Idaho facilities hold operating permits
issued by state and federal environmental agencies under the
Resource Conservation and Recovery Act, as amended, that require
renewal and modification from time to time. The Company expects
that it will obtain the renewals and modifications to its permits
that it requires to continue to provide landfill capacity in its
<PAGE>
NOTE E. COMMITMENTS AND CONTINGENCIES -- Continued
- - ------- ------------------------------------------
approved disposal cells well into the next decade.
The Company and its competitors and customers are subject to a
complex, evolving array of federal, state and local environmental
laws and regulations. In particular, such requirements not only
can affect the demand for treatment and disposal services, but
could also require the Company to incur significant costs for
such matters as facility upgrading, remediation or other
corrective action, facility closure and post-closure maintenance
and monitoring. It is possible that the future imposition of
such requirements could have a material adverse effect on the
Company's results of operations and/or financial condition, but
the Company believes that the consolidated financial statements
appropriately reflect all presently known compliance costs in
accordance with generally accepted accounting principles.
The Company is a party to litigation and proceedings arising in
the normal course of its present and former businesses. In the
opinion of management, the outcome of such matters will not have
a material adverse effect on the Company's financial condition or
results of operations.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
------------------------------------
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30
Three months
ended 1996 better(worse)
September 30, than 1995
------------- ---------
1996 1995 Amount %
---- ---- ------ -
(Dollars in millions)
<S> <C> <C> <C> <C>
Revenues
Industrial Environmental Services $ 54,833 $ 55,503 ($ 670) ( 1.2%)
Treatment & Disposal Services 8,541 9,319 ( 778) (8.3%)
----- ----- ---
$ 63,374 $ 64,822 ($ 1,448) (2.2%)
======== ======== ========
Gross Profit
Industrial Environmental Services $ 13,314 $ 15,230 ($ 1,916) (12.6%)
Treatment & Disposal Services 588 2,063 (1,475) (71.5%)
--- ----- ------
$ 13,902 $ 17,293 ($ 3,391) (19.6%)
======== ======== ========
Operating Income (Loss)
Industrial Environmental Services $ 9,616 $ 11,673 ($ 2,057) (17.6%)
Treatment & Disposal Services (690) 126 (816) -
Corporate headquarters (737) (1,653) 916 55.4%
Unusual items, net (960) 1,150 (2,110) -
---- ----- ------
$ 7,229 $ 11,296 ($ 4,067) (36.0%)
======== ======== ========
</TABLE>
Although conditions in the steel industry were strong in both
the 1996 and 1995 quarters, Industrial Environmental Services
revenues declined due to conditions in the aluminum industry. In
the 1995 quarter, aluminum prices were higher and the Company's
Idaho facility received a higher volume of used beverage cans for
recycling. The acquisition of Alexander Mill Services, Inc. in May
1996 contributed $2.7 million to revenues in the quarter, but the
increase was largely offset by the loss of a steel industry customer
that accounted for 4% of Industrial Environmental Services quarterly
revenues in 1995. After the close of the 1996 quarter, a
significant steel industry customer's employees commenced a strike.
Since the duration of the strike is uncertain, the extent of the
adverse impact on fourth quarter results cannot be estimated. Such
customer accounted for about 6% of Industrial Environmental Services
revenues in the three months ended September 30, 1996. Treatment &
Disposal Services revenues decreased because there was only $.2
million of scrubber sludge stabilization system contract revenue in
the 1996 quarter compared with $1.4 million in the same period of
1995. While Treatment & Disposal Services realized an increase in
treatment and disposal volume in the 1996 quarter, the related
revenue was about the same because treatment and disposal prices
declined. The volume increase resulted from additional contracts to
stabilize electric arc furnace dust (a hazardous waste produced by
steel mini-mills), as Treatment & Disposal Services continues its
comprehensive marketing program to increase volume by using
proprietary Super Detox(R) technology to treat steel mill electric arc
furnace dust at its Ohio and Idaho facilities.
Industrial Environmental Services gross profit decreased for
the reasons discussed above together with lower profit margins at
some steel industry customer sites. Treatment & Disposal Services
gross profit declined for the quarter primarily due to the lack of
stabilization system contracts and the decline in treatment and
disposal prices.
<PAGE>
Selling, general and administrative expenses decreased $1.4
million in the 1996 quarter as compared to the 1995 quarter due
primarily to the effects of the 1996 reorganization discussed in the
next paragraph.
In the 1996 quarter, unusual charges of $1 million were
recorded for additional costs of the Company's previously announced
1996 reorganization and additional expenses related to the Company's
earlier restructuring. See Note C for a description of the
reorganization. The Company expects to realize ongoing annual cost
savings of approximately $5 million. Savings of approximately $1.6
million were achieved in the third quarter and a total of $4 million
is expected for the year. The consolidation of headquarters
personnel in a single location also will enhance the Company's
ability to expand the range of environmental and specialized
material handling services provided to the U.S. steel industry, its
largest customer base.
In the third quarter of 1995, the Company favorably resolved a
number of liabilities resulting from its 1988 acquisition of IU
International Corporation. The benefit of these developments was
partially offset by additional charges for other matters arising
from that acquisition, resulting in a net $1.2 million unusual item
credit.
Interest expense in the 1996 quarter increased $1.3 million
over the 1995 quarter due to higher average debt levels, primarily
to finance the retirement of the Class G preferred stock and also
due to the Alexander acquisition.
Income tax expense payable consists of state and foreign taxes.
In the three months ended September 30, 1996, the Company recorded
$1.2 million of federal income tax expense to eliminate all of the
federal income tax benefit recorded in the first six months, due to
lower expected earnings from operations for the year.
Due to the factors described above, the Company incurred a net
loss of $1.8 million in the 1996 quarter as compared with net income
of $3.1 million in the 1995 quarter.
There was virtually no Class G preferred stock dividend
requirement in 1996 because all the remaining Class G stock was
redeemed on July 15, 1996.
<PAGE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30
Nine months
ended 1996 better(worse)
September 30, than 1995
------------ ---------
1996 1995 Amount %
---- ---- ------ -
<S> <C> <C> <C> <C>
(Dollars in millions)
Revenues
Industrial Environmental Services $ 164,012 $ 168,685 ($ 4,673) (2.8%)
Treatment & Disposal Services 23,745 33,493 ( 9,748) (29.1%)
--------- --------- ---------
$ 187,757 $ 202,178 ($ 14,421) (7.1%)
========= ========= =========
Gross Profit
Industrial Environmental Services $ 41,348 $ 45,618 ($ 4,270) (9.4%)
Treatment & Disposal Services 1,273 5,885 ( 4,612) (78.4%)
--------- --------- ---------
42,621 $ 51,503 ($ 8,882) (17.2%)
========= ========= =========
Operating Income (Loss)
Industrial Environmental Services $ 30,333 $ 34,546 ($ 4,213) (12.2%)
Treatment & Disposal Services ( 3,193) 385 ( 3,578) -
Corporate headquarters ( 3,544) ( 4,791) 1,247 26.0%
Unusual items net ( 5,600) 1,950 ( 7,550) -
--------- --------- ---------
$ 17,996 $ 32,090 ($ 14,094) (43.9%)
========= ========= =========
</TABLE>
Industrial Environmental Services revenues declined for the
reasons outlined in the three month discussion and because the
largest blast furnace at the Company's largest steel industry
customer suffered a 60-day outage during the period. The
acquisition of Alexander Mill Services, Inc. in May 1996 contributed
$4 million to revenues, but that increase was partially offset by
the third quarter loss of a steel industry customer that accounted
for 4% of Industrial Environmental Services revenues during the
first six months of 1996. Treatment & Disposal Services revenues
decreased because there was only $.2 million of scrubber sludge
stabilization system contract revenue in 1996 compared with $7.7
million of such revenue in 1995. Also, treatment and disposal
volumes have been lower in 1996 due to depressed market conditions,
but this decline has been partially offset by additional contracts
to stabilize electric arc furnace dust.
Industrial Environmental Services gross profit decreased for
the reasons discussed above, except that the impact of the blast
furnace outage was offset to some extent by an estimated business
interruption insurance recovery. Also, profit margins were somewhat
lower at some steel industry customer sites and at the Company's
aluminum recycling operations. Treatment & Disposal Services gross
profit decreased due to the decline in overall volume, a decrease in
treatment and disposal prices, and the lack of new stabilization
system contracts.
Selling, general and administrative expenses decreased $2.3
million in 1996 as compared to 1995 due primarily to the effects of
the 1996 reorganization discussed in the next paragraph.
Unusual charges, totaling $5.6 million in the nine month period
of 1996, include $.9 million resulting from the first quarter
settlement of the last disputed matter remaining from the Company's
1993 restructuring, $.3 million of related expenses, and $4.4
million for the Company's previously announced 1996 reorganization.
See Note C for a description of the reorganization. The Company
expects to realize ongoing annual cost savings of approximately $5
million. Savings of approximately $2.6 million were achieved in
1996 and a total of $4 million is expected for the year.
<PAGE>
In 1995, the Company favorably resolved a number of liabilities
resulting from its 1988 acquisition of IU International Corporation.
The benefit of these developments was partially offset by additional
charges for other matters arising from that acquisition, resulting
in a net $2 million unusual item credit.
Interest expense in 1996 increased $2.6 million over 1995 due
to higher average debt levels, primarily to finance the retirement
of the Class G preferred stock and also due to the Alexander
acquisition.
Income tax expense payable consists of state and foreign income
taxes. It is not likely that the Company's operating results will
reach a level that would require any significant federal income tax
expense for the year.
Due to the factors described above, the Company incurred a net
loss of $4.9 million in 1996 as compared with net income of $8
million in 1995.
Class G preferred stock dividend requirements in 1996 were
substantially reduced because almost all of the Class G stock was
retired in the first quarter at a $.3 million gain. The remaining
Class G stock was redeemed on July 15, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise primarily from the
funding of capital expenditures, Treatment & Disposal Services trust
fund payments, working capital needs, and debt service obligations.
Historically, the Company has met such requirements with cash flows
generated by operations and additional debt financing.
In the first quarter of 1996, virtually all of the Company's
Class G redeemable preferred stock was retired for $33.1 million,
financed with borrowings under its bank credit facility. The
remaining Class G stock was redeemed on July 15, 1996.
The Company expects 1996 capital expenditures of $23 to $25
million, primarily for equipment replacements. Through September
30, 1996, the Company has spent $19.1 million and has commitments
for an additional $5 million.
Treatment & Disposal Services' landfill permits require the
funding of closure and post-closure monitoring and maintenance
obligations by making essentially non-refundable trust fund
payments. These payments amounted to $27.1 million in the three
years 1993 through 1995. Payments for the nine month period of 1996
amounted to $.6 million. Based on current regulations and permitted
capacity, annual payments of approximately $1 million are expected
through 1998.
<PAGE>
The condensed consolidated balance sheet reflects negative
working capital of $4.9 million at September 30, 1996, including
$3.1 million of estimated liabilities for reorganization and
restructuring costs and $4 million of revolving credit borrowings
repaid subsequent to the quarter. Scheduled debt repayments in the
last quarter of 1996 total $1.3 million.
In early 1995, a multiemployer pension plan contacted the
Company concerning a potential claim against the Company for
deficiencies in the payment of withdrawal liabilities by a
subsidiary that was sold by IU International Corporation prior to
the Company's acquisition of IU International in 1988. See Note E.
In early 1996, such plan sent a letter to the Company indicating its
intention to initiate a claim under the Multiemployer Pension Plan
Amendments Act of 1980 ("MPPAA") if the plan and the Company are
unable to resolve the matter. The Company believes any such claim
is unwarranted and, if asserted, would contest any such claim
vigorously. The Company also believes it will ultimately prevail on
the merits. However, under MPPAA, the plan trustees could require
the Company to make substantial monthly payments before any issues
are arbitrated or litigated. If onerous monthly payments are
imposed by the plan, the Company will take any and all actions it
deems necessary and appropriate to protect itself until the matter
can be arbitrated and/or litigated on its merits. The Company and
the plan have met to discuss the issues raised in the plan's letter
and they are continuing their efforts to resolve this matter. The
Company continues to believe that the underlying facts and
circumstances support a conclusion that this matter will be resolved
with no material adverse effect on its financial condition.
However, resolution of this matter, which is likely to take place in
the near term, could result in a charge that is material to results
of operations and cash flows in a single accounting period.
The bank credit facility provides $100 million of revolving
credit borrowing and letter of credit capacity, declining by $12.5
million in each of January 1999 and 2000 and terminating January
2001. At September 30, 1996, $87 million of revolving credit
borrowings and $7.3 million of standby letters of credit were
outstanding. At September 30, 1996, the Company was in compliance
with all the covenants contained in its bank credit agreement,
including the financial covenants that require it to meet certain
financial ratios and tests. However, it is likely that the Company
will need to obtain modifications to some of the required financial
ratios to remain in compliance. The Company believes it will be
able to obtain any needed modifications.
Cash on hand, funds from operations, and borrowing capacity
under the bank credit facility are expected to satisfy the Company's
normal operating and debt service requirements.
Because its businesses are environmentally-oriented, and
therefore highly regulated, the Company is subject to violations
alleged by environmental regulators and, occasionally, fines. Such
matters have not had and are not expected to have a material impact
on the Company's business. Environmental compliance is discussed in
Note E.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
- - ------- ---------------------------------
(a) Exhibits.
--------
3.1 - Amended and Restated Certificate of Incorporation of
the Company (incorporated herein by reference to
Appendix A (pages A-1 to A-3) to the Company's Proxy
Statement filed April 29, 1996 in respect of its 1996
Annual Meeting of Stockholders (File No. 1-1363)).
3.2 - By-Laws of the Company (incorporated herein by
reference to Exhibit C (pages C-1 to C-9) to the
Company's Proxy Statement filed April 24, 1987,
in respect of its 1987 Annual Meeting of
Stockholders (File No. 1-1363)).
3.3 - Amendment to the By-Laws of the Company
(incorporated herein by reference to Exhibit 3.4
to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987 (File
No. 1-1363)).
4.1 - Loan and Security Agreement, dated as of April
6, 1993, between IMS Funding Corporation and
Greyhound Financial Corporation. (The Company
agrees to furnish a copy of such agreement to
the Commission upon request.)
4.2 - Agreement Amending Loan and Security Agreement and
Corporate Guarantee Agreement, dated as of December 8,
1995, between FINOVA Capital Corporation (formerly
known as Greyhound Financial Corporation), IMS Funding
Corporation, and International Mill Service, Inc. (The
Company agrees to furnish a copy of such agreement to
the Commission upon request.)
4.3 - Indenture, dated as of July 1, 1993, between the
Company and United States Trust Company of New
York, as Trustee, relating to the Company's 9-
3/4% Senior Notes due 2003, including the form
of such Notes attached as Exhibit A thereto
(incorporated herein by reference to Exhibit
4.10 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1993
(File No. 1-1363)).
4.4 - First Supplemental Indenture, dated as of November 2,
1995, between the Company and United States Trust
Company of New York, as Trustee, relating to the
Company's 9-3/4% Senior Notes due 2003 (incorporated
herein by reference to Exhibit 4.15 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995 (File No. 1-1363)).
<PAGE>
4.5 - Registration Rights Agreement, dated as of May
13, 1993, among the Company, FS Equity Partners
II, L.P., The IBM Retirement Plan Trust Fund and
Enso Partners, L.P. (incorporated herein by
reference to Exhibit 4.29 to Amendment No. 1 to
the Company's Registration Statement on Form S-
1, filed June 14, 1993 (File No. 33-62050)).
4.6 - Warrant to purchase shares of Common Stock of
the Company issued to FS Equity Partners II,
L.P., dated as of May 13, 1993 (incorporated
herein by reference to Exhibit 4.30 to Amendment
No. 1 to the Company's Registration Statement on
Form S-1, filed June 14, 1993 (File No. 33-62050)).
4.7 - Warrant to purchase shares of Common Stock of
the Company issued to The IBM Retirement Plan
Trust Fund, dated as of May 13, 1993 (incorporated
herein by reference to Exhibit 4.31 to Amendment
No. 1 to the Company's Registration Statement on
Form S-1,filed June 14, 1993 (File No. 33-62050)).
4.8 - Warrant to purchase shares of Common Stock of
the Company issued to Enso Partners, L.P.,
dated as of May 13, 1993 (incorporated herein by
reference to Exhibit 4.32 to Amendment No. 1 to the
Company's Registration Statement on Form S-1, filed
June 14, 1993 (File No. 33-62050)).
4.9 - Loan Agreement between the Industrial
Development Corporation of Owyhee County, Idaho
and Envirosafe Services of Idaho, Inc. relating
to $8,500,000 Industrial Revenue Bonds, Series
1994. (The Company agrees to furnish a copy of
such agreement to the Commission upon request.)
4.10 - Credit Agreement, dated as of December 19, 1995, among
the Company, International Mill Service, Inc., the
lenders parties thereto, NationsBank, N.A., as
Administrative Agent, and Credit Lyonnais as
Syndication Agent (incorporated herein by reference
to Exhibit 4.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1995 (File No. 1-1363)).
4.11 - Assignment and Acceptance, dated as of February
8, 1996, between NationsBank, N.A. and Banque Paribas;
and Assignment and Acceptance, dated as of February 8,
1996, between Credit Lyonnais New York Branch and Banque
Paribas (incorporated herein by reference to Exhibit 4.13
to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996 (File No. 1-1363)).
<PAGE>
4.12 - First Amendment, dated as of May 15, 1996, to the
Credit Agreement, dated as of December 19, 1995, among
the Company, International Mill Service, Inc., the
lenders parties thereto, NationsBank, N.A., as
Administrative Agent, and Credit Lyonnais as
Syndication Agent (incorporated herein by reference
to Exhibit 4.15 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1996
(File No. 1-1363)).
10.1 - Restated Incentive Stock Option Plan of the
Company, as amended (incorporated herein by
reference to Exhibit A to the Company's
Registration Statement on Form S-8, filed
January 17, 1989 (File No. 33-26633)).
10.2 - Promissory Note of Louis A. Guzzetti, Jr., dated
March 31, 1993, amending and replacing the
Promissory Notes dated October 15, 1987, March
31, 1991 and March 31, 1992 and the Letter
Amendments dated April 13, 1991 and May 12,
1992, payable to the Company in the principal
amount of $459,039.00 (incorporated herein by
reference to Exhibit 10.13 to Post-Effective
Amendment No. 1 to the Company's Registration
Statement on Form S-1, filed September 16, 1993
(File No. 33-46930)).
10.3 - Promissory Notes of Aarne Anderson, Jerrold I.
Dolinger, George E. Fuehrer, George T. Milano
and Mr. Guzzetti, dated as of April 1, 1993,
amending and replacing the Promissory Notes
dated January 13, 1989, April 1, 1991 and April
1, 1992, payable to the Company in the aggregate
principal amount of $1,122,601 (incorporated
herein by reference to Exhibit 10.17 to Post-
Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed
September 16, 1993 (File No. 33-46930)).
10.4 - Stock Option Agreement, dated March 18, 1992,
between the Company and Raymond P. Caldiero
(incorporated herein by reference to Exhibit
10.20 to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1992
(File No. 1-1363)).
10.5 - Stock Option Agreement, dated March 18, 1992,
between the Company and Jeffrey G. Miller
(incorporated herein by reference to Exhibit
10.21 to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1992
(File No. 1-1363)).
<PAGE>
10.6 - Amendment, dated August 5, 1993, to the Stock
Option Agreement, dated March 18, 1992, between
the Company and Jeffrey G. Miller (incorporated
herein by reference to Exhibit 10.22 to Post-
Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed
September 16, 1993(File No. 33-46930)).
10.7 - Stock Option Agreement, dated August 5, 1993,
between the Company and Wallace B. Askins
(incorporated herein by reference to Exhibit
10.23 to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-1,
filed September 16, 1993 (File No. 33-46930)).
10.8 - Stock Option Agreement, dated November 1, 1993,
between the Company and Arthur R. Seder, Jr.
(incorporated herein by reference to Exhibit
10.12 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993
(File No. 1-1363)).
10.9 - 1993 Stock Option Plan of the Company
(incorporated herein by reference to Exhibit
10.21 to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed June
14, 1993 (File No. 33-62050)).
10.10 - EnviroSource, Inc. Stock Option Plan for Non-
Affiliated Directors, dated as of January 1,
1995 (incorporated herein by reference to Exhibit
10.14 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 (File No. 1-
1363)).
10.11 - Supplemental Executive Retirement Plan of the
Company, effective January 1, 1995 (incorporated
herein by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-1363)).
*10.12 - Employment Agreement, dated November 5, 1996, between
the Company and Aarne Anderson.
*10.13 - Employment Agreement, dated November 5, 1996, between
the Company and William B. Davis
*10.14 - Employment Agreement, dated November 5, 1996, between
the Company and James C. Hull.
* Filed Herewith
(b) Reports on Form 8-K.
-------------------
During the quarter ended September 30, 1996, the Company
filed no Current Reports on Form 8-K.
<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.
Dated: November 13, 1996
ENVIROSOURCE, INC.
By:/s/ James C. Hull
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Number Exhibit Page
- - ------ ------- ----
10.12 Employment Agreement, dated November EXHIBIT 1
5, 1996, between the Company and
Aarne Anderson.
10.13 Employment Agreement, dated November EXHIBIT 2
5, 1996, between the Company and
William B. Davis.
10.14 Employment Agreement, dated November EXHIBIT 3
5, 1996, between the Company and
James C. Hull.
EMPLOYMENT AGREEMENT
--------------------
By signing below, I, Aarne Anderson, agree to the terms and conditions
of employment by EnviroSource, Inc. (the "Company") set forth in this
Employment Agreement (the "Agreement").
WHEREAS, the Company is relocating its corporate headquarters to
Horsham, Pennsylvania;
WHEREAS, the continuation of my duties requires me to relocate to that
area;
THEREFORE, the Company and I agree as follows:
1. Term of Agreement. My employment by the Company under this
------------------
Agreement shall commence on June 1, 1996 and shall end on May 31, 1999 (the
"Expiration Date"), unless sooner terminated under Section 5 of this
Agreement.
2. Nature of Duties. I shall continue my duties as Vice President -
----------------
Taxes of the Company. As such, I shall have all of the customary powers
and duties associated with that office and those I currently perform. I
shall be subject to the Company's supervisory procedures and approval practices,
as generally in effect from time-to-time.
3. Place of Performance. I shall be based at Company headquarters in
--------------------
Horsham, Pennsylvania, except for required travel on the Company's business.
4. Compensation and Related Matters.
----------------------------------
(a) Base Salary. The Company shall pay me base salary at an annual
-----------
rate of $147,800, or such higher amount as it elects to pay me.
My base salary shall be paid in conformity with the Company's salary
payment practices generally applicable to other executives of the
Company.
(b) Bonuses. I shall be eligible for bonuses and other incentive
-------
compensation under bonus and incentive compensation plans of the Company
generally available to other executives of the Company.
(c) Stock Options, Restricted Stock, and Incentive Plans. I shall be
------------------------------------------------------
eligible to participate in all stock option, restricted stock, and
incentive plans generally available to other executives of the
Company.
(d) Standard Benefits. During my employment I shall be entitled
-----------------
to participate in all employee benefit plans and programs,
including paid vacations, generally available to other executives of
the Company.
<PAGE>
(e) Indemnification. The Company shall extend to me the same
---------------
indemnification arrangements as are generally provided to other
executives of the Company.
(f) Expenses. I shall be entitled to receive prompt reimbursement for
--------
all reasonable and customary travel and business expenses I incur in
connection with my employment, but I must incur and account for those
expenses in accordance with the policies and procedures established by
the Company.
(g) Right to Change Policies. The Company reserves its right to amend,
------------------------
modify or change its benefit policies and procedures, at any time,
without notice.
5. Compensation Upon Termination. If, during the term of this
-----------------------------
Agreement, I am terminated without Just Cause or if I resign for Good
Reason, I shall be entitled to receive severance pay for up to 18 months at my
then base salary rate and medical and dental benefits of the nature then
generally being provided to employees of the Company provided I sign a general
release in the form attached as Schedule 1 to this Agreement. Such severance pay
and benefits shall cease upon my reemployment in a comparable position during
such 18 month period. The Company shall have no further obligation to me under
this Agreement, except its ongoing indemnification obligation under Section
4(e). If I fail to execute the release provided to me within 60 days after I
am terminated without Just Cause or resign for Good Reason (or, if the
Company disputes that I was terminated without Just Cause, within 60 days
after an arbitrator first determines that I was terminated without Just Cause),
or if I thereafter properly revoke the release, I shall not be entitled
to salary continuation payments and benefits under this Section 5. I agree
that I shall have no rights or remedies in the event of my termination without
Just Cause other than those set forth in this Agreement.
(a) Termination for Just Cause. The Company may terminate my
--------------------------
employment for Just Cause at any time without advance notice. "Just
Cause" shall mean:
(i) gross neglect or failure to perform my duties, in either case,
after I have been given written notice of such neglect or failure
and a reasonable opportunity to cure my default; or
(ii) acts of fraud, theft of dishonesty on my part; or
(iii) my conviction of or plea of guilty or nolo contendere to a felony.
<PAGE>
(b) Resignation For Good Reason: I may terminate my employment
----------------------------
voluntarily for Good Reason after giving the Company written notice
of the grounds for such Good Reason within 30 days of my knowledge
of the facts giving rise to such Good Reason to terminate, and
allowing the Company the opportunity to cure the circumstances giving
rise to Good Reason to terminate within 30 days of receipt of the
written notice. "Good Reason" shall mean:
(i) a material diminution in my responsibility;
(ii) a reduction in my base salary; or
(iii) a second required relocation of more than 50 miles from the
Company's headquarters in Horsham, PA within the term of this Agreement.
(c) Company Affiliates: I acknowledge that the Company's plans may
-------------------
result in a change in my employer to an affiliate of the Company.
This change alone shall not constitute a termination for "Just
Cause" or be grounds for resignation with "Good Cause."
(d) Resignation For Other Than Good Reason: In the event I terminate
---------------------------------------
my employment voluntarily, I will (1) give the Company at least 30
days' advance written notice, and (2) be entitled to any accrued, but
unpaid base salary and any other unpaid amounts due me through the
date of my resignation under Company compensation or benefit programs.
(e) Disputes Under This Section. All disputes relating to this
----------------------------
Agreement, including disputes relating to this Section, shall be
resolved by final and binding arbitration under Section 8. For
example, if I and the Company disagree as to whether the Company had
Just Cause to terminate my employment, we will resolve the dispute
through arbitration; the arbitrator will decide whether Just Cause
existed.
6. Confidentiality. I acknowledge that I currently possess or will
---------------
acquire secret, confidential, or proprietary information or trade
secrets concerning the operations, future plans, or business methods of the
Company or its affiliates. I agree that the Company would be severely damaged
if I used or disclosed this information. To prevent this harm, I am making
the promises set forth in this Section 6.
(a) Promise Not To Disclose. I promise never to use or disclose any
-----------------------
such information before it has become generally known within the
relevant industry through no fault of my own. I agree that this
promise shall never expire.
<PAGE>
(b) Promise Not To Solicit. To prevent me from inevitably breaking
------------------------
this promise, I further agree that, for a period of two years
commencing on the date of my termination of employment for any reason:
(i) as to any customer or supplier of the Company or its affiliates
with whom I had dealings or about whom I acquired proprietary
information during my employment, I will not solicit or attempt to
solicit the customer or supplier to do business with any person or
entity; and (ii) I will not solicit for employment any person who is,
or within the preceding six months was, an officer, manager, employee,
or consultant of the Company or its affiliates.
(c) Promise Not To Engage In Certain Employment. I agree that for a
--------------------------------------------
period of two years commencing on the date of my termination of
employment for any reason, I will not accept any employment or
engage in any activity, without the written consent of the
President of the Company, if the loyal and complete fulfillment of my
duties would inevitably require me to reveal or utilize trade
secrets or other confidential information which I have promised not
to disclose, as reasonably determined by the President of the
Company.
(d) Promise To Discuss Proposed Actions In Advance. To prevent the
-----------------------------------------------
inevitable use or disclosure of trade secrets or confidential
information, I promise that, before I disclose or use information
and before I commence employment, solicitations, or any other
activity which could possibly violate the promises I have just made,
I will discuss my proposed actions with the President of the Company,
who will advise me whether my proposed actions would violate these
promises.
7. Notice. Notices, demands, and all other communications provided
------
for in this Agreement shall be given in writing and shall be deemed to have been
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company:
EnviroSource, Inc.
Horsham Business Center
1155 Business Center Drive
Horsham, PA
Corporate Secretary
If to me:
Aarne Anderson
106 Clayton Court
North Wales, PA 19454
or to such other address as any party may have furnished to the other by giving
notice under this Section, except that notices of change of address shall be
effective only upon receipt.
<PAGE>
8. Arbitration of Disputes.
-----------------------
(a) Arbitrable Disputes. The Company and I agree to use final and
-------------------
binding arbitration to resolve any dispute (an "Arbitrable Dispute")
I may have with the Company or any affiliate. This arbitration
agreement applies to such things as disputes about the validity,
interpretation, or effect of this Agreement, or alleged violations
of it.
(b) Injunctive Relief. Notwithstanding Section 8(a), due to the
------------------
irreparable harm that would result from an actual or threatened
violation of Section 6 that involves disclosure or use of
confidential information, trade secrets, or competition with the
Company, I agree that the Company may seek, and shall be entitled to
obtain, an injunction prohibiting me from committing such a
violation.
(c) The Arbitration. Arbitration shall take place in Philadelphia
----------------
before an experienced employment arbitrator licensed to practice
law in Pennsylvania and selected in accordance with the Employment
Dispute Resolution Rules of the American Arbitration Association.
The arbitrator may not modify or change this Agreement in any way.
(d) Fees and Expenses. Each party shall pay the fees of their
--------------------
respective attorneys, the expenses of their witnesses, and any other
expenses connected with the arbitration, but all other costs of
the arbitration, including the fees of the arbitrator, cost of any
record or transcript of the arbitration, administrative fees, and
other fees and costs shall be paid in equal shares by me and the
Company.
(e) Exclusive Remedy. Arbitration in this manner shall be the
-----------------
exclusive remedy for any Arbitrable Dispute. Should I or the Company
attempt to resolve an Arbitrable Dispute by any method other than
arbitration pursuant to this Section, the responding party will be
entitled to recover from the initiating party all damages, expenses,
and attorneys' fees incurred as a result of that breach.
9. Internal Revenue Code Section 280G Limitation. I agree that my
------------------------------------------------
payments and benefits under this Agreement and all other contracts,
arrangements, or programs shall not, in the aggregate, exceed the
maximum amount that may be paid to me without triggering penalties
under Section 280G and related provisions of the Internal Revenue
Code, as determined in good faith by the Company's independent
auditors. If any benefits must be cut back to avoid triggering such
penalties, my benefits shall be cut back in the priority order I
designate or, if I fail promptly to designate an order, in the
priority order designated by the Company. If an amount in excess of
the limit set forth in this Section is paid to me, I will repay the
excess amount to the Company upon demand, with interest at the rate
provided for in Internal Revenue Code Section 1274(b)(2)(B). The
Company and I agree reasonably to cooperate with each other in
connection with any administrative or judicial proceedings concerning
the existence or amount of any such penalties with respect to
payments or benefits I receive.
<PAGE>
10. Miscellaneous. No provisions of this Agreement may be
-------------
modified, waived, or discharged except by a written document signed by me
and a duly authorized officer of the Company. A waiver of any conditions
or provisions of this Agreement in a given instance shall not be deemed a
waiver of such conditions or provisions at any other time. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania without regard to
its conflicts of law principles. This Agreement shall be binding upon,
and shall inure to the benefit of me and my estate and the Company and any
successor thereto, but neither this Agreement nor any rights arising under it
may be assigned or pledged by me, except to the extent permitted under the
terms of the benefit plans in which I participate.
11. Validity. The invalidity or unenforceability of any provisions
--------
of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute the same instrument.
13. Entire Agreement. All oral or written agreements or
----------------
representations, express or implied, with respect to the subject matter of
this Agreement are set forth in this Agreement.
ENVIROSOURCE, INC.
Date:11/5/96 By:/s/ Louis A. Guzzetti, Jr.
------------ -----------------------------
Name: Louis A. Guzzetti, Jr.
Title: President & CEO
Date:11/1/96 /s/ Aarne Anderson
------------ ------------------
Aarne Anderson
<PAGE>
Schedule 1
GENERAL RELEASE
---------------
I, the undersigned employee, and ENVIROSOURCE, INC. (the
"Company") agree as follows:
Section 1 -- Benefits
--------
The Company promises to pay or provide to me those payments and
benefits set forth in the certain Employment Agreement, dated as of
______, 1996, between me and the Company.
Section 2 -- Complete Release
----------------
(a) In General: I irrevocably and unconditionally release all the
----------
Claims described in subsection (b) that I may now have against the
Releasees listed in subsection (d). However, I am not releasing (i) my
right to enforce this Release; (ii) any rights or claims under the Age
Discrimination in Employment Act that arise after I sign this Release; (iii)
my right, if any, to government-provided unemployment benefits; or (iv)
any rights I may have to unpaid compensation, or benefits under the
Company's standard compensation and benefits programs, such as COBRA
benefits (except claims I made which were denied before I signed this
Release or any claim I might have for extra benefits as a consequence of
payments I receive because of signing this Release).
(b) Claims Released: Subject only to the exceptions just noted, I
---------------
am releasing all known and unknown claims, promises, causes of action,
or similar rights of any type ("Claims") that I may have with respect to any
Releasee listed in subsection (d). These include, but are not limited to,
Claims which in any way relate to: (i) my employment with the Company,
or the termination of that employment, such as Claims for compensation,
bonuses, commissions, lost wages, or unused accrued vacation or sick pay;
(ii) the design or administration of any employee benefit program; (iii) any
rights I may have to severance or similar benefits or to post-employment
health or group insurance benefits; or (iv) any Claims to attorneys' fees or
other indemnities. I understand that the Claims I am releasing might arise
under many different laws, including the following examples:
Anti-Discrimination Statutes, such as the Age Discrimination in
----------------------------
Employment Act and Executive Order 11141, which prohibit age
discrimination in employment; Title VII of the Civil Rights Act of
1964, Section 1981 of the Civil Rights Act of 1866 and Executive
Order 11246, which prohibit discrimination based on race, color,
national origin, religion or sex; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Americans
With Disabilities Act and Sections 503 and 504 of the Rehabilitation
Act of 1973, which prohibit discrimination against the disabled; and
any other federal, state or local laws prohibiting employment
discrimination.
<PAGE>
Federal Employment Statutes, such as the WARN Act, which requires
---------------------------
that advance notice be given of certain work force reductions; the
Employee Retirement Income Security Act of 1974, which, among
other things, protects employee benefits; the Fair Labor Standards Act
of 1938, which regulates wage and hour matters; the Family and
Medical Leave Act of 1993, which requires employers to provide
leaves of absence under certain circumstances; and any other federal
laws relating to employment, such as veterans reemployment rights
laws.
Other Laws, such as any federal, state, or local laws providing
----------
workers' compensation benefits, restricting an employer's right to
terminate employees or otherwise regulating employment; any federal,
state or local law enforcing express or implied employment contracts or
requiring an employer to deal with employees fairly or in good faith;
any other federal, state, or local laws providing recourse for alleged
wrongful discharge, physical or personal injury, emotional distress,
fraud, negligent misrepresentation, defamation, and similar or related
claims.
The laws referred to in this subsection include statutes, regulations, other
administrative guidance, and common law doctrines.
(c) Unknown Claims: I understand that I am releasing Claims that
--------------
I may not know about, and that is my intent. I expressly waive all rights I
might have under any law which is intended to prevent unknown claims
from being released. I understand the significance of doing so.
(d) Releasees: The Releasees are the Company, all related
---------
companies, partnerships, or joint ventures, and, with respect to each of
them, all of the Company's or such related entities' predecessors and
successors, and, with respect to each such entity, all of its past and present
employees, officers, directors, stockholders, owners, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the
trustees, administrators, fiduciaries and insurers of such programs), and
any other persons acting by, through, under, or in concert with any of the
persons or entities listed in this subsection.
Section 3 -- My Promises
-----------
(a) Employment Termination: I agree that my employment with
----------------------
the Company and its affiliates has ended or will end forever on the date
specified by the Company. I have voluntarily resigned in exchange for the
benefits I am receiving because I signed this Release.
(b) Pursuit Of Released Claims: I agree to withdraw with
--------------------------
prejudice all complaints or charges, if any, I have filed with any agency or
court against EnviroSource or any related person or entity. I represent that
I will not in the future file any lawsuit, complaint, or charge against them
based on the claims released in this Release.
(c) Company Property: I have returned, or by my last day of
-----------------
work will return, to the Company all files, memoranda, documents,
records, copies of the foregoing, credit cards, keys and any other property
of the Company or its affiliates in my possession.
<PAGE>
(d) Taxes: I am responsible for paying any taxes on amounts I
------
receive because I signed this Release and I agree that the Company is to
withhold all taxes it determines it is legally required to withhold.
(e) Ownership Of Claims: I have not assigned or transferred any
-------------------
Claim I am releasing, nor have I purported to do so.
(f) Non-Admission Of Liability: I agree not to assert that this
--------------------------
Release is an admission of guilt or wrongdoing since the Releasees do not
believe or admit that any of them has done anything wrong.
(g) No Disparagement: I agree not to criticize, denigrate, or
----------------
disparage any Releasee.
(h) False Claims Representations And Promises: I have
-----------------------------------------
disclosed to the Company any information I have concerning any conduct
involving the Company which I have any reason to believe may be
unlawful or to involve any false claims to the United States. I promise to
cooperate fully in any investigation the Company undertakes into matters
occurring during my employment with the Company. I understand that
nothing in this Release prevents me from cooperating with any U.S.
government investigation.
Section 4 -- Consequences Of Violating My Promises
-------------------------------------
(a) General Consequences: I agree to pay the reasonable
--------------------
attorneys' fees and any damages Releasees may incur as a result of my
breaching a promise I made in this Release (such as by suing a Releasee
over a released Claim) or if any representation I made in this Release was
false when made.
(b) Challenges To Validity: Should I attempt to challenge the
----------------------
enforceability of this Release, I agree first to deliver a certified check to
the Company for all amounts I have received because I signed this Release,
plus ten percent interest per annum, and to invite the Company to cancel
this Release. If the Company accepts my offer, this Release will be
canceled. If it rejects my offer, the Company will notify me and deposit
the amount I repaid in an interest-bearing account pending a determination
of the enforceability of this Release. If the Release is determined to be
enforceable, the Company will pay me the amount in the account. If this
Release is not enforceable, the Company or its designee is to retain the
account.
Section 5 -- Consideration Of Release
------------------------
I acknowledge that, before signing this Release, I was given a
period of at least 21 calendar days to review and consider this Release. I
further acknowledge that: (a) I took advantage of this period to consider
this Release before signing it; (b) I carefully read this Release; (c) I fully
understand it; and (d) I am entering into it voluntarily. I further
acknowledge that the Company strongly encouraged me to discuss this
Release with my attorney (at my own expense) before signing this Release
and that, to the extent I deemed it appropriate, I did so.
<PAGE>
Section 6 -- Miscellaneous
-------------
(a) Entire Agreement: This is the entire agreement between me
----------------
and the Company; it may not be modified or canceled in any manner
except by a writing signed by both me and the Company. I acknowledge
that the Company has made no promises to me other than those in this
Release. If any provision in this Release is found to be unenforceable, all
other provisions will remain fully enforceable. It is not necessary that the
Company sign this Release for it to become binding upon both me and the
Company.
(b) Successors: This Release binds my heirs, administrators,
----------
representatives, executors, successors, and assigns, and will inure to the
benefit of all Releasees and their respective heirs, administrators,
representatives, executors, successors, and assigns.
(c) Interpretation: This Release shall be construed as a whole
--------------
according to its fair meaning. It shall not be construed strictly for or
against me, the Company, or any Releasee. Unless the context indicates
otherwise, the term "or" shall be deemed to include the term "and" and the
singular or plural number shall be deemed to include the other. Captions
are intended solely for convenience of reference and shall not be used in
the interpretation of this Release. This Release shall be governed by the
statutes and common law of the State of [name], excluding its choice of laws
statutes or common law.
Section 7 -- Arbitration Of Disputes.
-----------------------
I agree to use final and binding arbitration to resolve any dispute
(an "Arbitrable Dispute") I may have with the Company or any Releasee. This
arbitration agreement applies to such things as disputes about the validity,
interpretation, or effect of this Release or alleged violations of it, claims of
discrimination under federal or state law, or other statutory violation
claims. Arbitration shall take place in accordance with the arbitration
provisions established in accordance with my existing employment
agreement with the Company, which I hereby reaffirm. Arbitration in this
manner shall be the exclusive remedy for any Arbitrable Dispute.
<PAGE>
TAKE THIS RELEASE HOME AND READ IT. CAREFULLY
CONSIDER ALL PROVISIONS BEFORE SIGNING THIS RELEASE:
IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN
CLAIMS. YOU SHOULD TAKE ADVANTAGE OF THE
CONSIDERATION PERIOD AND CONSULT YOUR ATTORNEY
IF YOU WISH.
Dated ______________ _____________________________
Signature
_____________________________
Print Name
________ - ________ - _______
Social Security Number
<PAGE>
APPENDIX
EMPLOYMENT TERMINATION CERTIFICATE
THIS CERTIFICATE MUST BE SIGNED AFTER TERMINATION
OF EMPLOYMENT AND MUST BE FILED WITH [NAME], AT
[PLACE] BY [TIME].
I entered into a Release with [name of company] (the "Company")
dated ________. I hereby acknowledge that:
(1) A blank copy of this Employment Termination Certificate was
attached as an Appendix to the Release when it was given to me for my
review. I have had more time to consider signing this Certificate than the
ample time I was given to consider signing the Release and I may revoke it
within seven days after I sign it. I was advised to discuss the Release,
including this Certificate, with an attorney before executing either
document.
(2) Most of the benefits payable under the Release and my
Employment Agreement (my "Remaining Benefits") become payable only
if I sign this Certificate and do not revoke it within seven days after I sign
it.
(3) My employment actually terminated before I signed this
Certificate and, in exchange for my Remaining Benefits, I hereby agree
that this Certificate will be a part of my Release and that my Release will
be construed and applied as if I signed it on the day I signed this
Certificate. This extends my release of Claims under the Release to any
Claims that arose during the remainder of my employment through the date
my employment terminated.
Dated ______________ _________________________
Signature
_________________________
Print Name
________ - ________ - _______
Social Security Number
EMPLOYMENT AGREEMENT
--------------------
By signing below, I, William B. Davis, agree to the terms and
conditions of employment by EnviroSource, Inc. (the "Company") set forth in this
Employment Agreement (the "Agreement").
WHEREAS, the Company is relocating its corporate headquarters to
Horsham, Pennsylvania;
WHEREAS, the continuation of my duties requires me to relocate to that
area;
THEREFORE, the Company and I agree as follows:
1. Term of Agreement. My employment by the Company under this
-----------------
Agreement shall commence on July 1, 1996 and shall end on June 30, 1999 (the
"Expiration Date"), unless sooner terminated under Section 5 of this Agreement.
2. Nature of Duties. I shall continue my duties as Vice President &
----------------
Treasurer of the Company. As such, I shall have all of the customary powers and
duties associated with that office and those I currently perform. I shall be
subject to the Company's supervisory procedures and approval practices, as
generally in effect from time-to-time.
3. Place of Performance. I shall be based at Company headquarters in
--------------------
Horsham, Pennsylvania, except for required travel on the Company's business.
4. Compensation and Related Matters.
--------------------------------
(a) Base Salary. The Company shall pay me base salary at an annual
------------
rate of $122,000, or such higher amount as it elects to pay me. My
base salary shall be paid in conformity with the Company's salary
payment practices generally applicable to other executives of the
Company.
(b) Bonuses. I shall be eligible for bonuses and other incentive
-------
compensation under bonus and incentive compensation plans of the
Company generally available to other executives of the Company.
(c) Stock Options, Restricted Stock, and Incentive Plans. I shall be
----------------------------------------------------
eligible to participate in all stock option, restricted stock, and
incentive plans generally available to other executives of the
Company.
(d) Standard Benefits. During my employment I shall be entitled to
-----------------
participate in all employee benefit plans and programs, including paid
vacations, generally available to other executives of the Company.
<PAGE>
(e) Indemnification. The Company shall extend to me the same
---------------
indemnification arrangements as are generally provided to other
executives of the Company.
(f) Expenses. I shall be entitled to receive prompt reimbursement
--------
for all reasonable and customary travel and business expenses I incur
in connection with my employment, but I must incur and account for
those expenses in accordance with the policies and procedures
established by the Company.
(g) Right to Change Policies. The Company reserves its right to
------------------------
amend, modify or change its benefit policies and procedures, at any
time, without notice.
5. Compensation Upon Termination. If, during the term of this
-----------------------------
Agreement, I am terminated without Just Cause or if I resign for Good Reason,
I shall be entitled to receive severance pay for up to 18 months at my then base
salary rate and medical and dental benefits of the nature then generally being
provided to employees of the Company provided I sign a general release in the
form attached as Schedule 1 to this Agreement. Such severance pay and
benefits shall cease upon my reemployment in a comparable position during
such 18 month period. The Company shall have no further obligation to me
under this Agreement, except its ongoing indemnification obligation under
Section 4(e).
If I fail to execute the release provided to me within 60 days after
I am terminated without Just Cause or resign for Good Reason (or, if the Company
disputes that I was terminated without Just Cause, within 60 days after an
arbitrator first determines that I was terminated without Just Cause), or if I
thereafter properly revoke the release, I shall not be entitled to salary
continuation payments and benefits under this Section 5. I agree that I shall
have no rights or remedies in the event of my termination without Just Cause
other than those set forth in this Agreement.
(a) Termination for Just Cause. The Company may terminate my
--------------------------
employment for Just Cause at any time without advance notice. "Just
Cause" shall mean:
(i) gross neglect or failure to perform my duties, in either case,
after I have been given written notice of such neglect or failure and
a reasonable opportunity to cure my default; or
(ii) acts of fraud, theft of dishonesty on my part; or
(iii) my conviction of or plea of guilty or nolo contendere to a
felony.
<PAGE>
(b) Resignation For Good Reason: I may terminate my employment
---------------------------
voluntarily for Good Reason after giving the Company written notice of
the grounds for such Good Reason within 30 days of my knowledge of the
facts giving rise to such Good Reason to terminate, and allowing the
Company the opportunity to cure the circumstances giving rise to Good
Reason to terminate within 30 days of receipt of the written notice.
"Good Reason" shall mean:
(i) a material diminution in my responsibility;
(ii) a reduction in my base salary; or
(iii) a second required relocation of more than 50 miles from the
Company's headquarters in Horsham, PA within the term of this
Agreement.
(c) Company Affiliates: I acknowledge that the Company's plans may
-------------------
result in a change in my employer to an affiliate of the Company.
This change alone shall not constitute a termination for "Just Cause"
or be grounds for resignation with "Good Cause."
(d) Resignation For Other Than Good Reason: In the event I terminate
--------------------------------------
my employment voluntarily, I will (1) give the Company at least 30
days' advance written notice, and (2) be entitled to any accrued, but
unpaid base salary and any other unpaid amounts due me through the
date of my resignation under Company compensation or benefit
programs.
(e) Disputes Under This Section. All disputes relating to this
---------------------------
Agreement, including disputes relating to this Section, shall be
resolved by final and binding arbitration under Section 8. For
example, if I and the Company disagree as to whether the Company had
Just Cause to terminate my employment, we will resolve the dispute
through arbitration; the arbitrator will decide whether Just Cause
existed.
6. Confidentiality. I acknowledge that I currently possess or will
---------------
acquire secret, confidential, or proprietary information or trade secrets
concerning the operations, future plans, or business methods of the Company or
its affiliates. I agree that the Company would be severely damaged if I used or
disclosed this information. To prevent this harm, I am making the promises set
forth in this Section 6.
(a) Promise Not To Disclose. I promise never to use or disclose any
-----------------------
such information before it has become generally known within the
relevant industry through no fault of my own. I agree that this
promise shall never expire.
<PAGE>
(b) Promise Not To Solicit. To prevent me from inevitably breaking
----------------------
this promise, I further agree that, for a period of two years
commencing on the date of my termination of employment for any reason:
(i) as to any customer or supplier of the Company or its affiliates
with whom I had dealings or about whom I acquired proprietary
information during my employment, I will not solicit or attempt to
solicit the customer or supplier to do business with any person or
entity; and (ii) I will not solicit for employment any person who is,
or within the preceding six months was, an officer, manager, employee,
or consultant of the Company or its affiliates.
(c) Promise Not To Engage In Certain Employment. I agree that for a
-------------------------------------------
period of two years commencing on the date of my termination of
employment for any reason, I will not accept any employment or engage
in any activity, without the written consent of the President of the
Company, if the loyal and complete fulfillment of my duties would
inevitably require me to reveal or utilize trade secrets or other
confidential information which I have promised not to disclose, as
reasonably determined by the President of the Company.
(d) Promise To Discuss Proposed Actions In Advance. To prevent the
----------------------------------------------
inevitable use or disclosure of trade secrets or confidential
information, I promise that, before I disclose or use information and
before I commence employment, solicitations, or any other activity
which could possibly violate the promises I have just made, I will
discuss my proposed actions with the President of the Company, who
will advise me whether my proposed actions would violate these
promises.
7. Notice. Notices, demands, and all other communications provided
-------
for in this Agreement shall be given in writing and shall be deemed to have been
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company:
EnviroSource, Inc.
Horsham Business Center
1155 Business Center Drive
Horsham, PA
Corporate Secretary
If to me:
William B. Davis
728 Lake Drive
Ambler, PA 19002
or to such other address as any party may have furnished to the other by
giving notice under this Section, except that notices of change of address
shall be effective only upon receipt.
<PAGE>
8. Arbitration of Disputes.
-----------------------
(a) Arbitrable Disputes. The Company and I agree to use final and
--------------------
binding arbitration to resolve any dispute (an "Arbitrable Dispute")
I may have with the Company or any affiliate. This arbitration
agreement applies to such things as disputes about the validity,
interpretation, or effect of this Agreement, or alleged violations of
it.
(b) Injunctive Relief. Notwithstanding Section 8(a), due to the
-----------------
irreparable harm that would result from an actual or threatened
violation of Section 6 that involves disclosure or use of confidential
information, trade secrets, or competition with the Company, I agree
that the Company may seek, and shall be entitled to obtain, an
injunction prohibiting me from committing such a violation.
(c) The Arbitration. Arbitration shall take place in Philadelphia
---------------
before an experienced employment arbitrator licensed to practice law
in Pennsylvania and selected in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. The
arbitrator may not modify or change this Agreement in any way.
(d) Fees and Expenses. Each party shall pay the fees of their
-----------------
respective attorneys, the expenses of their witnesses, and any other
expenses connected with the arbitration, but all other costs of the
arbitration, including the fees of the arbitrator, cost of any record
or transcript of the arbitration, administrative fees, and other fees
and costs shall be paid in equal shares by me and the Company.
(e) Exclusive Remedy. Arbitration in this manner shall be the
----------------
exclusive remedy for any Arbitrable Dispute. Should I or the Company
attempt to resolve an Arbitrable Dispute by any method other than
arbitration pursuant to this Section, the responding party will be
entitled to recover from the initiating party all damages, expenses,
and attorneys' fees incurred as a result of that breach.
9. Internal Revenue Code Section 280G Limitation. I agree that my
---------------------------------------------
payments and benefits under this Agreement and all other contracts,
arrangements, or programs shall not, in the aggregate, exceed the maximum
amount that may be paid to me without triggering penalties under Section 280G
and related provisions of the Internal Revenue Code, as determined in good faith
by the Company's independent auditors. If any benefits must be cut back to
avoid triggering such penalties, my benefits shall be cut back in the priority
order I designate or, if I fail promptly to designate an order, in the priority
order designated by the Company. If an amount in excess of the limit set forth
in this Section is paid to me, I will repay the excess amount to the Company
upon demand, with interest at the rate provided for in Internal Revenue Code
Section 1274(b)(2)(B). The Company and I agree reasonably to cooperate with
each other in connection with any administrative or judicial proceedings
concerning the existence or amount of any such penalties with respect to
payments or benefits I receive.
<PAGE>
10. Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived, or discharged except by a written document signed by me and a duly
authorized officer of the Company. A waiver of any conditions or provisions of
this Agreement in a given instance shall not be deemed a waiver of such
conditions or provisions at any other time. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania without regard to its conflicts of law
principles. This Agreement shall be binding upon, and shall inure to the
benefit of me and my estate and the Company and any successor thereto, but
neither this Agreement nor any rights arising under it may be assigned or
pledged by me, except to the extent permitted under the terms of the benefit
plans in which I participate.
11. Validity. The invalidity or unenforceability of any provisions
--------
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute the same instrument.
13. Entire Agreement. All oral or written agreements or
----------------
representations, express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement.
ENVIROSOURCE, INC.
Date: 11/5/96 By:/s/ Louis A. Guzzetti, Jr.
-------------- -----------------------------
Name: Louis A. Guzzetti, Jr.
Title: President & CEO
Date:11/4/96 /s/ William B. Davis
------------ --------------------
William B. Davis
<PAGE>
Schedule 1
GENERAL RELEASE
---------------
I, the undersigned employee, and ENVIROSOURCE, INC. (the
"Company") agree as follows:
Section 1 -- Benefits
--------
The Company promises to pay or provide to me those payments and
benefits set forth in the certain Employment Agreement, dated as of
______, 1996, between me and the Company.
Section 2 -- Complete Release
----------------
(a) In General: I irrevocably and unconditionally release all the
----------
Claims described in subsection (b) that I may now have against the
Releasees listed in subsection (d). However, I am not releasing (i) my
right to enforce this Release; (ii) any rights or claims under the Age
Discrimination in Employment Act that arise after I sign this Release; (iii)
my right, if any, to government-provided unemployment benefits; or (iv)
any rights I may have to unpaid compensation, or benefits under the
Company's standard compensation and benefits programs, such as COBRA
benefits (except claims I made which were denied before I signed this
Release or any claim I might have for extra benefits as a consequence of
payments I receive because of signing this Release).
(b) Claims Released: Subject only to the exceptions just noted, I
----------------
am releasing all known and unknown claims, promises, causes of action,
or similar rights of any type ("Claims") that I may have with respect to any
Releasee listed in subsection (d). These include, but are not limited to,
Claims which in any way relate to: (i) my employment with the Company,
or the termination of that employment, such as Claims for compensation,
bonuses, commissions, lost wages, or unused accrued vacation or sick pay;
(ii) the design or administration of any employee benefit program; (iii) any
rights I may have to severance or similar benefits or to post-employment
health or group insurance benefits; or (iv) any Claims to attorneys' fees or
other indemnities. I understand that the Claims I am releasing might arise
under many different laws, including the following examples:
Anti-Discrimination Statutes, such as the Age Discrimination in
----------------------------
Employment Act and Executive Order 11141, which prohibit age
discrimination in employment; Title VII of the Civil Rights Act of
1964, Section 1981 of the Civil Rights Act of 1866 and Executive
Order 11246, which prohibit discrimination based on race, color,
national origin, religion or sex; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Americans
With Disabilities Act and Sections 503 and 504 of the Rehabilitation
Act of 1973, which prohibit discrimination against the disabled; and
any other federal, state or local laws prohibiting employment
discrimination.
<PAGE>
Federal Employment Statutes, such as the WARN Act, which requires
---------------------------
that advance notice be given of certain work force reductions; the
Employee Retirement Income Security Act of 1974, which, among
other things, protects employee benefits; the Fair Labor Standards Act
of 1938, which regulates wage and hour matters; the Family and
Medical Leave Act of 1993, which requires employers to provide
leaves of absence under certain circumstances; and any other federal
laws relating to employment, such as veterans reemployment rights
laws.
Other Laws, such as any federal, state, or local laws providing
----------
workers' compensation benefits, restricting an employer's right to
terminate employees or otherwise regulating employment; any federal,
state or local law enforcing express or implied employment contracts or
requiring an employer to deal with employees fairly or in good faith;
any other federal, state, or local laws providing recourse for alleged
wrongful discharge, physical or personal injury, emotional distress,
fraud, negligent misrepresentation, defamation, and similar or related
claims.
The laws referred to in this subsection include statutes, regulations, other
administrative guidance, and common law doctrines.
(c) Unknown Claims: I understand that I am releasing Claims that
--------------
I may not know about, and that is my intent. I expressly waive all rights I
might have under any law which is intended to prevent unknown claims
from being released. I understand the significance of doing so.
(d) Releasees: The Releasees are the Company, all related
----------
companies, partnerships, or joint ventures, and, with respect to each of
them, all of the Company's or such related entities' predecessors and
successors, and, with respect to each such entity, all of its past and present
employees, officers, directors, stockholders, owners, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the
trustees, administrators, fiduciaries and insurers of such programs), and
any other persons acting by, through, under, or in concert with any of the
persons or entities listed in this subsection.
Section 3 -- My Promises
-----------
(a) Employment Termination: I agree that my employment with
----------------------
the Company and its affiliates has ended or will end forever on the date
specified by the Company. I have voluntarily resigned in exchange for the
benefits I am receiving because I signed this Release.
(b) Pursuit of Released Claims: I agree to withdraw with
--------------------------
prejudice all complaints or charges, if any, I have filed with any agency or
court against EnviroSource or any related person or entity. I represent that
I will not in the future file any lawsuit, complaint, or charge against them
based on the claims released in this Release.
<PAGE>
(c) Company Property: I have returned, or by my last day of
-----------------
work will return, to the Company all files, memoranda, documents,
records, copies of the foregoing, credit cards, keys and any other property
of the Company or its affiliates in my possession.
(d) Taxes: I am responsible for paying any taxes on amounts I
------
receive because I signed this Release and I agree that the Company is to
withhold all taxes it determines it is legally required to withhold.
(e) Ownership Of Claims: I have not assigned or transferred any
-------------------
Claim I am releasing, nor have I purported to do so.
(f) Non-Admission Of Liability: I agree not to assert that this
--------------------------
Release is an admission of guilt or wrongdoing since the Releasees do not
believe or admit that any of them has done anything wrong.
(g) No Disparagement: I agree not to criticize, denigrate, or
----------------
disparage any Releasee.
(h) False Claims Representations And Promises: I have
------------------------------------------
disclosed to the Company any information I have concerning any conduct
involving the Company which I have any reason to believe may be
unlawful or to involve any false claims to the United States. I promise to
cooperate fully in any investigation the Company undertakes into matters
occurring during my employment with the Company. I understand that
nothing in this Release prevents me from cooperating with any U.S.
government investigation.
Section 4 -- Consequences Of Violating My Promises
-------------------------------------
(a) General Consequences: I agree to pay the reasonable
--------------------
attorneys' fees and any damages Releasees may incur as a result of my
breaching a promise I made in this Release (such as by suing a Releasee
over a released Claim) or if any representation I made in this Release was
false when made.
(b) Challenges To Validity: Should I attempt to challenge the
----------------------
enforceability of this Release, I agree first to deliver a certified check to
the Company for all amounts I have received because I signed this Release,
plus ten percent interest per annum, and to invite the Company to cancel
this Release. If the Company accepts my offer, this Release will be
canceled. If it rejects my offer, the Company will notify me and deposit
the amount I repaid in an interest-bearing account pending a determination
of the enforceability of this Release. If the Release is determined to be
enforceable, the Company will pay me the amount in the account. If this
Release is not enforceable, the Company or its designee is to retain the
account.
Section 5 -- Consideration Of Release
------------------------
I acknowledge that, before signing this Release, I was given a
period of at least 21 calendar days to review and consider this Release. I
further acknowledge that: (a) I took advantage of this period to consider
this Release before signing it; (b) I carefully read this Release; (c) I fully
understand it; and (d) I am entering into it voluntarily. I further
acknowledge that the Company strongly encouraged me to discuss this
Release with my attorney (at my own expense) before signing this Release
and that, to the extent I deemed it appropriate, I did so.
<PAGE>
Section 6 -- Miscellaneous
-------------
(a) Entire Agreement: This is the entire agreement between me
----------------
and the Company; it may not be modified or canceled in any manner
except by a writing signed by both me and the Company. I acknowledge
that the Company has made no promises to me other than those in this
Release. If any provision in this Release is found to be unenforceable, all
other provisions will remain fully enforceable. It is not necessary that the
Company sign this Release for it to become binding upon both me and the
Company.
(b) Successors: This Release binds my heirs, administrators,
----------
representatives, executors, successors, and assigns, and will inure to the
benefit of all Releasees and their respective heirs, administrators,
representatives, executors, successors, and assigns.
(c) Interpretation: This Release shall be construed as a whole
--------------
according to its fair meaning. It shall not be construed strictly for or
against me, the Company, or any Releasee. Unless the context indicates
otherwise, the term "or" shall be deemed to include the term "and" and the
singular or plural number shall be deemed to include the other. Captions
are intended solely for convenience of reference and shall not be used in
the interpretation of this Release. This Release shall be governed by the
statutes and common law of the State of [name], excluding its choice of laws
statutes or common law.
Section 7 -- Arbitration Of Disputes.
-----------------------
I agree to use final and binding arbitration to resolve any dispute
(an "Arbitrable Dispute") I may have with the Company or any Releasee. This
arbitration agreement applies to such things as disputes about the validity,
interpretation, or effect of this Release or alleged violations of it, claims
of discrimination under federal or state law, or other statutory violation
claims. Arbitration shall take place in accordance with the arbitration
provisions established in accordance with my existing employment
agreement with the Company, which I hereby reaffirm. Arbitration in this
manner shall be the exclusive remedy for any Arbitrable Dispute.
<PAGE>
TAKE THIS RELEASE HOME AND READ IT. CAREFULLY
CONSIDER ALL PROVISIONS BEFORE SIGNING THIS RELEASE:
IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN
CLAIMS. YOU SHOULD TAKE ADVANTAGE OF THE
CONSIDERATION PERIOD AND CONSULT YOUR ATTORNEY
IF YOU WISH.
Dated ______________ _____________________________
Signature
_____________________________
Print Name
________ - ________ - _______
Social Security Number
<PAGE>
APPENDIX
EMPLOYMENT TERMINATION CERTIFICATE
THIS CERTIFICATE MUST BE SIGNED AFTER TERMINATION
OF EMPLOYMENT AND MUST BE FILED WITH [NAME], AT
[PLACE] BY [TIME].
I entered into a Release with [name of company] (the "Company")
dated ________. I hereby acknowledge that:
(1) A blank copy of this Employment Termination Certificate was
attached as an Appendix to the Release when it was given to me for my
review. I have had more time to consider signing this Certificate than the
ample time I was given to consider signing the Release and I may revoke it
within seven days after I sign it. I was advised to discuss the Release,
including this Certificate, with an attorney before executing either
document.
(2) Most of the benefits payable under the Release and my
Employment Agreement (my "Remaining Benefits") become payable only
if I sign this Certificate and do not revoke it within seven days after I sign
it.
(3) My employment actually terminated before I signed this
Certificate and, in exchange for my Remaining Benefits, I hereby agree
that this Certificate will be a part of my Release and that my Release will
be construed and applied as if I signed it on the day I signed this
Certificate. This extends my release of Claims under the Release to any
Claims that arose during the remainder of my employment through the date
my employment terminated.
Dated ______________ _____________________________
Signature
_____________________________
Print Name
________ - ________ - _______
Social Security Number
EMPLOYMENT AGREEMENT
--------------------
By signing below, I, James C. Hull, agree to the terms and conditions
of employment by EnviroSource, Inc. (the "Company") set forth in this
Employment Agreement (the "Agreement").
WHEREAS, the Company is relocating its corporate headquarters to
Horsham, Pennsylvania;
WHEREAS, the continuation of my duties requires me to relocate to that
area;
THEREFORE, the Company and I agree as follows:
1. Term of Agreement. My employment by the Company under this
-----------------
Agreement shall commence on July 1, 1996 and shall end on June 30, 1999 (the
"Expiration Date"), unless sooner terminated under Section 5 of this Agreement.
2. Nature of Duties. I shall continue my duties as Vice President &
----------------
Chief Financial Officer of the Company. As such, I shall have all of the
customary powers and duties associated with that office and those I currently
perform. I shall be subject to the Company's supervisory procedures and
approval practices, as generally in effect from time-to-time.
3. Place of Performance. I shall be based at Company headquarters in
--------------------
Horsham, Pennsylvania, except for required travel on the Company's business.
4. Compensation and Related Matters.
---------------------------------
(a) Base Salary. The Company shall pay me base salary at an annual
-----------
rate of $198,000, or such higher amount as it elects to pay me. My
base salary shall be paid in conformity with the Company's salary
payment practices generally applicable to other executives of the
Company.
(b) Bonuses. I shall be eligible for bonuses and other incentive
-------
compensation under bonus and incentive compensation plans of the
Company generally available to other executives of the Company.
(c) Stock Options, Restricted Stock, and Incentive Plans. I shall be
----------------------------------------------------
eligible to participate in all stock option, restricted stock, and
incentive plans generally available to other executives of the
Company.
(d) Standard Benefits. During my employment I shall be entitled to
------------------
participate in all employee benefit plans and programs, including paid
vacations, generally available to other executives of the Company.
<PAGE>
(e) Indemnification. The Company shall extend to me the same
---------------
indemnification arrangements as are generally provided to other
executives of the Company.
(f) Expenses. I shall be entitled to receive prompt reimbursement
--------
for all reasonable and customary travel and business expenses I incur
in connection with my employment, but I must incur and account for
those expenses in accordance with the policies and procedures
established by the Company.
(g) Right to Change Policies. The Company reserves its right to
------------------------
amend, modify or change its benefit policies and procedures, at any
time, without notice.
5. Compensation Upon Termination. If, during the term of this
------------------------------
Agreement, I am terminated without Just Cause or if I resign for Good Reason,
I shall be entitled to receive severance pay for up to 18 months at my then
base salary rate and medical and dental benefits of the nature then generally
being provided to employees of the Company provided I sign a general release
in the form attached as Schedule 1 to this Agreement. Such severance pay and
benefits shall cease upon my reemployment in a comparable position during
such 18 month period. The Company shall have no further obligation to me
under this Agreement, except its ongoing indemnification obligation under
Section 4(e).
If I fail to execute the release provided to me within 60 days after I
am terminated without Just Cause or resign for Good Reason (or, if the Company
disputes that I was terminated without Just Cause, within 60 days after an
arbitrator first determines that I was terminated without Just Cause), or if I
thereafter properly revoke the release, I shall not be entitled to salary
continuation payments and benefits under this Section 5. I agree that I shall
have no rights or remedies in the event of my termination without Just Cause
other than those set forth in this Agreement.
(a) Termination for Just Cause. The Company may terminate my
--------------------------
employment for Just Cause at any time without advance notice. "Just
Cause" shall mean:
(i) gross neglect or failure to perform my duties, in either case,
after I have been given written notice of such neglect or failure and
a reasonable opportunity to cure my default; or
(ii) acts of fraud, theft of dishonesty on my part; or
(iii) my conviction of or plea of guilty or nolo contendere to a
felony.
<PAGE>
(b) Resignation For Good Reason: I may terminate my employment
---------------------------
voluntarily for Good Reason after giving the Company written notice
of the grounds for such Good Reason within 30 days of my knowledge of
the facts giving rise to such Good Reason to terminate, and allowing
the Company the opportunity to cure the circumstances giving rise to
Good Reason to terminate within 30 days of receipt of the written
notice. "Good Reason" shall mean:
(i) a material diminution in my responsibility;
(ii) a reduction in my base salary; or
(iii) a second required relocation of more than 50 miles from the
Company's headquarters in Horsham, PA within the term of this
Agreement.
(c) Company Affiliates: I acknowledge that the Company's plans may
------------------
result in a change in my employer to an affiliate of the Company.
This change alone shall not constitute a termination for "Just Cause"
or be grounds for resignation with "Good Cause."
(d) Resignation For Other Than Good Reason: In the event I terminate
--------------------------------------
my employment voluntarily, I will (1) give the Company at least 30
days' advance written notice, and (2) be entitled to any accrued, but
unpaid base salary and any other unpaid amounts due me through the
date of my resignation under Company compensation or benefit
programs.
(e) Disputes Under This Section. All disputes relating to this
---------------------------
Agreement, including disputes relating to this Section, shall be
resolved by final and binding arbitration under Section 8. For
example, if I and the Company disagree as to whether the Company had
Just Cause to terminate my employment, we will resolve the dispute
through arbitration; the arbitrator will decide whether Just Cause
existed.
6. Confidentiality. I acknowledge that I currently possess or will
---------------
acquire secret, confidential, or proprietary information or trade
secrets concerning the operations, future plans, or business methods
of the Company or its affiliates. I agree that the Company would be
severely damaged if I used or disclosed this information. To prevent
this harm, I am making the promises set forth in this Section 6.
(a) Promise Not To Disclose. I promise never to use or disclose any
-----------------------
such information before it has become generally known within the
relevant industry through no fault of my own. I agree that this
promise shall never expire.
<PAGE>
(b) Promise Not To Solicit. To prevent me from inevitably breaking
----------------------
this promise, I further agree that, for a period of two years
commencing on the date of my termination of employment for any reason:
(i) as to any customer or supplier of the Company or its affiliates
with whom I had dealings or about whom I acquired proprietary
information during my employment, I will not solicit or attempt to
solicit the customer or supplier to do business with any person or
entity; and (ii) I will not solicit for employment any person who is,
or within the preceding six months was, an officer, manager, employee,
or consultant of the Company or its affiliates.
(c) Promise Not To Engage In Certain Employment. I agree that for a
-------------------------------------------
period of two years commencing on the date of my termination of
employment for any reason, I will not accept any employment or engage
in any activity, without the written consent of the President of the
Company, if the loyal and complete fulfillment of my duties would
inevitably require me to reveal or utilize trade secrets or other
confidential information which I have promised not to disclose, as
reasonably determined by the President of the Company.
(d) Promise To Discuss Proposed Actions In Advance. To prevent the
----------------------------------------------
inevitable use or disclosure of trade secrets or confidential
information, I promise that, before I disclose or use information and
before I commence employment, solicitations, or any other activity
which could possibly violate the promises I have just made, I will
discuss my proposed actions with the President of the Company, who
will advise me whether my proposed actions would violate these
promises.
7. Notice. Notices, demands, and all other communications provided
------
for in this Agreement shall be given in writing and shall be deemed to have been
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company:
EnviroSource, Inc.
Horsham Business Center
1155 Business Center Drive
Horsham, PA
Corporate Secretary
If to me:
James C. Hull
3575 Byron Drive
Doylestown, PA 18901
or to such other address as any party may have furnished to the other by giving
notice under this Section, except that notices of change of address shall be
effective only upon receipt.
<PAGE>
8. Arbitration of Disputes.
-----------------------
(a) Arbitrable Disputes. The Company and I agree to use final and
-------------------
binding arbitration to resolve any dispute (an "Arbitrable Dispute")
I may have with the Company or any affiliate. This arbitration
agreement applies to such things as disputes about the validity,
interpretation, or effect of this Agreement, or alleged violations of
it.
(b) Injunctive Relief. Notwithstanding Section 8(a), due to the
-----------------
irreparable harm that would result from an actual or threatened
violation of Section 6 that involves disclosure or use of confidential
information, trade secrets, or competition with the Company, I agree
that the Company may seek, and shall be entitled to obtain, an
injunction prohibiting me from committing such a violation.
(c) The Arbitration. Arbitration shall take place in Philadelphia
---------------
before an experienced employment arbitrator licensed to practice law
in Pennsylvania and selected in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. The
arbitrator may not modify or change this Agreement in any way.
(d) Fees and Expenses. Each party shall pay the fees of their
-----------------
respective attorneys, the expenses of their witnesses, and any other
expenses connected with the arbitration, but all other costs of the
arbitration, including the fees of the arbitrator, cost of any record
or transcript of the arbitration, administrative fees, and other fees
and costs shall be paid in equal shares by me and the Company.
(e) Exclusive Remedy. Arbitration in this manner shall be the
----------------
exclusive remedy for any Arbitrable Dispute. Should I or the Company
attempt to resolve an Arbitrable Dispute by any method other than
arbitration pursuant to this Section, the responding party will be
entitled to recover from the initiating party all damages, expenses,
and attorneys' fees incurred as a result of that breach.
9. Internal Revenue Code Section 280G Limitation. I agree that my
----------------------------------------------
payments and benefits under this Agreement and all other contracts,
arrangements, or programs shall not, in the aggregate, exceed the maximum
amount that may be paid to me without triggering penalties under Section 280G
and related provisions of the Internal Revenue Code, as determined in good faith
by the Company's independent auditors. If any benefits must be cut back to
avoid triggering such penalties, my benefits shall be cut back in the priority
order I designate or, if I fail promptly to designate an order, in the priority
order designated by the Company. If an amount in excess of the limit set forth
in this Section is paid to me, I will repay the excess amount to the Company
upon demand, with interest at the rate provided for in Internal Revenue Code
Section 1274(b)(2)(B). The Company and I agree reasonably to cooperate with
each other in connection with any administrative or judicial proceedings
concerning the existence or amount of any such penalties with respect to
payments or benefits I receive.
<PAGE>
10. Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived, or discharged except by a written document signed by me and a duly
authorized officer of the Company. A waiver of any conditions or provisions of
this Agreement in a given instance shall not be deemed a waiver of such
conditions or provisions at any other time. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania without regard to its conflicts of law
principles. This Agreement shall be binding upon, and shall inure to the
benefit of me and my estate and the Company and any successor thereto, but
neither this Agreement nor any rights arising under it may be assigned or
pledged by me, except to the extent permitted under the terms of the benefit
plans in which I participate.
11. Validity. The invalidity or unenforceability of any provisions
--------
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute the same instrument.
13. Entire Agreement. All oral or written agreements or
----------------
representations, express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement.
ENVIROSOURCE, INC.
Date:11/5/96 By:/s/ Louis A. Guzzetti, Jr.
------------ -----------------------------
Name: Louis A. Guzzetti, Jr.
Title: President & CEO
Date:10/14/96 /s/ James C. Hull
------------- -----------------
James C. Hull
<PAGE>
Schedule 1
GENERAL RELEASE
---------------
I, the undersigned employee, and ENVIROSOURCE, INC. (the
"Company") agree as follows:
Section 1 -- Benefits
--------
The Company promises to pay or provide to me those payments and
benefits set forth in the certain Employment Agreement, dated as of
______, 1996, between me and the Company.
Section 2 -- Complete Release
----------------
(a) In General: I irrevocably and unconditionally release all the
----------
Claims described in subsection (b) that I may now have against the
Releasees listed in subsection (d). However, I am not releasing (i) my
right to enforce this Release; (ii) any rights or claims under the Age
Discrimination in Employment Act that arise after I sign this Release; (iii)
my right, if any, to government-provided unemployment benefits; or (iv)
any rights I may have to unpaid compensation, or benefits under the
Company's standard compensation and benefits programs, such as COBRA
benefits (except claims I made which were denied before I signed this
Release or any claim I might have for extra benefits as a consequence of
payments I receive because of signing this Release).
(b) Claims Released: Subject only to the exceptions just noted, I
---------------
am releasing all known and unknown claims, promises, causes of action,
or similar rights of any type ("Claims") that I may have with respect to any
Releasee listed in subsection (d). These include, but are not limited to,
Claims which in any way relate to: (i) my employment with the Company,
or the termination of that employment, such as Claims for compensation,
bonuses, commissions, lost wages, or unused accrued vacation or sick pay;
(ii) the design or administration of any employee benefit program; (iii) any
rights I may have to severance or similar benefits or to post-employment
health or group insurance benefits; or (iv) any Claims to attorneys' fees or
other indemnities. I understand that the Claims I am releasing might arise
under many different laws, including the following examples:
Anti-Discrimination Statutes, such as the Age Discrimination in
----------------------------
Employment Act and Executive Order 11141, which prohibit age
discrimination in employment; Title VII of the Civil Rights Act of
1964, Section 1981 of the Civil Rights Act of 1866 and Executive
Order 11246, which prohibit discrimination based on race, color,
national origin, religion or sex; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Americans
With Disabilities Act and Sections 503 and 504 of the Rehabilitation
Act of 1973, which prohibit discrimination against the disabled; and
any other federal, state or local laws prohibiting employment
discrimination.
<PAGE>
Federal Employment Statutes, such as the WARN Act, which requires
---------------------------
that advance notice be given of certain work force reductions; the
Employee Retirement Income Security Act of 1974, which, among
other things, protects employee benefits; the Fair Labor Standards Act
of 1938, which regulates wage and hour matters; the Family and
Medical Leave Act of 1993, which requires employers to provide
leaves of absence under certain circumstances; and any other federal
laws relating to employment, such as veterans reemployment rights
laws.
Other Laws, such as any federal, state, or local laws providing
----------
workers' compensation benefits, restricting an employer's right to
terminate employees or otherwise regulating employment; any federal,
state or local law enforcing express or implied employment contracts or
requiring an employer to deal with employees fairly or in good faith;
any other federal, state, or local laws providing recourse for alleged
wrongful discharge, physical or personal injury, emotional distress,
fraud, negligent misrepresentation, defamation, and similar or related
claims.
The laws referred to in this subsection include statutes, regulations, other
administrative guidance, and common law doctrines.
(c) Unknown Claims: I understand that I am releasing Claims that
--------------
I may not know about, and that is my intent. I expressly waive all rights I
might have under any law which is intended to prevent unknown claims
from being released. I understand the significance of doing so.
(d) Releasees: The Releasees are the Company, all related
----------
companies, partnerships, or joint ventures, and, with respect to each of
them, all of the Company's or such related entities' predecessors and
successors, and, with respect to each such entity, all of its past and present
employees, officers, directors, stockholders, owners, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the
trustees, administrators, fiduciaries and insurers of such programs), and
any other persons acting by, through, under, or in concert with any of the
persons or entities listed in this subsection.
Section 3 -- My Promises
-----------
(a) Employment Termination: I agree that my employment with
----------------------
the Company and its affiliates has ended or will end forever on the date
specified by the Company. I have voluntarily resigned in exchange for the
benefits I am receiving because I signed this Release.
(b) Pursuit Of Released Claims: I agree to withdraw with
---------------------------
prejudice all complaints or charges, if any, I have filed with any agency or
court against EnviroSource or any related person or entity. I represent that
I will not in the future file any lawsuit, complaint, or charge against them
based on the claims released in this Release.
<PAGE>
(c) Company Property: I have returned, or by my last day of
----------------
work will return, to the Company all files, memoranda, documents,
records, copies of the foregoing, credit cards, keys and any other property
of the Company or its affiliates in my possession.
(d) Taxes: I am responsible for paying any taxes on amounts I
-----
receive because I signed this Release and I agree that the Company is to
withhold all taxes it determines it is legally required to withhold.
(e) Ownership Of Claims: I have not assigned or transferred any
-------------------
Claim I am releasing, nor have I purported to do so.
(f) Non-Admission Of Liability: I agree not to assert that this
--------------------------
Release is an admission of guilt or wrongdoing since the Releasees do not
believe or admit that any of them has done anything wrong.
(g) No Disparagement: I agree not to criticize, denigrate, or
----------------
disparage any Releasee.
(h) False Claims Representations And Promises: I have
-----------------------------------------
disclosed to the Company any information I have concerning any conduct
involving the Company which I have any reason to believe may be
unlawful or to involve any false claims to the United States. I promise to
cooperate fully in any investigation the Company undertakes into matters
occurring during my employment with the Company. I understand that
nothing in this Release prevents me from cooperating with any U.S.
government investigation.
Section 4 -- Consequences Of Violating My Promises
-------------------------------------
(a) General Consequences: I agree to pay the reasonable
--------------------
attorneys' fees and any damages Releasees may incur as a result of my
breaching a promise I made in this Release (such as by suing a Releasee
over a released Claim) or if any representation I made in this Release was
false when made.
(b) Challenges To Validity: Should I attempt to challenge the
----------------------
enforceability of this Release, I agree first to deliver a certified check to
the Company for all amounts I have received because I signed this Release,
plus ten percent interest per annum, and to invite the Company to cancel
this Release. If the Company accepts my offer, this Release will be
canceled. If it rejects my offer, the Company will notify me and deposit
the amount I repaid in an interest-bearing account pending a determination
of the enforceability of this Release. If the Release is determined to be
enforceable, the Company will pay me the amount in the account. If this
Release is not enforceable, the Company or its designee is to retain the
account.
<PAGE>
Section 5 -- Consideration Of Release
------------------------
I acknowledge that, before signing this Release, I was given a
period of at least 21 calendar days to review and consider this Release. I
further acknowledge that: (a) I took advantage of this period to consider
this Release before signing it; (b) I carefully read this Release; (c) I fully
understand it; and (d) I am entering into it voluntarily. I further
acknowledge that the Company strongly encouraged me to discuss this
Release with my attorney (at my own expense) before signing this Release
and that, to the extent I deemed it appropriate, I did so.
Section 6 -- Miscellaneous
-------------
(a) Entire Agreement: This is the entire agreement between me
----------------
and the Company; it may not be modified or canceled in any manner
except by a writing signed by both me and the Company. I acknowledge
that the Company has made no promises to me other than those in this
Release. If any provision in this Release is found to be unenforceable, all
other provisions will remain fully enforceable. It is not necessary that the
Company sign this Release for it to become binding upon both me and the
Company.
(b) Successors: This Release binds my heirs, administrators,
----------
representatives, executors, successors, and assigns, and will inure to the
benefit of all Releasees and their respective heirs, administrators,
representatives, executors, successors, and assigns.
(c) Interpretation: This Release shall be construed as a whole
--------------
according to its fair meaning. It shall not be construed strictly for or
against me, the Company, or any Releasee. Unless the context indicates
otherwise, the term "or" shall be deemed to include the term "and" and the
singular or plural number shall be deemed to include the other. Captions
are intended solely for convenience of reference and shall not be used in
the interpretation of this Release. This Release shall be governed by the
statutes and common law of the State of [name], excluding its choice of laws
statutes or common law.
Section 7 -- Arbitration Of Disputes.
-----------------------
I agree to use final and binding arbitration to resolve any dispute
(an "Arbitrable Dispute") I may have with the Company or any Releasee. This
arbitration agreement applies to such things as disputes about the validity,
interpretation, or effect of this Release or alleged violations of it, claims of
discrimination under federal or state law, or other statutory violation
claims. Arbitration shall take place in accordance with the arbitration
provisions established in accordance with my existing employment
agreement with the Company, which I hereby reaffirm. Arbitration in this
manner shall be the exclusive remedy for any Arbitrable Dispute.
<PAGE>
TAKE THIS RELEASE HOME AND READ IT. CAREFULLY
CONSIDER ALL PROVISIONS BEFORE SIGNING THIS RELEASE:
IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN
CLAIMS. YOU SHOULD TAKE ADVANTAGE OF THE
CONSIDERATION PERIOD AND CONSULT YOUR ATTORNEY
IF YOU WISH.
Dated ______________ _____________________________
Signature
_____________________________
Print Name
________ - ________ - _______
Social Security Number
<PAGE>
APPENDIX
EMPLOYMENT TERMINATION CERTIFICATE
THIS CERTIFICATE MUST BE SIGNED AFTER TERMINATION
OF EMPLOYMENT AND MUST BE FILED WITH [NAME], AT
[PLACE] BY [TIME].
I entered into a Release with [name of company] (the "Company")
dated ________. I hereby acknowledge that:
(1) A blank copy of this Employment Termination Certificate was
attached as an Appendix to the Release when it was given to me for my
review. I have had more time to consider signing this Certificate than the
ample time I was given to consider signing the Release and I may revoke it
within seven days after I sign it. I was advised to discuss the Release,
including this Certificate, with an attorney before executing either
document.
(2) Most of the benefits payable under the Release and my
Employment Agreement (my "Remaining Benefits") become payable only
if I sign this Certificate and do not revoke it within seven days after I sign
it.
(3) My employment actually terminated before I signed this
Certificate and, in exchange for my Remaining Benefits, I hereby agree
that this Certificate will be a part of my Release and that my Release will
be construed and applied as if I signed it on the day I signed this
Certificate. This extends my release of Claims under the Release to any
Claims that arose during the remainder of my employment through the date
my employment terminated.
Dated ______________ _____________________________
Signature
_____________________________
Print Name
________ - ________ - _______
Social Security Number
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements included in EnviroSource's Form 10-Q for the
quarterly period ended September 30, 1996 and is qualified in its entirety
by reference to such financial statements.
</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> 9,560
<SECURITIES> 0
<RECEIVABLES> 38,843
<ALLOWANCES> 990
<INVENTORY> 0
<CURRENT-ASSETS> 56,328
<PP&E> 311,818
<DEPRECIATION> 144,590
<TOTAL-ASSETS> 461,860
<CURRENT-LIABILITIES> 61,204
<BONDS> 321,276
0
0
<COMMON> 2,016
<OTHER-SE> 25,756
<TOTAL-LIABILITY-AND-EQUITY> 461,860
<SALES> 0
<TOTAL-REVENUES> 187,757
<CGS> 0
<TOTAL-COSTS> 145,136
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,271
<INCOME-PRETAX> (4,173)
<INCOME-TAX> 704
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,877)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
