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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 31, 2000
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Commission File Number 1-8368
SAFETY-KLEEN CORP.
(Exact name of registrant as specified in its charter)
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Delaware 51-0228924
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Gervais Street, Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 933-4200
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Securities Registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act: Title of each class
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Common Stock
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Par Value $1.00
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the common stock held by non-affiliates of the
registrant was $26,153,929 as of November 20, 2000.
The number of shares of the issuer's common stock outstanding as of November 20,
2000 was 100,783,596.
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TABLE OF CONTENTS
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ITEM PAGE
PART I
2. Properties......................................................................................... 3
3. Legal Proceedings.................................................................................. 4
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters.............................. 17
PART III
10. Directors and Executive Officers of the Registrant................................................. 18
11. Executive Compensation............................................................................. 21
12. Security Ownership of Certain Beneficial Owners and Management..................................... 28
13. Certain Relationships and Related Transactions..................................................... 29
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................... 30
Signatures......................................................................................... 35
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Safety-Kleen Corp. (the "Company" or "Registrant") has omitted
information responsive to Items 1, 6, 7, 7A, 8 and 14 and portions of other
Items which elicit financial information. As described in the Company's Current
Report on Form 8-K filed on August 8, 2000, the Company dismissed
PricewaterhouseCoopers LLP as its independent accountants on August 1, 2000 and
engaged Arthur Andersen LLP as successor independent accountants. Upon
completion of the audit by Arthur Andersen for fiscal years ended August 31,
1997 through August 31, 2000, the Company will amend this Form 10-K, file
audited restated financial statements for those four fiscal years, as
applicable, and respond to Items the information for which has been omitted in
this filing. The Company presently anticipates making that filing as soon as
practicable.
PART I
ITEM 2. PROPERTIES
In North America, the Company operates in 45 states, seven Canadian
provinces and Puerto Rico.
In North America, the Company's sales and service representatives
operate out of approximately 175 branch facilities. Of these, approximately half
are leased and half are owned. A typical branch is approximately 8,000 square
feet.
The Company has 13 accumulation centers across the United States and
Canada. Of these, 10 are owned. These locations serve branches by accumulating
shipments of waste from the branch. As truckload quantities are collected, they
are transported from these locations to the treatment, disposal or recycling
plants.
The Company has 18 service centers across the United States and Canada.
Of these, 16 are owned. These locations accumulate shipments of waste from the
industrial and other customers. As truckload quantities are collected, they are
transported from these locations to the treatment, disposal or recycling plants.
The Company owns 10 solvent recycling plants in the United States,
Canada and Puerto Rico. In total, these plants have an annual recycling capacity
of 63 million gallons of parts cleaner solvents and 15 million gallons of
halogenated, fluorinated and flammable solvents. The total storage capacity of
these plants is approximately 8.2 million gallons. In addition, the Company owns
two fuel-blending facilities, located on leased land, and has an exclusive
supply arrangement for its waste-derived fuel with a third facility. These three
facilities have combined storage capacity of approximately two million gallons.
The Company owns two oil re-refining plants with a combined annual
re-refining capacity of approximately 130 million gallons. These plants are
located in Breslau, Ontario and East Chicago, Indiana.
The Company owns one and leases five distribution facilities in the
United States, averaging approximately 45,000 square feet each.
The Company operates eight commercial incineration facilities and 10
landfills throughout the United States and Canada, all of which are owned. The
Company also operates 18 other treatment and disposal facilities, of which nine
are leased.
The Company operates approximately 3,800 step vans, straight truck and
tractors, 650 tank and vacuum trucks, 1,200 light duty trucks and 1,800 trailer
units, most of which are owned by the Company. The Company also operates
approximately 1,600 leased railroad tanker cars.
The Company owns a 106,000 square foot plant in New Berlin, Wisconsin
where parts cleaner machines are assembled and buffing pads are manufactured.
The Company owns a 66,000 square foot technical center located in Elk
Grove Village, Illinois.
The Company owns a 285,000 square foot administrative office building
located in Elgin, Illinois. The building was the premises for the former
corporate headquarters of Safety-Kleen Systems, Inc., a subsidiary of the
Company. The Company intends to sell this property.
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The Company leases 114,000 square feet of office space in Columbia,
South Carolina for its corporate headquarters.
ITEM 3. LEGAL PROCEEDINGS
CHAPTER 11 FILING
Safety-Kleen Corp. and 73 of its wholly owned domestic subsidiaries
filed a voluntary petition for reorganization under Chapter 11 of Title 11 of
the United States Code (the "Bankruptcy Code") on June 9, 2000. The petition was
filed in the United States Bankruptcy Court for the District of Delaware [Case
No. 00-2303 (PJW)]. Management of the Company continues to operate the business
of the Company as a debtor in possession under Sections 1107 and 1108 of the
Bankruptcy Code as described in Item 13 of Part 2. In this proceeding, the
Company and its subsidiaries will seek approval of a Plan for Reorganization and
intend to implement the Plan for Reorganization upon obtaining court approval of
the Plan. Pursuant to the automatic stay provision of Section 362 of the
Bankruptcy Code all non-exempt litigation matters are currently stayed.
Laidlaw Inc., a Canadian corporation, owns approximately 44 percent of
the outstanding common stock of the Company and has various other arrangements
and relationships with the Company and its affiliates. On November 7, 2000,
Laidlaw Inc., on behalf of itself and its direct and indirect subsidiaries,
filed a proof of claim in the unliquidated amount of not less than $6.5 billion
against the Company and its affiliates in the Chapter 11 cases. The Laidlaw Inc.
indemnification claims against the Company and its affiliates fall into the
following general categories: 1) Claims for indemnification; 2) contribution and
reimbursement in connection with certain litigation matters; 3) claims against
the company and its affiliates for fraudulent misrepresentation, fraud,
securities law violations, and related causes of action; 4) insurance claims; 5)
guaranty claims; 6) environmental contribution claims; 7) tax reimbursement
claims; and 8) additional miscellaneous claims.
The Company intends to file an objection to the claims asserted by
Laidlaw Inc. in the Bankruptcy proceedings.
MATTERS RELATED TO INVESTIGATION OF FINANCIAL RESULTS
As previously reported in the Company's Current Report on Form 8-K
dated March 6, 2000, the Company announced that it had initiated an internal
investigation of its prior reported financial results and certain of its
accounting policies and practices following receipt by the Company's Board of
Directors of information alleging possible accounting irregularities that may
have affected the previously reported financial results of the Company since
fiscal year 1998. The Board appointed a Special Committee, consisting of four
directors, who were then independent outside directors of the Company, to
conduct the internal investigation (the "Special Committee (Investigation)").
The Special Committee (Investigation) was later expanded to five directors, with
the addition of one additional independent outside director. The Company also
engaged the law firm Shaw Pittman and the accounting firm Arthur Andersen LLP to
assist with the comprehensive investigation of these matters. Pending the
outcome of the investigation, the Board placed Kenneth W. Winger, the Company's
Chief Executive Officer and a Director, Michael J. Bragagnolo, Executive Vice
President and Chief Operating Officer, and Paul R. Humphreys, Sr. Vice President
of Finance and Chief Financial Officer, on administrative leave. The Company
terminated the employment of Messrs. Winger, Bragagnolo, and Humphreys in July
2000. The Special Committee (Investigation) is continuing its investigation.
Beginning March 7, 2000, various Company shareholders filed actions in
the United States District Court for the District of South Carolina, Columbia
Division, on behalf of various alleged classes of Company shareholders (the
"Shareholder Class Actions"), asserting federal securities fraud claims against
the Company, Messrs. Winger, Humphreys and Bragagnolo (who are referred to
herein collectively as the "Individual Defendants") and in two cases James R.
Bullock, former Chairman of the Board of the Company. In August 2000, all of the
Shareholder Class Actions were consolidated into two actions that are discussed
in detail below. Due to the fact that the Company filed a Chapter 11 bankruptcy
petition under the Bankruptcy Code on June 9, 2000 and all litigation against
the Company is subject to an automatic stay, the Company was named as a nominal
defendant in each consolidated action.
On August 3, 2000, the United States District Court for the District of
South Carolina, Columbia Division, approved an Order consolidating 19 of the
Shareholder Class Actions and any other actions alleging claims on behalf of
investors who acquired shares of the Company's common stock in the time period
November 13, 1997
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through March 6, 2000 into one action, IN RE SAFETY-KLEEN CORP. SECURITIES
LITIGATION, Civil Action No. 3:00-CV-736-17 (the "Securities Consolidated
Action"). Each of the Shareholder Class Actions consolidated into the Securities
Consolidated Action was dismissed without prejudice. A Consolidated Amended
Complaint was filed in the United States District Court for the District of
South Carolina, Columbia Division, on September 18, 2000. The Securities
Consolidated Action is brought on behalf of all persons, except defendants, who
(i) purchased the common stock of Laidlaw Environmental Services, Inc. ("LES")
between July 9, 1997 and July 1, 1998, (ii) purchased the common stock of
Safety-Kleen Corp. between July 1, 1998 and March 6, 2000 or (iii) exchanged
shares of Safety-Kleen Corp. common stock for shares of the common stock of LES
in the merger of LES and Safety-Kleen Corp. In addition to naming the Individual
Defendants and Bullock, the Amended Complaint also named John R. Grainger,
Leslie W. Haworth, John W. Rollins, Jr., David E. Thomas, Jr., Henry B. Tippie,
James L. Wareham, Grover C. Wrenn and Henry H. Taylor, all of whom are present
or former officers or members of the Board of Directors of the Company and/or
Laidlaw Inc. and PricewaterhouseCoopers LLP as defendants to the Securities
Consolidated Action. The Amended Complaint alleges that the defendants
disseminated materially false and misleading information and failed to disclose
material facts with respect to the Company's financial condition and business
prospects, thereby causing the market price of Company securities to be
artificially inflated during the relevant class periods and that the class
members acquired Company securities during the class periods at artificially
inflated prices and were damaged thereby. The Amended Complaint asserts various
violations of federal securities laws including violations of Sections 10(b),
14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder and Sections 11, 12(a)(2) and 15 of the Securities Act of
1933. The Securities Consolidated Action seeks to recover damages in an
unspecified amount that the class members allegedly sustained by purchasing
shares of the Company's common stock at artificially inflated prices, as well as
related relief. Pursuant to a Scheduling Order in the Securities Consolidated
Action, all answers, responsive pleadings and motions must be filed or served
not later than December 11, 2000.
On August 11, 2000, the United States District Court for the District
of South Carolina, Columbia Division, approved an Order consolidating the
remaining two Shareholder Class Actions involving shareholders who were former
shareholders of Rollins Environmental Services, Inc. ("Rollins") into one
action, IN RE SAFETY-KLEEN CORP. SECURITY LITIGATION, Civil Action No. 3:00
1343-17 (the "Security Consolidated Action"). The two Shareholder Class Actions
consolidated into the Security Consolidated Action were dismissed without
prejudice. On October 2, 2000, a Consolidated Amended Class Action Complaint for
Violations of Federal Securities Laws in the Security Consolidated Action was
filed in the United States District Court for the District of South Carolina,
Columbia Division. The Security Consolidated Action is brought on behalf of all
persons, except defendants, who were former shareholders of Rollins and who
received or should have received the Proxy Statement (the "Proxy Statement")
issued to shareholders of Rollins to notify them of the special meeting that had
been convened to vote on the reverse acquisition of Rollins by the Company. The
Complaint named the Individual Defendants, Bullock, the Estate of John W.
Rollins, John W. Rollins, Jr. and Laidlaw Inc. as defendants to the Security
Consolidated Action. The Complaint principally alleges that the defendants
disseminated materially false and misleading information and failed to disclose
material facts with respect to the Company's financial condition and business
prospects in connection with the Proxy Statement and, as a result, the class
members were denied an opportunity to make an informed voting decision at the
special meeting for approval of the reverse acquisition. The Security
Consolidated Action asserts various violations of federal securities laws
including violations of Sections 14(a) and 20 of the Securities Exchange Act of
1934 and Rule 14a-9 promulgated thereunder. The Security Consolidated Action
seeks to recover damages in an unspecified amount that the class members
allegedly sustained as a result of the reverse acquisition and the voting in
connection therewith, as well as related relief. Pursuant to a Scheduling Order
in the Security Consolidated Action, all answers, responsive pleadings and
motions must be filed or served not later than December 5, 2000.
In addition to the above, two shareholder derivative lawsuits were filed in
the Delaware Court of Chancery for New Castle County on behalf of the Company,
against certain of its directors and former directors (the "Delaware Derivative
Actions"): (1) Civil Action No. 17923-NC on March 24, 2000, pending under the
caption PETER FRANK VS. KENNETH W. WINGER, JOHN W. ROLLINS, JAMES R. BULLOCK,
DAVID E. THOMAS, JR., LESLIE W. HAWORTH, HENRY B. TIPPIE, JAMES L. WAREHAM, JOHN
W. ROLLINS, JR., ROBERT W. LUBA AND GROVER C. WREN (SIC), (the "Director
Defendants") AND SAFETY-KLEEN CORP. (NOMINAL DEFENDANT) and (2) Civil Action No.
1974-NC on March 30, 2000, pending under the caption HARBOR FINANCE PARTNERS,
DERIVATIVELY ON BEHALF OF SAFETY-KLEEN CORP., AGAINST JAMES R. BULLOCK, JOHN W.
ROLLINS, SR., DAVID E. THOMAS, JR., KENNETH W. WINGER, LESLIE W. HAWORTH, HENRY
B. TIPPIE, JAMES L. WAREHAM, JOHN W. ROLLINS, JR., ROBERT W. LUBA, PETER N.T.
WIDDRINGTON AND GROVER C. WRENN, DEFENDANTS AND SAFETY-KLEEN CORP. (NOMINAL
DEFENDANT). The Delaware Derivative Actions assert, among other things, that the
Director Defendants breached their fiduciary obligations to the Company and its
shareholders by failing to adequately supervise the Company and to monitor its
internal financial administrative policies, procedures and controls over an
extended period of time, thereby exposing the Company to class action lawsuits
and the loss of
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goodwill in the investment community, resulting in damages to the Company and
its shareholders. These claims seek to recover damages on behalf of the Company
against the Director Defendants in an unspecified amount as well as related
relief.
On April 13, 2000, a class action MUZINICH & CO., INC., INDIVIDUALLY
AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. SAFETY-KLEEN CORP., KENNETH
W. WINGER, MICHAEL J. BRAGAGNOLO, PAUL R. HUMPHREYS, LAIDLAW, INC. AND
PRICEWATERHOUSE COOPERS, LLP, Civil Action No. 3:00-1145-17, was filed in the
United States District Court for the District of South Carolina, Columbia
Division. An Amended Class Action Complaint for violations of the federal
securities laws was filed on August 25, 2000 pursuant to an August 3, 2000 Order
of the United States District Court Judge. The Company was not named as a
defendant in the amended complaint. The action is filed on behalf of a class
comprised of all persons who purchased 9.25% Senior Subordinated Notes due 2008
of the Company (the "Bonds") during the period from October 23, 1998 through
June 9, 2000. The plaintiffs allege that during the class period the defendants
made material misrepresentations concerning the Company's financial results
causing the Bonds to trade at artificially inflated prices. The action asserts,
among other things, various violations of the federal securities laws including
violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The action
seeks to recover damages in an unspecified amount that the class members
allegedly sustained, as well as related relief.
On July 18, 2000, a class action AMERICAN HIGH- INCOME TRUST AND STATE
STREET RESEARCH INCOME TRUST SUING ON BEHALF OF THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED V. KENNETH W. WINGER, LAIDLAW, INC., PRICEWATERHOUSECOOPERS,
LLP, TD SECURITIES (USA) INC., NATIONSBANC MONTGOMERY SECURITIES, RAYMOND JAMES
& ASSOCIATES, INC., ARTHUR ANDERSEN LLP, JAMES R. BULLOCK, PAUL R. HUMPHREYS,
JOHN W. ROLLINS, SR., JOHN W. ROLLINS, JR., LESLIE W. HAWORTH, ROBERT W. LUBA,
DAVID E. THOMAS, JR., HENRY B. TIPPIE, JAMES L. WAREHAM, GROVER C. WRENN,
MICHAEL J. BRAGAGNOLO AND HENRY H. TAYLOR, Civil Action No. 00-661, was filed in
the United States District Court for the District of Delaware. This action is
brought on behalf of all investors who purchased or acquired certain bonds
issued by the Company in initial offerings or on the secondary market from April
17, 1998 through March 6, 2000. The action alleges that the Company disseminated
materially false and misleading financial statements and that the class members
purchased the bonds in reliance upon such financial statements. The action
asserts, among other things, various violations of federal securities laws
including violations of Sections 11, 12(a)(2) and 15 of the Securities Act of
1933, Sections 10(b), 18 and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated under the Exchange Act. The action seeks to recover
damages in an unspecified amount that the class members allegedly sustained, as
well as related relief.
In addition, two class actions have been filed against Laidlaw Inc. and
certain of its directors on behalf of purchasers of shares of the common stock
of Laidlaw Inc. and purchasers of bonds of Laidlaw Inc. during the period
October 15, 1997 through and including March 13, 2000. The shareholder class
action, BARBARA MELTZER V. JOHN R. GRAINGER, JAMES R. BULLOCK, LESLIE W. HAWORTH
AND LAIDLAW INC, Civil Action No. 3:00-CV-2518-17, was filed with the United
Stated District Court for the District of South Carolina, Columbia Division, on
August 14, 2000. The bondholder class action, DAVID I. L. SUNSTEIN V. JOHN R.
GRAINGER, JAMES R. BULLOCK, LESLIE W. HAWORTH AND LAIDLAW INC., Civil Action No.
3:00-CV-855, was filed with the United Stated District Court for the District of
South Carolina, Columbia Division, on March 17, 2000. Both actions allege, among
other things, that the defendants made false and misleading statements and
violated certain federal securities laws. The actions seek to recover damages in
an unspecified amount that the applicable class members allegedly sustained, as
well as related relief. Messrs. Grainger, Bullock and Haworth have demanded to
be indemnified by the Company in these actions.
Shortly after the Company's March 6, 2000 announcement, Company
representatives met with officials of the Securities and Exchange Commission
(the "Commission") and advised the Commission of the alleged accounting
irregularities and the Company's internal investigation with respect to the
allegations. On March 10, 2000, the Company was advised that the Commission had
initiated a formal investigation of the Company. Also on March 10, 2000, the
Commission issued a subpoena to the Company requiring the production of certain
financial and corporate documents relating to the preparation of Company
financial statements, reports and audits for fiscal years 1998, 1999 and
portions of fiscal years 1997 and 2000 and for various other documents
pertaining to and ancillary to the alleged accounting irregularities. The
Company has responded to the subpoenas.
On or about March 22, 2000, the Company was served with a subpoena
issued by a Grand Jury sitting in the United States District Court for the
Southern District of New York seeking production of the same documents described
in the Commission's subpoena. The Company has responded to the subpoena.
The Company is cooperating with each of the investigations.
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FINANCIAL ASSURANCE ISSUES
Under Resource Conservation and Recovery Act ("RCRA") and Toxic
Substances Control Act ("TSCA"), owners and operators of certain waste
management facilities are subject to financial assurance requirements to ensure
performance of their closure, post-closure and corrective action obligations.
The Company and certain of its subsidiaries as owners and operators of RCRA and
TSCA waste management facilities are subject to these financial assurance
requirements. Applicable regulations allow owners and operators to provide
financial assurance through a surety bond from an approved surety. In order to
qualify as an approved surety for the purposes of providing financial assurance
under RCRA and TSCA, a surety company must be listed on Circular 570, maintained
and distributed publicly by the United States Department of the Treasury. In
compliance with the law, the Company and its subsidiaries procured surety bonds
issued by Frontier Insurance Company ("Frontier") as financial assurance. Of the
total amount of financial assurance required of the Company and its affiliates
under the environmental statutes, which approximated $500 million as of May 31,
2000, slightly more than 50 percent of such requirements were satisfied through
assurances provided by Frontier in the form surety bonds.
On June 6, 2000, the U.S. Treasury issued notification that Frontier no
longer qualified as an acceptable surety on Federal bonds and had been removed
from Circular 570 on May 31, 2000. Accordingly, effective May 31, 2000, the
Company and its affiliates no longer had compliant financial assurance for many
of its facilities. Under applicable regulations, the Company and its affected
subsidiaries were required to obtain compliant financial assurance within sixty
days, and in some states, more quickly.
Immediately following the June 6, 2000 announcement that Frontier no
longer qualified as an approved surety, the Company notified the U.S.
Environmental Protection Agency ("EPA") of its lack of certified financial
statements for fiscal years 1997, 1998 and 1999 and the difficulties that
certain alleged accounting irregularities would cause in the Company in
attempting to obtain compliant financial assurance for its facilities previously
covered by the Frontier bonds. The Company and EPA also contacted states in
which the non-compliant facilities were located and apprised such states of
these facts.
The Company and EPA engaged in negotiations resulting in the entry of a
Consent Agreement and Final Order ("CAFO"). The main component of the CAFO is a
compliance schedule for the Company and its affected subsidiaries to obtain
compliant financial assurance for the facilities covered by the Frontier bonds.
Under the agreement, the Company and its affected subsidiaries are required to
obtain compliant financial assurance as expeditiously as possible, but no later
than December 15, 2000. If compliant financial assurance is not obtained by
December 15, 2000, EPA can extend the deadline to February 28, 2001. The Company
and its affected subsidiaries may also request further extensions of time from
EPA, but the CAFO does not obligate EPA to grant such further extensions. There
can be no assurance that the Company will meet the December 15, 2000, deadline
or any extension thereof, for obtaining compliant financial assurance.
If the Company's affected facilities are unable to secure compliant
financial assurance by the agreed-upon deadlines, the CAFO requires the Company
and its affected facilities to cease accepting waste and to initiate closure and
post-closure measures in accordance with their permits and applicable federal
and state requirements. Under the CAFO, EPA reserves the right, in consultation
with an affected state, to determine in its discretion and in accordance with
applicable law, to modify these requirements.
Under the CAFO, until such time as the affected facilities have
obtained compliant financial assurance, the Company and its affected facilities
must not seek to withdraw an existing irrevocable letter of credit in the amount
of $28.5 million from Toronto Dominion Bank for the benefit of Frontier and
shall take all steps necessary to keep current the existing Frontier surety
bonds.
Pursuant to the terms of the CAFO, the Company and its affected
subsidiaries have agreed to a schedule by which EPA and Participating States (as
defined below) may monitor the Company's efforts to obtain compliant financial
assurance. (A "Participating State" is a state with authority to enforce
financial assurance requirements, but which referred that authority to EPA for
purposes of the CAFO.) This schedule includes required periodic reports to EPA
and participating states. EPA and the Participating States are considering the
Company's request to modify certain deadlines in this schedule. In addition, the
CAFO requires the Company and its affected subsidiaries to retain an independent
environmental auditor to conduct an environmental management systems analysis
and to conduct comprehensive environmental audits at certain facilities. The
CAFO, as modified by the Bankruptcy Court Order approving it, also calls for the
payment of a civil penalty in the amount of approximately $201,000 by
Safety-Kleen Services, Inc., a wholly-owned subsidiary of the Company. If
additional states become Participating States, the amount of this penalty will
increase. In addition, the Company or certain of its subsidiaries may be
required to
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pay additional penalty amounts to states that enter similar, but separate,
agreements with the Company and its appropriate subsidiaries concerning the
replacement of Frontier.
In the CAFO, the Company and certain of its subsidiaries waived certain
arguments they otherwise could have asserted under the Bankruptcy Code with
respect to their financial assurance and certain other obligations under
environmental laws.
The Company and EPA contacted states in which affected company
facilities were located and apprised these states of the terms of the CAFO. As
noted, several of the Participating States referred the affected facilities
non-compliance to EPA for enforcement and joined in the CAFO. Certain other
states (referred to in the CAFO as the "Parallel Action States") have entered
parallel agreements with the Company and appropriate subsidiaries. Other states
have entered or have indicated an interest to enter agreement with affected
facilities with terms similar to the CAFO. If for any reason the Company and/or
its subsidiaries or affiliates were unable to conclude such an agreement in a
particular state, the impact on the Company could be material.
The State of South Carolina has indicated that it will not be a
Participating State or a Parallel Action State for facilities owned or operated
by Safety-Kleen (Pinewood), Inc.
The CAFO was approved by the U.S. Bankruptcy Court on October 17, 2000.
The Company and its affected subsidiaries continue to exercise their best
efforts to obtain compliant financial assurance in replacement of the Frontier
bonds as expeditiously as possible.
GENERAL
The Company's hazardous and industrial waste services are continuously
regulated by federal, state, provincial and local laws enacted to regulate the
discharge of materials into the environment or primarily for the purpose of
protecting the environment. This inherent regulation of the Company necessarily
results in its frequently becoming a party to judicial or administrative
proceedings involving all levels of governmental authorities and other
interested parties. The issues that are involved generally relate to
applications for permits and licenses by the Company and their conformity with
legal requirements and alleged violations of existing permits and licenses. At
August 31, 2000, subsidiaries of the Company were involved in 8 proceedings in
which a governmental authority is a party relating primarily to activities at
waste treatment, storage and disposal facilities where the Company believes
sanctions involved in each instance may exceed $100,000.
In the United States, CERCLA imposes financial liability on persons who
are responsible for the release of hazardous substances into the environment.
Present and past owners and operators of sites which release hazardous
substances, as well as generators, disposal arrangers and transporters of the
waste material, are jointly and severally liable for remediation costs and
environmental damage. At August 31, 2000, the Company had identified 52 active
federal or state-run CERCLA sites where the Company is a potentially responsible
party. The Company continually reviews its status with respect to each location
and the extent of its alleged contribution to the volume of waste at the
location, the available evidence connecting the Company to that location, and
the financial soundness of other potentially responsible parties at the
location.
PRODUCTS LIABILITY CASES
From time to time, the Company is named as a defendant in various
lawsuits arising in the ordinary course of business, including proceedings
wherein persons claim personal injury resulting from the use of the Company's
parts cleaner equipment and/or cleaning products. A number of such legal
proceedings are currently pending in various courts and jurisdictions throughout
the United States. These proceedings typically involve allegations that the
solvent used in the Company's parts cleaner equipment contains contaminants
and/or that the Company's recycling process does not effectively remove the
contaminants that become entrained in the solvent during its use. In addition,
claimants assert that the Company failed to adequately warn the product user of
potential risks. In the aggregate, the plaintiff's claims are in excess of $150
million. The Company maintains insurance which it believes will provide coverage
for these claims over self insured retentions and deductibles, which in the
aggregate, the Company believes are less than $10 million. The Company believes
that these claims are not meritorious and intends to vigorously defend itself
and the safety of its products against any and all such claims.
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SAFETY-KLEEN (PINEWOOD), INC.
A subsidiary of the Company, Safety-Kleen (Pinewood), Inc.
("Pinewood"), owns and operates a hazardous waste landfill near the Town of
Pinewood in Sumter County, South Carolina. On May 19, 1994, the South Carolina
Department of Health and Environmental Control ("DHEC") issued a Resource
Conservation and Recovery Act ("RCRA") Part B permit for operation of the
Pinewood Facility which included provisions governing financial assurance and
capacity for the facility.
FINANCIAL ASSURANCE
South Carolina law requires that hazardous waste facilities provide
evidence of financial assurance for potential environmental cleanup and
restoration in form and amount to be determined by DHEC.
In its order dated May 19, 1994, the Board of DHEC (the "Board")
decided that over a ten year period Pinewood must establish a cash funded trust
(the "GSX Contribution Fund") in the amount of $133 million, adjusted for
inflation, as financial assurance for potential environmental cleanup and
restoration. In August 1994, Pinewood paid approximately $14 million cash into
the trust fund as a first installment. The cash funded trust now stands at
approximately $19.2 million. Pinewood appealed to the South Carolina Circuit
Court contesting the legality of the Board's determination.
In June 1995, DHEC promulgated, and the South Carolina legislature
approved, regulations (the "Regulations") governing financial assurance for
environmental cleanup and restoration giving owner/operators of hazardous waste
facilities the right to choose from among six options for providing financial
assurance. The options include insurance, a bond, a letter of credit, a cash
trust fund and a corporate guaranty, subject to a financial soundness test.
In June 1995, under authority of the new Regulations, Pinewood
submitted financial assurance for potential environmental cleanup and
restoration composed of a combination of the existing State Permitted Sites Fund
(this is a state of South Carolina fund created by statute and funded by
hazardous waste disposal taxes) in the amount of approximately $8 million and
the balance of a total package of $135 million by way of a corporate guaranty by
Laidlaw Inc. in the amount of approximately $127 million. Pinewood also left in
place the existing cash trust fund in the amount of approximately $16 million.
DHEC accepted Pinewood's financial submittal. On September 15, 1995, DHEC issued
a declaratory ruling finding the new Regulations applicable to financial
assurance requirements for Pinewood. A group of parties opposed to the ruling
appealed the declaratory ruling to the South Carolina Circuit Court. The
opposing parties include Citizens Asking for a Safe Environment, Energy Research
Foundation, County of Sumter, Sierra Club, County of Clarendon, The Sumter
County Legislative Delegation, the South Carolina Department of Natural
Resources and the South Carolina Public Service Authority. In June 1996,
Pinewood submitted and DHEC accepted a similar financial assurance package for
the state fiscal year ended June 30, 1997. In June 1997, June 1998, and June
1999 Pinewood submitted and DHEC approved financial assurance packages for the
state fiscal years ending June 30, 1998, 1999 and 2000, consisting of the State
Permitted Sites Fund (approximately $14 million), the cash trust fund now in the
amount of approximately $19.2 million and the balance of a total package of
approximately $140 million in insurance coverage to replace the Laidlaw
guarantee.
CAPACITY
In its May 19, 1994 Order, DHEC established Pinewood's permitted
capacity at 2,250 acre feet and determined that from the date of the order all
wastes disposed, hazardous and non-hazardous, would be included in determining
the exhaustion of permitted capacity and non-hazardous waste disposed prior to
the May 19, 1994 order would not be counted toward the hazardous waste capacity.
CIRCUIT COURT DECISION
Pinewood's appeal of the May 19, 1994 DHEC order and the opposing
parties' appeal of the May 19, 1994 DHEC Order and the September 15, 1995 DHEC
declaratory ruling were consolidated in the South Carolina Circuit Court in the
case captioned Laidlaw Environmental Services of South Carolina, Inc. et. al.,
Petitioners vs. South Carolina Department of Health and Environmental Control
and South Carolina Board of Health and Environmental Control, Respondents -
Energy Research Foundation, et al., Intervenors, Docket Numbers C/A
94-CP-43-175, 94-CP-43-178, 94-CP-40-1412 and 94-CP-40-1859. A decision was
issued by the Circuit Court on August 19, 1997 finding the Regulations legally
valid and applicable to financial assurance requirements of the Pinewood
landfill and upholding DHEC determinations of capacity for the Pinewood
landfill. Opposing parties appealed the decision to
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the South Carolina Court of Appeals ("Court of Appeals"). The Court of Appeals
heard arguments in the case on September 9, 1999.
COURT OF APPEALS DECISION
The Court of Appeals issued a decision on January 17, 2000. The Court
of Appeals declared:
1. The Regulations were invalid due to insufficient public notice during the
promulgation procedure and ordered Pinewood to immediately comply with the
cash financial assurance requirements of the May 19th Order (this would
require a present cash payment of approximately $70 million).
2. That non-hazardous and hazardous waste counts against Pinewood capacity
from the beginning of waste disposal. The practical effect of the decision
would render Pinewood at 500 acre feet over its permitted capacity.
Pinewood petitioned for a rehearing which was denied by the Court of Appeals in
its order dated April 4, 2000.
FURTHER PROCEEDINGS
On May 4, 2000, Pinewood petitioned the South Carolina Supreme Court
for a writ of certiorari from the State Court of Appeals decision.
On June 9, 2000 (on the same day but after Pinewood filed its petition
for bankruptcy protection in the United States District Court for the District
of Delaware), DHEC issued an Emergency Order finding that Frontier Insurance
Company - which is the issuer of bonds used to provide for Pinewood's closure
cost, post-closure cost, and third party liability financial assurance - no
longer met regulatory standards for bond issuers. Based on this finding, DHEC
ordered Pinewood to cease accepting waste for disposal by August 28, 2000,
unless it could provide acceptable alternative financial assurance by June 27,
2000.
On June 13, 2000, the South Carolina Supreme Court denied Pinewood's
petition for a writ of certiorari and the decision of the Court of Appeals
became final.
On June 14, 2000, DHEC sent notice by letter to the Pinewood Facility
directing that Pinewood cease accepting waste for disposal in 30 days and submit
a closure plan. DHEC based this directive on the then final decision of the
Court of Appeals that all non-hazardous waste disposed at Pinewood should be
counted against Pinewood's hazardous waste capacity limit and DHEC's resulting
conclusion that there is no remaining permitted capacity at Pinewood.
On June 22, 2000, DHEC sent notice by letter to Pinewood that under the
Court of Appeals decision, financial assurance regulations for cleanup and/or
environmental impairment restoration at hazardous waste treatment, storage, and
disposal facilities were vacated and, therefore, the financial assurance for
Pinewood must be provided in accordance with the DHEC Board Order dated May 19,
1994. The June 22, 2000 letter further directed that within 15 days Pinewood
provide DHEC with information on how Pinewood would comply with the May 19, 1994
DHEC Board Order including payment into the GSX Contribution Fund. As of October
31, 2000, the GSX Contribution Fund contained $19,297,870, consequently under
the June 22, 2000 DHEC letter Pinewood would be required to currently pay
approximately $68 million into the GSX Contribution Fund, as well as make
payments of approximately $14 million each year for the next four years to reach
the full funding requirement.
FEDERAL DISTRICT COURT PROCEEDINGS
On July 7, 2000, in the legal action captioned: IN RE: SAFETY-KLEEN
CORP., ET AL. DEBTOR, CHAPTER 11 CASES, DELAWARE BANKRUPTCY COURT, CASE NOS.
00-203 (PJW), ADVERSARY PROCEEDING NO. 00-698-SAFETY-KLEEN (PINEWOOD), INC. V.
STATE OF SOUTH CAROLINA, ET AL., DISTRICT OF SOUTH CAROLINA (MJP) CASE NO.
3:00-2243-10, Pinewood commenced legal proceedings to enjoin enforcement of the
June 9, 2000 closure order and the June 14, 2000 closure letter as well as to
challenge the June 9, 2000 order, June 14, 2000 letter, and June 22, 2000 letter
on the merits. In this action, Pinewood sought to stay and/or enjoin DHEC and
the State of South Carolina from enforcement of the previously-described
directives to Pinewood set forth in the June 9, 2000 Order, the June 14, 2000
DHEC letter to Pinewood, and the June 22, 2000 DHEC letter to Pinewood upon the
grounds that the actions of DHEC are invalid under various provisions of the
United States Constitution and/or violate the automatic stay provision of the
Bankruptcy Code and/or should be enjoined under the equitable powers of the
Bankruptcy Court.
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As an alternative cause of action, Pinewood demanded that it be compensated for
the taking of its property without just compensation under provisions of the
Constitutions of the United States and the State of South Carolina.
On July 10, 2000, the United States District Court for the District of
Delaware issued an Order restraining DHEC and the State of South Carolina from
enforcing its anticipated closure of the Pinewood facility pursuant to the June
14, 2000 letter. On July 12, 2000 the United States District Court for the
District of Delaware issued an Order transferring the case to the United States
District Court for the District of South Carolina and ordering that the July 10,
2000 Order remain in full force and effect pending a ruling from the United
States District Court for the District of South Carolina on Pinewood's request
for a preliminary injunction against DHEC and the State of South Carolina.
On August 25, 2000, the United States District Court for the District
of South Carolina issued the following rulings:
1. Denied South Carolina's motion to dismiss Pinewood's claims upon
jurisdictional grounds and certified the issue for an immediate appeal to
the United States Court of Appeals for the Fourth Circuit (the
"Jurisdictional Ruling");
2. Held that the June 9, 2000 Emergency Order was subject to the automatic
stay provisions of Section 362 of the Bankruptcy Code (the "Automatic Stay
Ruling");
3. Denied Pinewood's Motion for a preliminary injunction with respect to the
June 14, 2000 DHEC letter; and
4. Granted a stay of enforcement of the June 14, 2000 DHEC letter for a period
of 30 days during which Pinewood may file a petition for injunction pending
appeal in the United States Court of Appeals for the Fourth Circuit.
The State of South Carolina appealed the Jurisdictional Ruling and the
Automatic Stay Ruling to the United States Court of Appeals for the Fourth
Circuit. Pinewood appealed the District Court's ruling denying Pinewood's motion
for a preliminary injunction, has petitioned the Appeals Court for an injunction
pending the appeal, and has filed a Motion with the Appeals Court asking for an
expedited appeal.
On September 22, 2000, The United States Court of Appeals for the
Fourth Circuit denied Pinewood's motion for an injunction pending the appeal and
granted Pinewood's motion to expedite the appeal.
FURTHER PROCEEDINGS BEFORE DHEC
On September 25, 2000 Pinewood filed with DHEC a request for a permit
modification increasing landfill capacity and concurrently filed a request for
temporary authorization to continue waste disposal at the facility pending a
DHEC decision on the requested permit modifications.
At midnight on September 25, 2000, Pinewood suspended waste disposal in
the landfill pending action by DHEC and/or court decision allowing continued
waste disposal. On September 26, 2000, DHEC denied Pinewood's request for
temporary authorization for continued waste disposal at its Pinewood landfill.
LAIDLAW INC. INDEMNIFICATION
The Stock Purchase Agreement (the "Stock Purchase Agreement") among
Rollins Environmental Services, Inc. (now Safety-Kleen Corp.) and Laidlaw Inc.
and Laidlaw Transportation, Inc. ("LTI") dated February 6, 1997, provides that
Laidlaw Inc. shall maintain, solely at its expense, until the tenth anniversary
of the Closing Date (May 15, 1997), the financial mechanism that as may be
permitted by the relevant environmental laws to provide the required financial
assurance for potential environmental cleanup and restoration at the Pinewood
facility. See also the "Laidlaw Inc. Relationships" discussion in Item 13 of
Part 2.
VILLE MERCIER FACILITY
On May 10, 1991, representatives of the Ministry of the Environment of
the Province of Quebec conducted a search on property of a subsidiary of the
Company in Ville Mercier pursuant to a search warrant issued on the basis of
allegations that the subsidiary, prior to its acquisition, had during the years
1973, 1974 and 1975, illegally
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buried between 500 and 600 barrels of industrial waste in the ground on the
site. As a result of that search and the finding of barrels of industrial waste,
the subsidiary immediately undertook an investigation and submitted a
restoration plan to the Ministry of the Environment and in fact, commenced the
restoration activity. On May 24, 1991, the Minister of the Environment issued an
order under the provisions of the Environment Quality Act, ordering the
subsidiary to collect all the contaminants dumped, emitted, issued or discharged
into the environment. This order was issued without notice to the subsidiary at
a time when the subsidiary was already carrying out its restoration plan. The
subsidiary filed a motion in the Superior Court in the Province of Quebec and
the District of Montreal seeking an order to, among other things, cancel and
annul the order on the basis, that the burial of the barrels between 1973 and
1975 did not constitute an actual and current discharge, emission or deposit of
contaminants into the environment justifying the 1991 order under the law and
that the order did not identify the contaminants that the subsidiary was
required to remove, their location, or the time in which this should be
accomplished. Following implementation of the restoration plan, these
proceedings were suspended. Management believes that the restoration plan
submitted by the subsidiary as amended after consultation with the Ministry of
the Environment has been implemented and that any contamination resulting from
the barrels of industrial waste has been remediated.
Unrelated to the barrels of industrial waste referred to above, in a
letter dated June 19, 1992, the Quebec Ministry of the Environment requested the
subsidiary to advise the Ministry, within 30 days of receipt of the request, of
its intentions concerning the carrying out of certain characterization studies
of soil and water and restoration work with respect to certain areas of the
Ville Mercier property. In 1968, the Quebec government had issued two permits to
an unrelated company to dump organic liquids into lagoons on the Ville Mercier
property. By 1971, groundwater contamination had been identified. In 1972, the
Quebec government provided an alternate water supply to Ville Mercier. In the
same year, the permit authorizing the dumping of liquids was terminated and a
permit to operate an organic liquids incinerator on the property was granted to
an entity which was indirectly acquired by the Company in 1989. In 1973, the
Quebec government contracted with the incinerator operator to incinerate the
pumpable liquids in the lagoons. In 1980, the incinerator operator removed,
solidified and disposed of the non-pumpable material from the lagoons in a
secure cell and completed the closure of the lagoons at its own expense. In
1983, the Quebec government constructed and continues to operate a groundwater
pumping and treatment facility near the lagoons. The Company believes that its
subsidiary is not the party responsible for the lagoon and groundwater
contamination. By letter dated July 17, 1992, the subsidiary responded by first
denying any responsibility for the decontamination and restoration of its site
and secondly, by proposing that the Quebec Ministry of the Environment and the
subsidiary form a working group to find the most appropriate technical solution
to the contamination problem. On November 16 and 25, 1992, the Minister of the
Environment, pursuant to the provisions of the Environment Quality Act, served
the subsidiary with two Notices alleging that the subsidiary was responsible for
the presence of contaminants on its property and that of its neighbor and
ordering the subsidiary to take all the necessary measures to excavate,
eliminate or treat all of the contaminated soils and residues located within the
areas defined in the Notices and to recover and treat all of the contaminated
waters resulting from the aforementioned measures. The Notices further provided
that failing the receipt by the Department of Environment, within ten days of
the date of service of the Notices, of an undertaking by the subsidiary to carry
out the aforementioned measures, the Minister of the Environment would proceed
to do the work and would claim from the subsidiary the direct and indirect costs
relating to such work.
By letter dated November 25, 1992, the subsidiary responded by
reiterating its position that it had no responsibility for the contamination
associated with the discharges of wastes into the former Mercier Lagoons between
1968 and 1972 and proposing to submit the question of responsibility to the
Courts for determination as expeditiously as possible through the cooperation of
the parties' respective attorneys. Concurrently, the subsidiary undertook to
prepare and submit to the Department of the Environment a technical plan to
address the contamination on the site identified in the notices. This plan was
developed with the assistance of highly qualified experts from Quebec and
elsewhere in North America drawing upon all available information and was
submitted to the Minister of the Environment. By letter dated December 7, 1992,
the subsidiary submitted to the Minister of the Environment a document entitled
"Detailed Scope of Work for the Groundwater Contamination Panel Ville Mercier,
Quebec". This proposal by the subsidiary was refused by the Minister of the
Environment by letter dated December 22, 1992 on the grounds that it did not
meet the terms of the above mentioned Notices issued against the subsidiary. The
Minister published a request for tenders for the preparation of plans and
specifications with respect to the excavation and storage of the contaminated
soils. The Minister also retained six independent experts to review the
subsidiary's technical plan. This panel of experts subsequently submitted to the
Minister of the Environment its recommended methodology to address the
contamination on the site.
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The Minister of the Environment convened a public hearing which
reviewed the report submitted to the Minister by the experts he retained and
recommended to the Minister what remedial plan should be instituted to address
the contamination on the site.
The subsidiary filed legal proceedings seeking a court determination of
the liability associated with the contamination of the former Mercier lagoons.
The subsidiary asserted that it has no responsibility for the contamination on
the site. The Minister claimed that the subsidiary is responsible for the
contamination and should reimburse the Province of Quebec for costs incurred to
the present in the amount of CDN$17.4 million and should be responsible for
future remediation costs.
On or about February 9 and March 12, 1999, Ville Mercier and three
neighboring municipalities filed separate legal proceedings against the
subsidiary and certain related companies together with certain former officers
and directors, as well as against the Government of Quebec. The lawsuits assert
that the defendants are jointly and severally responsible for the contamination
of groundwater in the region, which Plaintiffs claim was caused by contamination
from the former Ville Mercier lagoons, and which they claim caused each
municipality to incur additional costs to supply drinking water for their
citizens since the 1970's and early 1980's. The four municipalities claim a
total of CDN$1,595,000 as damages for additional costs to obtain drinking water
supplies and seek an injunctive order to obligate the defendants to remediate
the groundwater in the region. The subsidiary will continue to assert that it
has no responsibility for the ground water contamination in the region.
Pursuant to the Stock Purchase Agreement Laidlaw Inc. and LTI agreed to
indemnify and hold harmless the Company and its subsidiaries for any damages
resulting from the remediation of contaminated soils and water arising from the
former lagoon sites and the operation of the incinerator at Mercier, Quebec. The
indemnification is only to the extent that the aggregate cash expenditure with
respect to such damages exceeds in the aggregate (i) $1 million during such year
and (ii) since May 15, 1997, an amount equal to the product of $1 million times
the number of years that have elapsed since May 15, 1997; however, there shall
be no indemnification for any cash expenditures incurred more than six years
after May 15, 1997. As of August 31, 2000, the Company has not incurred expenses
for which it would be entitled to indemnification under the Stock Purchase
Agreement. See also the "Laidlaw Inc. Relationships" discussion in Item 13 of
Part 2.
MARINE SHALE PROCESSORS
Beginning in the mid-1980's and continuing until July 1996, Marine
Shale Processors, Inc., located in Amelia, Louisiana ("Marine Shale"), operated
a kiln which incinerated waste producing a vitrified aggregate as a by-product.
Marine Shale contended that its operation recycled waste into a useful product,
i.e. vitrified aggregate, and therefore, was exempt from RCRA regulation and
permitting requirements as a Hazardous Waste Incinerator. U.S. EPA contended
that Marine Shale was a sham recycler subject to the regulation and permitting
requirements as a Hazardous Waste Incinerator under RCRA, that its vitrified
aggregate by product was a hazardous waste, and that Marine Shale's continued
operation without required permits was illegal. Litigation between EPA and
Marine Shale with respect to this issue began in 1990 and continued until July
1996 when Marine Shale was ordered to shut down its operations by U.S. Fifth
Circuit Court of Appeals.
During the course of its operation, Marine Shale produced thousands of
tons of aggregate, some of which was sold as fill material at various locations
in the vicinity of Amelia, Louisiana, but most of which is stockpiled on the
premises of the Marine Shale Facility. Moreover, as a result of past operations,
soil and groundwater contamination exists on the Marine Shale site.
In November 1996, an option to buy Marine Shale was obtained by GTX,
Inc. with the intent to operate the facility as a permitted Hazardous Waste
Incinerator. Subsequently, Marine Shale, GTX and U.S. EPA reached a settlement,
including a required cleanup of the aggregate and the facility, and the
Louisiana Department of Environmental Quality issued a draft permit to GTX for
operation of the Marine Shale facility as a RCRA permitted Hazardous Waste
Incinerator. Appeals were taken by opposition parties and in October 1999, a
Louisiana State Court Judge ruled that the draft permit was improperly issued.
GTX appealed this decision and in October 2000, the Appeals Court reversed the
lower court and affirmed the permit issuance. It is uncertain whether GTX will
begin operation of the Marine Shale facility.
The Company was one of the largest customers of Marine Shale. In the
event Marine Shale does not operate, the potential exists for an EPA action
requiring cleanup of the Marine Shale site and the stockpiled aggregate under
CERCLA. In this event, Safety-Kleen Corp. would be exposed to potential
financial liability for remediation costs as a potentially responsible party
under CERCLA.
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The Stock Purchase Agreement provides that Laidlaw Inc. and LTI shall
indemnify Safety-Kleen Corp. for environmental liability arising with respect to
the treatment of waste at the Marine Shale facility. The indemnification is only
to the extent that the aggregate case expenditure with respect to such damages
exceeds in the aggregate (i) $1 million during such year; and (ii) since May 15,
1997 an amount equal to the product of $1 million times the number of years that
have elapsed since May 15, 1997; however, there shall be no indemnification for
any cash expenditures by Safety-Kleen Corp. incurred more than six years after
May 15, 1997. As of August 31, 2000, the Company has not incurred expenses for
which it would be entitled to indemnification under the Stock Purchase
Agreement. See also the "Laidlaw Inc. Relationships" discussion in Item 13 of
Part 2.
LAMBTON HAZARDOUS WASTE LANDFILL, ONTARIO, CANADA
On September 3, 1999, The Company's Lambton hazardous waste landfill
facility in Ontario, Canada, discovered an upwelling of water and natural gas in
a disposal cell designated as Sub-cell 3. While in the course of trying to
determine the source and cause of the upwelling, the Company informed the
Ontario Ministry of Environment and Energy ("MOE") of the situation. On November
2, 1999, MOE issued a Field Order finding that the upward migration of water and
methane gas onto the landfill cell floor necessitated that the Company not
utilize the newly constructed Sub-cell 3 for waste disposal. On December 14,
1999 the MOE issued a second Field Order requiring that Sub-cell 4, another
newly constructed cell, not be utilized for waste disposal after MOE officials
observed what they believed to be significant gas evolution from the bottom of
the cell. On December 21, 1999 independent technical experts and Company
professionals presented to MOE testimony and a report addressing MOE concerns.
Following the hearing and testimony, the MOE issued a third Field Order on
December 24, 1999 revoking the two previous orders and allowing the utilization
of Sub-cell 4 for waste disposal under new conditions which included that; (1)
no waste in Sub-cell 4 was to be placed below an elevation of 182 meters above
mean sea level and (2) with respect to Sub-cell 3 the Company was to provide a
report for the approval of the Director of the MOE which would provide the plan
for identifying potential areas of gas and water venting, the proposed measures
to remediate all areas identified and further steps to protect the integrity of
the sub-cell. In accordance with the third Field Order, the Company has
submitted a report to the MOE in February 2000 outlining its plan for present
and future site activities. Negotiations are ongoing regarding certain revisions
requested by the MOE to the Company's submittal.
RAYGAR ENVIRONMENTAL SYSTEMS INTERNATIONAL LITIGATION
On August 7, 2000, RayGar Environmental Systems International, Inc.
filed its First Amended Complaint in the United States District for the Southern
District of Mississippi, Hattiesburg Division, Civil Action No. 2:9CV376PG,
against Laidlaw, Inc., Laidlaw Investments, Ltd., LTI, Laidlaw Environmental
Services, Inc. (now Safety-Kleen Corp.), LES, Inc. (a wholly owned subsidiary of
the Company now known as Safety-Kleen Services, Inc.), Laidlaw Environmental
Services (US), Inc. (a wholly owned subsidiary of the Company now known as
Safety-Kleen (US), Inc.), Laidlaw OSCO Holdings, Inc. (a wholly owned subsidiary
of the Company now known as Safety-Kleen OSCO Holdings, Inc.), Laidlaw
International, and Safety-Kleen Corp. alleging that (1) all the Defendants
except Safety-Kleen Corp. engaged in a monopoly, attempted monopoly,
combination, or conspiracy to monopolize in violation of the Sherman Act,
Section 2 of Title 15 of the United States Code, (2) the defendants willfully
and recklessly disregarded their duties and obligations under an agreement
between RayGar and Laidlaw OSCO Holdings, Inc. (now Safety-Kleen OSCO Holdings,
Inc.), (3) the defendants tortiously breached their contractual agreements with
RayGar, (4) the defendants breached fiduciary duties owed to RayGar, (5) the
defendants breached the duty of good faith and fair dealing implied by law in
the execution and performance of agreements between the parties; (6) the
defendants breached duties of confidential relations owed to RayGar, (7) the
defendants unlawfully usurped RayGar's corporate opportunity, (8) the defendants
made negligent misrepresentations to RayGar, (9) the defendants made fraudulent
misrepresentations to RayGar, (10) the defendants engaged in anti-competitive
practices in violation of the laws of the United States and the laws of
Mississippi, (11) the defendants and others conspired together in restraint of
trading against RayGar, (12) the defendants tortiously and maliciously
interfered with contractual relations between RayGar and its contracting
parties, (13) the defendants tortiously and maliciously interfered with the
prospective contractual relationships between RayGar and its contracting
parties, (14) the defendants tortiously and maliciously interfered with RayGar's
prospective business relationships, (15) the defendants committed fraud, (16)
the defendants abused their superior economic bargaining and political power and
influence to the detriment of RayGar, and (17) the defendants' conduct was
willful, reckless, in bad faith, and in such gross, careless, indifferent, and
reckless disregard of the right of RayGar to entitle RayGar to an award of
punitive damages. RayGar seeks all of the damages it has allegedly sustained as
a result of the defendants' alleged violation of the Sherman Act, a trebling of
all damages pursuant to Section 15 of Title 15 of the United States Code,
interest, costs, attorney fees, and such other relief as the Court deems
appropriate, but in an amount of not less than $450 million in actual
compensatory damages and not less than $900 million for punitive damages.
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The dispute arises from an unsuccessful effort pursuant to an agreement
between RayGar and Safety-Kleen OSCO Holdings, Inc. to obtain RCRA and related
permits for the operation of a wastewater treatment facility in Pascagoula,
Mississippi. This lawsuit is in the very early states of discovery. Laidlaw
Inc., Laidlaw Investments, Ltd., LTI and Laidlaw International have filed a
motion to dismiss the Compliant for lack of personal jurisdiction and for
failure to state a claim upon which relief can be granted, and the motion is
currently pending. The action has not proceeded against the Company and its
subsidiaries due to the filing of their Chapter 11 bankruptcy petitions on June
9, 2000.
CITY OF BREMERTON TAX CLAIM
In the case initiated on September 22, 1997 and captioned CITY OF
BREMERTON V. LAIDLAW ENVIRONMENTAL SERVICES (GS), INC. (SUPERIOR COURT OF
WASHINGTON - KITSAP COUNTY CASE NUMBER 972027308), the Company's subsidiary was
sued by the City of Bremerton (the "City"), a Washington municipal corporation.
The City seeks in excess of $5 million in business and occupational taxes,
interest and penalties for three (3) projects completed at the Puget Sound Naval
Base during the period May 1993 through May 1995. The Company has consistently
taken the position that the imposition of a tax by the City in excess of 20% of
gross income on projects completed within the City's jurisdiction was
inappropriate and contrary to Washington statutory requirements. The Company's
position is that, even if the tax is constitutional, the rate cannot exceed .2%
of gross income. At August 31, 2000, the City had not sought relief from the
Bankruptcy Court to lift the automatic stay in order to proceed with this
action.
ALLWASTE/RUBICON SPILL
The Company (then known as Rollins Environmental Services, Inc.)
contracted with Rubicon, Inc. for removal of waste from a Rubicon Inc. site and
disposal at the Company's Deer Park, Texas incineration facility. The Company
subcontracted the waste hauling to Allwaste Environmental Services of Texas,
Inc. ("Allwaste") after the Company had processed the material. On March 26,
1997, an accident occurred on I-10 near Lake Charles Louisiana during Allwaste's
transportation of the Rubicon material. The accident resulted in the spillage of
a significant quantity of the waste material onto the roadway. Allwaste contends
that it was the processing of the cargo that caused the accident. A large number
of people subsequently claimed to have suffered injury as a result of exposure
to the material. A number of lawsuits have been filed in connection with this
incident.
A subsidiary of the Company has only been named as a direct defendant
in a single lawsuit filed by persons claiming to have been injured in connection
with the spill. This lawsuit is the matter of DESHAN JOSEPH, ET AL V. ALLWASTE
ENVIRONMENTAL SERVICES, ET AL., Civil Action No. 97-21195, in the Civil District
Court for the Parish of Orleans, State of Louisiana. No specific monetary demand
was ever made by the JOSEPH plaintiffs.
In April of 1998, the Company was named as a defendant in litigation filed
in Texas by Allwaste, Reliance National Indemnity Company and National Union
Fire Insurance Company. Claims were also made by Allwaste against Rubicon in
that litigation. This Texas litigation is captioned as ALLWASTE ENVIRONMENTAL
SERVICES OF TEXAS, INC., ET AL V. LAIDLAW ENVIRONMENTAL SERVICES, INC. F/K/A/
ROLLINS ENVIRONMENTAL SERVICES, INC., ET AL, No. H98-1270, United States
District Court for the Southern District of Texas, Houston Division.
In that suit, plaintiffs assert that they are owed complete
indemnification for any damages that they must pay to anyone as a result of the
spill, plus costs and attorney's fees incurred in defending such claims. Rubicon
has made a similar demand. Plaintiffs in the Texas litigation have also asserted
an entitlement to recover all costs incurred in responding to and cleaning up
the spill allegedly in excess of $5 million.
In 1999, the litigation was stayed as a result of Allwaste's filing for
bankruptcy. After Allwaste's plan of reorganization was confirmed, Allwaste
moved to have the stay lifted. The Company filed an opposition to the lifting of
the stay as a result of the Company's bankruptcy filing and, through the present
time, the district court has not chosen to rule that the stay should be lifted.
Also, Allwaste filed a motion in the Company's Chapter 11 Bankruptcy proceeding
to have the automatic stay lifted. This motion was denied.
FRANKLINVILLE, N.J. SITE REMEDIATION
This lawsuit, initiated in 1997 and captioned CHARLES T. NEVINS ET AL.
V. PROGRESSIVES FUEL OIL ET AL., INCLUDING SAFETY-KLEEN (BRIDGEPORT), INC.
SUPERIOR COURT OF NEW JERSEY, CHANCERY DIVISION / GENERAL EQUITY: C-107-91.,
involves claims that the Company's subsidiary, along with other defendants, is
responsible for the cost of remediating a former storage tank farm in
Franklinville, NJ found to have soil and groundwater contamination. The lawsuit
alleges that the subsidiary leased tanks for storage of waste oils at the site
and seeks unspecified
Page 15
<PAGE>
compensatory damages to assess and remediate contamination, including PCB
contamination, on the property. Plaintiffs' retained experts have estimated
potential cleanup costs to be $5,1million. However, Plaintiffs have indicated an
interest in having the Company provide in-kind hazardous waste cleanup and
disposal services in lieu of cash payments, at least in part. The Company's
experts have submitted a remediation plan with a total cost of approximately
$600,000. At August 31, 2000, the plaintiff had not sought relief from the
Bankruptcy Court to lift the automatic stay and proceed with its claim.
MCDONNELL DOUGLAS CORPORATION INDEMNIFICATION DEMAND
On October 5, 1999, a Company customer, McDonnell Douglas Corporation
("MDC"), brought suit against the Company demanding indemnity related to
liabilities it incurred at the Operating Industries, Inc. Superfund Site (the
"OII Site") and the Casmalia Superfund Site (the "Casmalia Site"). Allegedly,
the predecessor to a Company subsidiary transported certain MDC waste to the OII
Site and to the Casmalia Site for disposal. MDC is one of the largest generator
potentially responsible parties ("PRP") and a party to a series of partial
consent decrees with the EPA. MDC claims that the Company is liable for the
costs MDC has paid pursuant to those consent decrees and for amounts it may be
obligated to pay with respect to the final remediation of the OII Site. On
September 30, 1991, MDC made a demand of $11 million in costs it alleged it had
incurred and would incur at the OII Site. This lawsuit captioned: MCDONNELL
DOUGLAS CORPORATION V. OIL PROCESS CO. ET AL. United States District Court for
the Central District of California, Case Number 99-10159WMB. MDC and the Company
have stipulated to the lifting of the bankruptcy stay and discovery will ensue
in the next few months.
BAYOU SORREL LITIGATION
In October of 1999, a lawsuit was filed in state court in Lafayette
Parish, Louisiana, under the caption of BRYSON ADAMS, ET AL. V. ENVIRONMENTAL
PURIFICATION ADVANCEMENT CORPORATION, ET AL., Civil Action No. 994879, Fifteenth
Judicial District Court, Parish of Lafayette, State of Louisiana. In this
litigation, plaintiffs are suing for alleged personal injury and/or property
damage arising out of the operation of certain waste disposal facilities near
Bayou Sorrel, Louisiana. There are presently in excess of three hundred
plaintiffs in the ADAMS case.
A Company subsidiary is named as the owner and operator of a hazardous
waste injection well in Bayou Sorrel, Louisiana. A different Company subsidiary
is also involved as a defendant for its alleged role as a person who generated
and arranged for disposal or treatment at certain of the disposal facilities in
question. It is alleged that the Company was the operator of the injection well
in question from 1974 through the present. There is the potential that the
injection well's customers, who are also defendants, may assert a claim for
indemnification against the Company.
The action was removed to the United States District Court for the
Western District of Louisiana, where it bears the caption BRYSON ADAMS, ET AL.
V. ENVIRONMENTAL PURIFICATION ADVANCEMENT CORPORATION, ET AL., Civil Action No.
99-1998, U.S.D.C., Western District of Louisiana, Lafayette-Opelousas Division.
No substantive discovery commenced prior to the Company's filing of its Chapter
11 bankruptcy petition.
FRIENDS OF THE EARTH LITIGATION
FRIENDS OF THE EARTH INC. AND CITIZENS LOCAL ENVIRONMENTAL ACTION
NETWORK, INC. V. LAIDLAW ENVIRONMENTAL SERVICES (TOC), INC. Federal District
Court, District of South Carolina, Federal Court Civil Action No. 3:92-1697-17.
On July 2, 1992 the Plaintiff groups filed a citizen suit under Clean Water Act,
Section 1251 et seq. of Title 33 of the United States Code, seeking injunctive
relief, declaratory judgment, civil penalties, costs, and attorney and witness
fees, alleging various violations of the facility's NPDES permit. On January 22,
1997, the District court issued an order imposing a civil penalty upon the
facility in the amount of $405,800. The facility appealed the decision to the
Fourth Circuit Court of Appeals contending that the District Court lacked
jurisdiction due to the existence of a state court proceeding concerning the
same matter. The plaintiffs also appealed contending that the penalty imposed is
insufficient because the economic benefit of noncompliance was not adequately
factored into the penalty. In July 1998, the Court of Appeals reversed the
District Court and vacated the District Court judgment upon the grounds that the
plaintiffs claims were moot inasmuch as the sole remedy available (payment of
penalties to the U.S. Treasury) would not redress their alleged injuries. In the
spring of 1999, the United States Supreme Court granted a Writ of Certiorari and
oral arguments were heard in October 1999. The Supreme Court reversed the
decision of the Court of Appeals and remanded the case for further proceedings
in the District Court. The Plaintiffs are seeking attorneys fees and costs in
excess of $2 million in addition to any penalty ultimately assessed by the
court. At August 31, 2000, the plaintiffs had not sought relief from the
Bankruptcy Court to lift the automatic stay and proceed with their claim.
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<PAGE>
SEMNANI ROYALTY DISPUTE
Plaintiff filed suit captioned KOSHROW B. SEMNANI, D/B/A S.K. HART
ENGINEERING V. UNITED STATES POLLUTION CONTROL INC. AND USPCI, INC. United
States District Court, District of Utah, Central Division, No. 2:95 CV 638S on
July 15, 1995, asserting breach of contract and breach of the implied covenant
of good faith and fair dealing in regards to a 1981 written agreement and
various amendments thereto between the plaintiff and certain Company
subsidiaries. Plaintiff alleges that pursuant to this agreement, plaintiff was
to sell certain property to a Company subsidiary and provide services regarding
permitting and development of the Company's Grassy Mountain facility and in
consideration for which plaintiff was to receive royalties based upon gross
revenues. Plaintiff asserts that the Defendant breached the agreement and claims
resulting damages in excess of $10 million. The Plaintiff sought relief from the
Bankruptcy Court to lift the automatic stay and the motion was denied.
BOOTH OIL SUPERFUND SITE
An action captioned BOOTH OIL SITE ADMINISTRATIVE GROUP V. SAFETY-KLEEN
CORP. ET AL. United States District Court - Western District of New York Case
No.: 98-CV-0696(A)(F) was commenced against a Company subsidiary on December 9,
1998, by the Booth Oil PRP group, demanding contribution under CERCLA in excess
of $8 million for costs incurred in remediating the Booth Oil Superfund Site.
The complaint alleges that the subsidiary is the successor-in-interest to the
owner/operator of the site and is therefore liable for the majority of the
clean-up and response costs. The Company disputes the fact that it has any
liability associated with the site. A co-defendant, who is also a former officer
of the Company, has demanded indemnification for any liability that he may incur
as a result of this lawsuit. At August 31, 2000, the plaintiff had not sought
relief from the Bankruptcy Court to lift the automatic stay and proceed with its
claim.
HUDSON COUNTY IMPROVEMENT AUTHORITY LITIGATION
In July 1999, Hudson County Improvement Authority ("HCIA") filed suit
in the Superior Court, Hudson County, New Jersey against SK Services East, L.C.
(an indirect wholly owned Company subsidiary), Safety-Kleen Corp., American Home
Assurance Company, and Hankensack Meadowlands Development Commission. An Amended
Complaint was filed on August 18, 1999, in which HCIA sought damages and
injunctive relief evicting SK Services East from a 175 acre site in Kearny, NJ
owned by HCIA. SK Services East had been using the site pursuant to an Agreement
and Lease dated as of February 2, 1997 for the processing and disposal of
processed dredge material. HCIA alleged that certain conditions precedent to SK
Services East's right to continue operations at the site had not occurred, that
as a result the Agreement and Lease had automatically terminated, that SK
Services East owed HCIA some $11 million in back rent, and that SK Services East
was obligated to finish the remediation of the site and its preparation for
development as a commercial property. In January 2000, the Court granted HCIA
summary judgment on its motion to declare the Agreement and Lease null and void
as a result of the failure of the conditions precedent. This ruling effectively
terminated the relationship between SK Services East and HCIA leaving only the
issue of the determination of the rights and responsibilities of the parties in
the unwinding of the relationship. In May 2000, HCIA filed for summary judgment
seeking an order declaring that SK Services East is obligated to complete all
measures required under the Remedial Action Work Plan for the site. SK Services
East filed a brief opposing the motion. In June 2000, HCIA withdrew its pending
motion, with the Court's understanding that the motion could be re-filed if the
automatic stay in connection with the Company's Chapter 11 bankruptcy protection
is lifted. As of August 31, 2000, HCIA has not sought relief from the Bankruptcy
Court to lift the automatic stay.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock (the "Common Stock") was traded on the New
York Stock Exchange under the ticker symbol SK until it was suspended from
trading in June 2000. The Common Stock was thereafter delisted from the New York
Stock Exchange on July 28, 2000. As of June 15, 2000, the Common Stock began
trading on the OTC Bulletin Board under the ticker symbol SKLNQ. The approximate
number of record holders of Common Stock as of November 20, 2000 was 4,870. The
following table shows the high and low sales prices for the Common Stock for
each full quarterly period within the two most recent fiscal years that the
shares were traded on the New York Stock Exchange, and the high and low bid
prices for the Common Stock for each quarterly period within the two most recent
fiscal years that the shares were traded on the OTC Bulletin Board.
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<PAGE>
FISCAL YEAR ENDED AUGUST 31, 2000 HIGH LOW
Fourth Quarter $0.75 $.060
Third Quarter $5.00 $.5625
Second Quarter $12.50 $4.875
First Quarter $14.125 $10.625
FISCAL YEAR ENDED AUGUST 31, 1999
Fourth Quarter $19.375 $11.5625
Third Quarter $17.375 $11.375
Second Quarter $16.625 $11.8125
First Quarter $14.50 $7.50
STOCK PRICES ARE ADJUSTED TO REFLECT A 1-FOR-4 REVERSE SPLIT EFFECTIVE DECEMBER
1, 1998.
The Company has not paid dividends during the reported periods and does not
intend to pay dividends in the foreseeable future.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information with respect to the
executive officers of the Company:
Name Age Position Held
David E. Thomas, Jr. 43 Chief Executive Officer and Chairman of the Board
Grover C. Wrenn 58 President and Chief Operating Officer
Larry W. Singleton 50 Senior Vice President, Finance and Chief
Financial Officer
Henry H. Taylor 56 Vice President, General Counsel and Secretary
David M. Sprinkle 47 President Chemical Services Division
Roy Dean Bullinger 52 Divisional President of Branch Sales and Service
David E. Thomas was elected Chairman of the Board on May 4, 2000 and Chief
Executive Officer on May 22, 2000. Mr. Thomas had been acting as Chief Executive
Officer since March 6, 2000. Prior to that time, Mr. Thomas was the Senior
Managing Director and the Head of the Investment Banking Group of Raymond James
& Associates, Inc., an investment banking firm, since July 1996; from 1991 until
July 1996, he was a Managing Director of Raymond James. Mr. Thomas also is a
director of Reynolds, Smith and Hills, Inc., an engineering company. Mr. Thomas
has been a director of the Company since June 1997. Mr. Thomas was a member of
the Human Resources and Compensation Committee from June 24, 1997 until August
24, 2000. Mr. Thomas was the Chairman of the Executive Committee from February
2000 until May 2000, when the Committee was dissolved and has served as Chairman
of the Special Committee (Investigation) since its formation in March 2000.
Grover C. Wrenn was elected President and Chief Operating Officer on May
22, 2000. He had been acting as President and Chief Operating Officer since
March 6, 2000. Prior to that time, Mr. Wrenn was President and Chief Executive
Officer of Accent Health, Inc., a health care information and media company,
since June 1996; from April 1995 through December 1996 Mr. Wrenn was Chief
Executive Officer of Strategic Diagnostics Inc. (listed on NASDAQ: SDIX)
formerly EnSys Environmental Products, Inc.; and from 1991 through March 1995 he
was President and Chief Executive Officer of Applied Bioscience International.
Mr. Wrenn is a director of Strategic Diagnostics, Inc. and a Trustee of Eckerd
College. Mr. Wrenn has been a director of the Company since June 1997. Mr. Wrenn
was a member of the Special Committee relating to the sale of the Company (the
"Special Committee (Sale)")from September 1999 until February 2000 when the
Committee was dissolved, and is currently the Vice Chairman of the Special
Committee (Investigation).
Larry W. Singleton, a Florida C.P.A., became Senior Vice President and
Chief Financial Officer on August
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17, 2000. Mr. Singleton is a restructuring advisor who has served in various
management and consulting roles to troubled companies during the last sixteen
years. Since February 2000, Mr. Singleton has served as an investment committee
member to Revitalizacni Agentura, a.s., a subsidiary of the Czech Republic's
national bank, formed to assist the Czech government in restructuring numerous
industrial companies. Since May 1998, Mr. Singleton has been a consultant to
minority shareholders of a privately owned diversified agribusiness and real
estate company. In 1998 and 2000, Mr. Singleton served as an arbitrator in
litigation involving contract disputes. From February 1999 to July 2000, Mr.
Singleton served as the Executive Vice President of Gulf States Steel, Inc. of
Alabama, a fully integrated steel mill where he assisted with Chapter 11
reorganization efforts, including arranging pre-filing debtor-in-possession
financing and developing various business plans. During 1998, Mr. Singleton
served as a member of the Board of Directors of Alliance Entertainment Corp., a
wholesale distributor of pre-recorded music, where he joined the Board after
Chapter 11 filing and assisted with reorganization efforts. From 1996 through
1998, Mr. Singleton served as Chief Executive Officer, President and Treasurer
of New Energy Corporation of Indiana, an ethanol production facility where he
assisted with the restructuring of the company without a bankruptcy filing. From
1995 through 1996, Mr. Singleton served as a consultant to Apollo Management,
L.P., where he assisted in the financial evaluation and due diligence efforts in
connection with the proposed acquisition of a European based multinational
security services company. During 1995, Mr. Singleton served as a consultant and
acting Chief Financial Officer of Wellstream Company, L.P., a manufacturer of
flexible pipe for the oil and gas industry where he assisted with the evaluation
and ultimate sale of the company. From 1992 through 1995, Mr. Singleton served
as a member of the Board of Directors, and previously, as Chief Financial
Officer, of Alert Centre, Inc., a security services company where he assisted
with Chapter 11 reorganization efforts.
Henry H. Taylor became Vice President, General Counsel and Secretary of
the Company on May 15, 1997. He served as Vice President of Legal and Regulatory
Affairs and Secretary of Laidlaw Environmental Services, Inc. from September
1995 until May 1997.
David M. Sprinkle became President Chemical Services Division of the
Company in May 2000. Mr. Sprinkle has been employed by the Company or one of its
subsidiaries for more than five years. Since August 1, 1995, prior to his
promotion to President Chemical Services Division, he served in various
capacities including, as Senior Vice President of Operations, Senior Vice
President of the Eastern Division, Senior Vice President of the Southern
Division, and Senior Vice President of Sales and Services.
Roy D. Bullinger became Divisional President of Branch Sales and Service of
the Company in May 2000. Mr. Bullinger has been employed by the Company or one
of its subsidiaries for more than five years. Prior to his promotion to
Divisional President of Branch Sales and Service, Mr. Bullinger held the
position of Senior Vice President Business Management.
<TABLE>
<CAPTION>
DIRECTORS OF THE REGISTRANT
CLASS I DIRECTORS - TERMS TO EXPIRE AT THE 2000 ANNUAL MEETING.
<S> <C> <C>
Name, Present Position(s) and Age Principal Occupation or Employment During the Last
Term With the Company Five Years, Directorships of Public Companies
----------------------------------------------- ------ -----------------------------------------------------
Henry B. Tippie 73 For more than five years, Chairman of the Board and
Director of the Company since 1982 President of Tippie Services, a management services
company; Since April 2000 Chairman of the Board of
Rollins Truck Leasing Corp., for more than five
years, Chairman of the Executive Committee and Vice
Chairman of the Board of Rollins Truck Leasing
Corp. Mr. Tippie also is a director of Matlack
Systems, Inc., Dover Downs Entertainment, Inc.,
RPC, Inc. and Rollins Inc. Mr. Tippie is the
Chairman of the Audit Committee. Mr. Tippie was a
member of Special Committee (Sale) from September
1999 until its dissolution in February 2000 and is
currently a Member of the Special Committee
(Investigation) of the Board.
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
James L. Wareham 62 President of AK Steel Corporation, a steel
Director of the Company since June 1997 manufacturing company, since March 1997; from 1993
until 1996, President of Wheeling-Pittsburgh Steel
Corporation. Mr. Wareham is a member of the Audit
Committee and the Human Resources and Compensation
Committee.
CLASS II DIRECTORS - TERMS TO EXPIRE AT THE 2001 ANNUAL MEETING.
Name, Present Position(s) and Age Principal Occupation or Employment During the Last
Term With the Company Five Years, Directorships of Public Companies
------------------------------------------------------ -----------------------------------------------------
John W. Rollins, Jr. 58 Since January 2000, President and Chief Executive
Director of the Company since 1982 Officer and a director of Rollins Truck Leasing
Corp., a truck leasing company; Previously,
President and Chief Operating Officer and a
director of Rollins Truck Leasing Corp for more
than five years; Chairman of the Board of Matlack
Systems, Inc. for more than five years. Mr.
Rollins was Senior Vice Chairman of the Board of
the Company from 1988 until May 15, 1997. Mr.
Rollins also is a director of Dover Downs
Entertainment, Inc. Mr. Rollins is the Chairman of
the Human Resources and Compensation Committee.
Robert W. Luba 58 President of Luba Financial Inc., an investment
Director of the Company since March 1999 banking company for more than five years. Mr. Luba
is also a Director of Luba Financial Inc., ATS
Automation Tooling Systems, Inc., Franco-Nevada
Mining Corporation, AIM Canada Group of Mutual
Funds, Greenfield B.V., MDS Inc., Diabetogent Inc.,
Vincor International Inc., and Working Ventures
Canadian Fund Inc. Mr. Luba is a member of the
Audit Committee and the Human Resources and
Compensation Committee. Mr. Luba was a member of
Special Committee (Sale) from September 1999 until
its dissolution in February 2000 and is currently
a Member of the Special Committee (Investigation)
of the Board.
Grover C. Wrenn See "Executive Officers of the Registrant" above.
Director of the Company since July 1997
CLASS III DIRECTORS - TERMS TO EXPIRE AT THE 2002 ANNUAL MEETING.
Name, Present Position(s) and Age Principal Occupation or Employment During the Last
Term With the Company Five Years, Directorships of Public Companies
------------------------------------------------------ -----------------------------------------------------
David E. Thomas See "Executive Officers of the Registrant" above.
Director of the Company since June 1997
Kenneth K. Chalmers 71 Since 1997 Mr. Chalmers has been a business Director
of the Company since May 4, 2000 consultant and
director of various organizations. From 1994 to 1998
he served as a Trustee of First Union Real Estate
Equity and Mortgage Investments, he is a member of
the Board of Directors of Learning Insights, Inc., a
publisher of interactive multimedia training and
reference products. From 1997 to 1998 he was a
director of
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<PAGE>
Profile Systems, LLC, a provider of wireless data
communications services. He is an Advisory Board
Member of Magnify, Inc. a provider of scalable data
mining solutions for managing, mining and analyzing
large amounts of data; and Advisor to Paradigm
Capital Ltd., an advisor to companies seeking growth
capital. Mr. Chalmers also serves as a Director of
Catholic Health Partners, a Chicago multi-hospital
group, and Chairman of its Finance/Audit Committee;
Vice Chairman and Member of the Executive Committee
of Catholic Heath Partners Foundation; and Member of
the Alumni Advisory Board of the Kellogg Graduate
School of Management, Northwestern University. Mr.
Chalmers is a member of the Special Committee
(Investigation) of the Board.
</TABLE>
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
The executive officers of the Company are also officers of one or more
of the subsidiaries of the Company. The Company and 73 of its subsidiaries
simultaneously filed for protection under Chapter 11 of the Bankruptcy Code as
more specifically described in Item 3 of Part I of this Report on Form 10-K. All
of the executive officers of the Company are or were, at the time of the
bankruptcy filings, officers of at least one of these subsidiaries with the
exception of Mr. Singleton who was not an officer of the Company or any of its
subsidiaries at the time of the bankruptcy filings.
From February 1999 until July 2000, Mr. Singleton was employed as
Executive Vice President of Gulf States Steel, Inc. of Alabama to assist in the
restructuring of Gulf States which filed for protection under Chapter 11 of the
Bankruptcy Code after arranging for debtor-in-possession financing.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934,
directors and executive officers of the Company and beneficial owners of 10% or
more of the Common Stock are required to file reports with the Securities and
Exchange Commission indicating their holdings of and transactions in the Common
Stock. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all such persons have complied with all such filing
requirements with respect to the fiscal year ended August 31, 2000, except that
the following former officers or directors, Paul Humphreys, Kenneth Winger,
Michael Bragagnolo, James R. Bullock, Peter Widdrington and John R. Grainger did
not provide the Company with a copy of a Form 5 for the year ended August 31,
2000 and made no representation to the Company that such filing was not
necessary.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid to the Company's
current and former Chief Executive Officer, each of its four other most highly
compensated executive officers who were serving as executive officers on August
31, 2000 and two additional individuals who were no longer serving as executive
officers on August 31, 2000 (the "Named Executive Officers") for services
rendered to the Company during the fiscal years ended August 31, 1998, 1999 and
2000.
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<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term
ANNUAL COMPENSATION COMPENSATION AWARDS
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (g) (j)
Securities Underlying All Other
NAME AND PRINCIPAL POSITION FY SALARY($) BONUS($) OPTIONS/SARS COMPENSATION($)(2)
---- --------- --------- ------------------ -----------------
David E. Thomas, Jr 2000 $ 400,286 0(3) 0 $ 171,250
Chairman of the Board, Chief
Executive Officer and Director (1) 1999 -- -- -- --
1998 -- -- -- --
Grover C. Wrenn 2000 $ 365,671 $ 50,000 0 $ 197,735
President and Chief Operating
Officer (1) 1999 -- -- -- --
1998 -- -- -- --
Henry H. Taylor 2000 $ 197,000 $ 50,000 0 $ 15,244
Vice President and General
Counsel and Secretary 1999 $ 191,654 $ 66,882 10,000 $ 19,277
1998 $ 173,750 $ 74,799 5,000 $ 14,558
David M. Sprinkle 2000 $ 248,115 $ 100,000 0 $ 19,455
President Chemical Services
Division 1999 -- -- -- --
1998 -- -- -- --
Roy Dean Bullinger 2000 $ 205,769 $ 110,000 0 $ 35,089
Divisional President of Branch
Sales and Service 1999 -- -- -- --
1998 -- -- -- --
Kenneth W. Winger 2000 $ 478,154 0 0 $ 29,739
Former President, Chief
Executive Officer and Director (4) 1999 $ 504,180 $ 293,033 62,500 $ 24,041
1998 $ 441,667 $ 325,000 62,500 $ 17,943
Michael J. Bragagnolo, 2000 $ 311,000 0 0 $ 20,255
Former Executive Vice
President and Chief Operating 1999 $ 302,590 $ 150,835 37,500 $ 22,132
Officer (5)
1998 $ 273,750 $ 168,356 37,500 $ 16,848
Paul R. Humphreys (4) 2000 $ 240,000 0 0 $ 17,092
Former Senior Vice President
of Finance and Chief Financial 1999 $ 252,500 $ 100,880 30,000 $ 20,714
Officer
1998 $ 220,333 $ 108,404 15,000 $ 14,602
(1) Prior to becoming employees, Messrs. Thomas and Wrenn were non-employee directors of the Company
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<PAGE>
and as such qualified for non-employee director compensation. During fiscal year 2000, Mr. Thomas earned $63,370
total cash compensation for service as a nonemployee director. This amount is included in his total other
compensation. During fiscal year 2000, Mr. Wrenn earned $87,000 total cash compensation for service as a
nonemployee director. This amount is included in his total other compensation. Messrs. Thomas' and Wrenn's
employment Agreements provide that the effective date of their employment with the Company was March 6, 2000.
(2) Amounts shown for 2000 consist of (i) Mr. Thomas: premiums on life and accidental death insurance policies of
$775, living expenses of $8,845, professional fees in the amount of $2,760, transportation expenses in the amount
of $95,225 and Club dues in the amount of $275; (ii) Mr. Wrenn: premiums on life and accidental death insurance
policies of $759, living expenses of $9,056, transportation expenses in the amount of $100,100 and Club dues in the
amount of $820; (iii) for Mr. Taylor: premiums on life and accidental death insurance policies of $762, Company
contributions to and other allocations under the 401(k) Plan of $3,712, an $9000 automobile allowance, and club
dues in the amount of $1,770; (iv) Mr. Sprinkle: premiums on life and accidental death insurance policies of $964,
Company contributions to and other allocations under the 401(k) Plan of $7,649, an $9000 automobile allowance, and
club dues in the amount of $1,842; (v) Mr. Bullinger: premiums on life and accidental death insurance policies of
$793, Company contributions to and other allocations under the 401(k) Plan of $7,745, an $2077 automobile
allowance, relocation expenses of $23,674, and club dues in the amount of $800; (vi) for Mr. Winger: premiums on
life and accidental death insurance policies of $1,837, Company contribution to and other allocations under the
Safety-Kleen Corp. 401(k) Savings Plan (the "401(k) Plan") of $7,043, an $11,077 automobile allowance, club dues in
the amount of $480, and personal use of the Company airplane in the amount of $9302; (vii) for Mr. Bragagnolo:
premiums on life and accidental death insurance policies of $1203, Company contributions to and other allocations
under the 401(k) Plan of $7,649, a $10,380 automobile allowance, and club dues in the amount of $1,023; and (viii)
for Mr. Humphreys: premiums on life and accidental death insurance policies of $922, Company contributions to and
other allocations under the 401(k) Plan of $7,043, an $8,308 automobile allowance, and club dues in the amount of
$819.
Amounts shown for 1999 consist of (i) for Mr. Winger: premiums on life insurance policies of $1,935, Company
contribution to and other allocations under the Safety-Kleen Corp. 401(k) Savings Plan (the "401(k) Plan") of
$10,644 and an $11,462 automobile allowance; (ii) for Mr. Bragagnolo: premiums on life insurance policies of
$1,179, Company contributions to and other allocations under the 401(k) Plan of $11,039 and a $9,914 automobile
allowance; (iii) for Mr. Humphreys: premiums on life insurance policies of $984, Company contributions to and other
allocations under the 401(k) Plan of $11,134 and an $8,596 automobile allowance; and (iv) for Mr. Taylor: premiums
on life insurance policies of $747, Company contributions to and other allocations under the 401(k) Plan of $9,934
and an $8,596 automobile allowance.
(3) Mr. Thomas voluntarily waived his participation in the fiscal year 2000 bonus plan.
(4) Resigned as an executive officer in May 2000. The Company terminated employment of Messrs. Winger and Humphreys
on July 27, 2000.
(5) Resigned as an executive officer in May 2000. The Company terminated employment of Mr. Bragagnolo on July 27,
2000 which became effective on August 26, 2000.
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES(1)
<S> <C> <C>
(a) (d) (e)
Number of Securities Underlying ... Value of Unexercised In-the-Money
Unexercised Options/SARs at FY-End (#) Options/SARs at FY-End ($)
NAME ................................ EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
David E. Thomas, Jr. (2) ..................... 5000/10,000 0/0
Grover C. Wrenn (2) .......................... 5000/10,000 0/0
Henry H. Taylor .............................. 7,000/13,000 0/0
David M. Sprinkle ............................ 18,000/27,000 0/0
Roy D. Bullinger ............................. 9000/21,000 0/0
Kenneth W. Winger ............................ 75,000/112,500 0/0
Michael J. Bragagnolo ........................ 45,000/67,500 0/0
Paul R. Humphreys ............................ 21,000/39,000 0/0
</TABLE>
(1) There were no Option/SAR Grants in Fiscal Year 2000.
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<PAGE>
(2) The Options listed in column (d) above represent options issued to Messrs.
Thomas and Wrenn under the Director Stock Option Plan when they were
non-employee directors of the Company.
DEFINED BENEFIT PLANS
Effective as of October 14, 1997, the Company adopted a Supplemental
Executive Retirement Plan (the "SERP") for certain eligible employees. A SERP is
an unfunded plan which provides for benefit payments in addition to those
payable under a qualified retirement plan.
The following table shows the estimated annual benefits payable upon
retirement at normal retirement date under the SERP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
<TABLE>
FINAL AVERAGE PAY SERVICE YEARS
<S> <C> <C> <C> <C> <C>
15 20 25 30 35
$250,000 45,000 60,000 75,000 90,000 105,000
300,000 56,250 75,000 93,750 112,500 131,250
350,000 66,750 89,000 111,250 133,500 155,750
400,000 78,000 104,000 130,000 156,000 182,000
450,000 89,250 119,000 148,750 178,500 208,250
500,000 100,500 134,000 167,500 201,000 235,500
550,000 111,750 149,000 186,250 223,500 260,750
600,000 123,000 164,000 205,000 246,000 287,000
650,000 134,250 179,000 223,750 268,500 313,250
700,000 145,500 194,000 242,500 291,000 339,500
750,000 156,750 209,000 261,250 313,500 365,750
800,000 168,000 224,000 280,000 336,000 392,000
850,000 179,250 239,000 298,750 358,500 418,250
900,000 190,500 254,000 317,500 381,000 445,500
950,000 201,750 269,000 336,250 403,500 470,750
1,000,000 213,000 284,000 355,000 426,000 497,000
</TABLE>
For the Company's current executive officers, the compensation shown in
the columns labeled "Salary" and "Bonus" of the Summary Compensation Table is
covered by the SERP. As of August 31, 2000, Messrs. Taylor and Sprinkle had 5
years of credited service under the SERP and Mr. Bullinger had 2 years of
credited service under the SERP. Benefits under the SERP are computed based on a
straight-life annuity. The amounts in this table are subject to deduction for a
portion of Social Security benefits.
EMPLOYMENT CONTRACTS CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into an Employment Agreement with each of
Messrs. Thomas, Wrenn and Singleton.
The Employment Agreement with Mr. Thomas (the "Thomas Agreement")
provides that for the term of the Thomas Agreement (March 6, 2000 through March
6, 2002) he shall serve as the Chairman of the Board of Directors of the Company
and the Chief Executive Officer of the Company. During the term of the Thomas
Agreement, Mr. Thomas shall receive an annual base salary of $800,000 reduced by
the aggregate amount of compensation received from Raymond James & Associates,
Inc. attributable to services performed during the period subsequent to March 6,
2000. If Mr. Thomas is employed by the Company on the date a plan of
reorganization for the Company is consummated in connection with any Chapter 11
bankruptcy or similar proceeding or on the date of the consummation of the sale
of substantially all of the assets of the Company, then within fifteen days of
such consummation or sale, the Company shall pay to Mr. Thomas a bonus of
$1,500,000. Mr. Thomas is also eligible to receive discretionary bonuses as may
be determined by the Human Resources and Compensation Committee of the Board.
The Thomas Agreement also provides that Mr. Thomas shall be entitled to
participate in all applicable fringe benefit and perquisite programs and savings
and retirement plans (other than the SERP), practices, policies and programs of
the Company to the same extent such benefits were provided to the Chief
Executive Officer
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<PAGE>
immediately prior to March 6, 2000 or are otherwise generally provided to other
senior executives of the Company. The Thomas Agreement also provides for
indemnification, reimbursement of legal fees in connection with the preparation
of the Thomas Agreement, up to $3,500 per month for living expenses and $25,000
per year for taxation on transportation. If the employment of Mr. Thomas is
terminated by the Company other than for "Cause" (as defined in the Thomas
Agreement), death or disability or expiration of the Thomas Agreement, or if Mr.
Thomas terminates his employment for "Good Reason" (as defined in the Thomas
Agreement), the Company shall pay an amount equal to Mr. Thomas' then current
annual base Salary (without giving effect to reductions thereto) and any unpaid
amounts of the then current annual base salary and other amounts earned through
the date of termination. If such termination is other than the expiration of the
Term, during the second year following termination Mr. Thomas shall also receive
monthly payments equal to 1/12 of the then current annual base salary (which
amount shall be reduced by the amount of any salary earned by Mr. Thomas during
such month). The Company shall also pay or provide to Mr. Thomas, on or
following such a termination, any earned and unpaid bonuses, previously deferred
compensation and benefits payable to Mr. Thomas under the terms of the Company's
qualified pension plans. For a period not to exceed 18 months following the date
of termination or the expiration of the term of the Thomas Agreement, and only
until Mr. Thomas obtains full replacement coverage, the Company shall reimburse
Mr. Thomas for the cost of any premiums paid by Mr. Thomas pursuant to his (or
any of his eligible dependent's) election to have the Company provide
"continuation coverage" under the Company's group health plan.
The Employment Agreement with Mr. Wrenn (the "Wrenn Agreement")
provides that for the term of the Wrenn Agreement (March 6, 2000 through March
6, 2002) he shall serve the President and Chief Operating Officer of the
Company. During the term of the Wrenn Agreement Mr. Wrenn shall receive an
annual base salary of $650,000. If Mr. Wrenn is employed by the Company on the
date a plan of reorganization for the Company is consummated in connection with
any Chapter 11 bankruptcy or similar proceeding or on the date of the
consummation of the sale of substantially all of the assets of the Company, then
within fifteen days of such consummation or sale, the Company shall pay to Mr.
Wrenn a bonus of $1,250,000. Mr. Wrenn is also eligible to receive discretionary
bonuses as may be determined by the Human Resources and Compensation Committee
of the Board. The Wrenn Agreement also provides that Mr. Wrenn shall be entitled
to participate in all applicable fringe benefit and perquisite programs and
savings and retirement plans (other than the SERP), practices, policies and
programs of the Company to the same extent such benefits were provided to the
Chief Operating Officer immediately prior to March 6, 2000 or are otherwise
generally provided to other senior executives of the Company. The Wrenn
Agreement also provides for indemnification, reimbursement of legal fees in
connection with the preparation of the Wrenn Agreement, up to $3500 per month
for living expenses plus $25,000 per year for taxation on transportation. If the
employment of Mr. Wrenn is terminated by the Company other than for "Cause" (as
defined in the Wrenn Agreement), death or disability or expiration of the Wrenn
Agreement, or if Mr. Wrenn terminates his employment for "Good Reason" (as
defined in the Wrenn Agreement), the Company shall pay an amount equal to Mr.
Wrenn' then current annual base salary (without giving effect to reductions
thereto) and any unpaid amounts of the annual base salary and other amounts
earned through the date of termination. If such termination is other than the
expiration of the Term, during the second year following termination Mr. Wrenn
shall also receive monthly payments equal to 1/12 of the then current annual
base salary (which amount shall be reduced by the amount of any salary earned by
Mr. Wrenn during such month). The Company shall also pay or provide to Mr.
Wrenn, on or following such a termination, any earned and unpaid bonuses,
previously deferred compensation and benefits payable to Mr. Wrenn under the
terms of the Company's qualified pension plans. For a period not to exceed 18
months following the date of termination or the expiration of the term of the
Wrenn Agreement, and only until Mr. Wrenn obtains full replacement coverage, the
Company shall reimburse Mr. Wrenn for the cost of any premiums paid by Mr. Wrenn
pursuant to his (or any of his eligible dependent's) election to have the
Company provide "continuation coverage" under the Company's group health plan.
The Employment Agreement with Mr. Singleton (the "Singleton Agreement")
provides that for the term of the Singleton Agreement (July 17, 2000 through
July 17, 2002) he shall serve the Senior Vice President and Chief Financial
Officer of the Company. During the term of the Singleton Agreement Mr. Singleton
shall receive an annual base salary of $600,000. If Mr. Singleton is employed by
the Company on the date a plan of reorganization for the Company is consummated
in connection with any Chapter 11 bankruptcy or similar proceeding or on the
date of the consummation of the sale of substantially all of the assets of the
Company, then within fifteen days of such consummation or sale, the Company
shall pay to Mr. Singleton a bonus of $500,000. Mr. Singleton is also eligible
to receive discretionary bonuses as may be determined by the Board of Directors.
The Singleton Agreement also provides that Mr. Singleton shall be entitled to
participate in all applicable fringe benefit and perquisite programs and savings
and retirement plans (other than the SERP), practices, policies and programs of
the Company to the same extent such benefits were provided to the Chief
Financial Officer of the Company. The Singleton Agreement also provides for
indemnification, up to $3,500 per month for living expenses, $25,000 per year
for taxation on transportation, and $100,000 for relocation expenses. If the
employment of Mr. Singleton is terminated
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<PAGE>
by the Company other than for "Cause" (as defined in the Singleton Agreement),
death or disability, or if Mr. Singleton terminates his employment for "Good
Reason", (as defined in the Singleton Agreement), or if the Singleton Agreement
is not renewed upon expiration of the term, the Company shall pay Mr. Singleton
$500,000 not later than thirty days following the date of termination.
Each of the other three named executive officers, Messrs. Taylor,
Sprinkle and Bullinger have entered into a Senior Executive Change of Control
Agreement with the Company. The Senior Executive Change of Control Agreements
supersedes any prior agreement between the executive officer and the Company
which provides benefits upon a change in control of the Company and further
provides that if the officer's employment is terminated as a result of a "Change
in Control" (as defined in the Agreements), he will receive his then current
annual base salary for three years plus a guaranteed bonus of 40% of salary for
Mr. Taylor, 50% of salary for Mr. Sprinkle and 50% of salary for Mr. Bullinger.
In addition, each Executive Officer would receive three years continuation of
disability, life and health insurance and other fringe benefits and perquisites
in accordance with the most favorable Plans applicable to peer executives of the
Company. The Agreements provide that the executive officer shall be entitled to
accrued benefits under the SERP or any such successor plan , irrespective of
whether vested and without any reduction for early retirement, early payout and
social security benefits and taking into account for benefit accrual purposes,
the executive officer's entire period of service with the Company and its
affiliates. All of the Agreements provide that for purposes of determining the
pension entitlement under the SERP each Executive Officer would fully vest with
three additional years. The Agreements further provide that the Company will pay
a lump-sum cash payment equal to the spread (fair market value over exercise
price) of all outstanding options granted whether vested or not vested on the
date of termination following a Change in Control.
The Company also had Termination of Employment and Change in Control
Agreements with Messrs. Winger, Bragagnolo and Humphreys. The Agreements
provided that if the officer's employment was terminated as a result of a change
in control, he would receive a lump sum payment equal to (i) three times his
highest annual salary and bonus during the previous three fiscal years plus (ii)
three times the cash equivalent value of the perquisites in effect as of the
date of the change in control. In addition, each employee would receive three
years continuation of disability, life and health insurance. All of the
Agreements provided that for purposes of determining the pension entitlement
under the SERP each officer would fully vest with three additional years. The
agreements further provide that all stock options granted to such persons would
fully vest and lapse if not exercised within 90 days following the employment
termination date. These Agreements were terminated upon the termination of
employment of these former officers and no payments were made to these former
officers under the Agreements.
SEVERANCE PLAN AND RETENTION PLAN
Messrs. Taylor, Sprinkle and Bullinger are currently the only Named
Executive Officers eligible to participate in the Senior Executive Retention
Plan and the Senior Executive Severance Plan. The Senior Executive Severance
Plan provides that if the officer is terminated by the Company without "Cause"
or by the Senior Executive for "Good Reason" (as such terms are defined in the
Plan) they shall be entitled to two years base salary and benefits, 30% of which
will be paid to the officer upon termination. If the officer remains unemployed
after 7.2 months, the officer will return to normal payroll until such time as
the officer is employed, subject to a maximum severance and benefit payment of
the remaining 16.8 months. The officer will be entitled to outplacement benefits
with a cap of $25,000.
The Senior Executive Retention Plan provides that if the officer is
actively employed by the Company or its subsidiaries from the date of September
8, 2000 through December 31, 2000 (the "Retention Period") (except in the event
of death, permanent disability, or a termination without "Cause" or by the
officer for "Good Reason" (as such terms are defined in the Plan), the officer
or the officer's estate will receive a prorated portion of the full award based
upon the number of days during the Retention Period that the officer was
actively employed.) then the officer will receive a retention award equal to
52.89% of the officer's annual base salary amount as of September 8, 2000.
COMPENSATION OF DIRECTORS
During fiscal year 2000, each director who was not an employee of the
Company was paid an annual retainer of $10,000 (the "Annual Retainer").
Currently each director that is not an employee of the Company is to be paid an
annual retainer of $20,000 plus $750 for each Board of Directors meeting
attended plus expense reimbursement. A non-employee Chairman of the Board is
paid an additional $12,000 annually and non-employee Committee Chairmen, unless
otherwise specified, are paid an additional $4,000 annually. Non-employee
directors were paid $750 for each meeting that they attend of the Human
Resources and Compensation Committee and the Audit Committee. During fiscal year
2000, the directors on the Special Committee (Sale) and the Executive
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<PAGE>
Committee, both of which are no longer active committees, were paid $750 per
meeting attended. The Chairman of the Special Committee (Sale) was paid $1000
for each committee meeting which he attended And each non-employee director who
was a member of the Special Committee (Sale) received $20,000 additional
remuneration. Non-employee directors who are members of the Special Committee
(Investigation) receive $1000 for each meeting that they attend. The Chairman
and Vice Chairman of the Special Committee (Investigation) received $50,000
additional remuneration and the other members of the Special Committee
(Investigation) received $25,000 additional remuneration.
Prior to fiscal year 2000, pursuant to the Company's Nonemployee
Director Stock plan, 50% of the Annual Retainer for each nonemployee director,
as well as 50% of the additional annual amount paid to Chairman of the Board and
Committee Chairman were paid in shares of Common Stock. Shares issued under this
Plan were subject to a one year vesting period. On January 4, 2000, as partial
consideration to nonemployee directors for the period December 1, 1998 to
November 30, 1999, 5621 shares of Common Stock were issued under this Plan. No
other shares of Common Stock will be issued under this Plan as partial
consideration for the remainder of the fiscal year 2000. In addition, the Plan
was terminated on September 1, 2000.
The Company also maintains a Directors Stock Option Plan. Under such
Plan, options become exercisable at the rate of 20% per year, on or about one
year after the date of grant, with all options becoming fully vested on or about
five years after the date of grant. There were no grants of options under this
Plan in fiscal year 2000.
Directors who are also employees of the Company receive no separate
compensation for serving as directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMMITTEE MEMBERS
During the fiscal year ended August 31, 2000, the Human Resources and
Compensation Committee held primary responsibility for determining executive
compensation levels. John W. Rollins, Jr., Robert Luba and James Wareham
(Messrs. Luba and Wareham began serving on this Committee on August 24, 2000)
are the members of the Human Resources and Compensation Committee. David E.
Thomas, Jr. was a member of this Committee until the date that he became
Chairman of the Board of Directors. Certain matters relating to executive
compensation are determined by the Board of Directors as a whole.
RAYMOND JAMES & ASSOCIATES, INC.
Mr. Thomas was Senior Managing Director and Head of the Investment
Banking Group of Raymond James & Associates, Inc. During fiscal year 2000,
Raymond James & Associates, Inc. had acted as financial advisor and in other
capacities to the Company for various matters, including acquisitions,
divestitures and security offerings, and it is not expected to continue to act
in such capacity in the future, unless otherwise approved by the Board of
Directors and the Bankruptcy Court. Mr. Thomas had entered into an agreement
with Raymond James & Associates for a leave of absence from his employment with
them. The Agreement expired on November 15, 2000.
ROLLINS TRUCK LEASING CORP.
Mr. Tippie is Chairman and Chairman of the Executive Committee of
Rollins Truck Leasing Corp. and Mr. Rollins, Jr. is President and Chief
Executive Officer of Rollins Truck Leasing Corp. During fiscal year 2000, the
Company paid Rollins Truck Leasing Corp. approximately $1.6 million on account
of truck rentals. Rollins Truck Leasing Corp. also purchases certain supplies
from the Company. During fiscal year 2000 Rollins Truck Leasing paid
approximately $344,000 to the Company for these supplies. In the opinion of
management of the Company, the foregoing transactions were effected at rates
that approximate those the Company would have realized or incurred if such
transactions had been effected with independent third parties.
MATLACK SYSTEMS, INC.
Mr. Tippie is a director and shareholder of Matlack Systems, Inc. and
Mr. Rollins, Jr. is Chairman of the Board and a shareholder of Matlack Systems,
Inc. During fiscal year 2000, the Company paid Matlack Systems, Inc.
approximately $378,000 on account of transportation services. Matlack Systems,
Inc. also purchased supplies and/or services from the Company. During fiscal
year 2000, Matlack Systems, Inc. paid the Company approximately $615,000 to the
Company. In the opinion of management of the Company, the foregoing transactions
were effected at rates that approximate those the Company would have realized or
incurred if such transactions had
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<PAGE>
been effected with independent third parties.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERS OF FIVE PERCENT OR MORE OF THE COMMON STOCK
The following table sets forth the only stockholders which, to the
knowledge of management of the Company, were beneficial owners of five percent
or more of the outstanding shares of Common Stock as of November 21, 2000. The
shareholdings of Laidlaw Inc. reported are based on information provided by the
Company's transfer agent and confirmation with Laidlaw Inc. The shareholdings of
Merrill Lynch are based solely on a Schedule 13G Report filed with the
Securities and Exchange Commission by February 4, 2000.
<TABLE>
Amount and Nature of
NAME BENEFICIAL OWNERSHIP PERCENT OF CLASS
<S> <C> <C>
Laidlaw Inc. (1) 43,846,287 43.5%
3221 North Service Road
Burlington, Ontario
CANADA L7R3Y8
Merrill Lynch 5,345,300 5.3%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10381
</TABLE>
(1) All of the shares of Common Stock shown as owned by Laidlaw Inc. are held
of record by Laidlaw Finance (Barbados) Ltd. except for 31 shares which are
held by Laidlaw Transportation, Ltd.
STOCK OWNERSHIP OF THE COMPANY'S DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth as of November 21, 2000, the number of
shares of Common Stock beneficially owned by (i) each of the Company's
directors, (ii) the Named Executive Officers and (iii) all directors and
executive officers of the Company as a group.
<TABLE>
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME OWNERSHIP BENEFICIALLY OWNED
<S> <C> <C>
Kenneth K. Chalmers............................. 0 *
Robert W. Luba (1), (2) ........................ 6,930 *
John W. Rollins, Jr. (3), (4) .................. 46,660 *
David E. Thomas, Jr. (3), (5) .................. 6,363 *
Henry B. Tippie (3), (6), (7) .................. 322,771 *
James L. Wareham (3), (5) ...................... 6,613 *
Grover C. Wrenn (3), (5) ....................... 10,113 *
Roy D. Bullinger ............................... 2,500 *
David M. Sprinkle .............................. 0 *
Henry H. Taylor (8), (9) ....................... 8,338 *
All directors and
executive officers as a group
(11 persons)(10) ............................... 410,288 *
------------------------------
</TABLE>
* Signifies less than 1%
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<PAGE>
(1) Includes 430 shares of restricted stock granted on January 4, 2000, in
accordance with the Nonemployee Director Stock Plan. The shares do not fully
vest until January 4, 2001.
(2) Does not include 5,000 shares which are subject to vesting requirements
pursuant to the Directors Stock Option Plan. Under such plan, options become
exercisable at the rate of 20% per year, on or about one year after the date of
grant, with all options becoming fully vested on or about five years after the
date of grant.
(3) Includes 2,000 shares subject to presently exercisable options. Does not
include 13,000 shares which are subject to vesting requirements pursuant to the
Directors Stock Option Plan. Under such plan, options become exercisable at the
rate of 20% per year, on or about one year after the date of grant, with all
options becoming fully vested on or about five years after the date of grant
(4) Does not include 1,547 shares owned by Mr. Rollins' wife, as to which shares
Mr. Rollins disclaims any beneficial ownership. Includes 742 shares of
restricted stock granted on January 4, 2000, in accordance with the Nonemployee
Director Stock Plan. The shares do not fully vest until January 4, 2001.
(5) Includes 718 shares of restricted stock granted on January 4, 2000, in
accordance with the Nonemployee Director Stock Plan. The shares do not fully
vest until January 4, 2001.
(6) Includes 813 shares of restricted stock granted on January 4, 2000, in
accordance with the Nonemployee Director Stock Plan. The shares do not fully
vest until January 4, 2001.
(7) Does not include 230,644 shares held by Mr. Tippie as co-trustee, all of
which he disclaims any beneficial ownership of; Includes 6,500 shares held by
him as trustee; and 7,500 shares in which a wholly owned corporation over which
he has sole voting power has a beneficial partnership interest of 75 shares and
voting rights on 7,500 shares. Does not include 5,750 shares owned by Mr.
Tippie's wife, as to which shares Mr. Tippie disclaims any beneficial ownership.
Does not include 957,000 shares owned by the Estate of John W. Rollins, Sr. for
which Mr. Tippie is the Executor. Mr. Tippie disclaims any beneficial ownership
interest with respect to those shares.
(8) Includes shares subject to presently exercisable options. Does not include
13,000 remaining shares which are subject to vesting requirements pursuant to
the 1997 Stock Option Plan. Options become exercisable at the rate of 20% per
year, on or about one year after the date of grant, with all options becoming
fully vested on or about five years after the date of grant.
(9) Includes holdings of Common Stock held through the Company's 401(k) Plan as
of August 31, 2000.
(10) Excludes Messrs. Winger, Bragagnolo and Humphreys, whose employment was
terminated by the Company in July 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In addition to the transactions described below see also the
transactions described in "Compensation Committee Interlocks and Insider
Participation" in Item 11 of Part II.
LAIDLAW INC. RELATIONSHIPS
GENERAL. Laidlaw Inc. now beneficially owns approximately 43.5% of
the Common Stock. In the ordinary course of business, the Company or its
affiliates and Laidlaw Inc. or affiliates of Laidlaw Inc. have entered from
time to time into various business transactions and agreements. he following
is a summary of the material agreements, arrangements and transactions
between the Company or its affiliates and Laidlaw Inc. or its affiliates since
September 1, 1999.
LAIDLAW INC. INDEMNITIES. Pursuant to the terms of the Stock Purchase
Agreement, Laidlaw Inc. and LTI, agreed to jointly and severally indemnify and
hold harmless, subject to certain limitations, the Company and its affiliates
from and against any and all Damages (as defined in the Stock Purchase
Agreement) suffered by the Company resulting from or in respect of (i) various
tax obligations and liabilities, (ii) pre-closing insurance claims, (iii) any
breach or default in the performance by Laidlaw Inc. or LTI of (a) their
covenants and agreements in the Stock Purchase Agreement to be performed on or
after May 15, 1997 (the "Closing Date") or (b) any representation or warranty
which survives the Closing Date (to the extent that damages therefrom exceed
$2 million) and (iv) any environmental liability or environmental claim arising
as a result of any act or omission by Laidlaw Inc. or LTI,
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<PAGE>
including any release, occurring prior to the Closing Date, but only to the
extent such liability or claim (a) was known to Laidlaw Inc. or certain of its
affiliates and not disclosed in writing to the Company or (b) relates to the
Marine Shale or Mercier, Quebec facilities and exceeds (x) an aggregate of
$1million in a particular year and (y) an aggregate since the Closing of
$1million times the number of years elapsed since the Closing Date, but only to
the extent of cash expenditures incurred within six years after the Closing
Date.
On May 18, 2000, Laidlaw Inc. announced that its Board of Directors had
declared an interest payment moratorium on all advances under the Laidlaw Inc.
syndicated bank facility and on all outstanding public debt of Laidlaw Inc. and
Laidlaw One, Inc. Certain debt holders included in the moratorium have commenced
actions to attempt to recover amounts alleged to be owing to them and other debt
holders subject to the moratorium may also commence similar actions. The Company
can not predict the impact, if any, this moratorium and any related
circumstances will have on the Company's ability to collect upon Laidlaw Inc.'s
indemnification, guaranty and other contractual obligations to the Company.
LAIDLAW INC. GUARANTIES. Prior to the Closing Date, Laidlaw Inc.
entered into on behalf of the Company certain guaranties, performance
guaranties, bonds, performance bonds, suretyship arrangements, surety bonds,
credits, letters of credit, reimbursement agreements and other undertakings,
deposit commitments or arrangements by which Laidlaw Inc. may be primarily,
secondarily, contingently or conditionally liable for or in respect of (or which
create, constitute or evidence a lien or encumbrance on any of the assets or
properties of Laidlaw Inc. which secures the payment or performance of) a
present or future liability or obligation of the Company (each a "Laidlaw
Guaranty" and collectively the "Laidlaw Guaranties"). Pursuant to the terms of
the Stock Purchase Agreement, the Company agreed to use its best efforts to
cause Laidlaw Inc. to be fully and finally released and discharged from all
further liability or obligation in respect of all Laidlaw Guaranties within six
months following the Closing Date. As of August 31, 2000 Laidlaw Inc. had been
discharged from most of such obligations.
Financial assurance is required for the cost of clean-up or
environmental impairment restoration, if any should be incurred, following
closure of the hazardous waste management facility operated by the Company in
Pinewood, South Carolina. Prior to the Closing Date, Laidlaw Inc. provided its
corporate guaranty to satisfy, in part, this financial assurance. Insurance
coverage has been substituted for the Laidlaw Inc. corporate guaranty under the
present financial assurance submittal.
LAIDLAW SERVICE ARRANGEMENTS. Laidlaw Inc. and its affiliates have
provided certain financial and management services to the Company and its
subsidiaries. Such services have included providing general liability and
workers' compensation insurance. Each of the service arrangements has been on
arms-length terms comparable to those available in transactions with
unaffiliated parties. During the fiscal year ended August 31, 2000, the
Company paid Laidlaw Inc. approximately $14.8 million on account of
such services. All such services discontinued on August 31, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(3) Exhibits:
(3)(a) Restated Certificate of Incorporation of the Company dated May 13, 1997
and Amendment to Certificate of Incorporation dated May 15, 1997 filed as
Exhibit 3(a) to the Registrant's Form 10-Q for the Quarter ended May 31, 1997
and incorporated herein by reference.
(3)(a)(i) Certificate of Correction Filed to Correct a Certain Error in the
Restated and Amended Certificate of Incorporation of the Company dated October
15, 1997 filed as Exhibit (3)(a)(i) to the Registrant's Form 10-K-405 for the
Year ended August 31, 1997, and incorporated herein by reference.
(3)(a)(ii) Certificate of Amendment to the Restated Certificate of Incorporation
of the Company dated November 25, 1998 filed as Exhibit (3)(a)(iii) to the
Registrant's Form 10-Q for the quarter ended November 30, 1998 and incorporated
herein by reference.
(3)(a)(iii) Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated November 30, 1998 filed as Exhibit (3)(a)(iv)
to the Registrant's Form 10-Q for the quarter ended November 30, 1998 and
incorporated herein by reference.
<PAGE>
(3)(b) Amended and Restated Bylaws of the Company.
(4)(a) Indenture dated as of May 29, 1998 between LES, Inc. (a subsidiary of the
Registrant), Registrant, subsidiary guarantors of the Registrant and The Bank of
Nova Scotia Trust Company of New York, as trustee filed as Exhibit 4(b) to the
Registrant's Form S-4 Registration Statement No. 333-57587 filed June 24, 1998
and incorporated herein by reference.
(4)(b) First Supplemental Indenture effective as of November 15, 1998 among
Safety-Kleen Services, Inc. the Registrant, SK Europe, Inc. and The Bank of Nova
Scotia Trust Company of New York, as trustee filed as Exhibit (4)(f) to the
Registrant's Form S-4 Registration Statement No. 333-82689 filed July 12, 1999
and incorporated herein by reference.
(4)(c) Second Supplemental Indenture effective as of May 7, 1999 among
Safety-Kleen Services, Inc. the Company, SK Services, L.C., SK Services (East),
L.C. and The Bank of Nova Scotia Trust Company of New York, as trustee filed as
Exhibit (4)(d) to the Company's Form 10-K filed October 29, 1999 and
incorporated herein by reference.
(4)(d) Indenture dated as of May 17, 1999 between the Company and the Bank of
Nova Scotia Trust Company of New York, as trustee filed as Exhibit (4)(b) to the
Registrant's Form S-4 Registration Statement No. 333-82689 filed July 12, 1999
and incorporated herein by reference.
(4)(e) Amended and Restated Credit Agreement among Laidlaw Chem-Waste, Inc.,
Laidlaw Environmental Services (Canada) Ltd., Toronto Dominion (Texas) Inc., The
Toronto-Dominion Bank, TD Securities (USA) Inc., The Bank of Nova Scotia,
NationsBank, N.A. and The First National Bank of Chicago and NationsBank, N.A.
as Syndication Agent dated as of April 3, 1998, filed as Exhibit 4(f) to the
Registrant's Form 10-Q for the quarter ended February 28, 1999, and incorporated
herein by reference.
(4)(f) Supplement to the Amended and Restated Credit Agreement among Laidlaw
Chem-Waste, Inc., Laidlaw Environmental Services (Canada) Ltd., Toronto Dominion
(Texas) Inc., The Toronto-Dominion Bank, TD Securities (USA) Inc., The Bank of
Nova Scotia, NationsBank, N.A. and The First National Bank of Chicago and
NationsBank, N.A. as Syndication Agent dated as of April 3, 1998, filed as
Exhibit 4(e) to a subsidiary of the Registrant's Form S-4 Registration Statement
No. 333-57587 filed June 24, 1998 and incorporated herein by reference.
(4)(g) Waiver and First Amendment to the Amended and Restated Credit Agreement
dated as of May 15, 1998 among LES, Inc., Laidlaw Environmental Services
(Canada) Ltd., the Lenders, Toronto Dominion (Texas), Inc., The Toronto Dominion
Bank, TD Securities (USA) Inc., The Bank of Nova Scotia, NationsBank, N.A., The
First National Bank of Chicago and Wachovia Bank filed as Exhibit 4(f) to a
subsidiary of the Registrant's Form S-4 Registration Statement No. 333-57587
filed June 24, 1998 and incorporated herein by reference.
(4)(h) Commitment to Increase Supplement to the Amended and Restated Credit
Agreement dated as of June 3, 1998 among LES, Inc., Laidlaw Environmental
Services (Canada) Ltd., the Lenders, Toronto Dominion (Texas), Inc., The Toronto
Dominion Bank, TD Securities (USA) Inc., The Bank of Nova Scotia, NationsBank,
N.A., The First National Bank of Chicago and Wachovia Bank filed as Exhibit 4(g)
to a subsidiary of the Registrant's Form S-4 Registration Statement No.
333-57587 filed June 24, 1998 and incorporated herein by reference.
(4)(i) Second Amendment to the Amended and Restated Credit Agreement dated as of
November 20, 1998 among Safety-Kleen Services, Inc. (formerly known as LES,
Inc.), Safety-Kleen Services (Canada) Ltd. (formerly known as Laidlaw
Environmental Services (Canada) Ltd.), the Lenders, Toronto Dominion (Texas),
Inc., The Toronto Dominion Bank, TD Securities (USA) Inc., The Bank of Nova
Scotia, NationsBank, N.A., The First National Bank of Chicago and Wachovia Bank
N.A., filed as Exhibit (4)(j) to the Registrant's Form 10-Q for the quarter
ended February 28, 1999 and incorporated herein by reference.
(4)(j) Waiver and Third Amendment to the Amended and Restated Credit Agreement
dated as of May 6, 1999 among Safety-Kleen Services, Inc. (formerly known as
LES, Inc.), Safety-Kleen Services (Canada) Ltd. (formerly known as Laidlaw
Environmental Services (Canada) Ltd.), the Lenders, Toronto Dominion (Texas),
Inc., The Toronto Dominion Bank, TD Securities (USA) Inc., The Bank of Nova
Scotia, NationsBank, N.A., The First National Bank of Chicago and Wachovia Bank
N.A. filed as Exhibit (4)(l) to the Registrant's Form S-4 Registration Statement
No. 333-82689 filed July 12, 1999 and incorporated herein by reference.
(4)(k) Fourth Amendment dated as of March 13, 2000 to the Amended and Restated
Credit Agreement dated as of May 6, 1999 among Safety-Kleen Services, Inc.
(formerly known as LES, Inc.), Safety-Kleen Services (Canada) Ltd.
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<PAGE>
(formerly known as Laidlaw Environmental Services (Canada) Ltd.), the Lenders,
Toronto Dominion (Texas), Inc., The Toronto Dominion Bank, TD Securities (USA)
Inc., The Bank of Nova Scotia, NationsBank, N.A., The First National Bank of
Chicago and Wachovia Bank N.A. filed as Exhibit (4)(l) to the Registrant's
Current Report on Form 10-Q filed July 18, 2000 and incorporated herein by
reference.
(4)(l) Consent dated as of March 16, 2000 to the Amended and Restated Credit
Agreement dated as of May 6, 1999 among Safety-Kleen Services, Inc. (formerly
known as LES, Inc.), Safety-Kleen Services (Canada) Ltd. (formerly known as
Laidlaw Environmental Services (Canada) Ltd.), the Lenders, Toronto Dominion
(Texas), Inc., The Toronto Dominion Bank, TD Securities (USA) Inc., The Bank of
Nova Scotia, NationsBank, N.A., The First National Bank of Chicago and Wachovia
Bank N.A. filed as Exhibit (4)(m) to the Registrant's Current Report on Form
10-Q filed July 18, 2000 and incorporated herein by reference.
(4)(m) Amended and Restated $100,000,000 Debtor In Possession Credit Agreement
among Safety-Kleen Services, Inc., The Several Lenders from Time to Time Parties
thereto, Toronto Dominion (Texas), Inc., as General Administrative Agent and
Underwriter and The CIT Group/Business Credit, Inc. as Collateral Agent and
Underwriter Initially dated as of June 11, 2000 Amended and Restated as of July
19, 2000.
(4)(n) Registration Rights Agreement dated May 15, 1997 between the Company,
Laidlaw Transportation, Inc. and Laidlaw Inc. the form of which was filed as
Exhibit B to Annex A to the Registrant's Definitive Proxy Statement on Form DEF
14A, filed on May 1, 1997 and incorporated herein by reference.
(4)(o) Indenture dated as of May 1, 1993 between the Industrial Development
Board of the Metropolitan Government of Nashville and Davidson County
(Tennessee) and NationsBank of Tennessee, N.A., filed as Exhibit 4(f) to the
Registrant's Form 10-Q for the Quarter ended May 31, 1997, and incorporated
herein by reference.
(4)(p) Indenture of Trust dated as of August 1, 1995 between Tooele County, Utah
and West One Bank, Utah, now known as U.S. Bank, as Trustee, filed as Exhibit
4(h) to the Registrant's form 10-Q for the Quarter ended May 31, 1997, and
incorporated herein by reference.
(4)(q) Indenture of Trust dated as of July 1, 1997 between Tooele County, Utah
and U.S. Bank, a national banking association, as Trustee, filed as Exhibit 4(j)
to the Registrant's Form 10-Q for the Quarter ended May 31, 1997, and
incorporated herein by reference.
(4)(r) Indenture of Trust dated as of July 1, 1997 between California Pollution
Control Financing Authority and U.S. Bank, a national banking association, as
Trustee, filed as Exhibit 4(k) to the Registrant's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(s) Promissory Note dated May 15, 1997 for $60,000,000 from the Company to
Westinghouse Electric Corporation, filed as Exhibit 4(n) to the Registrant's
Form 10-Q for the Quarter ended May 31, 1997, and incorporated herein by
reference.
(4)(t) Letter dated May 7, 1999 from Toronto-Dominion (Texas) Inc. (as assignee
of Westinghouse Electric Corporation) and agreed to by the Company and Laidlaw
Inc. amending the terms of the Promissory Note dated May 15, 1997 (as referenced
in Exhibit (4)(r)) filed as Exhibit (4)(u) to the Registrant's Form S-4
Registration Statement No. 333-82689 filed July 12, 1999 and incorporated herein
by reference.
(4)(u) Guaranty Agreement dated May 15, 1997 by Laidlaw Inc. to Westinghouse
Electric Corporation guaranteeing Promissory Note dated May 15, 1997 (as
referenced in Exhibit (4)(s)) from Company to Westinghouse Electric
Corporation), filed as Exhibit 4(o) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by reference.
(4)(v) Rights Agreement dated as of October 15, 1999 between the Company and
EquiServe Trust Company, N.A., as Rights Agent, filed as Exhibit (c)1 to the
Company's Current Report on Form 8-K filed on October 15, 1999 and incorporated
herein by reference.
(4)(w) First Amendment to Rights Agreement, dated as of March 17, 2000, between
the Company and EquiServe Trust Company, N.A. filed as Exhibit 99.1 to the
Company's Current Report on Form 8-K filed on March 17, 2000 and incorporated
herein by reference.
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<PAGE>
(4)(x) Letter Agreement, dated October 12, 1999, between the Company and Laidlaw
Inc. filed as Exhibit 99.2 to the Company's Current Report on Form 8-K filed on
March 17, 2000 and incorporated herein by reference.
(4)(y) Other instruments defining the rights of holders of nonregistered debt of
the Company have been omitted from this exhibit list because the amount of debt
authorized under any such instrument does not exceed 10% of the total assets of
the Company and its subsidiaries. The Company agrees to furnish a copy of any
such instrument to the Commission upon request.
(10)(a) Agreement and Plan of Merger dated as of March 16, 1998 by and among
Registrant, LES Acquisition, Inc., and Safety-Kleen Corp. included as Annex A of
Safety-Kleen's Revised Amended Prospectus on Form 14D-9 filed as Exhibit 62 to
Safety-Kleen's Amendment No. 28 to Schedule 14-9A on March 17, 1998, and
incorporated herein by reference.
(10)(b) Stock Purchase Agreement between Westinghouse Electric Corporation
(Seller) and Rollins Environmental Services, Inc. (Buyer) for National Electric,
Inc. dated March 7, 1995 filed as Exhibit 2 to the Registrant's Current Report
on Form 8-K filed on June 13, 1995 and incorporated herein by reference.
(10)(c) Second Amendment to Stock Purchase Agreement (as referenced in Exhibit
(10)(b) above), dated May 15, 1997 among Westinghouse Electric Corporation,
Rollins Environmental Services, Inc. and Laidlaw Inc., filed as Exhibit 4(m) to
the Registrant's Form 10-Q for the Quarter ended May 31, 1997, and incorporated
herein by reference.
(10)(d) Agreement for the sale and purchase of shares and loan stock hold by SK
Europe, Inc. in Safety-Kleen Europe Limited between Safety-Kleen Europe Limited
and SK Europe, Inc. and the Company and The Electra Subscribers and Electra
European Fund LP dated as of July 6, 2000.
(10)(e) Rollins Environmental Services, Inc. 1982 Incentive Stock Option Plan
filed with Amendment No. 1 to the Company's Registration Statement No. 2-84139
on Form S-1 dated June 24, 1983 and incorporated herein by reference.
(10)(f) Rollins Environmental Services, Inc. 1993 Stock Option Plan filed as
Exhibit (10)(e) to the Registrant's Current Report on Form 10-Q filed July 18,
2000 and incorporated herein by reference.
(10)(g) Company's 1997 Stock Option Plan, filed as Exhibit 4.4 to the Company's
Registration Statement No. 333-41859 on Form S-8 dated December 10, 1997 and
incorporated herein by reference.
(10)(h) First Amendment to Company's 1997 Stock Option Plan, filed as Exhibit
(10)(g) to the Company's Form 10-Q dated January 14, 2000 and incorporated
herein by reference.
(10)(i) Company's Director's Stock Option Plan, filed as Exhibit 4.5 to the
Company's Registration Statement No. 333-41859 on Form S-8 dated December 10,
1997 and incorporated herein by reference.
(10)(j) First Amendment to Company's Director's Stock Option Plan filed as
Exhibit (10)(i) to the Company's Form 10-Q dated January 14, 2000 and
incorporated herein by reference.
(10)(k) Stock Purchase Agreement dated February 6, 1997 among the Company,
Laidlaw Inc., and Laidlaw Transportation, Inc. filed as Exhibit A to Annex A to
the Definitive Proxy Statement on Form DEF 14A filed on May 1, 1997 and
incorporated herein by reference.
(10)(l) Executive Bonus Plan for fiscal year 2000 filed as Appendix C to the
Definitive Proxy Statement on Form DEF 14A filed on October 29, 1999 and
incorporated herein by reference.
(10)(m) Company's U.S. Supplemental Executive Retirement Plan filed as Exhibit
10(g) to the Company's 10-Q for the quarter ended November 30, 1997, and
incorporated herein by reference.
(10)(n) Employment Agreement by and between Company and Grover C. Wrenn dated as
of August 23, 2000.
(10)(o) Employment Agreement by and between Company and David E. Thomas, Jr.
dated as of August 23, 2000.
(10)(p) Employment Agreement by and between Company and Larry W. Singleton dated
as of July 17, 2000.
(10)(q) Form of Senior Executive Change of Control Agreement.
Page 33
<PAGE>
(10)(r) Senior Executive Retention Plan.
(10)(s) Senior Executive Severance Plan.
(10)(t) Executive Retention Plan.
(10)(u) Executive Severance Plan.
(10)(v) Key Manager Retention Plan.
(10)(w) Key Manager Severance Plan.
(10)(x) Letter Agreement dated March 16, 2000 between Jay Alix & Associates and
the Company filed as Exhibit (10)(x) to the Company's Current Report on Form
10-Q filed July 18, 2000 and incorporated herein by reference.
(21) Subsidiaries of Registrant.
(24) Power of Attorney (on the signature pages hereof)
(99.1) Consent Agreement and Final Order by and between the United States
Environmental Protection Agency and Safety-Kleen Corp. and certain of its U. S.
Subsidiaries and/or affiliates.
(b) Reports on Form 8-K.
i. The Company filed a Current Report on Form 8-K on June 6, 2000, which
contained Item 5 related to the Company announcing that the Company did not make
debt payments, the sale of the Elgin property was terminated and that the
Company was seeking new financial assurance surety bonds.
ii. The Company filed a Current Report on Form 8-K on June 9, 2000 which
contained Item 5 related to the Company announcing a clarification of its June
6, 2000 press release.
iii. The Company filed a Current Report on Form 8-K on June 19, 2000 which
contained Item 3 and Item 5 related to the Company announcing the resignation of
Kenneth W. Winger as a Director of the Company as well as the fact that filing
for protection under the U.S. Bankruptcy Code was an event of default under the
Company's four Industrial Revenue Bonds.
iv. The Company filed a Current Report on Form 8-K on July 20, 2000 which
contained Item 5 related to the Company announcing finalization of
debtor-in-possession financing.
v. The Company filed a Current Report on Form 8-K on August 8, 2000 which
contained Item 4.
vi. The Company filed a Current Report on Form 8-K on August 18, 2000 which
contained Item 5 related to the Company announcing the appointment of Larry W.
Singleton as the new Chief Financial Officer of the Company.
vii. The Company filed a Current Report on Form 8-K on August 29, 2000 which
contained Item 5 related to the Company announcing that SK Europe, Inc., an
indirect subsidiary of the Registrant had sold its remaining interest in
Safety-Kleen Europe Limited.
Page 34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATE: November 29, 2000 SAFETY-KLEEN CORP.
---------------------------------------------
(Registrant)
/s/ David E. Thomas, Jr.
----------------------------
David E. Thomas, Jr.
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below hereby constitutes and appoints Larry W. Singleton and Henry H. Taylor and
each of them, his or her true and lawful agent, proxy and attorney-in-fact, each
acting alone, with full power and substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities to (i)
act on, sign and file with the Securities and Exchange Commission any and all
amendments to this Form 10-K together with all schedules and exhibits thereto,
(ii) act on, sign and file such certificates, instruments, agreements and other
documents as may be necessary or appropriate in connection therewith, (iii) take
any and all actions which may be necessary or appropriate in connection
therewith, granting unto such agents, proxies and attorneys-in-fact, and each of
them, full power and authority to do and perform each and every act and thing
necessary or appropriate to be done, as fully and for all intents and purposes
as he or she might or could do in person, hereby approving, ratifying and
confirming all that such agents, proxies and attorneys-in-fact, any of them or
any of his or her or their substitutes may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ David E. Thomas, Jr. Chairman of the Board, November 29, 2000
------------------------ Chief Executive Officer
David E. Thomas, Jr. and Director
/s/ Larry W. Singleton Senior Vice President, November 29, 2000
---------------------- Finance and Chief Financial
Larry W. Singleton Officer (principal financial
and accounting officer)
/s/ Grover C. Wrenn President and Chief November 29, 2000
------------------- Operating Officer
Grover C. Wrenn and Director
/s/ Robert W. Luba Director November 29, 2000
------------------
Robert W. Luba
/s/ Kenneth K. Chalmers Director November 29, 2000
-----------------------
Kenneth K. Chalmers
/s/ John W. Rollins, Jr. Director November 29, 2000
------------------------
John W. Rollins, Jr.
/s/ Henry B. Tippie Director November 29, 2000
-------------------
Henry B. Tippie
/s/ James L. Wareham Director November 29, 2000
--------------------
James L. Wareham
Page 35
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EXHIBIT INDEX
(3)(a) Restated Certificate of Incorporation of the Company dated May 13,
1997 and Amendment to Certificate of Incorporation dated May 15,
1997 filed as Exhibit 3(a) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997 and incorporated herein by reference.
(3)(a)(i) Certificate of Correction Filed to Correct a Certain Error in the
Restated and Amended Certificate of Incorporation of the Company
dated October 15, 1997 filed as Exhibit (3)(a)(i) to the
Registrant's Form 10-K-405 for the Year ended August 31, 1997, and
incorporated herein by reference.
(3)(a)(ii) Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated November 25, 1998 filed as
Exhibit (3)(a)(iii) to the Registrant's Form 10-Q for the quarter
ended November 30, 1998 and incorporated herein by reference.
(3)(a)(iii) Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated November 30, 1998 filed as
Exhibit (3)(a)(iv) to the Registrant's Form 10-Q for the quarter
ended November 30, 1998 and incorporated herein by reference.
(3)(b) Amended and Restated Bylaws of the Company.
(4)(a) Indenture dated as of May 29, 1998 between LES, Inc. (a subsidiary
of the Registrant), Registrant, subsidiary guarantors of the
Registrant and The Bank of Nova Scotia Trust Company of New York,
as trustee filed as Exhibit 4(b) to the Registrant's Form S-4
Registration Statement No. 333-57587 filed June 24, 1998 and
incorporated herein by reference.
(4)(b) First Supplemental Indenture effective as of November 15, 1998
among Safety-Kleen Services, Inc. the Registrant, SK Europe, Inc.
and The Bank of Nova Scotia Trust Company of New York, as trustee
filed as Exhibit (4)(f) to the Registrant's Form S-4 Registration
Statement No. 333-82689 filed July 12, 1999 and incorporated
herein by reference.
(4)(c) Second Supplemental Indenture effective as of May 7, 1999 among
Safety-Kleen Services, Inc. the Company, SK Services, L.C., SK
Services (East), L.C. and The Bank of Nova Scotia Trust Company of
New York, as trustee filed as Exhibit (4)(d) to the Company's Form
10-K filed October 29, 1999 and incorporated herein by reference.
(4)(d) Indenture dated as of May 17, 1999 between the Company and the
Bank of Nova Scotia Trust Company of New York, as trustee filed as
Exhibit (4)(b) to the Registrant's Form S-4 Registration Statement
No. 333-82689 filed July 12, 1999 and incorporated herein by
reference.
(4)(e) Amended and Restated Credit Agreement among Laidlaw Chem-Waste,
Inc., Laidlaw Environmental Services (Canada) Ltd., Toronto
Dominion (Texas) Inc., The Toronto-Dominion Bank, TD Securities
(USA) Inc., The Bank of Nova Scotia, NationsBank, N.A. and The
First National Bank of Chicago and NationsBank, N.A. as
Syndication Agent dated as of April 3, 1998, filed as Exhibit 4(f)
to the Registrant's Form 10-Q for the quarter ended February 28,
1999, and incorporated herein by reference.
(4)(f) Supplement to the Amended and Restated Credit Agreement among
Laidlaw Chem-Waste, Inc., Laidlaw Environmental Services (Canada)
Ltd., Toronto Dominion (Texas) Inc., The Toronto-Dominion Bank, TD
Securities (USA) Inc., The Bank of Nova Scotia, NationsBank, N.A.
and The First National Bank of Chicago and NationsBank, N.A. as
Syndication Agent dated as of April 3, 1998, filed as Exhibit 4(e)
to a subsidiary of the Registrant's Form S-4 Registration
Statement No. 333-57587 filed June 24, 1998 and incorporated
herein by reference.
<PAGE>
(4)(g) Waiver and First Amendment to the Amended and Restated Credit
Agreement dated as of May 15, 1998 among LES, Inc., Laidlaw
Environmental Services (Canada) Ltd., the Lenders, Toronto
Dominion (Texas), Inc., The Toronto Dominion Bank, TD Securities
(USA) Inc., The Bank of Nova Scotia, NationsBank, N.A., The First
National Bank of Chicago and Wachovia Bank filed as Exhibit 4(f)
to a subsidiary of the Registrant's Form S-4 Registration
Statement No. 333-57587 filed June 24, 1998 and incorporated
herein by reference.
(4)(h) Commitment to Increase Supplement to the Amended and Restated
Credit Agreement dated as of June 3, 1998 among LES, Inc., Laidlaw
Environmental Services (Canada) Ltd., the Lenders, Toronto
Dominion (Texas), Inc., The Toronto Dominion Bank, TD Securities
(USA) Inc., The Bank of Nova Scotia, NationsBank, N.A., The First
National Bank of Chicago and Wachovia Bank filed as Exhibit 4(g)
to a subsidiary of the Registrant's Form S-4 Registration
Statement No. 333-57587 filed June 24, 1998 and incorporated
herein by reference.
(4)(i) Second Amendment to the Amended and Restated Credit Agreement
dated as of November 20, 1998 among Safety-Kleen Services, Inc.
(formerly known as LES, Inc.), Safety-Kleen Services (Canada) Ltd.
(formerly known as Laidlaw Environmental Services (Canada) Ltd.),
the Lenders, Toronto Dominion (Texas), Inc., The Toronto Dominion
Bank, TD Securities (USA) Inc., The Bank of Nova Scotia,
NationsBank, N.A., The First National Bank of Chicago and Wachovia
Bank N.A., filed as Exhibit (4)(j) to the Registrant's Form 10-Q
for the quarter ended February 28, 1999 and incorporated herein by
reference.
(4)(j) Waiver and Third Amendment to the Amended and Restated Credit
Agreement dated as of May 6, 1999 among Safety-Kleen Services,
Inc. (formerly known as LES, Inc.), Safety-Kleen Services (Canada)
Ltd. (formerly known as Laidlaw Environmental Services (Canada)
Ltd.), the Lenders, Toronto Dominion (Texas), Inc., The Toronto
Dominion Bank, TD Securities (USA) Inc., The Bank of Nova Scotia,
NationsBank, N.A., The First National Bank of Chicago and Wachovia
Bank N.A. filed as Exhibit (4)(l) to the Registrant's Form S-4
Registration Statement No. 333-82689 filed July 12, 1999 and
incorporated herein by reference.
(4)(k) Fourth Amendment dated as of March 13, 2000 to the Amended and
Restated Credit Agreement dated as of May 6, 1999 among
Safety-Kleen Services, Inc. (formerly known as LES, Inc.),
Safety-Kleen Services (Canada) Ltd. (formerly known as Laidlaw
Environmental Services (Canada) Ltd.), the Lenders, Toronto
Dominion (Texas), Inc., The Toronto Dominion Bank, TD Securities
(USA) Inc., The Bank of Nova Scotia, NationsBank, N.A., The First
National Bank of Chicago and Wachovia Bank N.A. filed as Exhibit
(4)(l) to the Registrant's Current Report on Form 10-Q filed July
18, 2000 and incorporated herein by reference.
(4)(l) Consent dated as of March 16, 2000 to the Amended and Restated
Credit Agreement dated as of May 6, 1999 among Safety-Kleen
Services, Inc. (formerly known as LES, Inc.), Safety-Kleen
Services (Canada) Ltd. (formerly known as Laidlaw Environmental
Services (Canada) Ltd.), the Lenders, Toronto Dominion (Texas),
Inc., The Toronto Dominion Bank, TD Securities (USA) Inc., The
Bank of Nova Scotia, NationsBank, N.A., The First National Bank of
Chicago and Wachovia Bank N.A. filed as Exhibit (4)(m) to the
Registrant's Current Report on Form 10-Q filed July 18, 2000 and
incorporated herein by reference.
(4)(m) Amended and Restated $100,000,000 Debtor In Possession Credit
Agreement among Safety-Kleen Services, Inc., The Several Lenders
from Time to Time Parties thereto, Toronto Dominion (Texas), Inc.,
as General Administrative Agent and Underwriter and The CIT
Group/Business Credit, Inc. as Collateral Agent and Underwriter
Initially dated as of June 11, 2000 Amended and Restated as of
July 19, 2000.
<PAGE>
(4)(n) Registration Rights Agreement dated May 15, 1997 between the
Company, Laidlaw Transportation, Inc. and Laidlaw Inc. the form of
which was filed as Exhibit B to Annex A to the Registrant's
Definitive Proxy Statement on Form DEF 14A, filed on May 1, 1997
and incorporated herein by reference.
(4)(o) Indenture dated as of May 1, 1993 between the Industrial
Development Board of the Metropolitan Government of Nashville and
Davidson County (Tennessee) and NationsBank of Tennessee, N.A.,
filed as Exhibit 4(f) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by reference.
(4)(p) Indenture of Trust dated as of August 1, 1995 between Tooele
County, Utah and West One Bank, Utah, now known as U.S. Bank, as
Trustee, filed as Exhibit 4(h) to the Registrant's form 10-Q for
the Quarter ended May 31, 1997, and incorporated herein by
reference.
(4)(q) Indenture of Trust dated as of July 1, 1997 between Tooele County,
Utah and U.S. Bank, a national banking association, as Trustee,
filed as Exhibit 4(j) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by reference.
(4)(r) Indenture of Trust dated as of July 1, 1997 between California
Pollution Control Financing Authority and U.S. Bank, a national
banking association, as Trustee, filed as Exhibit 4(k) to the
Registrant's Form 10-Q for the Quarter ended May 31, 1997, and
incorporated herein by reference.
(4)(s) Promissory Note dated May 15, 1997 for $60,000,000 from the
Company to Westinghouse Electric Corporation, filed as Exhibit
4(n) to the Registrant's Form 10-Q for the Quarter ended May 31,
1997, and incorporated herein by reference.
(4)(t) Letter dated May 7, 1999 from Toronto-Dominion (Texas) Inc. (as
assignee of Westinghouse Electric Corporation) and agreed to by
the Company and Laidlaw Inc. amending the terms of the Promissory
Note dated May 15, 1997 (as referenced in Exhibit (4)(r)) filed as
Exhibit (4)(u) to the Registrant's Form S-4 Registration Statement
No. 333-82689 filed July 12, 1999 and incorporated herein by
reference.
(4)(u) Guaranty Agreement dated May 15, 1997 by Laidlaw Inc. to
Westinghouse Electric Corporation guaranteeing Promissory Note
dated May 15, 1997 (as referenced in Exhibit (4)(s)) from Company
to Westinghouse Electric Corporation), filed as Exhibit 4(o) to
the Registrant's Form 10-Q for the Quarter ended May 31, 1997, and
incorporated herein by reference.
(4)(v) Rights Agreement dated as of October 15, 1999 between the Company
and EquiServe Trust Company, N.A., as Rights Agent, filed as
Exhibit (c)1 to the Company's Current Report on Form 8-K filed on
October 15, 1999 and incorporated herein by reference.
(4)(w) First Amendment to Rights Agreement, dated as of March 17, 2000,
between the Company and EquiServe Trust Company, N.A. filed as
Exhibit 99.1 to the Company's Current Report on Form 8-K filed on
March 17, 2000 and incorporated herein by reference.
(4)(x) Letter Agreement, dated October 12, 1999, between the Company and
Laidlaw Inc. filed as Exhibit 99.2 to the Company's Current Report
on Form 8-K filed on March 17, 2000 and incorporated herein by
reference.
<PAGE>
(4)(y) Other instruments defining the rights of holders of nonregistered
debt of the Company have been omitted from this exhibit list
because the amount of debt authorized under any such instrument
does not exceed 10% of the total assets of the Company and its
subsidiaries. The Company agrees to furnish a copy of any such
instrument to the Commission upon request.
(10)(a) Agreement and Plan of Merger dated as of March 16, 1998 by and
among Registrant, LES Acquisition, Inc., and Safety-Kleen Corp.
included as Annex A of Safety-Kleen's Revised Amended Prospectus
on Form 14D-9 filed as Exhibit 62 to Safety-Kleen's Amendment No.
28 to Schedule 14-9A on March 17, 1998, and incorporated herein by
reference.
(10)(b) Stock Purchase Agreement between Westinghouse Electric Corporation
(Seller) and Rollins Environmental Services, Inc. (Buyer) for
National Electric, Inc. dated March 7, 1995 filed as Exhibit 2 to
the Registrant's Current Report on Form 8-K filed on June 13, 1995
and incorporated herein by reference.
(10)(c) Second Amendment to Stock Purchase Agreement (as referenced in
Exhibit (10)(b) above), dated May 15, 1997 among Westinghouse
Electric Corporation, Rollins Environmental Services, Inc. and
Laidlaw Inc., filed as Exhibit 4(m) to the Registrant's Form 10-Q
for the Quarter ended May 31, 1997, and incorporated herein by
reference.
(10)(d) Agreement for the sale and purchase of shares and loan stock hold
by SK Europe, Inc. in Safety-Kleen Europe Limited between
Safety-Kleen Europe Limited and SK Europe, Inc. and the Company
and The Electra Subscribers and Electra European Fund LP dated as
of July 6, 2000.
(10)(e) Rollins Environmental Services, Inc. 1982 Incentive Stock Option
Plan filed with Amendment No. 1 to the Company's Registration
Statement No. 2-84139 on Form S-1 dated June 24, 1983 and
incorporated herein by reference.
(10)(f) Rollins Environmental Services, Inc. 1993 Stock Option Plan filed
as Exhibit (10)(e) to the Registrant's Current Report on Form 10-Q
filed July 18, 2000 and incorporated herein by reference.
(10)(g) Company's 1997 Stock Option Plan, filed as Exhibit 4.4 to the
Company's Registration Statement No. 333-41859 on Form S-8 dated
December 10, 1997 and incorporated herein by reference.
(10)(h) First Amendment to Company's 1997 Stock Option Plan, filed as
Exhibit (10)(g) to the Company's Form 10-Q dated January 14, 2000
and incorporated herein by reference.
(10)(i) Company's Director's Stock Option Plan, filed as Exhibit 4.5 to
the Company's Registration Statement No. 333-41859 on Form S-8
dated December 10, 1997 and incorporated herein by reference.
(10)(j) First Amendment to Company's Director's Stock Option Plan filed as
Exhibit (10)(i) to the Company's Form 10-Q dated January 14, 2000
and incorporated herein by reference.
(10)(k) Stock Purchase Agreement dated February 6, 1997 among the Company,
Laidlaw Inc., and Laidlaw Transportation, Inc. filed as Exhibit A
to Annex A to the Definitive Proxy Statement on Form DEF 14A filed
on May 1, 1997 and incorporated herein by reference.
(10)(l) Executive Bonus Plan for fiscal year 2000 filed as Appendix C to
the Definitive Proxy Statement on Form DEF 14A filed on October
29, 1999 and incorporated herein by reference.
(10)(m) Company's U.S. Supplemental Executive Retirement Plan filed as
Exhibit 10(g) to the Company's 10-Q for the quarter ended November
30, 1997, and incorporated herein by reference.
(10)(n) Employment Agreement by and between Company and Grover C. Wrenn
dated as of August 23, 2000.
(10)(o) Employment Agreement by and between Company and David E. Thomas,
Jr. dated as of August 23, 2000.
<PAGE>
(10)(p) Employment Agreement by and between Company and Larry W. Singleton
dated as of July 17, 2000.
(10)(q) Form of Senior Executive Change of Control Agreement.
(10)(r) Senior Executive Retention Plan.
(10)(s) Senior Executive Severance Plan.
(10)(t) Executive Retention Plan.
(10)(u) Executive Severance Plan.
(10)(v) Key Manager Retention Plan.
(10)(w) Key Manager Severance Plan.
(10)(x) Letter Agreement dated March 16, 2000 between Jay Alix &
Associates and the Company filed as Exhibit (10)(x) to the
Company's Current Report on Form 10-Q filed July 18, 2000 and
incorporated herein by reference.
(21) Subsidiaries of Registrant.
(24) Power of Attorney (on the signature pages hereof)
(99.1) Consent Agreement and Final Order by and between the United States
Environmental Protection Agency and Safety-Kleen Corp. and certain
of its U. S. Subsidiaries and/or affiliates.
(b) Reports on Form 8-K.
i. The Company filed a Current Report on Form 8-K on June 6, 2000,
which contained Item 5 related to the Company announcing that the
Company did not make debt payments, the sale of the Elgin property
was terminated and that the Company was seeking new financial
assurance surety bonds.
ii. The Company filed a Current Report on Form 8-K on June 9, 2000
which contained Item 5 related to the Company announcing a
clarification of its June 6, 2000 press release.
iii. The Company filed a Current Report on Form 8-K on June 19, 2000
which contained Item 3 and Item 5 related to the Company
announcing the resignation of Kenneth W. Winger as a Director of
the Company as well as the fact that filing for protection under
the U.S. Bankruptcy Code was an event of default under the
Company's four Industrial Revenue Bonds.
iv. The Company filed a Current Report on Form 8-K on July 20, 2000
which contained Item 5 related to the Company announcing
finalization of debtor-in-possession financing.
v. The Company filed a Current Report on Form 8-K on August 8, 2000
which contained Item 4.
vi. The Company filed a Current Report on Form 8-K on August 18, 2000
which contained Item 5 related to the Company announcing the
appointment of Larry W. Singleton as the new Chief Financial
Officer of the Company.
vii. The Company filed a Current Report on Form 8-K on August 29, 2000
which contained Item 5 related to the Company announcing that SK
Europe, Inc., an indirect subsidiary of the Registrant had sold
its remaining interest in Safety-Kleen Europe Limited.
