<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 30, 1999
Commission File Number 1-8368
SAFETY-KLEEN CORP.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 51-0228924
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Gervais Street Columbia, Suite 300, South Carolina 29201
- ------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(803) 933-4200 (Registrant's telephone number, including area code)
--------------
---------------------------------------------------------------------------
(Former name, address and former fiscal year, if changed since last report)
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 X No ____
---
The number of shares of the issuer's common stock outstanding as of
January 12, 2000 was 100,637,975
<PAGE>
SAFETY-KLEEN CORP.
INDEX
<TABLE>
<CAPTION>
PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements
<S> <C> <C>
Consolidated Statements of Income for the Three Month Periods Ended
November 30, 1999 and 1998......................................................................... 2
Consolidated Statements of Comprehensive Income for the Three Months Ended
November 30, 1999 and 1998......................................................................... 3
Consolidated Balance Sheets as of November 30, 1999 and August 31, 1999................................. 4
Consolidated Statements of Cash Flows for the Three Months Ended
November 30, 1999 and 1998......................................................................... 5
Notes to Unaudited Consolidated Financial Statements for the Three Months Ended
November 30, 1999 and 1998......................................................................... 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations .................13
PART II OTHER INFORMATION
Item 1 Legal Proceedings....................................................................................... 19
Item 2 Changes In Securities and Use Of Proceeds............................................................... 20
Item 4 Submission of Matters to a Vote of Security Holders..................................................... 20
Item 6 Exhibits and Reports on Form 8-K........................................................................ 21
Signatures......................................................................................................... 33
</TABLE>
1
<PAGE>
SAFETY-KLEEN CORP.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share data)
(Unaudited)
Three Months Ended
November 30,
------------
1999 1998
---- ----
Revenues ............................................... $408,481 $467,019
-------- --------
Expenses:
Operating ........................................... 257,472 305,048
Depreciation and amortization ....................... 33,703 37,295
Selling, general and administrative ................. 34,250 34,500
-------- --------
Total expenses .................................... 325,425 376,843
-------- --------
Operating income ....................................... 83,056 90,176
Interest expense, net .................................. 40,135 43,084
Equity in earnings of associated company ............... 1,005 --
-------- --------
Income before income tax expense ....................... 43,926 47,092
Income tax expense ..................................... 19,219 19,320
-------- --------
Net income ............................................. $ 24,707 $ 27,772
======== ========
Basic income per share:
Net income .......................................... $ 0.25 $ 0.32
======== ========
Weighted average common stock outstanding (000s) .... 100,637 87,844
======== ========
Diluted income per share:
Net income .......................................... $ 0.25 $ 0.27
======== ========
Weighted average common stock outstanding and
assumed conversions (000s) ........................ 100,637 111,242
======== ========
See accompanying Notes to Unaudited Consolidated Financial Statements
2
<PAGE>
SAFETY-KLEEN CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in thousands)
(Unaudited)
Three Months Ended
November 30,
------------
1999 1998
---- ----
Net income .................................................. $24,707 $27,772
Other comprehensive income, net of tax:
Unrealized foreign currency translation adjustment ....... 1,837 1,492
------- -------
Other comprehensive income .................................. 1,837 1,492
------- -------
Comprehensive income ........................................ $26,544 $29,264
======= =======
See accompanying Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
SAFETY-KLEEN CORP.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
November 30,
1999
(Unaudited) August 31, 1999
----------- ---------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ........................... $ 5,932 $ 9,173
Trade and other accounts receivable, net of allowance
for doubtful accounts ............................. 446,917 395,009
Inventories and supplies ............................ 75,117 60,567
Deferred income taxes ............................... 58,659 58,641
Other current assets ................................ 54,466 50,005
----------- -----------
Total current assets .............................. 641,091 573,395
Long-term investments ................................. 80,134 76,739
Property, plant and equipment, net .................... 2,597,275 2,585,191
Goodwill, net of amortization ......................... 1,092,362 1,098,731
Other assets .......................................... 39,280 35,289
----------- -----------
Total assets ........................................ $ 4,450,142 $ 4,369,345
=========== ===========
LIABILITIES
Current liabilities
Accounts payable .................................... $ 189,408 $ 172,838
Accrued liabilities ................................. 121,515 163,818
Current portion of long-term debt ................... 91,796 85,063
----------- -----------
Total current liabilities ......................... 402,719 421,719
Environmental and other long-term liabilities ......... 203,816 226,631
Long-term debt ........................................ 1,961,640 1,882,371
Deferred income taxes ................................. 573,145 556,372
----------- -----------
Total liabilities ................................... 3,141,320 3,087,093
----------- -----------
Commitments and contingencies ......................... -- --
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share; authorized
250,000,000; issued and outstanding 100,637,975 -
November 30, 1999; 100,635,975 - August 31, 1999 ..... 100,638 100,636
Additional paid-in capital ............................ 1,342,472 1,342,448
Accumulated other comprehensive income ................ (11,112) (12,949)
Accumulated deficit ................................... (123,176) (147,883)
----------- -----------
Total stockholders' equity .......................... 1,308,822 1,282,252
----------- -----------
Total liabilities and stockholders' equity .......... $ 4,450,142 $ 4,369,345
=========== ===========
See accompanying Notes to Unaudited Consolidated Financial Statements
</TABLE>
4
<PAGE>
SAFETY-KLEEN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
<TABLE>
Three Months Ended
November 30,
------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 24,707 $ 27,772
Adjustments to reconcile net income to net cash provided
by (used in) operations:
Equity in undistributed earnings of associated companies (1,005) --
Depreciation and amortization 33,703 37,295
Deferred income taxes 15,567 11,060
Change in working capital and other items (115,648) (19,924)
----------- ---------
Net cash provided by (used in) operating activities (42,676) 56,203
----------- --------
Cash flows from investing activities:
Cash expended on business acquisitions (20,000) (4,058)
Purchases of property, plant and equipment (19,724) (14,424)
Increase in long-term investments (1,422) (53)
Change in other, net (945) 1,090
----------- --------
Net cash used in investing activities (42,091) (17,445)
----------- ---------
Cash flows from financing activities:
Issuance of common stock on exercise of stock options 26 --
Net borrowings (repayments) of long-term debt 82,106 (45,307)
--------- ---------
Net cash provided by (used in) financing activities 82,132 (45,307)
---------- ---------
Effect of exchange rate changes on cash (606) (5,203)
----------- ---------
Net decrease in cash and cash equivalents (3,241) (11,752)
Cash and cash equivalents at:
Beginning of period 9,173 16,333
---------- --------
End of period $ 5,932 $ 4,581
========== ========
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
5
<PAGE>
SAFETY-KLEEN CORP.
Notes to Unaudited Consolidated Financial Statements
For the Three Months Ended November 30, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X and, therefore, do not include all of the disclosures required by
generally accepted accounting principles for annual financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the interim period results have been included; all such
adjustments are of a normal recurring nature. Operating results for the three
months ended November 30, 1999 are not necessarily indicative of the results
that may be expected for the full fiscal year ending August 31, 2000. These
statements should be read in conjunction with the consolidated financial
statements, including the accounting policies, and notes thereto included in the
Registrant's Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on October 29, 1999. Certain amounts as of August 31, 1999 have been
reclassified to conform to the current period's presentations.
NOTE 2 - SEGMENT INFORMATION
The Company is organized along its two primary business activities - Collection
and Recovery and Treatment and Disposal. Each of these two segments are managed
independently from the other and report separately to senior management. The
Company evaluates performance based on several factors, of which the primary
financial measure is operating income before depreciation and amortization
("EBITDA"). The table below reflects certain information relating to the
Company's operations ($ in thousands):
6
<PAGE>
<TABLE>
Collection Treatment
and Recovery and Disposal Europe Other Total
------------ ------------------- ----- -----
<S> <C> <C> <C> <C> <C>
Three Months Ended
November 30, 1999
Outside revenue ............. $339,571 $ 68,910 $ -- $ -- $408,481
Intercompany revenue ........ 15,227 36,095 -- (51,322) --
Depreciation and amortization 18,006 8,179 -- 7,518 33,703
EBITDA ...................... 99,769 37,425 -- (20,435) 116,759
Three Months Ended
November 30, 1998
Outside revenue ............. $340,919 $ 94,400 $ 31,700 $ -- $467,019
Intercompany revenue ........ 7,532 29,071 -- (36,603) --
Depreciation and amortization 17,507 9,276 3,438 7,074 37,295
EBITDA ...................... 110,880 35,954 7,605 (26,968) 127,471
</TABLE>
Reconciliation of reportable segment primary financial measure to operating
income is as follows ($ in thousands):
Three Months Ended
------------------
November 30,
------------
1999 1998
---- ----
Total EBITDA $ 116,759 $ 127,471
Depreciation and amortization 33,703 37,295
--------- ---------
Operating income $ 83,056 $ 90,176
========= =========
NOTE 3 - STOCKHOLDERS' EQUITY
Changes in the components of stockholders' equity since September 1, 1999 are as
follows ($ in thousands):
<TABLE>
Accumulated
Additional Other Total
Common Paid-In Comprehensive Accumulated Stockholders'
Stock Capital Income Deficit Equity
----- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
Balance, September 1, 1999 $ 100,636 $1,342,448 $ (12,949) $ (147,883) $1,282,252
Net income for period ..... -- -- -- 24,707 24,707
Issuance of shares ........ 2 24 -- -- 26
Cumulative foreign currency
translation adjustment . -- -- 1,837 -- 1,837
---------- ---------- ---------- ---------- ----------
Balance, November 30, 1999 $ 100,638 $1,342,472 $ (11,112) $ (123,176) $1,308,822
========== ========== ========== ========== ==========
</TABLE>
NOTE 4 - STATEMENTS OF CASH FLOWS
The non-cash transactions for the three months ended November 30, 1999 and 1998
are as follows ($ in thousands):
Three Months Ended
November 30,
------------
1999 1998
---- ----
Non-cash investing and financing activities:
Issuance of common stock to satisfy interest payment
due on subordinated convertible debenture $ -- $ 8,750
Issuance of common stock to satisfy payment of directors'
fees -- 93
7
<PAGE>
NOTE 5 - SUMMARIZED FINANCIAL INFORMATION
The Senior Subordinated Notes (the "Notes") issued by Safety-Kleen Services,
Inc., a consolidated subsidiary of the Company, are jointly and severally
guaranteed by Safety-Kleen Corp. and all wholly-owned domestic subsidiaries of
the Company on a full and unconditional basis. The Notes contain certain
covenants, which, among other things, restrict the payment of dividends from
Safety-Kleen Services, Inc. and its subsidiary guarantors to Safety-Kleen Corp.
Summarized financial information for each of Safety-Kleen Corp., Safety-Kleen
Services, Inc., the subsidiary guarantors, and the subsidiary non-guarantors on
a consolidating basis are presented below. Separate financial statements and
other disclosures concerning the subsidiary guarantors are not included because
management believes that they are not material to investors.
8
<PAGE>
<TABLE>
Consolidating Condensed Balance Sheet
November 30, 1999
(Unaudited)
Safety-Kleen Subsidiary
Safety-Kleen Services, Subsidiary Non- Elimination Consolidated
($ in thousands) ..................... Corp. Inc. Guarantors Guarantors Entries Totals
------------ ------------ ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets ....................... $ 22,506 $ -- $ 578,842 $ 56,358 $ (16,615) $ 641,091
Property, plant and
equipment, net .................... -- -- 2,405,176 192,099 -- 2,597,275
Investment in subsidiaries ........... 1,627,025 3,040,176 2,597,252 3 (7,264,456) --
Goodwill ............................. -- -- 1,035,779 56,583 -- 1,092,362
Other non-current assets ............. -- -- 118,036 1,378 -- 119,414
----------- ----------- ----------- ----------- ----------- -----------
Total assets ...................... $ 1,649,531 $ 3,040,176 $ 6,735,085 $ 306,421 $(7,281,071) $ 4,450,142
=========== =========== =========== =========== =========== ===========
LIABILITIES
Current liabilities .................. $ 2,460 $ 117,404 $ 241,457 $ 58,013 $ (16,615) $ 402,719
Non-current liabilities .............. -- -- 765,270 11,691 -- 776,961
Long-term debt ....................... 338,249 1,568,384 15,656 39,351 -- 1,961,640
Subordinated convertible
debenture ......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities ................. 340,709 1,685,788 1,022,383 109,055 (16,615) 3,141,320
STOCKHOLDERS' EQUITY ................ 1,308,822 1,354,388 5,712,702 197,366 (7,264,456) 1,308,822
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities and
stockholders' equity .............. $ 1,649,531 $ 3,040,176 $ 6,735,085 $ 306,421 $(7,281,071) $ 4,450,142
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
Consolidating Condensed Statement of Income
Three Months Ended November 30, 1999
(Unaudited)
Safety-Kleen Subsidiary
Safety-Kleen Services, Subsidiary Non- Elimination Consolidated
($ in thousands) Corp. Inc. Guarantors Guarantors Entries Totals
----- ---- ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ............... $ -- $ -- $ 357,990 $ 55,644 $ (5,153) $ 408,481
Operating expenses ........... 500 -- 290,942 39,136 (5,153) 325,425
--------- --------- --------- --------- --------- ---------
Operating income (loss) ...... (500) -- 67,048 16,508 -- 83,056
Interest expense (income), net 7,422 30,577 (101) 2,237 -- 40,135
Equity in undistributed
earnings of subsidiaries .. 29,228 46,680 1,005 -- (75,908) 1,005
--------- --------- --------- --------- --------- ---------
Income before income
tax expense ............... 21,306 16,103 68,154 14,271 (75,908) 43,926
Income tax expense (benefit) . (3,401) (13,125) 29,256 6,489 -- 19,219
--------- --------- --------- --------- --------- ---------
Net income ................... $ 24,707 $ 29,228 $ 38,898 $ 7,782 $ (75,908) $ 24,707
========= ========= ========= ========= ========= =========
</TABLE>
9
<PAGE>
<TABLE>
Consolidating Condensed Statement of Cash Flows
Three Months Ended November 30, 1999
(Unaudited)
Safety-Kleen Subsidiary
Safety-Kleen Services, Subsidiary Non- Elimination Consolidated
($ in thousands) Corp. Inc. Guarantors Guarantors Entries Totals
----- ---- ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities ....... $ (19,195) $ (18,017) $ (25,244) $ 11,806 $ 7,974 $ (42,676)
---------- ---------- ---------- ---------- --------- ----------
Cash flows from investing
activities:
Cash expended on
acquisition of business .... -- -- (20,000) -- -- (20,000)
Proceeds from sale of property,
plant and equipment ........ -- -- -- -- -- --
Purchases of property, plant
and equipment .............. -- -- (18,091) (1,633) -- (19,724)
Increase in long-term
investments ................ -- -- (1,422) -- -- (1,422)
Change in other, net .......... -- -- (946) 1 -- (945)
---------- ---------- ---------- ---------- --------- ----------
Net cash (used in)
investing activities ....... -- -- (40,459) (1,632) -- (42,091)
---------- ---------- ----------- ---------- --------- ---------
Cash flows from financing
activities:
Issuance of common stock on
exercise of stock options .. 26 -- -- -- -- 26
Borrowings of long-term debt .. -- -- -- -- -- --
Repayment of long-term debt ... -- 84,894 (142) (2,646) -- 82,106
Bank overdraft ................ -- -- -- -- -- --
Intercompany payable
(receivable) ............... 8,939 (66,877) 65,845 (7,907) -- --
---------- ---------- ---------- ---------- --------- ----------
Net cash provided by (used in)
financing activities ....... 8,965 18,017 65,703 (10,553) -- 82,132
---------- ---------- ----------- ---------- --------- ----------
Effect of exchange rate
changes on cash ............ -- -- -- (606) -- (606)
---------- ---------- ----------- ---------- --------- ----------
Net decrease in cash and cash
equivalents ................ (10,230) -- -- (985) 7,974 (3,241)
Cash and cash equivalents at:
Beginning of period ........ 22,445 -- -- 1,026 (14,298) 9,173
---------- ---------- ----------- ---------- --------- ----------
End of period .............. $ 12,215 $ -- $ -- $ 41 $ (6,324) $ 5,932
========== ========== ========== ========== ========= ==========
</TABLE>
10
<PAGE>
<TABLE>
Consolidating Condensed Balance Sheet
August 31, 1999
Safety-Kleen Subsidiary
Safety-Kleen Services, Subsidiary Non- Elimination Consolidated
($ in thousands) Corp. Inc. Guarantors Guarantors Entries Totals
----- ---- ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets ........... $ 24,956 $ -- $ 514,319 $ 48,418 $ (14,298) $ 573,395
Property, plant and
equipment, net ........ -- -- 2,397,277 187,914 -- 2,585,191
Investment in subsidiaries 1,601,498 2,911,631 2,346,621 -- (6,859,750) --
Goodwill ................. -- -- 1,042,315 56,416 -- 1,098,731
Other non-current assets . -- -- 110,672 1,356 -- 112,028
----------- ----------- ----------- ---------- ------------ -----------
Total assets .......... $ 1,626,454 $ 2,911,631 $ 6,411,204 $ 294,104 $(6,874,048) $ 4,369,345
=========== =========== =========== ========== ============ ===========
LIABILITIES
Current liabilities ...... $ 7,189 $ 100,208 $ 277,455 $ 51,165 (14,298) $ 421,719
Non-current liabilities .. -- -- 777,149 5,854 -- 783,003
Long-term debt ........... 337,013 1,488,126 15,798 41,434 -- 1,882,371
----------- ----------- ----------- ---------- ------------ -----------
Total liabilities ..... 344,202 1,588,334 1,070,402 98,453 (14,298) 3,087,093
STOCKHOLDERS' EQUITY .... 1,282,252 1,323,297 5,340,802 195,651 (6,859,750) 1,282,252
----------- ----------- ----------- ---------- ------------ -----------
Total liabilities and
stockholders' equity .. $ 1,626,454 $ 2,911,631 $ 6,411,204 $ 294,104 $(6,874,048) $ 4,369,345
=========== =========== =========== ========== ============ ===========
</TABLE>
<TABLE>
Consolidating Condensed Statement of Income
Three Months Ended November 30, 1998
(Unaudited)
Safety-Kleen Subsidiary
Safety-Kleen Services, Subsidiary Non- Elimination Consolidated
($ in thousands) Corp. Inc. Guarantors Guarantors Entries Totals
----- ---- ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total revenues ............... $ -- $ -- $ 354,362 $ 123,171 $ (10,514) $ 467,019
Operating expenses ........... -- -- 300,382 86,975 (10,514) 376,843
-------- --------- ---------- ---------- ----------- ---------
Operating income ............. -- -- 53,980 36,196 -- 90,176
Interest expense (income), net 6,412 36,591 (7,400) 7,481 -- 43,084
Undistributed earnings
of subsidiaries ........... 31,504 52,800 -- -- (84,304) --
-------- --------- ---------- ---------- ----------- ---------
Income before income
tax expense (benefit) ..... 25,092 16,209 61,380 28,715 (84,304) 47,092
Income tax expense (benefit) . (2,680) (15,295) 25,639 11,656 -- 19,320
--------- --------- ---------- ---------- ---------- ---------
Net income ................... $ 27,772 $ 31,504 $ 35,741 $ 17,059 $ (84,304) $ 27,772
========= ========= ========== ========== =========== =========
</TABLE>
11
<PAGE>
<TABLE>
Consolidating Condensed Statement of Cash Flows
Three Months Ended November 30, 1998
(Unaudited)
Safety-Kleen Subsidiary
Safety-Kleen Services, Subsidiary Non- Elimination Consolidated
($ in thousands) Corp. Inc. Guarantors Guarantors Entries Totals
----- ---- ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $ (3,527) $ (18,185) $ 107,126 $ (29,211) $ -- $ 56,203
---------- ---------- -------- ---------- --------- ----------
Cash flows from investing
activities:
Cash expended on
acquisition of business ... -- -- (4,058) -- -- (4,058)
Proceeds from sale of business -- -- -- -- -- --
Proceeds from sale of
property, plant and
equipment ................. -- -- 693 397 -- 1,090
Purchases of property, plant
and equipment ............. -- -- (10,300) (4,124) -- (14,424)
Increase in long-term
investments ............... -- -- (53) -- -- (53)
Change in other, net ......... -- -- -- -- -- --
---------- ---------- ---------- ---------- --------- ----------
Net cash (used in) investing
activities ................ -- -- (13,718) (3,727) -- (17,445)
---------- ---------- ---------- ---------- --------- ----------
Cash flows from financing
activities:
Issuance of common stock on
exercise of stock options . -- -- -- -- -- --
Borrowings of long-term debt . -- -- -- -- -- --
Repayment of long-term debt .. -- (44,611) (696) -- -- (45,307)
Bank financing fees .......... -- -- -- -- -- --
Intercompany payable
(receivable) .............. 3,527 62,796 (96,624) 30,301 -- --
---------- ---------- ---------- ---------- -------- ----------
Net cash provided by (used in)
financing activities ...... 3,527 18,185 (97,320) 30,301 -- (45,307)
---------- ---------- ---------- ---------- --------- ----------
Effect of exchange rate
changes on cash ........... -- -- -- (5,203) -- (5,203)
---------- ---------- ---------- ---------- --------- ----------
Net decrease in cash and
cash equivalents .......... -- -- (3,912) (7,840) -- (11,752)
Cash and cash equivalents at:
Beginning of period ....... -- -- 4,343 11,990 -- 16,333
---------- ---------- --------- ---------- --------- ----------
End of period ............. $ -- $ -- $ 431 $ 4,150 $ -- $ 4,581
========== ========== ========== ========== ========= ==========
</TABLE>
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and related notes thereto
included elsewhere herein.
The following discussion and analysis includes statements that are
considered forward-looking based on the Company's expectations and, as such,
these statements are subject to uncertainty and risk. See "Factors That May
Affect Future Results" below.
Results of Operations:
Three Months Ended November 30, 1999 compared with Three Months Ended November
30, 1998
Operating results are as follows ($ in millions):
Three Months Ended November 30,
1999 1998
---- ----
Revenues .............................. $ 408.5 100.0% $ 467.0 100.0%
Operating expense ..................... 257.5 63.1% 305.0 65.3%
Depreciation and amortization ......... 33.7 8.2% 37.3 8.0%
Selling, general and administrative ... 34.2 8.4% 34.5 7.4%
------- ------ ------- ------
Operating income ...................... $ 83.1 20.3% $ 90.2 19.3%
======= ====== ======= ======
Revenues
Components of revenue ($ in millions): Three Months Ended November 30,
-------------------------------
1999 1998
--------------- --------------
Collection and Recovery Services
Industrial Services ................. $ 193.6 47% $ 206.2 44%
Commercial and Institutional Services 146.0 36% 134.7 29%
------- ---- ------ ----
Total Collection and Recovery Services .. 339.6 83% 340.9 73%
Treatment and Disposal Services ......... 68.9 17% 94.4 20%
European Operations ..................... 0.0 0% 31.7 7%
------- ---- ------ ----
Total revenue ...................... $ 408.5 100% $ 467.0 100%
======= ==== ======= ====
13
<PAGE>
Revenues decreased $58.5 million, or 12.5%, during the three months
ended November 30, 1999, compared to the three months ended November 30, 1998.
Revenue from collection and recovery services to industrial customers decreased
$12.6 million, or 6.1%, while collection and recovery services to commercial and
institutional customers increased $11.3 million, or 8.4%. Revenue from treatment
and disposal services decreased $25.5 million, or 27%, primarily due to a
reduction in the level of activity at the Company's harbor dredging and
treatment operations.
The Company eliminates inter-company revenues in presenting
consolidated financial results. The majority of such eliminations occur at the
Company's disposal facilities which receive waste streams from the Company's
collection and recovery services network.
Management's estimate of the components of the changes in the Company's
consolidated revenue is as follows:
Percentage Increase (Decrease)
Three Months Ended November 30,
1999 over 1998
Expansion of customer base by acquisition 1.7%
Other, primarily through volume and price changes (8.0%)
Divestitures and closures (6.8%)
Foreign exchange rate changes 0.6%
------
Total (12.5%)
The revenue increase from acquisitions related to a used oil collection
business acquired on September 1, 1999. Revenues from existing operations were
impacted by a significant reduction in the level of activity in the Company's
harbor dredging and treatment operations within the treatment and disposal
component. Revenues from these operations of nil in the current period compare
to revenues of $19.4 million in the prior year period. Excluding harbor dredging
and treatment operations, price and volume changes from existing operations
would have declined by 4.3%, due primarily to reductions in event work activity
in the treatment and disposal and industrial services components. Prior year
revenues included contributions from the Company's European Operations which
were deconsolidated as of November 30, 1998. An increase in revenues due to
foreign exchange rate changes resulted from a relative increase in the Canadian
dollar translation rate.
It is expected that revenues will be lower for the three month period
ending February 29, 2000 compared to the three months ended November 30, 1999
due to the traditional seasonality impact of fewer working days and a decrease
in customer activity associated with holiday down-time within their operations.
In addition, the revenues for the three months ended February 28, 1999 had
previously included the predecessor Safety-Kleen's year-end sales drive
(December 31), which drive now coincides with the Company's August 31 fiscal
year end.
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For the third and fourth quarters of fiscal 2000, the Company
anticipates moderate revenue growth of 1.5% to 1.75% adjusted for differing
business days (on a quarter-to-quarter basis) in its collection and recovery
line of business. The Company also expects to generate revenues of approximately
$300 million in fiscal 2000 in its treatment and disposal line of business. The
Company's revenue estimates are based on current market conditions and could be
impacted by any of the factors described in "Factors That May Affect Future
Results".
Operating Expense
Operating expenses decreased $47.5 million, or 15.6%, during the three
months ended November 30, 1999, compared to the three months ended November 30,
1998. The reduction was primarily attributable to the deconsolidation of the
Company's European Operations and the reduction in harbor dredging and treatment
operations. As a percentage of revenue, operating expense decreased to 63.1%
from 65.3% in the prior year, primarily due to the increased utilization of
existing facilities and other operational assets, acquisition related cost
reduction measures, primarily personnel related costs, and an decrease in lower
margin business.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased $3.6 million, or 9.6%,
during the three months ended November 30, 1999, compared to the prior year. The
decrease was primarily attributable to the deconsolidation of the Company's
European Operations. As a percentage of revenue, depreciation and amortization
expense was 8.2%, compared to 8.0% in the prior year.
Selling, General and Administrative Expense
Selling, general and administrative expenses decreased $0.3 million, or
0.9%, during the three months ended November 30, 1999, versus the prior year. As
a percentage of revenue, selling, general and administrative expenses increased
to 8.4% from 7.4% in the prior year due to increased selling costs and lower
than average administrative costs for the deconsolidated European Operations.
Interest Expense
Interest expense decreased $4.0 million, or 9.1%, during the three
months ended November 30, 1999, over the prior year as a result of the reduction
in long term debt outstanding.
Equity in Earnings of Associated Companies
On December 23, 1998, the Company sold a 56% interest in its European
operations. The Company's remaining interest in the European Operations
contributed $1.0 million on an equity basis for the three months ended November
30, 1999. The Company intends to permanently reinvest its share of the earnings
of the European Operations.
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Income Tax Expense
The effective tax rate of 45% on income before restructuring and other
charges, equity earnings and taxes ($43.1 million) has increased over the prior
year effective rate primarily due to the sale of 56% of the Company's European
operations. The European operations had an effective tax rate below that of the
overall Company average.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This report contains various forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, including
financial, operating and other projections. These statements are based on
current plans and expectations of the Company and involve a number of risks and
uncertainties that could cause actual future activities and results of
operations to be materially different from those set forth in the
forward-looking statements.
Important factors that could cause actual results to differ include,
among others, risks associated with acquisitions and fluctuations in operating
results because of acquisitions; impact of new and existing competitors;
successful integration of the former Laidlaw Environmental Services and
Safety-Kleen industrial sales forces; implementation of a common operational
management information system in the industrial services and treatment and
disposal lines of business; general level of economic activity in North America
remaining constant; the ability of the Company to effectively introduce new
product offerings; the ability of the Company to increase cash collections of
accounts receivable; changes in applicable government regulations (environmental
and other), the impact of litigation, and other factors described in Part I,
Item 1 of the Company's Annual Report on Form 10-K for the Twelve Months Ended
August 31, 1999. As a result of these factors, the Company's revenue and income
could vary significantly from quarter to quarter, and past financial performance
should not be considered a reliable indicator of future performance.
CAPITALIZATION
On November 24, 1998, the Company's shareholders approved a
one-for-four reverse stock split which became effective on November 30, 1998. As
a result, shareholders received one share of Safety-Kleen common stock for each
four shares previously held.
On November 15, 1998, the Company issued 635,208 shares to satisfy
interest due on the subordinated convertible debenture.
On May 17, 1999, the Company issued 533,333 shares to satisfy interest
due on the subordinated convertible debenture.
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On May 17, 1999, the Company issued $225 million 9.25% Senior Notes due
2009 (the "Senior Notes") in a private offering. Net proceeds from the sale of
the Senior Notes, after the underwriting discount and other expenses, were
approximately $214 million. The net proceeds were used to finance the cash
portion of the purchase price for the repurchase of the subordinated convertible
debenture (the "Repurchase"). The purchase price also included approximately
11.3 million common shares of the Company. The issuance of the common shares was
approved at a Special Meeting of the stockholders of the Company on August 27,
1999.
On August 27, 1999, the Company issued 376,858 shares to satisfy
interest due, through the date of the repurchase, on the subordinated
convertible debenture.
LIQUIDITY
Total cash used in operations during the three months ended November
30, 1999 was $42.7 million. This was composed of $66.0 million from operations
before financing working capital requirements of $101.7 million and $7.0 million
related to spending on acquisition environmental liabilities.
The Company's primary sources of liquidity are cash flows from
operations, existing cash and short-term investments of $5.9 million, and the
unused cash portion of the Senior Credit Facility's revolver tranche of $198.0
million. The available portion of this revolver tranche varies from quarter to
quarter.
The Company's Senior Credit Facility contains negative, affirmative and
financial covenants customarily found in credit agreements for financings
similar to the financing provided under the Senior Credit Facility, including
covenants limiting annual capital expenditures, restricting quarterly debt,
guaranties and lien amounts, mergers and consolidations, sales of assets and
payment of dividends. The Company was in compliance with all of its covenants at
November 30, 1999.
The Company's 1999 Notes are effectively subordinated to the Company's
subsidiaries' indebtedness. The payment of dividends, advances or other
distributions from the Company's subsidiaries to the Company, as may be required
to service the Senior Notes, may be restricted as they are subject to the
various indentures, covenants and other obligations of the subsidiaries.
Trade and other accounts receivable represent the largest portion of
current assets, totaling $446.9 million at November 30, 1999. The average days
sales outstanding ("DSO") increased to 93 days, from 82 days at August 31, 1999.
The DSO increase and the related increase in working capital was due to billing
and collections systems integration and modifications. The Company expects days
sales outstanding to decrease over the balance of fiscal 2000 as these
integration issues are resolved and as systems modifications become complete.
The Company is targeting reducing trade accounts receivable by $15 to $20
million during its second quarter of fiscal 2000.
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The Company expects to fund capital expenditures, debt repayment and
environmental liability requirements from cash flows from operations.
The Company has not paid dividends during the reported periods, and
does not intend to pay dividends in the foreseeable future. Additionally, the
Senior Credit Facility prohibits the payment of dividends (unless a given
percentage of lenders otherwise agree).
CAPITAL EXPENDITURES AND CAPITAL RESOURCES
Investing activities for the three months ended November 30, 1999, used
cash of $42.1 million. Net expenditures for the purchase of fixed assets for
normal replacement requirements and increases in services were $19.7 million and
$20.0 million was spent acquiring new businesses. The Company's projected
capital expenditures for fiscal 2000 are approximately $75 to $80 million. The
Company believes that it has adequate resources to finance these expenditures.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 ("Y2K") issue is the result of computer programs using
a two-digit format, as opposed to four digits, to indicate the year. Such
computer programs will be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions in
operations. The Company developed a three-phase program for Y2K systems
compliance. Phase I identified those systems with respect to which the Company
had exposure to Y2K issues. Phase II was the development and implementation of
action plans for Y2K compliance. Phase III was the final testing of the
appropriate major areas of exposure to ensure compliance.
All three phases were completed by December 31, 1999, and to January
14, 2000, the Company is not aware of any significant problems, or financial
losses, associated with Y2K issues.
Given the short period of time that has elapsed post December 31,
1999, it is possible that the Company and its major vendors might not have yet
identified or become aware of some Y2K issues and the related implications.
While we believe the identification of significant Y2K issues is
unlikely at this time, a possible worst case scenario might include (a) delays,
inaccuracies or other difficulties with respect to billing customers or the loss
of customer records, (b) our inability to run one or more of our incinerators or
recycling facilities, (c) our key vendors not being able to supply goods and
services on a timely basis, and (d) the inability of our customers to remit
payment for services rendered on a timely basis. The financial impact of any or
all of the above worst case scenarios has not been and cannot be estimated by
management due to the numerous uncertainties and variables associated with such
scenarios.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
GENERAL
The business of the Company's hazardous and industrial waste services
is continuously regulated by federal, state, provincial and local provisions
that have been enacted or adopted, regulating the discharge of materials into
the environment or primarily for the purpose of protecting the environment. The
nature of the Company's businesses 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 technical violations of existing
permits and licenses. The Company does not believe that these issues will be
material to the Company's operations or financial condition. At November 30,
1999, subsidiaries of the Company were involved in four proceedings of the
latter type relating primarily to activities at waste treatment, storage and
disposal facilities where the Company believes sanctions involved in each
instance may exceed $100,000. The Company believes that the ultimate disposition
of these issues will not have a materially adverse effect upon the Company's
consolidated financial position or results of operations.
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 injury resulting from the use of the Company's parts
cleaner equipment and/or cleaning products, other matters involving personal
injury and property damage claims and employment-related claims. A number of
such legal proceedings are currently pending in various courts and jurisdictions
throughout North America. Based on the Company's assessment of known claims and
its historical claims payment pattern, and discussions with internal and outside
legal counsel and risk management personnel, the Company believes that there is
no proceeding pending against the Company relating to such matters arising out
of the ordinary course of business that, if resolved against the Company, would
have a materially adverse effect upon the Company's consolidated financial
position or results of operations.
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 and transporters of the waste material, are
jointly and severally liable for remediation costs and environmental damage. At
November 30, 1999, the Company had been notified that it was a potentially
responsible party in connection with 49 locations in its hazardous waste
management and other businesses. 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 numbers and financial soundness of other potentially
responsible parties at the location. Based upon presently available information,
the Company does not believe that potential liabilities arising from its
involvement with these locations will be material to the Company's operations or
financial condition.
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LAMBTON HAZARDOUS WASTE LANDFILL, ONTARIO, CANADA
On September 3, 1999, The Company's Lambton hazardous waste landfill
facility in Ontario, Canada (the "Facility"), 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 will provide a report for the approval of the Director of
the MOE which provides 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.
These events at the Facility have resulted in an immaterial financial
loss due to the temporary closure of the landfill and may result in a reduction
in cell and overall landfill capacity which, depending upon the level of waste
disposal at the Facility may (1) decrease operating income margins and (2)
require a permit expansion earlier than previously anticipated.
Other than as herein reported there have been no additional significant
legal proceedings nor any material changes in the legal proceedings reported in
PART II, Item 3 of the Registrant's Report on Form 10-K for the twelve months
ended August 31, 1999.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On October 5, 1999, the Board of Directors of the Company declared a
dividend distribution of one Common Share Purchase Right on each outstanding
share of Common Stock payable on or about October 25, 1999 to shareholders of
record on such date. For a further description of the Rights, see the Summary of
Rights to Purchase Common Stock which was attached as Exhibit B to the Rights
Agreement and attached as Exhibit 1 to the Company's Current Report on Form 8-K
filed on October 15, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Shareholders was held on November 30,
1999. At the meeting, the Company's shareholders (i) elected the three
individuals who had been nominated to be members of the Board of Directors, (ii)
approved an increase of the number of shares available under the 1997 stock
option plan by 1,000,000 shares; and (iii) approved the Executive Bonus Plan.
The following table sets forth the voting results:
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For Against Withheld Abstentions
--- ------- -------- -----------
Election of Directors:
John W. Rollins, Sr. 89,253,134 N/A 1,830,632 N/A
David E. Thomas, Jr. 89,247,094 N/A 1,836,672 N/A
James R. Bullock 89,252,725 N/A 1,831,041 N/A
Employee Option Increase 84,599,137 6,200,874 N/A 283,755
Executive Bonus Plan 88,981,816 1,672,847 N/A 429,103
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 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.
(3)(b) Amended and Restated Bylaws of the Company filed as Exhibit 4(ii) to
the Registrant's Current Report on Form 8-K dated July 29, 1997 and incorporated
herein by reference.
(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) Indenture dated as of May 17, 1999 between 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
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Statement No. 333-82689 filed July 12,1999 and incorporated herein by reference.
(4)(d) Second Supplemental Indenture effective as of May 7, 1999 among
Safety-Kleen Services, Inc. the Registrant, 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 Registrant's Form 10-K filed October 29, 1999 and
incorporated herein by reference.
(4)(e) Registration Rights Agreement dated as of May 17, 1999 between
Registrant and TD Securities, NationsBanc Montgomery Securities LLC and Raymond
James & Associates, Inc. filed as Exhibit (4)(a) to the Registrant's Form S-4
Registration Statement No. 333-82689 filed July 12, 1999 and incorporated herein
by reference.
(4)(f) 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)(g) 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)(h) 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)(i) 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)(j) 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,
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1999 and incorporated herein by reference.
(4)(k) 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)(l) Registration Rights Agreement dated May 15, 1997 between Registrant,
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)(m) 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)(n) 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)(o) Indenture of Trust dated as of July 1, 1997 between Carbon County,
Utah and U.S. Bank, a national banking association, as Trustee, filed as Exhibit
4(i) 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 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)(q) 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)(r) Promissory Note dated May 15, 1997 for $60,000,000 from the
Registrant 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)(s) Letter dated May 7, 1999 from Toronto-Dominion (Texas) Inc. (as
assignee of Westinghouse Electric Corporation) and agreed to by the Registrant
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.
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(4)(t) 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 Registrant 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)(u) Collateral Account Pledge and Security Agreement dated as of May 17,
1999 between the Registrant, the Bank of Nova Scotia Trust Company of New York,
as escrow agent and the Bank of Nova Scotia Trust Company of New York, as
trustee, filed as Exhibit (4)(d) to the Registrant's Form S-4 Registration
Statement No. 333-82689 filed July 12, 1999 and incorporated herein by
reference.
(4)(v) Registration Rights Agreement dated as of October 15, 1999 between
the Registrant and EquiServe Trust Company, N.A., as Rights Agent, filed as
Exhibit (c)1 to the Registrant's Current Report on Form 8-K filed on October 15,
1999 and incorporated herein by reference.
(4)(w) Other instruments defining the rights of holders of nonregistered
debt of the Registrant 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 Registrant and its subsidiaries. The Registrant 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) 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)(e) Rollins Environmental Services, Inc. 1993 Stock Option Plan filed
with the Company's Proxy Statement for the Annual Meeting of Shareholders held
January 28, 1994 and incorporated herein by reference.
(10)(f) Registrant'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.
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(10)(g) First Amendment to Registrant's 1997 Stock Option Plan.
(10)(h) Registrant'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)(i) First Amendment to Registrant's Director's Stock Option Plan.
(10)(j) Stock Purchase Agreement dated February 6, 1997 among the
Registrant, 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)(k) 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)(l) Registrant's U.S. Supplemental Executive Retirement Plan filed as
Exhibit 10(g) to the Registrant's 10-Q for the quarter ended November 30, 1997,
and incorporated herein by reference.
(10)(m) Form of Change of Control Agreement COCA.
(10)(n) Form of Change of Control Agreement A1RBCOC.
(10)(o) Form of Change of Control Agreement A1RMCOC.
(10)(p) Form of Change of Control Agreement COCB.
(10)(q) Form of Change of Control Agreement COCC.
(10)(r) Form of Change of Control Agreement A2COC.
(11) Statement of Computation of Per Share Earnings
(12) Statement Re: Computation of Ratios.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
i. The Company filed a Current Report on Form 8-K on September
13, 1999, which contained Item 5 related to the Company
announcing that it had been advised that Laidlaw Inc.
planned to actively seek a buyer for its 44% interest in the
Company.
ii. The Company filed a Current Report on Form 8-K on September
14, 1999 which contained Item 5 related to the Company
announcing that the Board of Directors appointed a Special
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Committee of non-Laidlaw Inc. directors to consider
implications of the announced change in Laidlaw Inc.'s time
horizon for divesting its 44% common shares of the Company.
iii. The Company filed a Current Report on Form 8-K on October 6,
1999 which contained Item 5 related to the Company
announcing its operating results for the fourth quarter and
fiscal year ending August 31, 1999.
iv. The Company filed a Current Report on Form 8-K on October
12, 1999 which contained Item 5 announcing that the Company
received detailed report from its Special Committee and its
financial advisor, Raymond James and Associates on strategic
and financial alternatives for the Company.
v. The Company filed a Current Report on Form 8-K on October
15, 1999 which contained Item 5 announcing that the Board of
Directors of the Company declared a dividend distribution of
1 common share purchase right on each outstanding share of
common stock payable on or about October 25, 1999 to
shareholders of record on such date.
26
<PAGE>
EXHIBIT INDEX
(a) 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.
(3)(b) Amended and Restated Bylaws of the Company filed as Exhibit 4(ii) to
the Registrant's Current Report on Form 8-K dated July 29, 1997 and incorporated
herein by reference.
(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) Indenture dated as of May 17, 1999 between 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. 333-82689 filed July 12,
1999 and incorporated herein by reference.
(4)(d) Second Supplemental Indenture effective as of May 7, 1999 among
Safety-Kleen Services, Inc. the Registrant, SK Services, L.C., SK Services
(East), L.C. and The
27
<PAGE>
Bank of Nova Scotia Trust Company of New York, as trustee filed as Exhibit
(4)(d) to the Registrant's Form 10-K filed October 29, 1999 and incorporated
herein by reference.
(4)(e) Registration Rights Agreement dated as of May 17, 1999 between
Registrant and TD Securities, NationsBanc Montgomery Securities LLC and Raymond
James & Associates, Inc. filed as Exhibit (4)(a) to the Registrant's Form S-4
Registration Statement No. 333-82689 filed July 12, 1999 and incorporated herein
by reference.
(4)(f) 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)(g) 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)(h) 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)(i) 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)(j) 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
28
<PAGE>
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)(k) 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)(l) Registration Rights Agreement dated May 15, 1997 between Registrant,
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)(m) 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)(n) 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)(o) Indenture of Trust dated as of July 1, 1997 between Carbon County,
Utah and U.S. Bank, a national banking association, as Trustee, filed as Exhibit
4(i) 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 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)(q) 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)(r) Promissory Note dated May 15, 1997 for $60,000,000 from the
Registrant 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.
29
<PAGE>
(4)(s) Letter dated May 7, 1999 from Toronto-Dominion (Texas) Inc. (as
assignee of Westinghouse Electric Corporation) and agreed to by the Registrant
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)(t) 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 Registrant 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)(u) Collateral Account Pledge and Security Agreement dated as of May 17,
1999 between the Registrant, the Bank of Nova Scotia Trust Company of New York,
as escrow agent and the Bank of Nova Scotia Trust Company of New York, as
trustee, filed as Exhibit (4)(d) to the Registrant's Form S-4 Registration
Statement No. 333-82689 filed July 12, 1999 and incorporated herein by
reference.
(4)(v) Registration Rights Agreement dated as of October 15, 1999 between
the Registrant and EquiServe Trust Company, N.A., as Rights Agent, filed as
Exhibit (c)1 to the Registrant's Current Report on Form 8-K filed on October 15,
1999 and incorporated herein by reference.
(4)(w) Other instruments defining the rights of holders of nonregistered
debt of the Registrant 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 Registrant and its subsidiaries. The Registrant 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.
30
<PAGE>
(10)(d) 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)(e) Rollins Environmental Services, Inc. 1993 Stock Option Plan filed
with the Company's Proxy Statement for the Annual Meeting of Shareholders held
January 28, 1994 and incorporated herein by reference.
(10)(f) Registrant'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)(g) First Amendment to the 1997 Stock Option Plan.
(10)(h) Registrant'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)(i) First Amendment to the 1997 Director's Stock Option Plan.
(10)(j) Stock Purchase Agreement dated February 6, 1997 among the
Registrant, 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)(k) Executive Bonus Plan for fiscal year 2000 filed as Appendix C to
the Definitive Proxy Statement on Form DEF 14A filed on November 30, 1999 and
incorporated herein by reference.
(10)(l) Registrant's U.S. Supplemental Executive Retirement Plan filed as
Exhibit 10(g) to the Registrant's 10-Q for the quarter ended November 30, 1997,
and incorporated herein by reference.
(10)(m) Form of Change of Control Agreement COCA.
(10)(n) Form of Change of Control Agreement A1RBCOC.
(10)(o) Form of Change of Control Agreement A1RMCOC.
(10)(p) Form of Change of Control Agreement COCB.
(10)(q) Form of Change of Control Agreement COCC.
(10)(r) Form of Change of Control Agreement A2COC.
31
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(11) Statement of Computation of Per Share Earnings
(12) Statement Re: Computation of Ratios.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
i. The Company filed a Current Report on Form 8-K on September
13, 1999, which contained Item 5 related to the Company
announcing that it had been advised that Laidlaw Inc.
planned to actively seek a buyer for its 44% interest in the
Company.
ii. The Company filed a Current Report on Form 8-K on September
14, 1999 which contained Item 5 related to the Company
announcing that the Board of Directors appointed a Special
Committee of non-Laidlaw Inc. directors to consider
implications of the announced change in Laidlaw Inc.'s time
horizon for divesting its 44% common shares of the Company.
iii. The Company filed a Current Report on Form 8-K on October 6,
1999 which contained Item 5 related to the Company
announcing its operating results for the fourth quarter and
fiscal year ending August 31, 1999. iv. The Company filed a
Current Report on Form 8-K on October 12, 1999 which
contained Item 5 announcing that the Company received
detailed report from its Special Committee and its financial
advisor, Raymond James and Associates on strategic and
financial alternatives for the Company.
v. The Company filed a Current Report on Form 8-K on October
15, 1999 which contained Item 5 announcing that the Board of
Directors of the Company declared a dividend distribution of
1 common share purchase right on each outstanding share of
common stock payable on or about October 25, 1999 to
shareholders of record on such date.
32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: January 14, 2000 SAFETY-KLEEN CORP.
(Registrant)
/s/Kenneth W. Winger
---------------------------------
Kenneth W. Winger
President and Chief Executive Officer
/s/Paul R. Humphreys
---------------------------------
Paul R. Humphreys
Senior Vice President-Finance and
Chief Financial Officer
33
FIRST AMENDMENT TO THE
1997 STOCK OPTION PLAN
WHEREAS, Safety-Kleen Corp. (the "Company") has previously established
the Stock Option Plan effective July 9, 1997 (the "Plan") for the benefit of the
employees of the Company.
WHEREAS, the Plan is intended to advance the interests of the Company
and its subsidiaries by encouraging stock ownership by key employees of the
Company and its subsidiaries as a means to attract, motivate and retain such
employees;
WHEREAS, the Plan was approved by the Board of Directors of the Company
(the "Board") on July 9, 1997;
WHEREAS, the Plan was approved by the shareholders of the Company on
November 25, 1997;
WHEREAS, the Plan authorized the Human Resources and Compensation
Committee of the Board (the "HRCC") to grant options for the purchase of not
more than 1,500,000 shares of Company common stock (the "Shares") (taking into
account the one for four reverse stock split) in the aggregate; and
WHEREAS, the Board, by unanimous resolution at its regular quarterly
meeting on October 5, 1999, and the shareholders of the Company, at its annual
meeting on November 30, 1999, approved an amendment to the Plan increasing the
number of Shares which may be issued under the Plan by an additional 1,000,000
to authorize additional Shares to be granted pursuant to the Plan.
NOW THEREFORE, the Plan is amended as set forth below.
I. SHARES SUBJECT TO THE PLAN
Section 3 of the Plan shall be amended and restated to read as follows:
SHARES SUBJECT TO THE PLAN
The HRCC may grant options ("Options") for the purchase of not more than
2,500,000 Common Shares ("Shares") $1.00 par value of LESI in the aggregate
subject to adjustments as provided in paragraph 5 hereof; provided, however,
that each grant of an option hereunder to any person who is an officer of LESI
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended
(an "Officer"), shall be approved by the Board of Directors of LESI. If any
Option granted to a person eligible to be granted Options under the Plan
("Participant") lapses or is otherwise terminated, such Shares shall then be
again available for the grant of Options hereunder. Such Shares may be treasury
Shares or authorized but unissued Shares.
II. EFFECTIVE DATE OF FIRST AMENDMENT
This First Amendment to the Plan shall be effective and shall be deemed to
have been adopted on November 30, 1999 upon Shareholder approval.
III. CONTINUING EFFECTS
Except as expressly amended hereby, the Plan shall continue to be and
shall remain in full force and effect in accordance with its terms.
FIRST AMENDMENT TO THE
1997 DIRECTOR'S STOCK OPTION PLAN
WHEREAS, Safety-Kleen Corp. (the "Company") has previously established the
Director's Stock Option Plan effective July 9, 1997 (the "Plan") for the benefit
of the non-employee directors of the Company.
WHEREAS, the Plan is intended to advance the interests of the Company and
its subsidiaries by encouraging stock ownership by directors of the Company;
WHEREAS, the Plan was approved by the Board of Directors of the Company
(the "Board") on July 9, 1997 and was approved by the shareholders of the
Company on November 25, 1997;
WHEREAS, the Plan authorized the Board to grant options for the purchase
of not more than 135,000 shares of Company common stock (the "Shares") (taking
into account the one for four reverse stock split) in the aggregate;
WHEREAS, the Board has granted to non-employee directors options to
purchase 135,000 Shares to date; and
WHEREAS, the Board by unanimous resolution at its regular quarterly
meeting on October 5, 1999 approved an amendment to the Plan increasing the
number of Shares which may be issued under the Plan by an additional 300,000.
NOW THEREFORE, the Plan is amended as set forth below.
I. SHARES SUBJECT TO THE PLAN
Section 3 of the Plan shall be amended and restated to read as follows:
SHARES SUBJECT TO THE PLAN
The Board of Directors may grant options ("Options") for the purchase of
not more than 435,000 Common Shares ("Shares") $1.00 par value of LESI in the
aggregate subject to adjustments as provided in paragraph 4 hereof. If any
Option granted to a person eligible to be granted Options under the Plan
("Participant") lapses or is otherwise terminated, such Shares shall then be
again available for the grant of Options hereunder.
II. EFFECTIVE DATE OF FIRST AMENDMENT
This First Amendment to the Plan shall be effective and shall be deemed to
have been adopted on October 5, 1999.
III. CONTINUING EFFECTS
Except as expressly amended hereby, the Plan shall continue to be and
shall remain in full force and effect in accordance with its terms.
Exhibit (10)(m)
SAFETY-KLEEN
CHANGE OF CONTROL SEVERANCE AGREEMENT
(FirstName) (LastName)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. - PURPOSES 1
ARTICLE II. - CERTAIN DEFINITIONS 1
2.1 Accrued Obligations 1
2.2 Agreement Term 1
2.3 Article 2
2.4 Beneficial owner 2
2.5 Cause 2
2.6 Change of Control 2
2.7 Code 2
2.8 Disability 2
2.9 Effective Date 2
2.10 Good Reason 3
2.11 Gross-up Payment 3
2.12 Imminent Change of Control Date 3
2.13 IRS 3
2.14 1934 Act 3
2.15 Notice of Termination 3
2.16 Plans 3
2.17 Policies 3
2.18 Post-Change Period 3
2.19 SEC 3
2.20 Section 3
2.21 Subsidiary 3
2.22 Termination Date 4
2.23 Termination Performance Period 4
2.24 Voting Securities 4
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS 4
3.1 Position and Duties 4
3.2 Compensation 5
3.3 Stock Options 7
3.4 Excess / Supplemental Plans 7
ARTICLE IV. - TERMINATION OF EMPLOYMENT 8
4.1 Disability 8
4.2 Death 8
4.3 Cause 8
4.4 Good Reason 9
ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION 10
5.1 If by the Executive for Good Reason or by the
Company Other Than for Cause or Disability 10
<PAGE>
5.2 If by the Company for Cause 11
5.3 If by the Executive Other Than for Good Reason 12
5.4 If by the Company for Disability 12
5.5 If upon Death 12
5.6 Joint and Several Obligation 12
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS 12
6.1 Waiver of Other Severance Rights 12
6.2 Other- Rights 13
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 13
7.1 Gross-up for Certain Taxes 13
7.2 Determination by the Executive 13
7.3 Additional Gross-up Amounts 14
7.4 Gross-up Multiple 14
7.5 Opinion of Counsel 15
7.6 Amount Increased or Contested 15
7.7 Refunds 16
7.8 Joint and Several Obligation 16
ARTICLE VIII. - EXPENSES AND INTEREST 16
8.1 Legal Fees and Other Expenses 16
8.2 Interest 17
8.3 Joint and Several Obligation 17
ARTICLE IX. - NO SET-OFF OR MITIGATION 17
9.1 No Set-off by Company 17
9.2 No Mitigation 17
ARTICLE X. - CONFIDENTIALITY AND NON-COMPETITION 18
10.1 Confidentiality 18
10.2 Non-competition/ Non-Solicitation 18
10.3 Remedy 19
ARTICLE XI. - MISCELLANEOUS 19
11.1 No Assignability 19
11.2 Successors 19
11.3 Payments to Beneficiary 20
11.4 Non-alienation of Benefits 20
11.5 Severability 20
11.6 Amendments 20
11.7 Notices 20
11.8 Counterparts 21
11.9 Governing Law 21
<PAGE>
11.10 Captions 21
11.11 Tax Withholding 21
11.12 No Waiver 21
11.13 Entire Agreement 21
11.14 Cancellation 21
<PAGE>
SAFETY-KLEEN
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 6, 1999, is made among SAFETY- KLEEN
CORP., a Delaware corporation having its principal place of business in
Columbia, South Carolina (the "Company"), SAFETY-KLEEN SERVICES, INC., a
Delaware corporation having its principal place of business in Columbia, South
Carolina and a wholly owned subsidiary of the Company ("Services") and
(FirstName) (LastName) (the "Executive"), a resident of (State).
The Company, Services and the Executive agree that this agreement
supersedes any prior agreement between any of them which specifically provides
benefits upon a change in control of the Company or Services, and further agree
that, if benefits become payable to the Executive pursuant to Article V hereof,
such benefits will be in lieu of any other severance or termination benefits to
which the Executive otherwise would be entitled under any other severance or
termination plan, policy or arrangement of the Company or Services.
ARTICLE I.
PURPOSES
The Board of Directors of the Company (the "Board") and the Board of
Directors of Services have determined that it is in the best interests of the
Company and its stockholders, and of Services, to assure that the Company and
Services will have the continued service of the Executive, despite the
possibility or occurrence of a change of control of the Company or Services. The
Board believes it is imperative to reduce the distraction of the Executive that
would result from the personal uncertainties caused by a pending or threatened
change of control, to encourage the Executive's full attention and dedication to
the Company and Services, and to provide the Executive with compensation and
benefits arrangements upon a change of control which ensure that the
expectations of the Executive will be satisfied and are competitive with those
of similarly-situated corporations. This Agreement is intended to accomplish
these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" -- see Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is twelve (12) months following the date
that both
1
<PAGE>
the Company and Services give notice of cancellation pursuant to Section 11.14
hereof (the "Expiration Date"); provided, however, that if an Imminent Change of
Control Date occurs before the Expiration Date, then the Agreement Term shall
automatically extend to a date which is twelve (12) months after the date of the
Imminent Change of Control Date: and provided further, that if a Change of
Control occurs before the Expiration Date, the Expiration Date shall
automatically be extended to the last day of the Post-Change Period.
2.3 "Article" means an article of this Agreement.
2.4 "Beneficial owner" means such term as defined in Rule 13d-3 of the
SEC under the 1934 Act.
2.5 "Cause" - see Section 4.3(b).
2.6 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
a. (X) any person (as such term is used in Rule 13(d)- 5 of
the SEC under the 1934 Act) or group (as such term is defined in
Section 13(d) of the 1934 Act), other than a Subsidiary or any employee
benefit plan (or related trust) of the Company or a Subsidiary, becomes
the beneficial owner of 15% or more of the common stock of the Company
or of Voting Securities representing 15% or more of the combined voting
power of all Voting Securities of the Company, (Y) Laidlaw Inc. ceases
to be the beneficial owner, directly or indirectly, of 43.6% or more of
the Voting Securities of the Company and (Z) another person or group
becomes the beneficial owner of Voting Securities of the Company which
represent a larger number of Voting Securities than those held by
Laidlaw Inc.
b. within a period of 24 months or less, the individuals who,
as of any date, constitute the Board (the "Incumbent Directors") cease
for any reason to constitute at least a majority of the Board unless at
the end of such period, the majority of individuals then constituting
the Board were nominated upon the recommendation of a majority of the
Incumbent Directors.
c. the sale or other disposition of all or substantially all
of the assets of the Company or Services.
d. the sale or other disposition by the Company of 50% or more
of the Voting Securities of Services or any other transaction which
results in any person, other than the Company or a subsidiary or any
employee benefit plan of the Company, becoming the beneficial owner of
50% or more of the Voting Securities of Services.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
2.9 "Effective Date" means the first date on which a Change of Control
occurs during the Agreement Term. Despite anything in this Agreement to the
contrary, if the
2
<PAGE>
Company or Services terminates the Executive's employment before the date of a
Change of Control, and if the Executive reasonably demonstrates that such
termination of employment (a) was at the request of a third party who had taken
steps reasonably calculated to effect the Change of Control or (b) otherwise
arose in connection with or anticipation of the Change of Control, then
"Effective Date" shall mean the date immediately before the date of such
termination of employment.
2.10 "Employer" means whichever of the Company or Services is the
primary common-law employer of the Executive at the relevant time.
2.11 "Good Reason" -- see Section 4.4(b).
2.12 "Gross-up Payment" -- see Section 7.1.
2.13 "Imminent Change of Control Date" means any date on which occurs
(a) a presentation to the Company's stockholders generally or any of the
Company's directors or executive officers of a proposal or offer for a Change of
Control, or (b) the public announcement (whether by advertisement, press
release, press interview, public statement, SEC filing or otherwise) of a
proposal or offer for a Change of Control, and in case of either (a) or (b) such
proposal or offer remains effective and unrevoked.
2.14 "IRS" means the Internal Revenue Service.
2.15 "1934 Act" means the Securities Exchange Act of 1934.
2.16 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under such termination provision and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
2.17 "Plans" means plans, programs, policies or practices of the
Company and Services.
2.18 "Policies" means policies, practices or procedures of the Company
and Services.
2.19 "Post-Change Period" means the period commencing on the Effective
Date and ending on the third anniversary of such date.
2.20 "SEC" means the Securities and Exchange Commission.
2.21 "Section" means, unless the context otherwise requires, a section
of this Agreement.
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2.22 "Subsidiary" means a corporation as defined in Section 424(f) of
the Code with the Company being treated as the employer corporation for purposes
of this definition.
2.23 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company or Services terminates the
Executive's employment other than for Cause or Disability, then the Termination
Date shall be the date of receipt of such Notice of Termination and (b) if the
Executive's employment is terminated by reason of death or Disability, then the
Termination Date shall be the date of death of the Executive or the "Disability
Effective Date" (as defined in Section 4.1), as the case may be.
2.24 "Termination Performance Period" - see Section 3.2(b)(2).
2.25 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 Position and Duties.
a. During the Post-Change Period, (1) the Executive's position
with the Company and Services, (in the case of a Change of Control
involving the Company) or with Services (in the case of a Change of
Control involving Services) (including offices, titles, reporting
requirements and responsibilities), authority and duties shall be at
least commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the 90-day
period immediately before the Effective Date and (2) the Executive's
services shall be performed at the location where the Executive was
employed immediately before the Effective Date or any other location
less than 40 miles from such former location.
b. During the Post-Change Period (other than any periods of
vacation, sick leave or disability to which the Executive is entitled),
the Executive agrees to devote the Executive's full attention and time
to the business and affairs of the Company and Services and, to the
extent necessary to discharge the duties assigned to the Executive in
accordance with this Agreement, to use the Executive's best efforts to
perform faithfully and efficiently such duties. During the Post-Change
Period, the Executive may (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (3) manage
personal investments, so long as such activities are consistent with
the Policies of the Company or Services at the Effective Date and do
not significantly interfere with the performance of the Executive's
duties under this Agreement. To the extent that any such activities
have been conducted by the Executive before the
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Effective Date and were consistent with the Policies of the Company and
Services at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the
Effective Date shall not be deemed to interfere with the performance of
the Executive's duties under this Agreement.
3.2 Compensation.
a. Base Salary. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive an annual base
salary in cash ("Guaranteed Base Salary"), which shall be paid in a
manner consistent with the Company's or Services' (as applicable to the
Executive) payroll practices in effect immediately before the Effective
Date at a rate at least equal to 12 times the highest monthly base
salary paid or payable to the Executive by the Company and Services in
respect of the 12-month period immediately before the Effective Date.
During the Post-Change Period, the Guaranteed Base Salary shall be
reviewed at least annually and shall be increased at any time and from
time to time as shall be substantially consistent with increases in
base salary awarded to other peer executives of the Company and
Services. Any increase in Guaranteed Base Salary shall not limit or
reduce any other obligation of the Company and Services to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
b. Target Bonus. During the Post-Change Period, the Company
and Services shall pay or cause to be paid to the Executive a bonus
(the "Guaranteed Bonus") for each Performance Period which ends during
the Post-Change Period. "Performance Period" means each period of time
designated in accordance with any bonus arrangement of the Company or
Services ("Bonus Plan") which is based upon performance and approved by
the Board or any committee of the Board. The Guaranteed Bonus shall be
at least equal to the greatest of:
(1) the On Plan Bonus, which shall mean the cash bonus
which the Executive would accrue under any Bonus Plan
for the Performance Period for which the Guaranteed
Bonus is awarded ("Current Performance Period") as if
the performance achieved 100% of plan established
pursuant to such Bonus Plan and the maximum level of
the discretionary portion is achieved;
(2) the Actual Bonus, which shall mean the cash bonus
which Executive would accrue under any Bonus Plan for
the Current Performance Period if the performance
during the Current Performance Period were measured
by actual performance; provided, however, that for
purposes of Article V of this Agreement, the Actual
Bonus for the Performance Period in which the
Termination Date occurred (the "Termination
Performance Period") shall not be less than the cash
bonus which the Executive would accrue under any
Bonus Plan if performance during
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that Termination Performance Period were measured by
the actual performance during the Termination
Performance Period before the Termination Date
projected to the last day of such Performance Period
and the maximum level of the discretionary portion is
achieved; and
(3) the Historical Bonus, which shall mean the greatest
bonus that the Executive accrued under any Bonus Plan
in the last three (3) Performance Periods that ended
before the Post-Change Period; provided, however,
that for purposes of Article V of this Agreement, the
Historical Bonus for the Performance Period in which
the Termination Date occurred shall not be less than
the cash bonus that the Executive accrued in the last
Performance Period that ended before the Termination
Date.
c. Incentive, Savings and Retirement Plans. In addition to
Guaranteed Base Salary and Guaranteed Bonus payable as provided in this
Section, the Executive shall be entitled to participate during the
Post-Change Period in all incentive (including long-term incentives),
savings and retirement Plans applicable to other peer executives of the
Company and Services, but in no event shall such Plans provide the
Executive with incentive (including long-term incentives), savings and
retirement benefits which are less favorable, in the aggregate, than
the most favorable of those provided by the Company or Services to the
Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before the Effective Date.
d. Welfare Benefit Plans. During the Post-Change Period, the
Executive and the Executive's family shall be eligible to participate
in, and receive all benefits under, welfare benefit Plans provided by
the Company and Services (including, without limitation, medical,
prescription, dental, disability, individual life, group life,
dependent life, accidental death and travel accident insurance Plans)
and applicable to other peer executives of the Company and Services and
their families, but in no event shall such Plans provide benefits which
in any case are less favorable, in the aggregate, than the most
favorable of those provided to the Executive or to peer executives
under such Plans as in effect at any time during the 90-day period
immediately before the Effective Date.
e. Fringe Benefits. During the Post-Change Period, the
Executive shall be entitled to fringe benefits and other executive
perquisites in accordance with the most favorable Plans applicable to
peer executives of the Company and Services, but in no event shall such
Plans provide fringe benefits and other executive perquisites which in
any case are less favorable, in the aggregate, than the most favorable
of those provided by the Company and Services to the Executive or to
peer executives under such Plans in effect at any time during the
90-day period immediately before the Effective Date.
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f. Expenses. During the Post-Change Period, the Executive
shall be entitled to prompt reimbursement of all reasonable
employment-related expenses incurred by the Executive upon the
Company's or Services' (as applicable) receipt of accountings in
accordance with the most favorable Policies applicable to peer
executives of the Company and Services, but in no event shall such
Policies be less favorable, in the aggregate, than the most favorable
of those provided by the Company and Services to the Executive or to
peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
g. Office and Support Staff. During the Post-Change Period,
the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance in accordance with the most favorable
Policies applicable to peer executives of the Company and Services, but
in no event shall such Policies be less favorable, in the aggregate,
than the most favorable of those provided by the Company and Services
to the Executive or to peer executives under such Policies in effect at
any time during the 90-day period immediately before the Effective
Date.
h. Vacation. During the Post-Change Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable Policies applicable to peer executives of the Company and
Services, but in no event shall such Policies be less favorable, in the
aggregate, than the most favorable of those provided by the Company and
Services to the Executive or to peer executives under such Policies in
effect at any time during the 90-day period immediately before the
Effective Date.
3.3 Stock Options.
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to the Executive a lump-sum cash
payment equal to the spread (fair market value over exercise price) of all
outstanding options granted to the Executive for shares of common stock of the
Company whether vested or not vested on the Effective Date. Whichever of the
Company and Services is not the Employer, shall be jointly and severally
liable for the obligation of the Employer under this Section 3.3.
3.4 Excess/Supplemental Plans.
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to Executive an amount equal to the
value (determined using (i) the interest rate published by the PBGC, as of the
calendar month immediately prior to the Effective Date, for the specific
purpose of determining the present value of lump sum benefits as discussed in
29 C.F.R. 4044 and (ii) the UP 84 Mortality Table) of the Executive's accrued
benefits under (1) the Safety-Kleen Supplemental Executive Retirement Plan, or
(2) any such successor plan or other nonqualified unfunded retirement Plan as
may be in effect as of (or as may have been in effect at any time during the
90-day period immediately before) the Effective Date (the "Excess/Supplemental
Plans"), irrespective of
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whether or not Executive is vested therein, and without any reduction for early
retirement, early payout and social security benefits, and taking into account
for benefit accrual purposes, the Executive's entire period of service with the
Company and its affiliates as reflected on the Company's Human Resources
database. Whichever of the Company and Services is not the Employer, shall be
jointly and severally liable for the obligation of the Employer under this
Section 3.4.
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
a. During the Post-Change Period, the Employer may terminate
the Executive's employment upon the Executive's Disability (as defined
in Section 4.1(b)) by giving the Executive or his legal representative,
as applicable, (1) written notice in accordance with Section 11.7 of
the Employer's intention to terminate the Executive's employment
pursuant to this Section and (2) a certification of the Executive's
Disability by a physician selected by the Employer or its insurers and
reasonably acceptable to the Executive or the Executive's legal
representative. The Executive's employment shall terminate effective on
the 30th day (the 'Disability Effective Date') after the Executive's
receipt of such notice unless, before the Disability Effective Date,
the Executive shall have resumed the full-time performance of the
Executive's duties.
b. "Disability" means any medically determinable physical or
mental impairment that has lasted for a continuous period of not less
than six months and can be expected to be permanent or of indefinite
duration. and that renders the Executive unable to perform the
essential functions required under this Agreement with or without
reasonable accommodation.
4.2 Death. The Executive's employment shall terminate automatically
upon the Executive's death during the Post-Change Period.
4.3 Cause.
a. During the Post-Change Period, the Employer may terminate
the Executive's employment for Cause.
b. "Cause" means any of the following: (i) conviction of the
Executive of, or the Executive's pleading guilty or nolo contendere to,
any felony which includes as an element of the crime a premeditated
intention to commit the act, (ii) Executive's inability to perform his
duties due to habitual alcohol or drug addiction, (iii) serious
misconduct involving dishonesty in the course of Executive's
employment, or (iv) the Executive's habitual neglect of his duties;
except that Cause shall not mean:
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(1) bad judgment or negligence other than habitual
neglect of duty;
(2) any act or omission believed by the Executive in
good faith to have been in or not opposed to the interest of
the Company and Services (without intent of the Executive to
gain, directly or indirectly, a profit to which the Executive
was not legally entitled);
(3) any act or omission with respect to which a
determination could properly have been made by the Board that
the Executive met the applicable standard of conduct for
indemnification or reimbursement under the Company's or
Services' by-laws, any applicable indemnification agreement,
or applicable law, in each case in effect at the time of such
act or omission; or
(4) any act or omission with respect to which notice
of termination of employment of the Executive is given more
than 12 months after the earliest date on which any member of
the Board, not a party to the act or omission, knew or should
have known of such act or omission.
c. Any termination of the Executive's employment by the
Employer for Cause shall be communicated to the Executive by a Notice
of Termination.
4.4 Good Reason.
a. During the Post-Change Period, the Executive may
terminate his or her employment for Good Reason.
b. "Good Reason" means any of the following:
(1) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's
position (including offices, titles, reporting
requirements or responsibilities), authority or
duties as contemplated by Section 3.1 (a)(1), or any
other action by the Company or Services which results
in a diminution on or other material adverse change
in such position, authority or duties;
(2) any failure by the Company or Services to comply with
any of the provisions of Article III;
(3) the Company's or Services' requiring the Executive to
be based at any office or location other than the
location described in Section 3.1(a)(2);
(4) any other material adverse change to the terms and
conditions of the Executive's employment; or
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(5) any purported termination by the Employer of the
Executive's employment other than as expressly
permitted by this Agreement (any such purported
termination shall not be effective for any other
purpose under this Agreement).
Any reasonable determination of "Good Reason" made in good faith by the
Executive shall be conclusive.
c. Any termination of employment by the Executive for Good
Reason shall be communicated to the Employer by a Notice of
Termination. A passage of time prior to delivery of a Notice of
Termination or a failure by the Executive to include in the Notice of
Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Executive under this
Agreement or preclude the Executive from asserting such fact or
circumstance in enforcing rights under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE EMPLOYER UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Employer Other Than
for Cause or Disability. If, during the Post-Change Period, the Employer shall
terminate Executive's employment other than for Cause or Disability, or if the
Executive shall terminate employment for Good Reason, the Employer shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the following amounts:
a. to the extent not previously paid, the Guaranteed Base
Salary and any accrued vacation pay through the Termination Date;
b. the difference between (1) the product of (A) the
Guaranteed Bonus, multiplied by (B) a fraction, the numerator of which
is the number of days in the Termination Performance Period which
elapsed before the Termination Date, and the denominator of which is
the total number of days in the Termination Performance Period, and (2)
the amount of any Guaranteed Bonus previously paid to the Executive
with respect to the Termination Performance Period;
c. all amounts previously deferred by or an accrual to the
benefit of the Executive under any nonqualified deferred compensation
or pension plan, together with any accrued earnings thereon, and not
yet paid by the Company or Services;
d. an amount equal to the product of (1) three (3) multiplied
by (2) the sum of (A) the Guaranteed Base Salary and (B) the Guaranteed
Bonus;
e. an amount equal to the sum of the value of the unvested
portion of the Executive's accounts or accrued benefits under any
qualified plan maintained by the
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Company or Services, as of the Termination Date;
f. if the Company or Services maintains any cash-based long
term incentive bonus plan or arrangement, an amount in satisfaction of
the Company's or Services (as applicable) obligation to the Executive
under such plan or arrangement equal to the amount which would be
payable to the Executive if (i) the Company or Services (as applicable)
attained target performance over the entire performance period and (ii)
the Executive had remained employed during the entire performance
period;
g. the difference between (1) an amount equal to the value
(determined using the actuarial assumptions then applied by the Pension
Benefit Guaranty Corporation for determining immediate annuity present
values) of the Executive's accrued benefits under the
Excess/Supplemental Plans (taking into account for benefit accrual
purposes the Executive's entire period of service with the Company and
its affiliates as reflected on the Company's Human Resources database)
calculated as though the Executive (A) continued to accrue benefits
under the Excess/Supplemental Plans for a period of three years after
the Termination Date, and (B) received compensation during each year of
such three-year period equal to the sum of the Guaranteed Base Salary
and the highest Guaranteed Bonus paid (or payable) to the Executive in
the three years preceding the Termination Date, and (C) were three (3)
years older than his age at the Termination Date and (2) the amount
actually previously paid to Executive pursuant to Section 3.4; provided
however, that the amount computed under this paragraph shall not be
reduced for early retirement, early payout and social security
benefits; further provided, however, that such amount shall be paid
irrespective of whether Executive is vested in any of the Excess/
Supplemental Plans; and
h. pay Executive outplacement services, to a maximum of
$25,000.
Until the third anniversary of the Termination Date or such later date
as any Plan of the Company or Services may specify, the Employer shall continue
to provide to the Executive and shall provide to the Executive's family welfare
benefits (including, without limitation, medical, prescription, dental,
disability, individual life, group life, accidental death and travel accident
insurance plans and programs), fringe benefits and other executive perquisites,
which are at least as favorable as the most favorable Plans of the Company and
Services applicable to Executive and other peer executives and their families as
of the Termination Date, but which are in no event less favorable than the most
favorable Plans of the Company and Services applicable to the Executive and
other peer executives and their families during the 90-day period immediately
before the Effective Date. The cost to the Executive of such welfare benefits
shall not exceed the cost of such benefits to the Executive immediately before
the Termination Date or, if less, the Effective Date. Notwithstanding the
foregoing, if the Executive is covered under any medical, life, or disability
insurance plan(s) provided by a subsequent employer, then the amount of coverage
required to be provided by the Employer hereunder shall be secondary to the
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coverage provided by the subsequent employer's medical, life, or disability
insurance plan(s). The Executive's rights under this Section shall be in
addition to, and not in lieu of, any post-termination continuation coverage or
conversion rights the Executive may have pursuant to applicable law, including
without limitation continuation coverage required by Section 4980B of the Code
and Section 601 et. seq. of the Employee Retirement Income Security Act of 1974,
as amended.
5.2 If by the Employer for Cause. If the Employer terminates the
Executive's employment for Cause during the Post-Change Period, this Agreement
shall terminate without further obligation by the Employer to the Executive,
other than the obligation immediately to pay the Executive in cash the
Executive's Guaranteed Base Salary through the Termination Date, plus the amount
of any compensation previously deferred by the Executive, plus any accrued
vacation pay, in each case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good
Reason, Disability or death, this Agreement shall terminate without further
obligations by the Employer, other than the obligation immediately to pay the
Executive in cash all amounts specified in clauses (a), (b) and (c) of the
first sentence of Section 5.1 (such amounts collectively, the "Accrued
Obligations").
5.4 If by the Employer for Disability. If the Employer terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than
(a) the Employer's obligation immediately to pay the Executive
in cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date
to receive disability and other benefits at least equal to the greater
of (1) those provided under the most favorable disability Plans
applicable to peer executives of the Company or Services in effect
immediately before the Termination Date or (2) those provided under the
most favorable disability Plans of the Company and Services in effect
at any time during the 90-day period immediately before the Effective
Date.
5.5 If upon Death. If the Executive's employment is terminated by
reason of the Executive's death during the Post-Change Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the obligation of the
Employer immediately to pay the Executive's estate or beneficiary in cash all
Accrued Obligations. Despite anything in this Agreement to the contrary, the
Executive's family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company and Services to the surviving
families of peer executives of the Company or Services under such Plans, but
in no event shall such Plans provide benefits which in each case are less
favorable, in the aggregate, than the most favorable of
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those provided by the Company and Services to the Executive under such Plans
in effect at any time during the 90-day period immediately before the Effec-
tive Date.
5.6 Joint and Several Obligation. Whichever of the Company and Services
is not the Employer shall be jointly and severally liable for the obligations
of the Employer under this Article V.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are
made to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of the
Company or Services.
6.2 Other Rights. Except as provided in Section 6.1 and in the second
paragraph of this Agreement, this Agreement shall not prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other Plans, provided by the Company or any of its Subsidiaries
and for which the Executive may qualify, nor shall this Agreement limit or
otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any Plan of the Company or any of its Subsidiaries and any other payment or
benefit required by law at or after the Termination Date shall be payable in
accordance with such Plan or applicable law except as expressly modified by
this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Employer's independent auditors, which determinations shall
be certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or
deemed received by the Executive from the Company or Services pursuant to this
Agreement or otherwise (collectively, the "Payments") is or will become
subject to any excise tax under Section 4999 of the Code or any similar tax
payable under any United States federal, state, local or other law (such
excise tax and all such similar taxes collectively, "Excise Taxes"), then the
Employer shall, immediately after such determination, pay the Executive an
amount (the "Gross-up Payment") equal to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
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The Gross-up Payment is intended to compensate the Executive for the
Excise Taxes and any federal, state, local or other income or excise taxes or
other taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Employer may at any time request the preparation
and delivery to the Executive of a Certificate. The Employer shall, in
addition to complying with Section 7.2, cause all determinations and
certifications under the Article to be made as soon as reasonably possible and
in adequate time to permit the Executive to prepare and file the Executive's
individual tax returns on a timely basis.
7.2 Determination by the Executive.
a. If the Employer shall fail to deliver a Certificate to the
Executive (and to pay to the Executive the amount of the Gross-up
Payment, if any) within 14 days after receipt from the Executive of a
written request for a Certificate, or if at any time following receipt
of a Certificate the Executive disputes the amount of the Gross-up
Payment set forth therein, the Executive may elect to demand the
payment of the amount which the Executive, in accordance with an
opinion of counsel to the Executive ("Executive Counsel Opinion"),
determines to be the Gross-up Payment. Any such demand by the Executive
shall be made by delivery to the Employer of a written notice which
specifies the Gross-up Payment determined by the Executive and an
Executive Counsel Opinion regarding such Gross-up Payment (such written
notice and opinion collectively, the "Executive's Determination").
Within 14 days after delivery of the Executive's Determination to the
Employer, the Employer shall either (1 ) pay the Executive the Gross-up
Payment set forth in the Executive's Determination (less the portion of
such amount, if any, previously paid to the Executive by the Employer)
or (2) deliver to the Executive a Certificate specifying the Gross-up
Payment determined by the Employer's independent auditors, together
with an opinion of the Employer's counsel (" Employer Counsel
Opinion"), and pay the Executive the Gross-up Payment specified in such
Certificate. If for any reason the Employer fails to comply with clause
(2) of the preceding sentence, the Gross-up Payment specified in the
Executive's Determination shall be controlling for all purposes.
b. If the Executive does not make a request for, and the
Employer does not deliver to the Executive, a Certificate, the Employer
shall, for purposes of Section 7.3, be deemed to have determined that
no Gross-up Payment is due.
7.3 Additional Gross-up Amounts. If, despite the initial conclusion of
the Employer and/or the Executive that certain Payments are neither subject
to Excise Taxes nor to be counted in determining whether other Payments are
subject to Excise Taxes (any such item, a "Non-Parachute Item"), it is later
determined (pursuant to the subsequently-enacted provisions of the Code,
final regulations or published rulings of the IRS, final judgment of a court
of competent jurisdiction or the Employer's independent auditors) that any of
the Non-Parachute Items are subject to Excise Taxes, or are to be counted in
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determining whether any Payments are subject to Excise Taxes, with the result
that the amount of Excise Taxes payable by the Executive is greater than the
amount determined by the Employer or the Executive pursuant to Section 7.1 or
7.2, as applicable, then the Employer shall pay the Executive an amount
(which shall also be deemed a Gross-up Payment) equal to the product of
(a) the sum of (1) such additional Excise Taxes and (2) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction,
the numerator of which is one (1.0), and the denominator of which is one
(1.0) minus the sum, expressed as a decimal fraction, of the rates of all
federal, state, local and other income and other taxes and any Excise Taxes
applicable to the Gross-up Payment. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel that there is
a reasonable basis to support a conclusion that the Gross-up Payment
determined by the Executive has been calculated in accord with this Article
and applicable law. " Employer Counsel Opinion" means a legal opinion of
nationally recognized executive compensation counsel that (a) there is a
reasonable basis to support a conclusion that the Gross-up Payment set forth
of the Certificate of Employer's independent auditors has been calculated in
accord with this Article and applicable law, and (b) there is no reasonable
basis for the calculation of the Gross-up Payment determined by the
Executive.
7.6 Amount Increased or Contested. The Executive shall notify the
Employer in writing of any claim by the IRS or other taxing authority that,
if successful, would require the payment by the Employer of a Gross-up
Payment. Such notice shall include the nature of such claim and the date on
which such claim is due to be paid. The Executive shall give such notice as
soon as practicable, but no later than 10 business days, after the Executive
first obtains actual knowledge of such claim; provided, however, that any
failure to give or delay in giving such notice shall affect the Employer's
obligations under this Article only if and to the extent that such failure
results in actual prejudice to the Employer. The Executive shall not pay such
claim less than 30 days after the Executive gives such notice to the Employer
(or, if sooner, the date on which payment of such claim is due). If the
Employer notifies the Executive in writing before the expiration of such
period that it desires to contest such claim, the Executive shall:
a. give the Employer any information that it reasonably
requests relating to such claim,
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b. take such action in connection with contesting such claim
as the Employer reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Employer,
c. cooperate with the Employer in good faith to contest such
claim, and
d. permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including related interest and penalties, imposed as a
result of such representation and payment of costs and expenses.
Without limiting the foregoing, the Employer shall control all
proceedings in connection with such contest and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the Executive to pay
the tax claimed and sue for a refund or contest the claim in any
permissible manner. The Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Employer shall
determine; provided, however, that if the Employer directs the
Executive to pay such claim and sue for a refund, the Employer shall
advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify the Executive, on an after-tax
basis, for any Excise Tax or income tax, including related interest or
penalties, imposed with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. The Employer's control of the contest shall be
limited to issues with respect to which a Gross-up Payment would be
payable. The Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the IRS or other taxing
authority.
7.7 Refunds. If, after the receipt by the Executive of an amount
advanced by the Employer pursuant to Section 7.6, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Employer's complying with the requirements of Section 7.6) promptly pay
the Employer the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Employer pursuant to Section 7.6, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Employer does not notify the Executive in
writing of its intent to contest such determination before the expiration of 30
days after such
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determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-up Payment required to be paid. Any contest of a denial of
refund shall be controlled by Section 7.6.
7.8 Joint and Several Obligation. Whichever of the Company and Services
is not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VII. In the event of any assertion of liability
under this Section 7.8 against whichever of the Company or Services is not the
Employer, the party against which such liability is asserted shall succeed to
all of the rights and obligations of the Employer under Article VII.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
a. If the Executive incurs legal, accounting and other fees or
other expenses in a good faith effort to obtain benefits under this
Agreement (including, without limitation, the fees and other expenses
of the Executive's legal counsel and the accounting and other fees and
expenses in connection with the delivery of the Opinion referred to in
Article VII), regardless of whether the Executive ultimately prevails,
the Employer shall reimburse the Executive on a monthly basis upon the
written request for such fees and expenses to the extent not reimbursed
under the Company's and Services' officers and directors liability
insurance policy, if any. The existence of any controlling case or
controlling regulatory law which is directly inconsistent with the
position taken by the Executive shall be evidence that the Executive
did not act in good faith.
b. Reimbursement of legal fees and expenses shall be made
monthly upon the written submission of a request for reimbursement
together with evidence that such fees and expenses are due and payable
or were paid by the Executive. If the Employer shall have reimbursed
the Executive for legal fees and expenses and it is later determined
that the Executive was not acting in good faith, all amounts paid on
behalf of, or reimbursed to, the Executive shall be promptly refunded
to the Employer.
8.2 Interest. If the Employer does not pay any amount due to the
Executive under this Agreement within three days after such amount became due
and owing, interest shall accrue on such amount from the date it became due and
owing until the date of payment at a annual rate equal to two percent (2.0%)
above the base commercial lending rate announced by The Bank of America in
effect from time to time during the period of such nonpayment.
8.3 Joint and Several Obligation. Whichever of the Company and Services
is not the Employer shall be jointly and severally liable for the obligations of
the Employer under
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this Article VIII. The right of refund referred to in the last sentence of
Section 8.1 b. shall inure to whichever of the Company or Services originally
paid the reimbursement to the Executive.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company or Services. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and subject to no set-off, counterclaim or legal or
equitable defense. Time is of the essence in the performance by the Company and
Services of their obligations under this Agreement. Any claim which the Company
or Services may have against the Executive, whether for a breach of this
Agreement or otherwise, shall be brought in a separate action or proceeding and
not as part of any action or proceeding brought by the Executive to enforce any
rights against the Company or Services under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate
the amounts payable by the Company or Services under this Agreement by seeking
new employment following termination. Except as specifically otherwise provided
in this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary, compensation or other
amounts which may be paid or payable to the Executive as the result of the
Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NON-COMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of
the Company and its Subsidiaries to maintain as secret and confidential all
valuable and unique information and techniques acquired, developed or used by
the Company and its Subsidiaries relating to their business, operations,
employees and customers, which gives the Company and its Subsidiaries a
competitive advantage in the businesses in which the Company and its
Subsidiaries are engaged ("Confidential Information"). Executive recognizes
that all such Confidential Information is the sole and exclusive property of
the Company and its Subsidiaries, and that disclosure of Confidential
Information would cause damage to the Company and its Subsidiaries. Executive
agrees that, except as required by the duties of his employment with the
Company and/or its Subsidiaries and except in connection with enforcing the
Executive's rights under this Agreement or if compelled by a court or
governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained
during his employment with the Company and/or its Subsidiaries for so long as
such information is valuable and unique.
10.2 Non-competition/ Non-solicitation.
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a. Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business
as defined in Section 10.2(d).
b. Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form
of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose
stock is listed on a national securities exchange or actively traded in
the over-the-counter market; provided that (1) such investment does not
give Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
c. Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to
the termination of employment.
d. For the purpose of this Section 10.2, "Prohibited Business"
shall be defined as any entity and any branch, office or operation
thereof, which is a direct and material competitor of the Company and/
or its Subsidiaries wherever the Company and/ or its Subsidiaries does
business, in the United States or abroad.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company and Services under this Agreement, and in no
event shall an asserted breach of the Executive's obligations under this Article
X constitute a basis for
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deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company and Services shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company, Services and their respective successors and assigns.
The Company and Services will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
their respective businesses or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company or
Services, as applicable, would be required to perform it if no such succession
had taken place. Any successor to the business and/or assets of the Company or
Services which assumes or agrees to perform this Agreement by operation of law,
contract, or otherwise shall be jointly and severally liable with the Company
and Services under this Agreement as if such successor were the Company or
Services, as applicable.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other
portions of this Agreement are declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Sections 2.2 and 11.14 hereof,
this Agreement shall not be altered, amended or modified except by written
instrument executed by the Company, Services and Executive.
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11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
(FirstName) (LastName)
(Address1)
(City) (State) (PostalCode)
If to the Company:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
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If to Services:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed
in accordance with the laws of the State of South Carolina without regard to its
choice of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company and Services may withhold from any
amounts payable under this Agreement any federal, state or local taxes that are
required to be withheld pursuant to any applicable law or regulation.
11.12 No Waiver. The Executive's failure to insist upon strict
compliance with any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision of this Agreement. A waiver of any
provision of this Agreement shall not be deemed a waiver of any other provision,
and any waiver of any default in any such provision shall not be deemed a waiver
of any later default thereof or of any other provision.
11.13 Entire Agreement. This Agreement contains the entire
understanding of the Company and Services and the Executive with respect to its
subject matter.
11.14 Cancellation. The Company and Services may, at any time prior to
a Change in Control, unilaterally cancel this Agreement on behalf of all parties
hereto by both of them (and not only one of them) notifying the Executive of
such cancellation in writing at least twelve (12) months prior to the effective
date of the cancellation, provided however that no such notice may be given
after an Imminent Change of Control Date.
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IN WITNESS WHEREOF, the Executive, Services and the Company have
executed this Agreement as of the date first above written.
--------------------------------------
(FirstName) (LastName) (the Executive)
SAFETY-KLEEN CORP.
By:
-------------------------------
Kenneth W. Winger
President & Chief Executive Officer
SAFETY-KLEEN SERVICES, INC.
By:
-------------------------------
Kenneth W. Winger
President
23
Exhibit (10)(n)
SAFETY-KLEEN
CHANGE OF CONTROL SEVERANCE AGREEMENT
(FirstName) (LastName)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. - PURPOSES 1
ARTICLE II. - CERTAIN DEFINITIONS 1
2.1 Accrued Obligations 1
2.2 Agreement Term 1
2.3 Article 2
2.4 Beneficial owner 2
2.5 Cause 2
2.6 Change of Control 2
2.7 Code 2
2.8 Disability 2
2.9 Effective Date 2
2.10 Good Reason 3
2.11 Gross-up Payment 3
2.12 Imminent Change of Control Date 3
2.13 IRS 3
2.14 1934 Act 3
2.15 Notice of Termination 3
2.16 Plans 3
2.17 Policies 3
2.18 Post-Change Period 3
2.19 SEC 3
2.20 Section 3
2.21 Subsidiary 3
2.22 Termination Date 4
2.23 Termination Performance Period 4
2.24 Voting Securities 4
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS 4
3.1 Position and Duties 4
3.2 Compensation 5
3.3 Stock Options 7
3.4 Excess / Supplemental Plans 7
ARTICLE IV. - TERMINATION OF EMPLOYMENT 8
4.1 Disability 8
4.2 Death 8
4.3 Cause 8
4.4 Good Reason 9
ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION 10
5.1 If by the Executive for Good Reason or by the Company
Other Than for
<PAGE>
Cause or Disability 10
5.2 If by the Company for Cause 12
5.3 If by the Executive Other Than for Good Reason 12
5.4 If by the Company for Disability 12
5.5 If upon Death 12
5.6 Joint and Several Obligation 12
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS 13
6.1 Waiver of Other Severance Rights 13
6.2 Other- Rights 13
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 13
7.1 Gross-up for Certain Taxes 13
7.2 Determination by the Executive 13
7.3 Additional Gross-up Amounts 14
7.4 Gross-up Multiple 15
7.5 Opinion of Counsel 15
7.6 Amount Increased or Contested 15
7.7 Refunds 16
7.8 Joint and Several Obligation 16
ARTICLE VIII. - EXPENSES AND INTEREST 17
8.1 Legal Fees and Other Expenses 17
8.2 Interest 17
ARTICLE IX. - NO SET-OFF OR MITIGATION 17
9.1 No Set-off by Company 17
9.2 No Mitigation 18
ARTICLE X. - CONFIDENTIALITY AND NON-COMPETITION 18
10.1 Confidentiality 18
10.2 Non-competition/ Non-Solicitation 18
10.3 Remedy 19
ARTICLE XI. - MISCELLANEOUS 19
11.1 No Assignability 19
11.2 Successors 19
11.3 Payments to Beneficiary 19
11.4 Non-alienation of Benefits 20
11.5 Severability 20
11.6 Amendments 20
11.7 Notices 20
11.8 Counterparts 21
11.9 Governing Law 21
11.10 Captions 21
<PAGE>
11.11 Tax Withholding 21
11.12 No Waiver 21
11.13 Entire Agreement 21
11.14 Cancellation 21
<PAGE>
SAFETY-KLEEN.
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 6, 1999, is made among SAFETY- KLEEN
CORP., a Delaware corporation having its principal place of business in
Columbia, South Carolina (the "Company"), SAFETY-KLEEN SERVICES, INC., a
Delaware corporation having its principal place of business in Columbia, South
Carolina and a wholly owned subsidiary of the Company ("Services") and (name)
(the "Executive"), a resident of SC.
The Company, Services and the Executive agree that this agreement
supersedes any prior agreement between any of them which specifically provides
benefits upon a change in control of the Company or Services, and further agree
that, if benefits become payable to the Executive pursuant to Article V hereof,
such benefits will be in lieu of any other severance or termination benefits to
which the Executive otherwise would be entitled under any other severance or
termination plan, policy or arrangement of the Company or Services.
ARTICLE I.
PURPOSES
The Board of Directors of the Company (the "Board") and the Board of
Directors of Services have determined that it is in the best interests of the
Company and its stockholders, and of Services, to assure that the Company and
Services will have the continued service of the Executive, despite the
possibility or occurrence of a change of control of the Company or Services. The
Board believes it is imperative to reduce the distraction of the Executive that
would result from the personal uncertainties caused by a pending or threatened
change of control, to encourage the Executive's full attention and dedication to
the Company and Services, and to provide the Executive with compensation and
benefits arrangements upon a change of control which ensure that the
expectations of the Executive will be satisfied and are competitive with those
of similarly-situated corporations. This Agreement is intended to accomplish
these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" -- see Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is twelve (12) months following the date
that both
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the Company and Services give notice of cancellation pursuant to Section 11.14
hereof (the "Expiration Date"); provided, however, that if an Imminent Change of
Control Date occurs before the Expiration Date, then the Agreement Term shall
automatically extend to a date which is twelve (12) months after the date of the
Imminent Change of Control Date: and provided further, that if a Change of
Control occurs before the Expiration Date, the Expiration Date shall
automatically be extended to the last day of the Post-Change Period.
2.3 "Article" means an article of this Agreement.
2.4 "Beneficial owner" means such term as defined in Rule 13d-3 of the
SEC under the 1934 Act.
2.5 "Cause" - see Section 4.3(b).
2.6 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
a. (X) any person (as such term is used in Rule 13(d)- 5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a Subsidiary or any employee benefit plan (or
related trust) of the Company or a Subsidiary, becomes the beneficial
owner of 15% or more of the common stock of the Company or of Voting
Securities representing 15% or more of the combined voting power of all
Voting Securities of the Company, (Y) Laidlaw Inc. ceases to be the
beneficial owner, directly or indirectly, of 43.6% or more of the Voting
Securities of the Company and (Z) another person or group becomes the
beneficial owner of Voting Securities of the Company which represent a
larger number of Voting Securities than those held by Laidlaw Inc.
b. within a period of 24 months or less, the individuals who, as of
any date, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board unless at the end of
such period, the majority of individuals then constituting the Board were
nominated upon the recommendation of a majority of the Incumbent
Directors.
c. the sale or other disposition of all or substantially all of the
assets of the Company or Services.
d. the sale or other disposition by the Company of 50% or more of
the Voting Securities of Services or any other transaction which results
in any person, other than the Company or a subsidiary or any employee
benefit plan of the Company, becoming the beneficial owner of 50% or more
of the Voting Securities of Services.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
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2.9 "Effective Date" means the first date on which a Change of Control
occurs during the Agreement Term. Despite anything in this Agreement to the
contrary, if the Company or Services terminates the Executive's employment
before the date of a Change of Control, and if the Executive reasonably
demonstrates that such termination of employment (a) was at the request of a
third party who had taken steps reasonably calculated to effect the Change of
Control or (b) otherwise arose in connection with or anticipation of the Change
of Control, then "Effective Date" shall mean the date immediately before the
date of such termination of employment.
2.10 "Employer" means whichever of the Company or Services is the primary
common-law employer of the Executive at the relevant time.
2.11 "Good Reason" -- see Section 4.4(b).
2.12 "Gross-up Payment" -- see Section 7.1.
2.13 "Imminent Change of Control Date" means any date on which occurs (a)
a presentation to the Company's stockholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, and in case of either (a) or (b) such proposal or offer
remains effective and unrevoked.
2.14 "IRS" means the Internal Revenue Service.
2.15 "1934 Act" means the Securities Exchange Act of 1934.
2.16 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under such termination provision and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
2.17 "Plans" means plans, programs, policies or practices of the Company
and Services.
2.18 "Policies" means policies, practices or procedures of the Company and
Services.
2.19 "Post-Change Period" means the period commencing on the Effective
Date and ending on the third anniversary of such date.
2.20 "SEC" means the Securities and Exchange Commission.
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2.21 "Section" means, unless the context otherwise requires, a section
of this Agreement.
2.22 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code with the Company being treated as the employer corporation for purposes of
this definition.
2.23 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company or Services terminates the
Executive's employment other than for Cause or Disability, then the Termination
Date shall be the date of receipt of such Notice of Termination and (b) if the
Executive's employment is terminated by reason of death or Disability, then the
Termination Date shall be the date of death of the Executive or the "Disability
Effective Date" (as defined in Section 4.1), as the case may be.
2.24 "Termination Performance Period" - see Section 3.2(b)(2).
2.25 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 Position and Duties.
a. During the Post-Change Period, (1) the Executive's position with
the Company and Services, (in the case of a Change of Control involving
the Company) or with Services (in the case of a Change of Control
involving Services) (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate in
all material respects with the most significant of those held, exercised
and assigned at any time during the 90-day period immediately before the
Effective Date and (2) the Executive's services shall be performed at the
location where the Executive was employed immediately before the Effective
Date or any other location less than 40 miles from such former location.
b. During the Post-Change Period (other than any periods of
vacation, sick leave or disability to which the Executive is entitled),
the Executive agrees to devote the Executive's full attention and time to
the business and affairs of the Company and Services and, to the extent
necessary to discharge the duties assigned to the Executive in accordance
with this Agreement, to use the Executive's best efforts to perform
faithfully and efficiently such duties. During the Post-Change Period, the
Executive may (1) serve on corporate, civic or charitable boards or
committees, (2) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (3) manage personal investments, so long as
such activities are consistent with the Policies of the Company or
Services at the Effective Date and do not significantly
4
<PAGE>
interfere with the performance of the Executive's duties under this
Agreement. To the extent that any such activities have been conducted by
the Executive before the Effective Date and were consistent with the
Policies of the Company and Services at the Effective Date, the continued
conduct of such activities (or activities similar in nature and scope)
after the Effective Date shall not be deemed to interfere with the
performance of the Executive's duties under this Agreement.
3.2 Compensation.
a. Base Salary. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive an annual base
salary in cash ("Guaranteed Base Salary"), which shall be paid in a manner
consistent with the Company's or Services' (as applicable to the
Executive) payroll practices in effect immediately before the Effective
Date at a rate at least equal to 12 times the highest monthly base salary
paid or payable to the Executive by the Company and Services in respect of
the 12-month period immediately before the Effective Date. During the
Post-Change Period, the Guaranteed Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded to other
peer executives of the Company and Services. Any increase in Guaranteed
Base Salary shall not limit or reduce any other obligation of the Company
and Services to the Executive under this Agreement. After any such
increase, the Guaranteed Base Salary shall not be reduced and the term
"Guaranteed Base Salary" shall thereafter refer to the increased amount.
b. Target Bonus. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive a bonus (the
"Guaranteed Bonus") for each Performance Period which ends during the
Post-Change Period. "Performance Period" means each period of time
designated in accordance with any bonus arrangement of the Company or
Services ("Bonus Plan") which is based upon performance and approved by
the Board or any committee of the Board. The Guaranteed Bonus shall be at
least equal to the greatest of:
(1) the On Plan Bonus, which shall mean the cash bonus which the
Executive would accrue under any Bonus Plan for the
Performance Period for which the Guaranteed Bonus is awarded
("Current Performance Period") as if the performance achieved
100% of plan established pursuant to such Bonus Plan and the
maximum level of the discretionary portion is achieved;
(2) the Actual Bonus, which shall mean the cash bonus which
Executive would accrue under any Bonus Plan for the Current
Performance Period if the performance during the Current
Performance Period were measured by actual performance;
provided, however, that for purposes of Article V of this
Agreement, the Actual Bonus for the Performance Period in
which the Termination Date occurred (the "Termination
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Performance Period") shall not be less than the cash bonus
which the Executive would accrue under any Bonus Plan if
performance during that Termination Performance Period were
measured by the actual performance during the Termination
Performance Period before the Termination Date projected to
the last day of such Performance Period and the maximum level
of the discretionary portion is achieved; and
(3) the Historical Bonus, which shall mean the greatest bonus that
the Executive accrued under any Bonus Plan in the last three
(3) Performance Periods that ended before the Post-Change
Period; provided, however, that for purposes of Article V of
this Agreement, the Historical Bonus for the Performance
Period in which the Termination Date occurred shall not be
less than the cash bonus that the Executive accrued in the
last Performance Period that ended before the Termination
Date.
c. Incentive, Savings and Retirement Plans. In addition to
Guaranteed Base Salary and Guaranteed Bonus payable as provided in this
Section, the Executive shall be entitled to participate during the
Post-Change Period in all incentive (including long-term incentives),
savings and retirement Plans applicable to other peer executives of the
Company and Services, but in no event shall such Plans provide the
Executive with incentive (including long-term incentives), savings and
retirement benefits which are less favorable, in the aggregate, than the
most favorable of those provided by the Company or Services to the
Executive or to peer executives under such Plans as in effect at any time
during the 90-day period immediately before the Effective Date.
d. Welfare Benefit Plans. During the Post-Change Period, the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans provided by the
Company and Services(including, without limitation, medical, prescription,
dental, disability, individual life, group life, dependent life,
accidental death and travel accident insurance Plans) and applicable to
other peer executives of the Company and Services and their families, but
in no event shall such Plans provide benefits which in any case are less
favorable, in the aggregate, than the most favorable of those provided to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before the Effective Date.
e. Fringe Benefits. During the Post-Change Period, the Executive
shall be entitled to fringe benefits and other executive perquisites in
accordance with the most favorable Plans applicable to peer executives of
the Company and Services, but in no event shall such Plans provide fringe
benefits and other executive perquisites which in any case are less
favorable, in the aggregate, than the most favorable of those provided by
the Company and Services to the Executive or to peer executives
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under such Plans in effect at any time during the 90-day period
immediately before the Effective Date.
f. Expenses. During the Post-Change Period, the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's or Services' (as
applicable) receipt of accountings in accordance with the most favorable
Policies applicable to peer executives of the Company and Services, but in
no event shall such Policies be less favorable, in the aggregate, than the
most favorable of those provided by the Company and Services to the
Executive or to peer executives under such Policies in effect at any time
during the 90-day period immediately before the Effective Date.
g. Office and Support Staff. During the Post-Change Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance in accordance with the most favorable Policies
applicable to peer executives of the Company and Services, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive
or to peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
h. Vacation. During the Post-Change Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company and Services, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive
or to peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
3.3 Stock Options.
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to the Executive a lump-sum cash payment
equal to the spread (fair market value over exercise price) of all outstanding
options granted to the Executive for shares of common stock of the Company
whether vested or not vested on the Effective Date. Whichever of the Company and
Services is not the Employer, shall be jointly and severally liable for the
obligation of the Employer under this Section 3.3.
3.4 Excess/Supplemental Plans. (NOTE: THIS SECTION 3.4 IS APPLICABLE IF
AND ONLY IF YOUR PARTICIPATION IN THE SAFETY-KLEEN SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN IS APPROVED BY THE HUMAN RESOURCES AND COMPENSATION COMMITTEE OF
THE COMPANY'S BOARD OF DIRECTORS)
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to Executive an amount equal to the value
(determined using (i) the interest rate published by the PBGC, as of the
calendar month immediately prior to the
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Effective Date, for the specific purpose of determining the present value of
lump sum benefits as discussed in 29 C.F.R. 4044 and (ii) the UP 84 Mortality
Table) of the Executive's accrued benefits under (1) the Safety-Kleen
Supplemental Executive Retirement Plan, or (2) any such successor plan or
other nonqualified unfunded retirement Plan as may be in effect as of (or as
may have been in effect at any time during the 90-day period immediately
before) the Effective Date (the "Excess/Supplemental Plans"), irrespective of
whether or not Executive is vested therein, and without any reduction for
early retirement, early payout and social security benefits, and taking into
account for benefit accrual purposes, the Executive's period of service with
the Company beginning February 22, 1989. Whichever of the Company and Services
is not the Employer, shall be jointly and severally liable for the obligation
of the Employer under this Section 3.4.
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, (1) written notice in accordance with Section 11.7 of the
Employer's intention to terminate the Executive's employment pursuant to
this Section and (2) a certification of the Executive's Disability by a
physician selected by the Employer or its insurers and reasonably
acceptable to the Executive or the Executive's legal representative. The
Executive's employment shall terminate effective on the 30th day (the
"Disability Effective Date") after the Executive's receipt of such notice
unless, before the Disability Effective Date, the Executive shall have
resumed the full-time performance of the Executive's duties.
b. "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration. and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accommodation.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment for Cause.
b. "Cause" means any of the following: (i) conviction of the
Executive of, or the Executive's pleading guilty or nolo contendere to,
any felony which includes as an element of the crime a premeditated
intention to commit the act, (ii) Executive's
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inability to perform his duties due to habitual alcohol or drug addiction,
(iii) serious misconduct involving dishonesty in the course of Executive's
employment, or (iv) the Executive's habitual neglect of his duties; except
that Cause shall not mean:
(1) bad judgment or negligence other than habitual
neglect of duty;
(2) any act or omission believed by the Executive in good
faith to have been in or not opposed to the interest of the
Company and Services (without intent of the Executive to gain,
directly or indirectly, a profit to which the Executive was
not legally entitled);
(3) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive
met the applicable standard of conduct for indemnification or
reimbursement under the Company's or Services' by-laws, any
applicable indemnification agreement, or applicable law, in
each case in effect at the time of such act or omission; or
(4) any act or omission with respect to which notice of
termination of employment of the Executive is given more than
12 months after the earliest date on which any member of the
Board, not a party to the act or omission, knew or should have
known of such act or omission.
c. Any termination of the Executive's employment by the Employer for
Cause shall be communicated to the Executive by a Notice of Termination.
4.4 Good Reason.
a. During the Post-Change Period, the Executive may terminate his or
her employment for Good Reason.
b. "Good Reason" means any of the following:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including
offices, titles, reporting requirements or responsibilities),
authority or duties as contemplated by Section 3.1 (a)(1), or
any other action by the Company or Services which results in a
diminution on or other material adverse change in such
position, authority or duties;
(2) any failure by the Company or Services to comply with any
of the provisions of Article III;
(3) the Company's or Services' requiring the Executive to be
based at any office or location other than the location
described in Section 3.1(a)(2);
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(4) any other material adverse change to the terms and
conditions of the Executive's employment; or
(5) any purported termination by the Employer of the
Executive's employment other than as expressly permitted by
this Agreement (any such purported termination shall not be
effective for any other purpose under this Agreement).
Any reasonable determination of "Good Reason" made in good faith by the
Executive shall be conclusive.
c. Any termination of employment by the Executive for Good Reason
shall be communicated to the Employer by a Notice of Termination. A
passage of time prior to delivery of a Notice of Termination or a failure
by the Executive to include in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive under this Agreement or preclude the Executive
from asserting such fact or circumstance in enforcing rights under this
Agreement.
ARTICLE V.
OBLIGATIONS OF THE EMPLOYER UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Employer Other Than for
Cause or Disability. If, during the Post-Change Period, the Employer shall
terminate Executive's employment other than for Cause or Disability, or if the
Executive shall terminate employment for Good Reason, the Employer shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the following amounts:
a. to the extent not previously paid, the Guaranteed Base
Salary and any accrued vacation pay through the Termination Date;
b. the difference between (1) the product of (A) the Guaranteed
Bonus, multiplied by (B) a fraction, the numerator of which is the number
of days in the Termination Performance Period which elapsed before the
Termination Date, and the denominator of which is the total number of days
in the Termination Performance Period, and (2) the amount of any Guaranteed
Bonus previously paid to the Executive with respect to the Termination
Performance Period;
c. all amounts previously deferred by or an accrual to the benefit
of the Executive under any nonqualified deferred compensation or pension
plan, together with any accrued earnings thereon, and not yet paid by the
Company or Services;
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d. an amount equal to the product of (1) three (3)
multiplied by (2) the
sum of (A) the Guaranteed Base Salary and (B) the Guaranteed Bonus;
e. an amount equal to the sum of the value of the unvested portion
of the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company or Services, as of the Termination Date;
f. if the Company or Services maintains any cash-based long term
incentive bonus plan or arrangement, an amount in satisfaction of the
Company's or Services (as applicable) obligation to the Executive under
such plan or arrangement equal to the amount which would be payable to the
Executive if (i) the Company or Services (as applicable) attained target
performance over the entire performance period and (ii) the Executive had
remained employed during the entire performance period;
g. (NOTE: THIS SECTION 5.1 (G) IS APPLICABLE IF AND ONLY IF YOUR
PARTICIPATION IN THE SAFETY-KLEEN SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
IS APPROVED BY THE HUMAN RESOURCES AND COMPENSATION COMMITTEE OF THE
COMPANY'S BOARD OF DIRECTORS) the difference between (1) an amount equal
to the value (determined using the actuarial assumptions then applied by
the Pension Benefit Guaranty Corporation for determining immediate annuity
present values) of the Executive's accrued benefits under the
Excess/Supplemental Plans (taking into account for benefit accrual
purposes the Executive's period of service with the Company beginning
February 22, 1989) calculated as though the Executive (A) continued to
accrue benefits under the Excess/Supplemental Plans for a period of three
years after the Termination Date, and (B) received compensation during
each year of such three-year period equal to the sum of the Guaranteed
Base Salary and the highest Guaranteed Bonus paid (or payable) to the
Executive in the three years preceding the Termination Date, and (C) were
three (3) years older than his age at the Termination Date and (2) the
amount actually previously paid to Executive pursuant to Section 3.4;
provided however, that the amount computed under this paragraph shall not
be reduced for early retirement, early payout and social security
benefits; further provided, however, that such amount shall be paid
irrespective of whether Executive is vested in any of the Excess/
Supplemental Plans; and
h. pay Executive outplacement services, to a maximum of $25,000.
Until the third anniversary of the Termination Date or such later date as
any Plan of the Company or Services may specify, the Employer shall continue
to provide to the Executive and the provide to the Executive's family welfare
benefits (including, without limitation, medical, prescription, dental,
disability, individual life, group life, accidental death and travel accident
insurance plans and programs), fringe benefits and other executive
perquisites, which are at least as favorable as the most favorable Plans of
the Company and Services applicable to Executive and other peer executives and
their families as of the Termination Date, but which are in no event less
favorable than the most favorable Plans of the Company and Services applicable
to the Executive and other peer executives and their
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families during the 90-day period immediately before the Effective Date. The
cost to the Executive of such welfare benefits shall not exceed the cost of
such benefits to the Executive immediately before the Termination Date or, if
less, the Effective Date. Notwithstanding the foregoing, if the Executive is
covered under any medical, life, or disability insurance plan(s) provided by a
subsequent employer, then the amount of coverage required to be provided by
the Employer hereunder shall be secondary to the coverage provided by the
subsequent employer's medical, life, or disability insurance plan(s). The
Executive's rights under this Section shall be in addition to, and not in lieu
of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980B of the Code and Section 601
et. seq. of the Employee Retirement Income Security Act of 1974, as amended.
5.2 If by the Employer for Cause. If the Employer terminates the
Executive's employment for Cause during the Post-Change Period, this Agreement
shall terminate without further obligation by the Employer to the Executive,
other than the obligation immediately to pay the Executive in cash the
Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay, in each case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good
Reason, Disability or death, this Agreement shall terminate without further
obligations by the Employer, other than the obligation immediately to pay the
Executive in cash all amounts specified in clauses (a), (b) and (c) of the
first sentence of Section 5.1 (such amounts collectively, the "Accrued
Obligations").
5.4 If by the Employer for Disability. If the Employer terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than
(a) the Employer's obligation immediately to pay the
Executive in cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (1)
those provided under the most favorable disability Plans applicable to
peer executives of the Company or Services in effect immediately before
the Termination Date or (2) those provided under the most favorable
disability Plans of the Company and Services in effect at any time during
the 90-day period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason
of the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation of the Employer immediately to
pay the Executive's estate or beneficiary in
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cash all Accrued Obligations. Despite anything in this Agreement to the
contrary, the Executive's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided by the Company and
Services to the surviving families of peer executives of the Company or
Services under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive under
such Plans in effect at any time during the 90-day period immediately before
the Effective Date.
5.6 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article V.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of the
Company or Services.
6.2 Other Rights. Except as provided in Section 6.1 and in the second
paragraph of this Agreement, this Agreement shall not prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other Plans, provided by the Company or any of its Subsidiaries
and for which the Executive may qualify, nor shall this Agreement limit or
otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any Plan of the Company or any of its Subsidiaries and any other payment or
benefit required by law at or after the Termination Date shall be payable in
accordance with such Plan or applicable law except as expressly modified by
this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Employer's independent auditors, which determinations shall
be certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or
deemed received by the Executive from the Company or Services pursuant to this
Agreement or otherwise (collectively, the "Payments") is or will become
subject to any excise tax under Section 4999 of the Code or any similar tax
payable under any United States federal, state, local or other law (such
excise tax and all such similar taxes collectively, "Excise Taxes"), then the
Employer shall, immediately after such determination, pay the Executive an
amount (the "Gross-up Payment") equal to the product of
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(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the
Excise Taxes and any federal, state, local or other income or excise taxes or
other taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Employer may at any time request the preparation and
delivery to the Executive of a Certificate. The Employer shall, in addition to
complying with Section 7.2, cause all determinations and certifications under
the Article to be made as soon as reasonably possible and in adequate time to
permit the Executive to prepare and file the Executive's individual tax
returns on a timely basis.
7.2 Determination by the Executive.
a. If the Employer shall fail to deliver a Certificate to the
Executive (and to pay to the Executive the amount of the Gross-up Payment,
if any) within 14 days after receipt from the Executive of a written
request for a Certificate, or if at any time following receipt of a
Certificate the Executive disputes the amount of the Gross-up Payment set
forth therein, the Executive may elect to demand the payment of the amount
which the Executive, in accordance with an opinion of counsel to the
Executive ("Executive Counsel Opinion"), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Employer of a written notice which specifies the Gross-up Payment
determined by the Executive and an Executive Counsel Opinion regarding
such Gross-up Payment (such written notice and opinion collectively, the
"Executive's Determination"). Within 14 days after delivery of the
Executive's Determination to the Employer, the Employer shall either (1 )
pay the Executive the Gross-up Payment set forth in the Executive's
Determination (less the portion of such amount, if any, previously paid to
the Executive by the Employer) or (2) deliver to the Executive a
Certificate specifying the Gross-up Payment determined by the Employer's
independent auditors, together with an opinion of the Employer's counsel
(" Employer Counsel Opinion"), and pay the Executive the Gross-up Payment
specified in such Certificate. If for any reason the Employer fails to
comply with clause (2) of the preceding sentence, the Gross-up Payment
specified in the Executive's Determination shall be controlling for all
purposes.
b. If the Executive does not make a request for, and the Employer
does not deliver to the Executive, a Certificate, the Employer shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
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7.3 Additional Gross-up Amounts. If, despite the initial conclusion of the
Employer and/or the Executive that certain Payments are neither subject to
Excise Taxes nor to be counted in determining whether other Payments are subject
to Excise Taxes (any such item, a "Non-Parachute Item"), it is later determined
(pursuant to the subsequently-enacted provisions of the Code, final regulations
or published rulings of the IRS, final judgment of a court of competent
jurisdiction or the Employer's independent auditors) that any of the
Non-Parachute Items are subject to Excise Taxes, or are to be counted in
determining whether any Payments are subject to Excise Taxes, with the result
that the amount of Excise Taxes payable by the Executive is greater than the
amount determined by the Employer or the Executive pursuant to Section 7.1 or
7.2, as applicable, then the Employer shall pay the Executive an amount (which
shall also be deemed a Gross-up Payment) equal to the product of
(a) the sum of (1) such additional Excise Taxes and (2) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the sum, expressed as a decimal fraction, of the rates of all federal, state,
local and other income and other taxes and any Excise Taxes applicable to the
Gross-up Payment. (If different rates of tax are applicable to various portions
of a Gross-up Payment, the weighted average of such rates shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel that there is a
reasonable basis to support a conclusion that the Gross-up Payment determined by
the Executive has been calculated in accord with this Article and applicable
law. " Employer Counsel Opinion" means a legal opinion of nationally recognized
executive compensation counsel that (a) there is a reasonable basis to support a
conclusion that the Gross-up Payment set forth of the Certificate of Employer's
independent auditors has been calculated in accord with this Article and
applicable law, and (b) there is no reasonable basis for the calculation of the
Gross-up Payment determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the Employer
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Employer of a Gross-up Payment.
Such notice shall include the nature of such claim and the date on which such
claim is due to be paid. The Executive shall give such notice as soon as
practicable, but no later than 10 business days, after the Executive first
obtains actual knowledge of such claim; provided, however, that any failure to
give or delay in giving such notice shall affect the Employer's obligations
under this Article only if and to the extent that such failure results in actual
prejudice to the Employer. The Executive shall
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not pay such claim less than 30 days after the Executive gives such notice to
the Employer (or, if sooner, the date on which payment of such claim is due). If
the Employer notifies the Executive in writing before the expiration of such
period that it desires to contest such claim, the Executive shall:
a. give the Employer any information that it reasonably
requests relating to such claim,
b. take such action in connection with contesting such claim as the
Employer reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Employer,
c. cooperate with the Employer in good faith to contest such
claim, and
d. permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax,
including related interest and penalties, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing, the Employer shall control all proceedings in connection with
such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Employer shall determine; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a refund, the
Employer shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify the Executive, on an after-tax
basis, for any Excise Tax or income tax, including related interest or
penalties, imposed with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
The Employer's control of the contest shall be limited to issues with
respect to which a Gross-up Payment would be payable. The Executive shall
be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Employer pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with
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respect to such claim, the Executive shall (subject to the Employer's complying
with the requirements of Section 7.6) promptly pay the Employer the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Employer pursuant to Section 7.6, a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Employer does not notify the Executive in writing of its intent to contest
such determination before the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-up Payment required to be paid. Any contest of a denial of refund shall be
controlled by Section 7.6.
7.8 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VII. In the event of any assertion of liability
under this Section 7.8 against whichever of the Company or Services is not the
Employer, the party against which such liability is asserted shall succeed to
all of the rights and obligations of the Employer under Article VII.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
a. If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel and the accounting and other fees and expenses
in connection with the delivery of the Opinion referred to in Article
VII), regardless of whether the Executive ultimately prevails, the
Employer shall reimburse the Executive on a monthly basis upon the written
request for such fees and expenses to the extent not reimbursed under the
Company's and Services' officers and directors liability insurance policy,
if any. The existence of any controlling case or controlling regulatory
law which is directly inconsistent with the position taken by the
Executive shall be evidence that the Executive did not act in good faith.
b. Reimbursement of legal fees and expenses shall be made monthly
upon the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Employer shall have reimbursed the Executive for
legal fees and expenses and it is later determined that the Executive was
not acting in good faith, all amounts paid on behalf of, or reimbursed to,
the Executive shall be promptly refunded to the Employer.
8.2 Interest. If the Employer does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and owing,
interest shall
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accrue on such amount from the date it became due and owing until the date of
payment at a annual rate equal to two percent (2.0%) above the base commercial
lending rate announced by The Bank of America in effect from time to time during
the period of such nonpayment.
8.3 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VIII. The right of refund referred to in the
last sentence of Section 8.1 b. shall inure to whichever of the Company or
Services originally paid the reimbursement to the Executive.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company or Services. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and subject to no set-off, counterclaim or legal or
equitable defense. Time is of the essence in the performance by the Company and
Services of their obligations under this Agreement. Any claim which the Company
or Services may have against the Executive, whether for a breach of this
Agreement or otherwise, shall be brought in a separate action or proceeding and
not as part of any action or proceeding brought by the Executive to enforce any
rights against the Company or Services under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company or Services under this Agreement by seeking new
employment following termination. Except as specifically otherwise provided in
this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary, compensation or other
amounts which may be paid or payable to the Executive as the result of the
Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NON-COMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its Subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its Subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its Subsidiaries a competitive advantage
in the businesses in which the Company and its Subsidiaries are engaged
("Confidential Information"). Executive recognizes that all such Confidential
Information is the sole and exclusive property of the Company and its
Subsidiaries, and that disclosure of Confidential Information would cause damage
to the Company and its Subsidiaries. Executive agrees that, except as required
by the duties of his employment with the Company and/or its Subsidiaries and
except in connection with enforcing the Executive's rights under this Agreement
or if compelled by a court or governmental agency, he will not, without the
consent of the Company, disseminate or
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otherwise disclose any Confidential Information obtained during his employment
with the Company and/or its Subsidiaries for so long as such information is
valuable and unique.
10.2 Non-competition/ Non-solicitation.
a. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
b. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock
is listed on a national securities exchange or actively traded in the
over-the-counter market; provided that (1) such investment does not give
Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
c. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to the
termination of employment.
d. For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any entity and any branch, office or operation thereof,
which is a direct and material competitor of the Company and/ or its
Subsidiaries wherever the Company and/ or its Subsidiaries does business,
in the United States or abroad.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing,
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the Company shall not be precluded from pursuing any and all remedies it may
have at law or in equity for breach of such obligations; provided, however, that
such breach shall not in any manner or degree whatsoever limit, reduce or
otherwise affect the obligations of the Company and Services under this
Agreement, and in no event shall an asserted breach of the Executive's
obligations under this Article X constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company and Services shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company, Services and their respective successors and assigns.
The Company and Services will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
their respective businesses or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company or
Services, as applicable, would be required to perform it if no such succession
had taken place. Any successor to the business and/or assets of the Company or
Services which assumes or agrees to perform this Agreement by operation of law,
contract, or otherwise shall be jointly and severally liable with the Company
and Services under this Agreement as if such successor were the Company or
Services, as applicable.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
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11.6 Amendments. Except as provided in Sections 2.2 and 11.14 hereof, this
Agreement shall not be altered, amended or modified except by written instrument
executed by the Company, Services and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
(First Name)(Last Name)
(address)
(City)(State) (Postal Code)
If to the Company:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
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If to Services:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received
by the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of South Carolina without regard to its
choice of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company and Services may withhold from any
amounts payable under this Agreement any federal, state or local taxes that are
required to be withheld pursuant to any applicable law or regulation.
11.12 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
11.13 Entire Agreement. This Agreement contains the entire understanding
of the Company and Services and the Executive with respect to its subject
matter.
11.14 Cancellation. The Company and Services may, at any time prior to a
Change in Control, unilaterally cancel this Agreement on behalf of all parties
hereto by both of them (and not only one of them) notifying the Executive of
such cancellation in writing at least twelve (12) months prior to the effective
date of the cancellation, provided however that no such notice may be given
after an Imminent Change of Control Date.
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IN WITNESS WHEREOF, the Executive, Services and the Company have
executed this Agreement as of the date first above written.
--------------------------------------
(FirstName) (LastName) (the Executive)
SAFETY-KLEEN CORP.
By:-------------------------------
Kenneth W. Winger
President & Chief Executive Officer
SAFETY-KLEEN SERVICES, INC.
By:-------------------------------
Kenneth W. Winger
President
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SAFETY-KLEEN
CHANGE OF CONTROL SEVERANCE AGREEMENT
(name)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. - PURPOSES 1
ARTICLE II. - CERTAIN DEFINITIONS 1
2.1 Accrued Obligations 1
2.2 Agreement Term 1
2.3 Article 2
2.4 Beneficial owner 2
2.5 Cause 2
2.6 Change of Control 2
2.7 Code 2
2.8 Disability 2
2.9 Effective Date 2
2.10 Good Reason 3
2.11 Gross-up Payment 3
2.12 Imminent Change of Control Date 3
2.13 IRS 3
2.14 1934 Act 3
2.15 Notice of Termination 3
2.16 Plans 3
2.17 Policies 3
2.18 Post-Change Period 3
2.19 SEC 3
2.20 Section 3
2.21 Subsidiary 3
2.22 Termination Date 4
2.23 Termination Performance Period 4
2.24 Voting Securities 4
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS 4
3.1 Position and Duties 4
3.2 Compensation 5
3.3 Stock Options 7
3.4 Excess / Supplemental Plans 7
ARTICLE IV. - TERMINATION OF EMPLOYMENT 8
4.1 Disability 8
4.2 Death 8
4.3 Cause 8
4.4 Good Reason 9
ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION 10
5.1 If by the Executive for Good Reason or by the Company
Other Than for
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Cause or Disability 10
5.2 If by the Company for Cause 12
5.3 If by the Executive Other Than for Good Reason 12
5.4 If by the Company for Disability 12
5.5 If upon Death 12
5.6 Joint and Several Obligation 12
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS 13
6.1 Waiver of Other Severance Rights 13
6.2 Other- Rights 13
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 13
7.1 Gross-up for Certain Taxes 13
7.2 Determination by the Executive 13
7.3 Additional Gross-up Amounts 14
7.4 Gross-up Multiple 15
7.5 Opinion of Counsel 15
7.6 Amount Increased or Contested 15
7.7 Refunds 16
7.8 Joint and Several Obligation 16
ARTICLE VIII. - EXPENSES AND INTEREST 17
8.1 Legal Fees and Other Expenses 17
8.2 Interest 17
ARTICLE IX. - NO SET-OFF OR MITIGATION 17
9.1 No Set-off by Company 17
9.2 No Mitigation 18
ARTICLE X. - CONFIDENTIALITY AND NON-COMPETITION 18
10.1 Confidentiality 18
10.2 Non-competition/ Non-Solicitation 18
10.3 Remedy 19
ARTICLE XI. - MISCELLANEOUS 19
11.1 No Assignability 19
11.2 Successors 19
11.3 Payments to Beneficiary 19
11.4 Non-alienation of Benefits 20
11.5 Severability 20
11.6 Amendments 20
11.7 Notices 20
11.8. Counterparts 21
11.9 Governing Law 21
11.10 Captions 21
<PAGE>
11.11 Tax Withholding 21
11.12 No Waiver 21
11.13 Entire Agreement 21
11.14 Cancellation 21
<PAGE>
SAFETY-KLEEN.
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 6, 1999, is made among SAFETY- KLEEN
CORP., a Delaware corporation having its principal place of business in
Columbia, South Carolina (the "Company"), SAFETY-KLEEN SERVICES, INC., a
Delaware corporation having its principal place of business in Columbia, South
Carolina and a wholly owned subsidiary of the Company ("Services") and (name)
(the "Executive"), a resident of SC.
The Company, Services and the Executive agree that this agreement
supersedes any prior agreement between any of them which specifically provides
benefits upon a change in control of the Company or Services, and further agree
that, if benefits become payable to the Executive pursuant to Article V hereof,
such benefits will be in lieu of any other severance or termination benefits to
which the Executive otherwise would be entitled under any other severance or
termination plan, policy or arrangement of the Company or Services.
ARTICLE I.
PURPOSES
The Board of Directors of the Company (the "Board") and the Board of
Directors of Services have determined that it is in the best interests of the
Company and its stockholders, and of Services, to assure that the Company and
Services will have the continued service of the Executive, despite the
possibility or occurrence of a change of control of the Company or Services. The
Board believes it is imperative to reduce the distraction of the Executive that
would result from the personal uncertainties caused by a pending or threatened
change of control, to encourage the Executive's full attention and dedication to
the Company and Services, and to provide the Executive with compensation and
benefits arrangements upon a change of control which ensure that the
expectations of the Executive will be satisfied and are competitive with those
of similarly-situated corporations. This Agreement is intended to accomplish
these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" -- see Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is twelve (12) months following the date
that both
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the Company and Services give notice of cancellation pursuant to
Section 11.14 hereof (the "Expiration Date"); provided, however, that if an
Imminent Change of Control Date occurs before the Expiration Date, then the
Agreement Term shall automatically extend to a date which is twelve (12) months
after the date of the Imminent Change of Control Date: and provided further,
that if a Change of Control occurs before the Expiration Date, the Expiration
Date shall automatically be extended to the last day of the Post-Change Period.
2.3 "Article" means an article of this Agreement.
2.4 "Beneficial owner" means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.
2.5 "Cause" - see Section 4.3(b).
2.6 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
a. (X) any person (as such term is used in Rule 13(d)- 5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a Subsidiary or any employee benefit plan (or
related trust) of the Company or a Subsidiary, becomes the beneficial
owner of 15% or more of the common stock of the Company or of Voting
Securities representing 15% or more of the combined voting power of all
Voting Securities of the Company, (Y) Laidlaw Inc. ceases to be the
beneficial owner, directly or indirectly, of 43.6% or more of the Voting
Securities of the Company and (Z) another person or group becomes the
beneficial owner of Voting Securities of the Company which represent a
larger number of Voting Securities than those held by Laidlaw Inc.
b. within a period of 24 months or less, the individuals who, as of
any date, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board unless at the end of
such period, the majority of individuals then constituting the Board were
nominated upon the recommendation of a majority of the Incumbent
Directors.
c. the sale or other disposition of all or substantially all of the
assets of the Company or Services.
d. the sale or other disposition by the Company of 50% or more of
the Voting Securities of Services or any other transaction which results
in any person, other than the Company or a subsidiary or any employee
benefit plan of the Company, becoming the beneficial owner of 50% or more
of the Voting Securities of Services.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
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2.9 "Effective Date" means the first date on which a Change of Control
occurs during the Agreement Term. Despite anything in this Agreement to the
contrary, if the Company or Services terminates the Executive's employment
before the date of a Change of Control, and if the Executive reasonably
demonstrates that such termination of employment (a) was at the request of a
third party who had taken steps reasonably calculated to effect the Change of
Control or (b) otherwise arose in connection with or anticipation of the Change
of Control, then "Effective Date" shall mean the date immediately before the
date of such termination of employment.
2.10 "Employer" means whichever of the Company or Services is the primary
common-law employer of the Executive at the relevant time.
2.11 "Good Reason" -- see Section 4.4(b).
2.12 "Gross-up Payment" -- see Section 7.1.
2.13 "Imminent Change of Control Date" means any date on which occurs (a)
a presentation to the Company's stockholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, and in case of either (a) or (b) such proposal or offer
remains effective and unrevoked.
2.14 "IRS" means the Internal Revenue Service.
2.15 "1934 Act" means the Securities Exchange Act of 1934.
2.16 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under such termination provision and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
2.17 "Plans" means plans, programs, policies or practices of the Company
and Services.
2.18 "Policies" means policies, practices or procedures of the Company and
Services.
2.19 "Post-Change Period" means the period commencing on the Effective
Date and ending on the third anniversary of such date.
2.20 "SEC" means the Securities and Exchange Commission.
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2.21 "Section" means, unless the context otherwise requires, a section of
this Agreement.
2.22 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code with the Company being treated as the employer corporation for purposes of
this definition.
2.23 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company or Services terminates the
Executive's employment other than for Cause or Disability, then the Termination
Date shall be the date of receipt of such Notice of Termination and (b) if the
Executive's employment is terminated by reason of death or Disability, then the
Termination Date shall be the date of death of the Executive or the "Disability
Effective Date" (as defined in Section 4.1), as the case may be.
2.24 "Termination Performance Period" - see Section 3.2(b)(2).
2.25 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 Position and Duties.
a. During the Post-Change Period, (1) the Executive's position with
the Company and Services, (in the case of a Change of Control involving
the Company) or with Services (in the case of a Change of Control
involving Services) (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate in
all material respects with the most significant of those held, exercised
and assigned at any time during the 90-day period immediately before the
Effective Date and (2) the Executive's services shall be performed at the
location where the Executive was employed immediately before the Effective
Date or any other location less than 40 miles from such former location.
b. During the Post-Change Period (other than any periods of
vacation, sick leave or disability to which the Executive is entitled),
the Executive agrees to devote the Executive's full attention and time to
the business and affairs of the Company and Services and, to the extent
necessary to discharge the duties assigned to the Executive in accordance
with this Agreement, to use the Executive's best efforts to perform
faithfully and efficiently such duties. During the Post-Change Period, the
Executive may (1) serve on corporate, civic or charitable boards or
committees, (2) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (3) manage personal investments, so long as
such activities are consistent with the Policies of the Company or
Services at the Effective Date and do not significantly
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interfere with the performance of the Executive's duties under this
Agreement. To the extent that any such activities have been conducted by
the Executive before the Effective Date and were consistent with the
Policies of the Company and Services at the Effective Date, the continued
conduct of such activities (or activities similar in nature and scope)
after the Effective Date shall not be deemed to interfere with the
performance of the Executive's duties under this Agreement.
3.2 Compensation.
a. Base Salary. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive an annual base
salary in cash ("Guaranteed Base Salary"), which shall be paid in a manner
consistent with the Company's or Services' (as applicable to the
Executive) payroll practices in effect immediately before the Effective
Date at a rate at least equal to 12 times the highest monthly base salary
paid or payable to the Executive by the Company and Services in respect of
the 12-month period immediately before the Effective Date. During the
Post-Change Period, the Guaranteed Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded to other
peer executives of the Company and Services. Any increase in Guaranteed
Base Salary shall not limit or reduce any other obligation of the Company
and Services to the Executive under this Agreement. After any such
increase, the Guaranteed Base Salary shall not be reduced and the term
"Guaranteed Base Salary" shall thereafter refer to the increased amount.
b. Target Bonus. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive a bonus (the
"Guaranteed Bonus") for each Performance Period which ends during the
Post-Change Period. "Performance Period" means each period of time
designated in accordance with any bonus arrangement of the Company or
Services ("Bonus Plan") which is based upon performance and approved by
the Board or any committee of the Board. The Guaranteed Bonus shall be at
least equal to the greatest of:
(1) the On Plan Bonus, which shall mean the cash bonus which the
Executive would accrue under any Bonus Plan for the
Performance Period for which the Guaranteed Bonus is awarded
("Current Performance Period") as if the performance achieved
100% of plan established pursuant to such Bonus Plan and the
maximum level of the discretionary portion is achieved;
(2) the Actual Bonus, which shall mean the cash bonus which
Executive would accrue under any Bonus Plan for the Current
Performance Period if the performance during the Current
Performance Period were measured by actual performance;
provided, however, that for purposes of Article V of this
Agreement, the Actual Bonus for the Performance Period in
which the Termination Date occurred (the "Termination
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Performance Period") shall not be less than the cash bonus
which the Executive would accrue under any Bonus Plan if
performance during that Termination Performance Period were
measured by the actual performance during the Termination
Performance Period before the Termination Date projected to
the last day of such Performance Period and the maximum level
of the discretionary portion is achieved; and
(3) the Historical Bonus, which shall mean the greatest bonus
that the Executive accrued under any Bonus Plan in the last
three (3) Performance Periods that ended before the
Post-Change Period; provided, however, that for purposes of
Article V of this Agreement, the Historical Bonus for the
Performance Period in which the Termination Date occurred
shall not be less than the cash bonus that the Executive
accrued in the last Performance Period that ended before
the Termination Date.
c. Incentive, Savings and Retirement Plans. In addition to
Guaranteed Base Salary and Guaranteed Bonus payable as provided in this
Section, the Executive shall be entitled to participate during the
Post-Change Period in all incentive (including long-term incentives),
savings and retirement Plans applicable to other peer executives of the
Company and Services, but in no event shall such Plans provide the
Executive with incentive (including long-term incentives), savings and
retirement benefits which are less favorable, in the aggregate, than the
most favorable of those provided by the Company or Services to the
Executive or to peer executives under such Plans as in effect at any time
during the 90-day period immediately before the Effective Date.
d. Welfare Benefit Plans. During the Post-Change Period, the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans provided by the
Company and Services(including, without limitation, medical, prescription,
dental, disability, individual life, group life, dependent life,
accidental death and travel accident insurance Plans) and applicable to
other peer executives of the Company and Services and their families, but
in no event shall such Plans provide benefits which in any case are less
favorable, in the aggregate, than the most favorable of those provided to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before the Effective Date.
e. Fringe Benefits. During the Post-Change Period, the Executive
shall be entitled to fringe benefits and other executive perquisites in
accordance with the most favorable Plans applicable to peer executives of
the Company and Services, but in no event shall such Plans provide fringe
benefits and other executive perquisites which in any case are less
favorable, in the aggregate, than the most favorable of those provided by
the Company and Services to the Executive or to peer executives under such
Plans in effect at any time during the 90-day period immediately before
the Effective Date.
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f. Expenses. During the Post-Change Period, the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's or Services' (as
applicable) receipt of accountings in accordance with the most favorable
Policies applicable to peer executives of the Company and Services, but in
no event shall such Policies be less favorable, in the aggregate, than the
most favorable of those provided by the Company and Services to the
Executive or to peer executives under such Policies in effect at any time
during the 90-day period immediately before the Effective Date.
g. Office and Support Staff. During the Post-Change Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance in accordance with the most favorable Policies
applicable to peer executives of the Company and Services, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive
or to peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
h. Vacation. During the Post-Change Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company and Services, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive
or to peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
3.3 Stock Options.
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to the Executive a lump-sum cash payment
equal to the spread (fair market value over exercise price) of all outstanding
options granted to the Executive for shares of common stock of the Company
whether vested or not vested on the Effective Date. Whichever of the Company and
Services is not the Employer, shall be jointly and severally liable for the
obligation of the Employer under this Section 3.3.
3.4 Excess/Supplemental Plans. (Note: This Section 3.4 is applicable if
and only if your participation in the Safety-Kleen Supplemental Executive
Retirement Plan is approved by the Human Resources and Compensation Committee of
the Company's Board of Directors)
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to Executive an amount equal to the value
(determined using (i) the interest rate published by the PBGC, as of the
calendar month immediately prior to the Effective Date, for the specific purpose
of determining the present value of lump sum benefits as discussed in 29 C.F.R.
4044 and (ii) the UP 84 Mortality Table) of the
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Executive's accrued benefits under (1) the Safety-Kleen Supplemental Executive
Retirement Plan, or (2) any such successor plan or other nonqualified unfunded
retirement Plan as may be in effect as of (or as may have been in effect at any
time during the 90-day period immediately before) the Effective Date (the
"Excess/Supplemental Plans"), irrespective of whether or not Executive is vested
therein, and without any reduction for early retirement, early payout and social
security benefits, and taking into account for benefit accrual purposes, the
Executive's period of service with the Company beginning February 22, 1989.
Whichever of the Company and Services is not the Employer, shall be jointly and
severally liable for the obligation of the Employer under this Section 3.4.
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, (1) written notice in accordance with Section 11.7 of the
Employer's intention to terminate the Executive's employment pursuant to
this Section and (2) a certification of the Executive's Disability by a
physician selected by the Employer or its insurers and reasonably
acceptable to the Executive or the Executive's legal representative. The
Executive's employment shall terminate effective on the 30th day (the
"Disability Effective Date") after the Executive's receipt of such notice
unless, before the Disability Effective Date, the Executive shall have
resumed the full-time performance of the Executive's duties.
b. "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration. and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accommodation.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment for Cause.
b. "Cause" means any of the following: (i) conviction of the
Executive of, or the Executive's pleading guilty or nolo contendere to,
any felony which includes as an element of the crime a premeditated
intention to commit the act, (ii) Executive's inability to perform his
duties due to habitual alcohol or drug addiction, (iii) serious
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misconduct involving dishonesty in the course of Executive's employment,
or (iv) the Executive's habitual neglect of his duties; except that Cause
shall not mean:
(1) bad judgment or negligence other than habitual neglect
of duty;
(2) any act or omission believed by the Executive in good
faith to have been in or not opposed to the interest of the
Company and Services (without intent of the Executive to gain,
directly or indirectly, a profit to which the Executive was
not legally entitled);
(3) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive
met the applicable standard of conduct for indemnification or
reimbursement under the Company's or Services' by-laws, any
applicable indemnification agreement, or applicable law, in
each case in effect at the time of such act or omission; or
(4) any act or omission with respect to which notice of
termination of employment of the Executive is given more than
12 months after the earliest date on which any member of the
Board, not a party to the act or omission, knew or should have
known of such act or omission.
c. Any termination of the Executive's employment by the Employer for
Cause shall be communicated to the Executive by a Notice of Termination.
4.4 Good Reason.
a. During the Post-Change Period, the Executive may terminate his or
her employment for Good Reason.
b. "Good Reason" means any of the following:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including
offices, titles, reporting requirements or responsibilities),
authority or duties as contemplated by Section 3.1 (a)(1), or
any other action by the Company or Services which results in a
diminution on or other material adverse change in such
position, authority or duties;
(2) any failure by the Company or Services to comply with any
of the provisions of Article III;
(3) the Company's or Services' requiring the Executive to be
based at any office or location other than the location
described in Section 3.1(a)(2);
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(4) any other material adverse change to the terms and
conditions of the Executive's employment; or
(5) any purported termination by the Employer of the
Executive's employment other than as expressly permitted by
this Agreement (any such purported termination shall not be
effective for any other purpose under this Agreement).
Any reasonable determination of "Good Reason" made in good faith by the
Executive shall be conclusive.
c. Any termination of employment by the Executive for Good Reason
shall be communicated to the Employer by a Notice of Termination. A
passage of time prior to delivery of a Notice of Termination or a failure
by the Executive to include in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive under this Agreement or preclude the Executive
from asserting such fact or circumstance in enforcing rights under this
Agreement.
ARTICLE V.
OBLIGATIONS OF THE EMPLOYER UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Employer Other Than for
Cause or Disability. If, during the Post-Change Period, the Employer shall
terminate Executive's employment other than for Cause or Disability, or if the
Executive shall terminate employment for Good Reason, the Employer shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the following amounts:
a. to the extent not previously paid, the Guaranteed Base Salary and
any accrued vacation pay through the Termination Date;
b. the difference between (1) the product of (A) the Guaranteed
Bonus, multiplied by (B) a fraction, the numerator of which is the number
of days in the Termination Performance Period which elapsed before the
Termination Date, and the denominator of which is the total number of days
in the Termination Performance Period, and (2) the amount of any Guaranteed
Bonus previously paid to the Executive with respect to the Termination
Performance Period;
c. all amounts previously deferred by or an accrual to the benefit
of the Executive under any nonqualified deferred compensation or pension
plan, together with any accrued earnings thereon, and not yet paid by the
Company or Services;
d. an amount equal to the product of (1) three (3) multiplied by (2)
the
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sum of (A) the Guaranteed Base Salary and (B) the Guaranteed Bonus;
e. an amount equal to the sum of the value of the unvested portion
of the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company or Services, as of the Termination Date;
f. if the Company or Services maintains any cash-based long term
incentive bonus plan or arrangement, an amount in satisfaction of the
Company's or Services (as applicable) obligation to the Executive under
such plan or arrangement equal to the amount which would be payable to the
Executive if (i) the Company or Services (as applicable) attained target
performance over the entire performance period and (ii) the Executive had
remained employed during the entire performance period;
g. (Note: This Section 5.1 (g) is applicable if and only if your
participation in the Safety-Kleen Supplemental Executive Retirement Plan is
approved by the Human Resources and Compensation Committee of the Company's
Board of Directors) the difference between (1) an amount equal to the value
(determined using the actuarial assumptions then applied by the Pension
Benefit Guaranty Corporation for determining immediate annuity present
values) of the Executive's accrued benefits under the Excess/Supplemental
Plans (taking into account for benefit accrual purposes the Executive's
period of service with the Company beginning February 22, 1989) calculated
as though the Executive (A) continued to accrue benefits under the
Excess/Supplemental Plans for a period of three years after the Termination
Date, and (B) received compensation during each year of such three-year
period equal to the sum of the Guaranteed Base Salary and the highest
Guaranteed Bonus paid (or payable) to the Executive in the three years
preceding the Termination Date, and (C) were three (3) years older than his
age at the Termination Date and (2) the amount actually previously paid to
Executive pursuant to Section 3.4; provided however, that the amount
computed under this paragraph shall not be reduced for early retirement,
early payout and social security benefits; further provided, however, that
such amount shall be paid irrespective of whether Executive is vested in
any of the Excess/ Supplemental Plans; and
h. pay Executive outplacement services, to a maximum of $25,000.
Until the third anniversary of the Termination Date or such later date as
any Plan of the Company or Services may specify, the Employer shall continue
to provide to the Executive and the provide to the Executive's family welfare
benefits (including, without limitation, medical, prescription, dental,
disability, individual life, group life, accidental death and travel accident
insurance plans and programs), fringe benefits and other executive
perquisites, which are at least as favorable as the most favorable Plans of
the Company and Services applicable to Executive and other peer executives and
their families as of the Termination Date, but which are in no event less
favorable than the most favorable Plans of the Company and Services applicable
to the Executive and other peer executives and their families during the
90-day period immediately before the Effective Date. The cost to the
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Executive of such welfare benefits shall not exceed the cost of such benefits
to the Executive immediately before the Termination Date or, if less, the
Effective Date. Notwithstanding the foregoing, if the Executive is covered
under any medical, life, or disability insurance plan(s) provided by a
subsequent employer, then the amount of coverage required to be provided by
the Employer hereunder shall be secondary to the coverage provided by the
subsequent employer's medical, life, or disability insurance plan(s). The
Executive's rights under this Section shall be in addition to, and not in lieu
of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980B of the Code and Section 601
et. seq. of the Employee Retirement Income Security Act of 1974, as amended.
5.2 If by the Employer for Cause. If the Employer terminates the
Executive's employment for Cause during the Post-Change Period, this Agreement
shall terminate without further obligation by the Employer to the Executive,
other than the obligation immediately to pay the Executive in cash the
Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay, in each case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good
Reason, Disability or death, this Agreement shall terminate without further
obligations by the Employer, other than the obligation immediately to pay the
Executive in cash all amounts specified in clauses (a), (b) and (c) of the
first sentence of Section 5.1 (such amounts collectively, the "Accrued
Obligations").
5.4 If by the Employer for Disability. If the Employer terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than
(a) the Employer's obligation immediately to pay the Executive in
cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (1)
those provided under the most favorable disability Plans applicable to
peer executives of the Company or Services in effect immediately before
the Termination Date or (2) those provided under the most favorable
disability Plans of the Company and Services in effect at any time during
the 90-day period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason
of the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation of the Employer immediately to
pay the Executive's estate or beneficiary in cash all Accrued Obligations.
Despite anything in this Agreement to the contrary, the
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Executive's family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company and Services to the surviving
families of peer executives of the Company or Services under such Plans, but
in no event shall such Plans provide benefits which in each case are less
favorable, in the aggregate, than the most favorable of those provided by the
Company and Services to the Executive under such Plans in effect at any time
during the 90-day period immediately before the Effective Date.
5.6 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article V.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of the
Company or Services.
6.2 Other Rights. Except as provided in Section 6.1 and in the second
paragraph of this Agreement, this Agreement shall not prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other Plans, provided by the Company or any of its Subsidiaries
and for which the Executive may qualify, nor shall this Agreement limit or
otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any Plan of the Company or any of its Subsidiaries and any other payment or
benefit required by law at or after the Termination Date shall be payable in
accordance with such Plan or applicable law except as expressly modified by
this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Employer's independent auditors, which determinations shall
be certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or
deemed received by the Executive from the Company or Services pursuant to this
Agreement or otherwise (collectively, the "Payments") is or will become
subject to any excise tax under Section 4999 of the Code or any similar tax
payable under any United States federal, state, local or other law (such
excise tax and all such similar taxes collectively, "Excise Taxes"), then the
Employer shall, immediately after such determination, pay the Executive an
amount (the "Gross-up Payment") equal to the product of
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(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the
Excise Taxes and any federal, state, local or other income or excise taxes or
other taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Employer may at any time request the preparation and
delivery to the Executive of a Certificate. The Employer shall, in addition to
complying with Section 7.2, cause all determinations and certifications under
the Article to be made as soon as reasonably possible and in adequate time to
permit the Executive to prepare and file the Executive's individual tax
returns on a timely basis.
7.2 Determination by the Executive.
a. If the Employer shall fail to deliver a Certificate to the
Executive (and to pay to the Executive the amount of the Gross-up Payment,
if any) within 14 days after receipt from the Executive of a written
request for a Certificate, or if at any time following receipt of a
Certificate the Executive disputes the amount of the Gross-up Payment set
forth therein, the Executive may elect to demand the payment of the amount
which the Executive, in accordance with an opinion of counsel to the
Executive ("Executive Counsel Opinion"), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Employer of a written notice which specifies the Gross-up Payment
determined by the Executive and an Executive Counsel Opinion regarding
such Gross-up Payment (such written notice and opinion collectively, the
"Executive's Determination"). Within 14 days after delivery of the
Executive's Determination to the Employer, the Employer shall either (1 )
pay the Executive the Gross-up Payment set forth in the Executive's
Determination (less the portion of such amount, if any, previously paid to
the Executive by the Employer) or (2) deliver to the Executive a
Certificate specifying the Gross-up Payment determined by the Employer's
independent auditors, together with an opinion of the Employer's counsel
(" Employer Counsel Opinion"), and pay the Executive the Gross-up Payment
specified in such Certificate. If for any reason the Employer fails to
comply with clause (2) of the preceding sentence, the Gross-up Payment
specified in the Executive's Determination shall be controlling for all
purposes.
b. If the Executive does not make a request for, and the Employer
does not deliver to the Executive, a Certificate, the Employer shall,
for purposes of Section 7.3, be deemed to have determined that no
Gross-up Payment is due.
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7.3 Additional Gross-up Amounts. If, despite the initial conclusion of
the Employer and/or the Executive that certain Payments are neither subject to
Excise Taxes nor to be counted in determining whether other Payments are subject
to Excise Taxes (any such item, a "Non-Parachute Item"), it is later determined
(pursuant to the subsequently-enacted provisions of the Code, final regulations
or published rulings of the IRS, final judgment of a court of competent
jurisdiction or the Employer's independent auditors) that any of the
Non-Parachute Items are subject to Excise Taxes, or are to be counted in
determining whether any Payments are subject to Excise Taxes, with the result
that the amount of Excise Taxes payable by the Executive is greater than the
amount determined by the Employer or the Executive pursuant to Section 7.1 or
7.2, as applicable, then the Employer shall pay the Executive an amount (which
shall also be deemed a Gross-up Payment) equal to the product of
(a) the sum of(1) such additional Excise Taxes and (2) any
interest, fines, penalties, expenses or other costs
incurred by the Executive as a result of having taken a
position in accordance with a determination made pursuant
to Section 7.1
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the sum, expressed as a decimal fraction, of the rates of all federal, state,
local and other income and other taxes and any Excise Taxes applicable to the
Gross-up Payment. (If different rates of tax are applicable to various portions
of a Gross-up Payment, the weighted average of such rates shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel that there is a
reasonable basis to support a conclusion that the Gross-up Payment determined by
the Executive has been calculated in accord with this Article and applicable
law. " Employer Counsel Opinion" means a legal opinion of nationally recognized
executive compensation counsel that (a) there is a reasonable basis to support a
conclusion that the Gross-up Payment set forth of the Certificate of Employer's
independent auditors has been calculated in accord with this Article and
applicable law, and (b) there is no reasonable basis for the calculation of the
Gross-up Payment determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the Employer
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Employer of a Gross-up Payment.
Such notice shall include the nature of such claim and the date on which such
claim is due to be paid. The Executive shall give such notice as soon as
practicable, but no later than 10 business days, after the Executive first
obtains actual knowledge of such claim; provided, however, that any failure to
give or delay in giving such notice shall affect the Employer's obligations
under this Article only if and to the extent that such failure results in actual
prejudice to the Employer. The Executive shall
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not pay such claim less than 30 days after the Executive gives such notice to
the Employer (or, if sooner, the date on which payment of such claim is due). If
the Employer notifies the Executive in writing before the expiration of such
period that it desires to contest such claim, the Executive shall:
a. give the Employer any information that it reasonably
requestsrelating to such claim,
b. take such action in connection with contesting such claim as the
Employer reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Employer,
c. cooperate with the Employer in good faith to contest such claim,
and
d. permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax,
including related interest and penalties, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing, the Employer shall control all proceedings in connection with
such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Employer shall determine; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a refund, the
Employer shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify the Executive, on an after-tax
basis, for any Excise Tax or income tax, including related interest or
penalties, imposed with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
The Employer's control of the contest shall be limited to issues with
respect to which a Gross-up Payment would be payable. The Executive shall
be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Employer pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with
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respect to such claim, the Executive shall (subject to the Employer's complying
with the requirements of Section 7.6) promptly pay the Employer the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Employer pursuant to Section 7.6, a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Employer does not notify the Executive in writing of its intent to contest
such determination before the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-up Payment required to be paid. Any contest of a denial of refund shall be
controlled by Section 7.6.
7.8 Joint and Several Obligation. Whichever of the Company and Services
is not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VII. In the event of any assertion of liability
under this Section 7.8 against whichever of the Company or Services is not the
Employer, the party against which such liability is asserted shall succeed to
all of the rights and obligations of the Employer under Article VII.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
a. If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel and the accounting and other fees and expenses
in connection with the delivery of the Opinion referred to in Article
VII), regardless of whether the Executive ultimately prevails, the
Employer shall reimburse the Executive on a monthly basis upon the written
request for such fees and expenses to the extent not reimbursed under the
Company's and Services' officers and directors liability insurance policy,
if any. The existence of any controlling case or controlling regulatory
law which is directly inconsistent with the position taken by the
Executive shall be evidence that the Executive did not act in good faith.
b. Reimbursement of legal fees and expenses shall be made monthly
upon the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Employer shall have reimbursed the Executive for
legal fees and expenses and it is later determined that the Executive was
not acting in good faith, all amounts paid on behalf of, or reimbursed to,
the Executive shall be promptly refunded to the Employer.
8.2 Interest. If the Employer does not pay any amount due to the
Executive under this Agreement within three days after such amount became due
and owing, interest shall
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accrue on such amount from the date it became due and owing until the date of
payment at a annual rate equal to two percent (2.0%) above the base commercial
lending rate announced by The Bank of America in effect from time to time during
the period of such nonpayment.
8.3 Joint and Several Obligation. Whichever of the Company and Services
is not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VIII. The right of refund referred to in the
last sentence of Section 8.1 b. shall inure to whichever of the Company or
Services originally paid the reimbursement to the Executive.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company or Services. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and subject to no set-off, counterclaim or legal or
equitable defense. Time is of the essence in the performance by the Company and
Services of their obligations under this Agreement. Any claim which the Company
or Services may have against the Executive, whether for a breach of this
Agreement or otherwise, shall be brought in a separate action or proceeding and
not as part of any action or proceeding brought by the Executive to enforce any
rights against the Company or Services under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company or Services under this Agreement by seeking new
employment following termination. Except as specifically otherwise provided in
this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary, compensation or other
amounts which may be paid or payable to the Executive as the result of the
Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NON-COMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its Subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its Subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its Subsidiaries a competitive advantage
in the businesses in which the Company and its Subsidiaries are engaged
("Confidential Information"). Executive recognizes that all such Confidential
Information is the sole and exclusive property of the Company and its
Subsidiaries, and that disclosure of Confidential Information would cause damage
to the Company and its Subsidiaries. Executive agrees that, except as required
by the duties of his employment with the Company and/or its Subsidiaries and
except in connection with enforcing the Executive's rights under this Agreement
or if compelled by a court or governmental agency, he will not, without the
consent of the Company, disseminate or
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otherwise disclose any Confidential Information obtained during his employment
with the Company and/or its Subsidiaries for so long as such information is
valuable and unique.
10.2 Non-competition/ Non-solicitation.
a. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
b. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock
is listed on a national securities exchange or actively traded in the
over-the-counter market; provided that (1) such investment does not give
Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
c. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to the
termination of employment.
d. For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any entity and any branch, office or operation thereof,
which is a direct and material competitor of the Company and/ or its
Subsidiaries wherever the Company and/ or its Subsidiaries does business,
in the United States or abroad.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing,
19
<PAGE>
the Company shall not be precluded from pursuing any and all remedies it may
have at law or in equity for breach of such obligations; provided, however, that
such breach shall not in any manner or degree whatsoever limit, reduce or
otherwise affect the obligations of the Company and Services under this
Agreement, and in no event shall an asserted breach of the Executive's
obligations under this Article X constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company and Services shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company, Services and their respective successors and assigns.
The Company and Services will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
their respective businesses or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company or
Services, as applicable, would be required to perform it if no such succession
had taken place. Any successor to the business and/or assets of the Company or
Services which assumes or agrees to perform this Agreement by operation of law,
contract, or otherwise shall be jointly and severally liable with the Company
and Services under this Agreement as if such successor were the Company or
Services, as applicable.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other
portions of this Agreement are declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
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11.6 Amendments. Except as provided in Sections 2.2 and 11.14 hereof,
this Agreement shall not be altered, amended or modified except by written
instrument executed by the Company, Services and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
(First Name) (Last Name)
(Address)
(City) (State) (Postal Code)
If to the Company:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
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If to Services:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received
by the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of South Carolina without regard to its
choice of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company and Services may withhold from any
amounts payable under this Agreement any federal, state or local taxes that are
required to be withheld pursuant to any applicable law or regulation.
11.12 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
11.13 Entire Agreement. This Agreement contains the entire understanding
of the Company and Services and the Executive with respect to its subject
matter.
11.14 Cancellation. The Company and Services may, at any time prior to a
Change in Control, unilaterally cancel this Agreement on behalf of all parties
hereto by both of them (and not only one of them) notifying the Executive of
such cancellation in writing at least twelve (12) months prior to the effective
date of the cancellation, provided however that no such notice may be given
after an Imminent Change of Control Date.
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<PAGE>
IN WITNESS WHEREOF, the Executive, Services and the Company have
executed this Agreement as of the date first above written.
-------------------------------
(name) (the Executive)
SAFETY-KLEEN CORP.
By:----------------------------
Kenneth W. Winger
President & Chief Executive Officer
SAFETY-KLEEN SERVICES, INC.
By:----------------------------
Kenneth W. Winger
President
October 6, 1999
Private and Confidential
(Title) (FirstName) (LastName)
(Address1)
(City), (State) (PostalCode)
Dear (FirstName):
Safety-Kleen Corp. ("Safety-Kleen") and Safety-Kleen Services, Inc.
("Services"), (Safety-Kleen, Services, and their subsidiaries, collectively
referred to herein, as the "Corporation") consider it essential and in the best
interests of the Corporation and their shareholders to foster the continuous
employment of key management personnel. In this regard, the board of directors
of Safety-Kleen (the "Board") has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of the
members of senior management of the Corporation, including yourself, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from any possible change in control of Safety-Kleen or
Services.
In order to induce you to remain in the employ of the Corporation, the
Corporation has agreed with you that you shall receive the severance benefits
set forth in this letter agreement (this "Agreement") in the event your
employment with the Corporation is terminated subsequent to a Change in Control
(as defined below) under the circumstances described below.
1. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there shall
have been a "Change in Control", which, for purposes of this Agreement, shall
mean the occurrence of any of the following:
a. (X) any person (as such term is used in Rule 13(d)- 5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a subsidiary or any employee benefit plan (or
related trust) of Safety-Kleen or its subsidiary, becomes the beneficial
owner of 15% or more of the common stock of Safety-Kleen or of voting
securities representing 15% or more of the combined voting power of all
voting securities of Safety-Kleen, (Y) Laidlaw Inc. ceases to be the
beneficial owner, directly or indirectly, of 43.6% or more of the voting
securities of Safety-Kleen and (Z) another person or group becomes the
beneficial owner of voting securities of Safety-Kleen which represent a
larger number of voting securities than those held by Laidlaw Inc.
b. within a period of 24 months or less, the individuals who, as of
any date, constitute the Board (the "Incumbent Directors") cease for any
reason to
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constitute at least a majority of the Board unless at the end of such
period, the majority of individuals then constituting the Board were
nominated upon the recommendation of a majority of the Incumbent
Directors.
c. the sale or other disposition of all or substantially all of the
assets of Safety-Kleen or Services.
d. the sale or other disposition by Safety-Kleen of 50% or more of
the voting securities of Services or any other transaction which results
in any person, other than Safety-Kleen or a subsidiary or any employee
benefit plan of Safety-Kleen, becoming the beneficial owner of 50% or more
of the voting securities of Services.
2. TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control shall
have occurred, you shall be entitled to the benefits provided for herein
upon the subsequent termination of your employment ("Termination") during
the period ("Window Period") beginning upon the date of the Change in
Control and ending on the third anniversary thereof, unless such
Termination is because of your death or retirement, by the Corporation for
Cause or by you other than for Good Reason. For purposes of this
paragraph:
a. "Cause" shall mean:
(I) the willful and continued failure by you substantially to
perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure
resulting from Termination by you for Good Reason, as
hereinafter defined) after a written demand for substantial
performance is delivered to you by the Board or executive
management of the Corporation, which demand specifically
identifies the manner in which the Board or executive
management believes that you have not substantially performed
your duties and you failed to correct such failure to perform
your duties within 30 days after such written demand is
delivered to you; or
(II) the willful engaging by you in conduct that is
demonstrably and materially injurious to the Corporation,
monetarily or otherwise, and no act or failure to act on your
part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief
that your action or omission was in the best interests of the
Corporation;
b. "Good Reason" shall mean the occurrence, without your express
written consent, of any of the following:
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<PAGE>
(I) INCONSISTENT DUTIES - a meaningful and detrimental
alteration in your position or in the nature or status of your
responsibilities from those in effect immediately prior to the
Change in Control;
(II) REDUCTION IN REMUNERATION - a reduction by the
Corporation in your annual base salary as in effect
immediately prior to the Change in Control or at any time
during the Window Period; or a reduction by the Corporation in
long term incentive opportunity as in effect immediately prior
to the Change in Control or at any time during the Window
Period; or a reduction by the Corporation in bonus opportunity
as in effect immediately prior to the Change in Control or at
any time during the Window Period;
(III) RELOCATION - the relocation of the office of the
Corporation where you are employed at the time of the Change
in Control ("the CIC Location") to a location that is more
than 40 miles away from the CIC Location, or the Corporation
requiring you to be based more than 40 miles away from the CIC
Location (except for required travel on the Corporation
business to an extent substantially consistent with your
customary business travel obligations in the ordinary course
of your business during the year immediately prior to the
Change in Control); provided, however, your relocation to
Columbia, South Carolina, in connection with the consolidation
of Safety-Kleen Corp. offices in Columbia, S.C., such
relocation shall not constitute Reason for Termination by you
and shall not entitle you to the Termination Payment
(hereinafter defined) in the event of your refusal to
relocate.
(IV) BENEFITS AND PERQUISITES - the failure by the Corporation
to continue to provide you with benefits and perquisites at
least as favorable as those enjoyed by you immediately prior
to the Change in Control as may be increased thereafter and
prior to the expiry of the Window Period.
3. TERMINATION PAYMENT. If any event of Termination shall have occurred
during the Window Period and prior to the expiry of the Term of this
Agreement, and you shall have provided written notice to that effect to
the Corporation, you shall be entitled to a payment ("the Termination
Payment") in a lump sum (subject to mandatory statutory tax
withholding) in the amount of eighteen month's average compensation
plus to the extent not previously paid but accrued, through the date of
Termination, vacation pay and salary. Average compensation is equal to
the average aggregate monthly salary, bonus, and perquisites during the
fiscal year of the Corporation ended immediately prior to the date
("Termination Payment Date") on which the Termination Payment shall be
due provided, however, the average compensation shall not be less than
the average
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<PAGE>
aggregate monthly salary, bonus, and perquisites received during the
fiscal year ending August 31, 1999.
4. CONTINUATION OF BENEFITS FOLLOWING TERMINATION. For eighteen
months following the Termination, the Corporation shall continue to
provide to you and your family welfare benefits (including, without
limitation, medical, prescription, dental, disability, individual life,
group life, accidental death and travel accident insurance plans and
programs), fringe benefits and other perquisites, which are at least as
favorable as the most favorable plans of the Corporation applicable to you
and other peer executives and their families as of the Termination, but
which are in no event less favorable than the most favorable plans of the
Corporation applicable to you and other peer executives and their families
during the 90-day period immediately before the Change of Control. The
cost to you of such welfare benefits shall not exceed the cost of such
benefits to you immediately before the Termination or, if less, the Change
of Control. Notwithstanding the foregoing, if you are covered under any
medical, life, or disability insurance plan(s) provided by a subsequent
employer, then the amount of coverage required to be provided by the
Corporation hereunder shall be secondary to the coverage provided by the
subsequent employer's medical, life, or disability insurance plan(s). Your
rights under this paragraph shall be in addition to, and not in lieu of,
any post-termination continuation coverage or conversion rights you may
have pursuant to applicable law, including without limitation continuation
coverage required by Section 4980B of the Code and Section 601 et. seq. of
the Employee Retirement Income Security Act of 1974, as amended.
5. EMPLOYEE STOCK OPTIONS. Upon a Change of Control, the Corporation
shall pay to you a lump-sum cash payment equal to the spread (fair market
value over exercise price) of all outstanding options granted to you for
shares of common stock of Safety-Kleen whether vested or not vested at the
time of the Change of Control.
6. LEGAL COUNSEL FEES. If the Corporation shall fail to comply with
its obligations hereunder or call into question the legal validity of this
Agreement, all reasonable legal counsel fees incurred by you in the course
of seeking to enforce this Agreement shall be for the account of and
payable by the Corporation, except to the extent that a court shall
determine that your action in seeking to enforce this Agreement was
frivolous.
7. OUTPLACEMENT EXPENSES. In the event that the Termination Payment
shall become payable hereunder, the Corporation shall pay, on your behalf,
the fees and expenses of "outplacement" services on your behalf which
shall have been arranged by you, to a maximum of $25,000.
4
<PAGE>
8. CONFIDENTIALITY AND NONCOMPETITION
8.1 CONFIDENTIALITY. You acknowledge that it is the policy of the
Corporation to maintain as secret and confidential all valuable and unique
information and techniques acquired, developed or used by the Corporation
relating to their business, operations, employees and customers, which
gives the Corporation a competitive advantage in the businesses in which
the Corporation is engaged ("Confidential Information"). You recognize
that all such Confidential Information is the sole and exclusive property
of the Corporation, and that disclosure of Confidential Information would
cause damage to the Corporation. You agree that, except as required by the
duties of your employment with the Corporation and except in connection
with enforcing your rights under this Agreement or if compelled by a court
or governmental agency, you will not, without the consent of the
Corporation, disseminate or otherwise disclose any Confidential
Information obtained during your employment with the Corporation for so
long as such information is valuable and unique.
8.2 NON-COMPETITION/ NON-SOLICITATION.
a. You agree that, during the period of your employment with the
Corporation and, if your employment is terminated for any reason,
thereafter for a period of one (1) year, you will not at any time directly
or indirectly, in any capacity, engage or participate in, or become
employed by or render advisory or consulting or other services in
connection with any Prohibited Business as defined in Section 8.2(d).
b. You agree that, during the period of your employment with the
Corporation and, if your employment is terminated for any reason,
thereafter for a period of one (1) year, you shall not make any financial
investment, whether in the form of equity or debt, or own any interest,
directly or indirectly, in any Prohibited Business. Nothing in this
Section 8.2(b) shall, however, restrict you from making any investment in
any company whose stock is listed on a national securities exchange or
actively traded in the over-the-counter market; provided that (1) such
investment does not give you the right or ability to control or influence
the policy decisions of any Prohibited Business, and (2) such investment
does not create a conflict of interest between your duties hereunder and
your interest in such investment.
c. You agree that, during the period of your employment with the
Corporation and, if your employment is terminated for any reason,
thereafter for a period of one (1) year, you shall not (1) employ any
employee of the Corporation or (2) interfere with the Corporation's
relationship with, or endeavor to entice away from the Corporation any
person, firm, corporation,
5
<PAGE>
or other business organization who or which at any time (whether before or
after the date of your termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Corporation which was conducted at any time
during the period commencing one year prior to the termination of
employment.
d. For the purpose of this Section 8.2, "Prohibited Business" shall
be defined as any entity and any branch, office or operation thereof,
which is a direct and material competitor of the Corporation wherever the
Corporation does business, in the United States or abroad.
8.3 REMEDY. You and the Corporation specifically agree that, in the
event that you shall breach your obligations under this Section 8, the
Corporation will suffer irreparable injury and no adequate remedy for such
breach, and shall be entitled to injunctive relief therefor, and in
particular, without limiting the generality of the foregoing, the
Corporation shall not be precluded from pursuing any and all remedies it
may have at law or in equity for breach of such obligations; provided,
however, that such breach shall not in any manner or degree whatsoever
limit, reduce or otherwise affect the obligations of the Corporation under
this Agreement, and in no event shall an asserted breach of your
obligations under this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to you under this Agreement.
9. TERM. This Agreement shall terminate on the later of (a) the
third anniversary of the date hereof and (b) the expiry of the Window
Period in respect of the last Change in Control which shall have occurred
prior to the third anniversary of the date hereof.
10. FINAL AGREEMENT. It is the intention of the Corporation and you
that the compensation and benefits to be provided to you under this
Agreement shall be the only compensation and benefits to you provided by
the Corporation in the event of your Termination of employment following
the Change in Control, and by your acceptance hereof, you hereby waive any
and all other rights which you might have as a result of such Termination
of employment.
11. NOTICE. For purposes of this Agreement, notices and all other
communications shall be in writing and shall be hand delivered and shall
be deemed given when delivered and received addressed to Safety-Kleen
Corp., 1301 Gervais Street, Suite 300, Columbia, South Carolina 29201,
Attention: Vice President, Administration or to you at the address set
forth on the first page of this Agreement or to such other address as
either party may have furnished to the other in writing in accordance
herewith.
6
<PAGE>
12. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of South Carolina applicable
therein.
13. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not effect the validity or
enforceability of any other provision of this Agreement which shall remain
in full force and effect.
14. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but both of which together
shall constitute one and the same instrument.
15. NO CONTRACT OF EMPLOYMENT. Nothing in this Agreement shall be
construed as giving you any right to be retained in the employment of the
Corporation.
If the foregoing sets forth our agreement on the subject matter hereof,
kindly sign in the space provided below and return to the Vice President of
Administration of the Corporation for execution by the Corporation. One fully
executed copy of this Agreement shall be returned to you.
SAFETY-KLEEN CORP.
By:----------------------
Kenneth W. Winger
President & Chief Executive Officer
SAFETY-KLEEN SERVICES, INC.
By:-----------------------
Kenneth W. Winger
President
Agreed to this ----- day of
- -------------- , 2000
- ------------------------
(FirstName) (LastName)
7
Private and Confidential
(Title) (FirstName) (LastName)
(Address1)
(City) (State) (PostalCode)
Dear (FirstName):
Safety-Kleen Corp. ("Safety-Kleen") and Safety-Kleen Services, Inc.
("Services"), (Safety-Kleen, Services, and their subsidiaries, collectively
referred to herein, as the "Corporation") consider it essential and in the best
interests of the Corporation and their shareholders to foster the continuous
employment of key management personnel. In this regard, the board of directors
of Safety-Kleen (the "Board") has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of the
members of senior management of the Corporation, including yourself, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from any possible change in control of Safety-Kleen or
Services.
In order to induce you to remain in the employ of the Corporation, the
Corporation has agreed with you that you shall receive the severance benefits
set forth in this letter agreement (this "Agreement") in the event your
employment with the Corporation is terminated subsequent to a Change in Control
(as defined below) under the circumstances described below.
1. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there shall
have been a "Change in Control", which, for purposes of this Agreement, shall
mean the occurrence of any of the following:
a. (X) any person (as such term is used in Rule 13(d)- 5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a subsidiary or any employee benefit plan (or
related trust) of Safety-Kleen or its subsidiary, becomes the beneficial
owner of 15% or more of the common stock of Safety-Kleen or of voting
securities representing 15% or more of the combined voting power of all
voting securities of Safety-Kleen, (Y) Laidlaw Inc. ceases to be the
beneficial owner, directly or indirectly, of 43.6% or more of the voting
securities of Safety-Kleen and (Z) another person or group becomes the
beneficial owner of voting securities of Safety-Kleen which represent a
larger number of voting securities than those held by Laidlaw Inc.
b. within a period of 24 months or less, the individuals who, as of
any date, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board unless at the end of
such period, the majority of
1
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individuals then constituting the Board were nominated upon the
recommendation of a majority of the Incumbent Directors.
c. the sale or other disposition of all or substantially all of the
assets of Safety-Kleen or Services.
d. the sale or other disposition by Safety-Kleen of 50% or more of
the voting securities of Services or any other transaction which
results in any person, other than Safety-Kleen or a subsidiary or
any employee benefit plan of Safety-Kleen, becoming the beneficial
owner of 50% or more of the voting securities of Services.
2. TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control shall
have occurred, you shall be entitled to the benefits provided for
herein upon the subsequent termination of your employment
("Termination") during the period ("Window Period") beginning upon the
date of the Change in Control and ending on the third anniversary
thereof, unless such Termination is because of your death or
retirement, by the Corporation for Cause or by you other than for Good
Reason. For purposes of this paragraph:
a. "Cause" shall mean:
(I) the willful and continued failure by you substantially to
perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure
resulting from Termination by you for Good Reason, as
hereinafter defined) after a written demand for substantial
performance is delivered to you by the Board or executive
management of the Corporation, which demand specifically
identifies the manner in which the Board or executive
management believes that you have not substantially performed
your duties and you failed to correct such failure to perform
your duties within 30 days after such written demand is
delivered to you; or
(II) the willful engaging by you in conduct that is
demonstrably and materially injurious to the Corporation,
monetarily or otherwise, and no act or failure to act on your
part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief
that your action or omission was in the best interests of the
Corporation;
b. "Good Reason" shall mean the occurrence, without your express
written consent, of any of the following:
(I) Inconsistent Duties - a meaningful and detrimental
alteration in your position or in the nature or status of your
responsibilities from those in effect immediately prior to the
Change in Control;
(II) Reduction in Remuneration - a reduction by the
Corporation in your annual base salary as in effect
immediately prior to the Change in Control or at any time
during the Window Period; or a reduction by the Corporation in
long term incentive opportunity as in effect immediately prior
to the Change in Control;
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<PAGE>
or at any time during the Window
Period; or a reduction by the Corporation in bonus opportunity
as in effect immediately prior to the Change in Control or at
any time during the Window Period;
(III) RELOCATION - the relocation of the office of the
Corporation where you are employed at the time of the Change
in Control
("the CIC Location") to a location that is more than 40 miles
away from the CIC Location, or the Corporation requiring you
to be based more than 40 miles away from the CIC Location
(except for required travel on the Corporation business to an
extent substantially consistent with your customary business
travel obligations in the ordinary course of your business
during the year immediately prior to the Change in Control);
provided, however, your relocation to Columbia, South
Carodlina, in connection with the consolidation of
Safety-Kleen Corp. offices in Columbia, S.C., such relocation
shall not constitute Reason for Termination by you and shall
not entitle you to the Termination Payment (hereinafter
defined) in the event of your refusal to relocate.
(IV) BENEFITS AND PERQUISITES - the failure by the Corporation
to continue to provide you with benefits and perquisites at
least as favorable as those enjoyed by you immediately prior
to the Change in Control as may be increased thereafter and
prior to the expiry of the Window Period.
3. TERMINATION PAYMENT. If any event of Termination shall have occurred
during the Window Period and prior to the expiry of the Term of this
Agreement, and you shall have provided written notice to that effect to
the Corporation, you shall be entitled to a payment ("the Termination
Payment") in a lump sum (subject to mandatory statutory tax
withholding) in the amount of twelve month's average compensation plus
to the extent not previously paid but accrued, through the date of
Termination, vacation pay and salary. Average compensation is equal to
the average aggregate monthly salary, bonus, and perquisites during the
fiscal year of the Corporation ended immediately prior to the date
("Termination Payment Date") on which the Termination Payment shall be
due provided, however, the average compensation shall not be less than
the average aggregate monthly salary, bonus, and perquisites received
during the fiscal year ending August 31, 1999.
4. CONTINUATION OF BENEFITS FOLLOWING TERMINATION
For twelve months following the Termination, the Corporation shall
continue to provide to you and your family welfare benefits (including,
without limitation, medical, prescription, dental, disability, individual
life, group life, accidental death and travel accident insurance plans and
programs), fringe benefits and other perquisites, which are at least as
favorable as the most favorable plans of the
3
<PAGE>
Corporation applicable to you and other peer executives and their families
as of the Termination, but which are in no event less favorable than the
most favorable plans of the Corporation applicable to you and other peer
executives and their families during the 90-day period immediately before
the Change of Control. The cost to you of such welfare benefits shall not
exceed the cost of such benefits to you immediately before the Termination
or, if less, the Change of Control. Notwithstanding the foregoing, if you
are covered under any medical, life, or disability insurance plan(s)
provided by a subsequent employer, then the amount of coverage required to
be provided by the Corporation hereunder shall be secondary to the
coverage provided by the subsequent employer's medical, life, or
disability insurance plan(s). Your rights under this paragraph shall be in
addition to, and not in lieu of, any post-termination continuation
coverage or conversion rights you may have pursuant to applicable law,
including without limitation continuation coverage required by Section
4980B of the Code and Section 601 et. seq. of the Employee Retirement
Income Security Act of 1974, as amended.
5. EMPLOYEE STOCK OPTIONS. Upon a Change of Control, the Corporation shall
pay to you a lump-sum cash payment equal to the spread (fair market value
over exercise price) of all outstanding options granted to you for shares
of common stock of Safety-Kleen whether vested or not vested at the time
of the Change of Control.
6. LEGAL COUNSEL FEES. If the Corporation shall fail to comply with its
obligations hereunder or call into question the legal validity of this
Agreement, all reasonable legal counsel fees incurred by you in the course
of seeking to enforce this Agreement shall be for the account of and
payable by the Corporation, except to the extent that a court shall
determine that your action in seeking to enforce this Agreement was
frivolous.
7. OUTPLACEMENT EXPENSES. In the event that the Termination Payment shall
become payable hereunder, the Corporation shall pay, on your behalf, the
fees and expenses of "outplacement" services on your behalf which shall
have been arranged by you, to a maximum of $25,000.
8. CONFIDENTIALITY AND NONCOMPETITION
8.1 CONFIDENTIALITY. You acknowledge that it is the policy of the Corporation
to maintain as secret and confidential all valuable and unique information
and techniques acquired, developed or used by the Corporation relating to
their business, operations, employees and customers, which gives the
Corporation a competitive advantage in the businesses in which the
Corporation is engaged ("Confidential Information"). You recognize that
all such Confidential Information is the sole and exclusive property of
the Corporation, and that disclosure of Confidential Information would
cause damage to the Corporation. You agree that, except as required by the
duties of your employment with the Corporation and except in connection
with enforcing your rights
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under this Agreement or if compelled by a court or governmental agency,
you will not, without the consent of the Corporation, disseminate or
otherwise disclose any Confidential Information obtained during your
employment with the Corporation for so long as such information is
valuable and unique.
8.2 NON-COMPETITION/ NON-SOLICITATION.
a. You agree that, during the period of your employment with the
Corporation and, if your employment is terminated for any reason,
thereafter for a period of one (1) year, you will not at any time directly
or indirectly, in any capacity, engage or participate in, or become
employed by or render advisory or consulting or other services in
connection with any Prohibited Business as defined in Section 8.2(d).
b. You agree that, during the period of your employment with the
Corporation and, if your employment is terminated for any reason,
thereafter for a period of one (1) year, you shall not make any financial
investment, whether in the form of equity or debt, or own any interest,
directly or indirectly, in any Prohibited Business. Nothing in this
Section 8.2(b) shall, however, restrict you from making any investment in
any company whose stock is listed on a national securities exchange or
actively traded in the over-the-counter market; provided that (1) such
investment does not give you the right or ability to control or influence
the policy decisions of any Prohibited Business, and (2) such investment
does not create a conflict of interest between your duties hereunder and
your interest in such investment.
c. You agree that, during the period of your employment with the
Corporation and, if your employment is terminated for any reason,
thereafter for a period of one (1) year, you shall not (1) employ any
employee of the Corporation or (2) interfere with the Corporation's
relationship with, or endeavor to entice away from the Corporation any
person, firm, corporation, or other business organization who or which at
any time (whether before or after the date of your termination of
employment), was an employee, customer, vendor or supplier of, or
maintained a business relationship with, any business of the Corporation
which was conducted at any time during the period commencing one year
prior to the termination of employment.
d. For the purpose of this Section 8.2, "Prohibited Business" shall
be defined as any entity and any branch, office or operation thereof,
which is a direct and material competitor of the Corporation wherever the
Corporation does business, in the United States or abroad.
8.3 REMEDY. You and the Corporation specifically agree that, in the event that
you shall breach your obligations under this Section 8, the Corporation
will suffer irreparable injury and no adequate remedy for such breach, and
shall be entitled to injunctive relief therefor, and in particular,
without limiting the generality of the foregoing, the
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Corporation shall not be precluded from pursuing any and all remedies it
may have at law or in equity for breach of such obligations; provided,
however, that such breach shall not in any manner or degree whatsoever
limit, reduce or otherwise affect the obligations of the Corporation under
this Agreement, and in no event shall an asserted breach of your
obligations under this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to you under this Agreement.
9. TERM. This Agreement shall terminate on the later of (a) the third
anniversary of the date hereof and (b) the expiry of the Window Period in
respect of the last Change in Control which shall have occurred prior to
the third anniversary of the date hereof.
10. FINAL AGREEMENT. It is the intention of the Corporation and you that the
compensation and benefits to be provided to you under this Agreement shall
be the only compensation and benefits to you provided by the Corporation
in the event of your Termination of employment following the Change in
Control, and by your acceptance hereof, you hereby waive any and all other
rights which you might have as a result of such Termination of employment.
11. NOTICE. For purposes of this Agreement, notices and all other
communications shall be in writing and shall be hand delivered and
shall be deemed given when delivered and received addressed to
Safety-Kleen Corp., 1301 Gervais Street, Suite 300, Columbia, South
Carolina 29201, Attention: Vice President, Administration or to you at
the address set forth on the first page of this Agreement or to such
other address as either party may have furnished to the other in
writing in accordance herewith.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina applicable
therein.
13. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not effect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
15. NO CONTRACT OF EMPLOYMENT. Nothing in this Agreement shall be construed as
giving you any right to be retained in the employment of the Corporation.
If the foregoing sets forth our agreement on the subject matter hereof,
kindly sign in the space provided below and return to the Vice President of
Administration of the Corporation for execution by the Corporation. One fully
executed copy of this Agreement shall be returned to you.
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SAFETY-KLEEN CORP.
By:-------------------------
Kenneth W. Winger
President & Chief Executive Officer
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SAFETY-KLEEN SERVICES, INC.
By:-------------------------
Kenneth W. Winger
President
Agreed to this ----- day of
- ---------------, 2000
- ------------------------
(FirstName) (LastName)
7
Exhibit (10)(r)
SAFETY-KLEEN
CHANGE OF CONTROL SEVERANCE AGREEMENT
(name)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. - PURPOSES 1
ARTICLE II. - CERTAIN DEFINITIONS 1
2.1 Accrued Obligations 1
2.2 Agreement Term 1
2.3 Article 2
2.4 Beneficial owner 2
2.5 Cause 2
2.6 Change of Control 2
2.7 Code 2
2.8 Disability 2
2.9 Effective Date 2
2.10 Good Reason 3
2.11 Gross-up Payment 3
2.12 Imminent Change of Control Date 3
2.13 IRS 3
2.14 1934 Act 3
2.15 Notice of Termination 3
2.16 Plans 3
2.17 Policies 3
2.18 Post-Change Period 3
2.19 SEC 3
2.20 Section 3
2.21 Subsidiary 3
2.22 Termination Date 4
2.23 Termination Performance Period 4
2.24 Voting Securities 4
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS 4
3.1 Position and Duties 4
3.2 Compensation 5
3.3 Stock Options 7
ARTICLE IV. - TERMINATION OF EMPLOYMENT 7
4.1 Disability 7
4.2 Death 8
4.3 Cause 8
4.4 Good Reason 8
ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION 9
5.1 If by the Executive for Good Reason or by the Company
Other Than for Cause or Disability 9
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5.2 If by the Company for Cause 11
5.3 If by the Executive Other Than for Good Reason 11
5.4 If by the Company for Disability 11
5.5 If upon Death 11
5.6 Joint and Several Obligation 12
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS 12
6.1 Waiver of Other Severance Rights 12
6.2 Other- Rights 12
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 12
7.1 Gross-up for Certain Taxes 12
7.2 Determination by the Executive 13
7.3 Additional Gross-up Amounts 13
7.4 Gross-up Multiple 14
7.5 Opinion of Counsel 14
7.6 Amount Increased or Contested 14
7.7 Refunds 15
7.8 Joint and Several Obligation 15
ARTICLE VIII. - EXPENSES AND INTEREST 16
8.1 Legal Fees and Other Expenses 16
8.2 Interest 16
8.3 Joint and Several Obligation 16
ARTICLE IX. - NO SET-OFF OR MITIGATION 16
9.1 No Set-off by Company 16
9.2 No Mitigation 17
ARTICLE X. - CONFIDENTIALITY AND NON-COMPETITION 17
10.1 Confidentiality 17
10.2 Non-competition/ Non-Solicitation 17
10.3 Remedy 18
ARTICLE XI. - MISCELLANEOUS 18
11.1 No Assignability 18
11.2 Successors 18
11.3 Payments to Beneficiary 19
11.4 Non-alienation of Benefits 19
11.5 Severability 19
11.6 Amendments 19
11.7 Notices 19
11.8 Counterparts 20
11.9 Governing Law 20
11.10 Captions 20
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11.11 Tax Withholding 20
11.12 No Waiver 20
11.13 Entire Agreement 20
11.14 Cancellation 20
<PAGE>
SAFETY-KLEEN.
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 6, 1999, is made among SAFETY- KLEEN
CORP., a Delaware corporation having its principal place of business in
Columbia, South Carolina (the "Company"), SAFETY-KLEEN SERVICES, INC., a
Delaware corporation having its principal place of business in Columbia, South
Carolina and a wholly owned subsidiary of the Company ("Services") and
(FirstName) (LastName) (the "Executive"), a resident of (State).
The Company, Services and the Executive agree that this agreement
supersedes any prior agreement between any of them which specifically provides
benefits upon a change in control of the Company or Services, and further agree
that, if benefits become payable to the Executive pursuant to Article V hereof,
such benefits will be in lieu of any other severance or termination benefits to
which the Executive otherwise would be entitled under any other severance or
termination plan, policy or arrangement of the Company or Services.
ARTICLE I.
PURPOSES
The Board of Directors of the Company (the "Board") and the Board of
Directors of Services have determined that it is in the best interests of the
Company and its stockholders, and of Services, to assure that the Company and
Services will have the continued service of the Executive, despite the
possibility or occurrence of a change of control of the Company or Services. The
Board believes it is imperative to reduce the distraction of the Executive that
would result from the personal uncertainties caused by a pending or threatened
change of control, to encourage the Executive's full attention and dedication to
the Company and Services, and to provide the Executive with compensation and
benefits arrangements upon a change of control which ensure that the
expectations of the Executive will be satisfied and are competitive with those
of similarly-situated corporations. This Agreement is intended to accomplish
these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" -- see Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is twelve (12) months following the date
that both
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the Company and Services give notice of cancellation pursuant to
Section 11.14 hereof (the "Expiration Date"); provided, however, that if an
Imminent Change of Control Date occurs before the Expiration Date, then the
Agreement Term shall automatically extend to a date which is twelve (12) months
after the date of the Imminent Change of Control Date: and provided further,
that if a Change of Control occurs before the Expiration Date, the Expiration
Date shall automatically be extended to the last day of the Post-Change Period.
2.3 "Article" means an article of this Agreement.
2.4 "Beneficial owner" means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.
2.5 "Cause" - see Section 4.3(b).
2.6 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
a. (X) any person (as such term is used in Rule 13(d)- 5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a Subsidiary or any employee benefit plan (or
related trust) of the Company or a Subsidiary, becomes the beneficial
owner of 15% or more of the common stock of the Company or of Voting
Securities representing 15% or more of the combined voting power of all
Voting Securities of the Company, (Y) Laidlaw Inc. ceases to be the
beneficial owner, directly or indirectly, of 43.6% or more of the Voting
Securities of the Company and (Z) another person or group becomes the
beneficial owner of Voting Securities of the Company which represent a
larger number of Voting Securities than those held by Laidlaw Inc.
b. within a period of 24 months or less, the individuals who, as of
any date, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board unless at the end of
such period, the majority of individuals then constituting the Board were
nominated upon the recommendation of a majority of the Incumbent
Directors.
c. the sale or other disposition of all or substantially all
of the assets of the Company or Services.
d. the sale or other disposition by the Company of 50% or more of
the Voting Securities of Services or any other transaction which results
in any person, other than the Company or a subsidiary or any employee
benefit plan of the Company, becoming the beneficial owner of 50% or more
of the Voting Securities of Services.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
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2.9 "Effective Date" means the first date on which a Change of Control
occurs during the Agreement Term. Despite anything in this Agreement to the
contrary, if the Company or Services terminates the Executive's employment
before the date of a Change of Control, and if the Executive reasonably
demonstrates that such termination of employment (a) was at the request of a
third party who had taken steps reasonably calculated to effect the Change of
Control or (b) otherwise arose in connection with or anticipation of the Change
of Control, then "Effective Date" shall mean the date immediately before the
date of such termination of employment.
2.10 "Employer" means whichever of the Company or Services is the primary
common-law employer of the Executive at the relevant time.
2.11 "Good Reason" -- see Section 4.4(b).
2.12 "Gross-up Payment" -- see Section 7.1.
2.13 "Imminent Change of Control Date" means any date on which occurs (a)
a presentation to the Company's stockholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, and in case of either (a) or (b) such proposal or offer
remains effective and unrevoked.
2.14 "IRS" means the Internal Revenue Service.
2.15 "1934 Act" means the Securities Exchange Act of 1934.
2.16 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under such termination provision and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
2.17 "Plans" means plans, programs, policies or practices of the Company
and Services.
2.18 "Policies" means policies, practices or procedures of the Company and
Services.
2.19 "Post-Change Period" means the period commencing on the Effective
Date and ending on the third anniversary of such date.
2.20 "SEC" means the Securities and Exchange Commission.
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2.21 "Section" means, unless the context otherwise requires, a section of
this Agreement.
2.22 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code with the Company being treated as the employer corporation for purposes of
this definition.
2.23 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company or Services terminates the
Executive's employment other than for Cause or Disability, then the Termination
Date shall be the date of receipt of such Notice of Termination and (b) if the
Executive's employment is terminated by reason of death or Disability, then the
Termination Date shall be the date of death of the Executive or the "Disability
Effective Date" (as defined in Section 4.1), as the case may be.
2.24 "Termination Performance Period" - see Section 3.2(b)(2).
2.25 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 Position and Duties.
a. During the Post-Change Period, (1) the Executive's position with
the Company and Services, (in the case of a Change of Control involving
the Company) or with Services (in the case of a Change of Control
involving Services) (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate in
all material respects with the most significant of those held, exercised
and assigned at any time during the 90-day period immediately before the
Effective Date and (2) the Executive's services shall be performed at the
location where the Executive was employed immediately before the Effective
Date or any other location less than 40 miles from such former location.
b. During the Post-Change Period (other than any periods of
vacation, sick leave or disability to which the Executive is entitled),
the Executive agrees to devote the Executive's full attention and time to
the business and affairs of the Company and Services and, to the extent
necessary to discharge the duties assigned to the Executive in accordance
with this Agreement, to use the Executive's best efforts to perform
faithfully and efficiently such duties. During the Post-Change Period, the
Executive may (1) serve on corporate, civic or charitable boards or
committees, (2) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (3) manage personal investments, so long as
such activities are consistent with the Policies of the Company or
Services at the Effective Date and do not significantly
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interfere with the performance of the Executive's duties under this
Agreement. To the extent that any such activities have been conducted by
the Executive before the Effective Date and were consistent with the
Policies of the Company and Services at the Effective Date, the continued
conduct of such activities (or activities similar in nature and scope)
after the Effective Date shall not be deemed to interfere with the
performance of the Executive's duties under this Agreement.
3.2 Compensation.
a. Base Salary. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive an annual base
salary in cash ("Guaranteed Base Salary"), which shall be paid in a manner
consistent with the Company's or Services' (as applicable to the
Executive) payroll practices in effect immediately before the Effective
Date at a rate at least equal to 12 times the highest monthly base salary
paid or payable to the Executive by the Company and Services in respect of
the 12-month period immediately before the Effective Date. During the
Post-Change Period, the Guaranteed Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded to other
peer executives of the Company and Services. Any increase in Guaranteed
Base Salary shall not limit or reduce any other obligation of the Company
and Services to the Executive under this Agreement. After any such
increase, the Guaranteed Base Salary shall not be reduced and the term
"Guaranteed Base Salary" shall thereafter refer to the increased amount.
b. Target Bonus. During the Post-Change Period, the Company and
Services shall pay or cause to be paid to the Executive a bonus (the
"Guaranteed Bonus") for each Performance Period which ends during the
Post-Change Period. "Performance Period" means each period of time
designated in accordance with any bonus arrangement of the Company or
Services ("Bonus Plan") which is based upon performance and approved by
the Board or any committee of the Board. The Guaranteed Bonus shall be at
least equal to the greatest of:
(1) the On Plan Bonus, which shall mean the cash bonus which the
Executive would accrue under any Bonus Plan for the Performance
Period for which the Guaranteed Bonus is awarded ("Current
Performance Period") as if the performance achieved 100% of plan
established pursuant to such Bonus Plan and the maximum level of the
discretionary portion is achieved;
(2) the Actual Bonus, which shall mean the cash bonus which
Executive would accrue under any Bonus Plan for the Current
Performance Period if the performance during the Current Performance
Period were measured by actual performance; provided, however, that
for purposes of Article V of this Agreement, the Actual Bonus for
the Performance Period in which the Termination Date occurred (the
"Termination Performance Period") shall not be less than the cash
bonus which the Executive would accrue under any
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Bonus Plan if performance during that Termination Performance Period
were measured by the actual performance during the Termination
Performance Period before the Termination Date projected to the last
day of such Performance Period and the maximum level of the
discretionary portion is achieved; and
(3) the Historical Bonus, which shall mean the greatest bonus that
the Executive accrued under any Bonus Plan in the last three (3)
Performance Periods that ended before the Post-Change Period;
provided, however, that for purposes of Article V of this Agreement,
the Historical Bonus for the Performance Period in which the
Termination Date occurred shall not be less than the cash bonus that
the Executive accrued in the last Performance Period that ended
before the Termination Date.
c. Incentive, Savings and Retirement Plans. In addition to
Guaranteed Base Salary and Guaranteed Bonus payable as provided in this
Section, the Executive shall be entitled to participate during the
Post-Change Period in all incentive (including long-term incentives),
savings and retirement Plans applicable to other peer executives of the
Company and Services, but in no event shall such Plans provide the
Executive with incentive (including long-term incentives), savings and
retirement benefits which are less favorable, in the aggregate, than the
most favorable of those provided by the Company or Services to the
Executive or to peer executives under such Plans as in effect at any time
during the 90-day period immediately before the Effective Date.
d. Welfare Benefit Plans. During the Post-Change Period, the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans provided by the
Company and Services(including, without limitation, medical, prescription,
dental, disability, individual life, group life, dependent life,
accidental death and travel accident insurance Plans) and applicable to
other peer executives of the Company and Services and their families, but
in no event shall such Plans provide benefits which in any case are less
favorable, in the aggregate, than the most favorable of those provided to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before the Effective Date.
e. Fringe Benefits. During the Post-Change Period, the Executive
shall be entitled to fringe benefits and other executive perquisites in
accordance with the most favorable Plans applicable to peer executives of
the Company and Services, but in no event shall such Plans provide fringe
benefits and other executive perquisites which in any case are less
favorable, in the aggregate, than the most favorable of those provided by
the Company and Services to the Executive or to peer executives under such
Plans in effect at any time during the 90-day period immediately before
the Effective Date.
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f. Expenses. During the Post-Change Period, the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's or Services' (as
applicable) receipt of accountings in accordance with the most favorable
Policies applicable to peer executives of the Company and Services, but in
no event shall such Policies be less favorable, in the aggregate, than the
most favorable of those provided by the Company and Services to the
Executive or to peer executives under such Policies in effect at any time
during the 90-day period immediately before the Effective Date.
g. Office and Support Staff. During the Post-Change Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance in accordance with the most favorable Policies
applicable to peer executives of the Company and Services, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive
or to peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
h. Vacation. During the Post-Change Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company and Services, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive
or to peer executives under such Policies in effect at any time during the
90-day period immediately before the Effective Date.
3.3 Stock Options.
In addition to the other benefits provided in this Section, on the
Effective Date, the Employer shall pay to the Executive a lump-sum cash
payment equal to the spread (fair market value over exercise price) of all
outstanding options granted to the Executive for shares of common stock of the
Company whether vested or not vested on the Effective Date. Whichever of the
Company and Services is not the Employer, shall be jointly and severally
liable for the obligation of the Employer under this Section 3.3.
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, (1) written notice in accordance with Section 11.7 of the
Employer's intention to terminate the Executive's employment pursuant to
this Section and (2) a certification of the Executive's Disability by a
physician selected by the Employer or its insurers and
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reasonably acceptable to the Executive or the Executive's legal
representative. The Executive's employment shall terminate effective on
the 30th day (the "Disability Effective Date") after the Executive's
receipt of such notice unless, before the Disability Effective Date, the
Executive shall have resumed the full-time performance of the Executive's
duties.
b. "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration. and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accommodation.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment for Cause.
b. "Cause" means any of the following: (i) conviction of the
Executive of, or the Executive's pleading guilty or nolo contendere to,
any felony which includes as an element of the crime a premeditated
intention to commit the act, (ii) Executive's inability to perform his
duties due to habitual alcohol or drug addiction, (iii) serious misconduct
involving dishonesty in the course of Executive's employment, or (iv) the
Executive's habitual neglect of his duties; except that Cause shall not
mean:
(1) bad judgment or negligence other than habitual
neglect of duty;
(2) any act or omission believed by the Executive in good
faith to have been in or not opposed to the interest of the
Company and Services (without intent of the Executive to gain,
directly or indirectly, a profit to which the Executive was
not legally entitled);
(3) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive
met the applicable standard of conduct for indemnification or
reimbursement under the Company's or Services' by-laws, any
applicable indemnification agreement, or applicable law, in
each case in effect at the time of such act or omission; or
(4) any act or omission with respect to which notice of
termination of employment of the Executive is given more than
12 months after the earliest date on which any member of the
Board, not a party to the act or omission, knew or should have
known of such act or omission.
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c. Any termination of the Executive's employment by the Employer for
Cause shall be communicated to the Executive by a Notice of Termination.
4.4 Good Reason.
a. During the Post-Change Period, the Executive may terminate his or
her employment for Good Reason.
b. "Good Reason" means any of the following:
(1) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including offices,
titles, reporting requirements or responsibilities), authority or
duties as contemplated by Section 3.1 (a)(1), or any other action by
the Company or Services which results in a diminution on or other
material adverse change in such position, authority or duties;
(2) any failure by the Company or Services to comply with any of the
provisions of Article III;
(3) the Company's or Services' requiring the Executive to be based
at any office or location other than the location described in
Section 3.1(a)(2);
(4) any other material adverse change to the terms and conditions of
the Executive's employment; or
(5) any purported termination by the Employer of the Executive's
employment other than as expressly permitted by this Agreement (any
such purported termination shall not be effective for any other
purpose under this Agreement).
Any reasonable determination of "Good Reason" made in good faith by the
Executive shall be conclusive.
c. Any termination of employment by the Executive for Good Reason
shall be communicated to the Employer by a Notice of Termination. A
passage of time prior to delivery of a Notice of Termination or a failure
by the Executive to include in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive under this Agreement or preclude the Executive
from asserting such fact or circumstance in enforcing rights under this
Agreement.
ARTICLE V.
OBLIGATIONS OF THE EMPLOYER UPON TERMINATION
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5.1 If by the Executive for Good Reason or by the Employer Other Than for
Cause or Disability. If, during the Post-Change Period, the Employer shall
terminate Executive's employment other than for Cause or Disability, or if the
Executive shall terminate employment for Good Reason, the Employer shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the following amounts:
a. to the extent not previously paid, the Guaranteed Base
Salary and any accrued vacation pay through the Termination Date;
b. the difference between (1) the product of (A) the Guaranteed
Bonus, multiplied by (B) a fraction, the numerator of which is the number
of days in the Termination Performance Period which elapsed before the
Termination Date, and the denominator of which is the total number of days
in the Termination Performance Period, and (2) the amount of any Guaranteed
Bonus previously paid to the Executive with respect to the Termination
Performance Period;
c. all amounts previously deferred by or an accrual to the benefit
of the Executive under any nonqualified deferred compensation or pension
plan, together with any accrued earnings thereon, and not yet paid by the
Company or Services;
d. an amount equal to the product of (1) three (3) multiplied by (2)
the sum of (A) the Guaranteed Base Salary and (B) the Guaranteed Bonus;
e. an amount equal to the sum of the value of the unvested portion
of the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company or Services, as of the Termination Date;
f. if the Company or Services maintains any cash-based long term
incentive bonus plan or arrangement, an amount in satisfaction of the
Company's or Services (as applicable) obligation to the Executive under
such plan or arrangement equal to the amount which would be payable to the
Executive if (i) the Company or Services (as applicable) attained target
performance over the entire performance period and (ii) the Executive had
remained employed during the entire performance period;
g. pay Executive outplacement services, to a maximum of $25,000.
Until the third anniversary of the Termination Date or such later date as
any Plan of the Company or Services may specify, the Employer shall continue
to provide to the Executive and the provide to the Executive's family welfare
benefits (including, without limitation, medical, prescription, dental,
disability, individual life, group life, accidental death and travel accident
insurance plans and programs), fringe benefits and other executive
perquisites, which are at least as favorable as the most favorable Plans of
the Company and Services applicable to Executive and other peer executives and
their families as of the Termination Date, but which are in no event less
favorable than the most favorable Plans of
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the Company and Services applicable to the Executive and other peer executives
and their families during the 90-day period immediately before the Effective
Date. The cost to the Executive of such welfare benefits shall not exceed the
cost of such benefits to the Executive immediately before the Termination Date
or, if less, the Effective Date. Notwithstanding the foregoing, if the
Executive is covered under any medical, life, or disability insurance plan(s)
provided by a subsequent employer, then the amount of coverage required to be
provided by the Employer hereunder shall be secondary to the coverage provided
by the subsequent employer's medical, life, or disability insurance plan(s).
The Executive's rights under this Section shall be in addition to, and not in
lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980B of the Code and Section 601
et. seq. of the Employee Retirement Income Security Act of 1974, as amended.
5.2 If by the Employer for Cause. If the Employer terminates the
Executive's employment for Cause during the Post-Change Period, this Agreement
shall terminate without further obligation by the Employer to the Executive,
other than the obligation immediately to pay the Executive in cash the
Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay, in each case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good
Reason, Disability or death, this Agreement shall terminate without further
obligations by the Employer, other than the obligation immediately to pay the
Executive in cash all amounts specified in clauses (a), (b) and (c) of the
first sentence of Section 5.1 (such amounts collectively, the "Accrued
Obligations").
5.4 If by the Employer for Disability. If the Employer terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than
(a) the Employer's obligation immediately to pay the
Executive in cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (1)
those provided under the most favorable disability Plans applicable to
peer executives of the Company or Services in effect immediately before
the Termination Date or (2) those provided under the most favorable
disability Plans of the Company and Services in effect at any time during
the 90-day period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason
of the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than
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the obligation of the Employer immediately to pay the Executive's estate or
beneficiary in cash all Accrued Obligations. Despite anything in this
Agreement to the contrary, the Executive's family shall be entitled to receive
benefits at least equal to the most favorable benefits provided by the Company
and Services to the surviving families of peer executives of the Company or
Services under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most
favorable of those provided by the Company and Services to the Executive under
such Plans in effect at any time during the 90-day period immediately before
the Effective Date.
5.6 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article V.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of the
Company or Services.
6.2 Other Rights. Except as provided in Section 6.1 and in the second
paragraph of this Agreement, this Agreement shall not prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other Plans, provided by the Company or any of its Subsidiaries
and for which the Executive may qualify, nor shall this Agreement limit or
otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any Plan of the Company or any of its Subsidiaries and any other payment or
benefit required by law at or after the Termination Date shall be payable in
accordance with such Plan or applicable law except as expressly modified by
this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Employer's independent auditors, which determinations shall
be certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or
deemed received by the Executive from the Company or Services pursuant to this
Agreement or otherwise (collectively, the "Payments") is or will become
subject to any excise tax under Section 4999 of the Code or any similar tax
payable under any United States federal, state, local or other law (such
excise tax and all such similar taxes collectively, "Excise Taxes"), then the
Employer shall, immediately after such determination, pay the Executive an
amount (the "Gross-up Payment") equal to the product of
(a) the amount of such Excise Taxes
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multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the
Excise Taxes and any federal, state, local or other income or excise taxes or
other taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Employer may at any time request the preparation and
delivery to the Executive of a Certificate. The Employer shall, in addition to
complying with Section 7.2, cause all determinations and certifications under
the Article to be made as soon as reasonably possible and in adequate time to
permit the Executive to prepare and file the Executive's individual tax
returns on a timely basis.
7.2 Determination by the Executive.
a. If the Employer shall fail to deliver a Certificate to the
Executive (and to pay to the Executive the amount of the Gross-up Payment,
if any) within 14 days after receipt from the Executive of a written
request for a Certificate, or if at any time following receipt of a
Certificate the Executive disputes the amount of the Gross-up Payment set
forth therein, the Executive may elect to demand the payment of the amount
which the Executive, in accordance with an opinion of counsel to the
Executive ("Executive Counsel Opinion"), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Employer of a written notice which specifies the Gross-up Payment
determined by the Executive and an Executive Counsel Opinion regarding
such Gross-up Payment (such written notice and opinion collectively, the
"Executive's Determination"). Within 14 days after delivery of the
Executive's Determination to the Employer, the Employer shall either (1 )
pay the Executive the Gross-up Payment set forth in the Executive's
Determination (less the portion of such amount, if any, previously paid to
the Executive by the Employer) or (2) deliver to the Executive a
Certificate specifying the Gross-up Payment determined by the Employer's
independent auditors, together with an opinion of the Employer's counsel
(" Employer Counsel Opinion"), and pay the Executive the Gross-up Payment
specified in such Certificate. If for any reason the Employer fails to
comply with clause (2) of the preceding sentence, the Gross-up Payment
specified in the Executive's Determination shall be controlling for all
purposes.
b. If the Executive does not make a request for, and the Employer
does not deliver to the Executive, a Certificate, the Employer shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
7.3 Additional Gross-up Amounts. If, despite the initial conclusion of the
Employer and/or the Executive that certain Payments are neither subject to
Excise Taxes nor
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to be counted in determining whether other Payments are subject to Excise Taxes
(any such item, a "Non-Parachute Item"), it is later determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Employer's independent auditors) that any of the Non-Parachute Items are subject
to Excise Taxes, or are to be counted in determining whether any Payments are
subject to Excise Taxes, with the result that the amount of Excise Taxes payable
by the Executive is greater than the amount determined by the Employer or the
Executive pursuant to Section 7.1 or 7.2, as applicable, then the Employer shall
pay the Executive an amount (which shall also be deemed a Gross-up Payment)
equal to the product of
(a) the sum of (1) such additional Excise Taxes and (2) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the sum, expressed as a decimal fraction, of the rates of all federal, state,
local and other income and other taxes and any Excise Taxes applicable to the
Gross-up Payment. (If different rates of tax are applicable to various portions
of a Gross-up Payment, the weighted average of such rates shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel that there is a
reasonable basis to support a conclusion that the Gross-up Payment determined by
the Executive has been calculated in accord with this Article and applicable
law. "Employer Counsel Opinion" means a legal opinion of nationally recognized
executive compensation counsel that (a) there is a reasonable basis to support a
conclusion that the Gross-up Payment set forth of the Certificate of Employer's
independent auditors has been calculated in accord with this Article and
applicable law, and (b) there is no reasonable basis for the calculation of the
Gross-up Payment determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the Employer
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Employer of a Gross-up Payment.
Such notice shall include the nature of such claim and the date on which such
claim is due to be paid. The Executive shall give such notice as soon as
practicable, but no later than 10 business days, after the Executive first
obtains actual knowledge of such claim; provided, however, that any failure to
give or delay in giving such notice shall affect the Employer's obligations
under this Article only if and to the extent that such failure results in actual
prejudice to the Employer. The Executive shall not pay such claim less than 30
days after the Executive gives such notice to the Employer (or, if sooner, the
date on which payment of such claim is due). If the Employer notifies the
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Executive in writing before the expiration of such period that it desires to
contest such claim, the Executive shall:
a. give the Employer any information that it reasonably
requests relating to such claim,
b. take such action in connection with contesting such claim as the
Employer reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Employer,
c. cooperate with the Employer in good faith to contest such
claim, and
d. permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax,
including related interest and penalties, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing, the Employer shall control all proceedings in connection with
such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Employer shall determine; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a refund, the
Employer shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify the Executive, on an after-tax
basis, for any Excise Tax or income tax, including related interest or
penalties, imposed with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
The Employer's control of the contest shall be limited to issues with
respect to which a Gross-up Payment would be payable. The Executive shall
be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced by
the Employer pursuant to Section 7.6, the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Employer's complying with the requirements of Section 7.6) promptly pay the
Employer the amount of such refund (together
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with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Employer
pursuant to Section 7.6, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Employer does not
notify the Executive in writing of its intent to contest such determination
before the expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-up Payment
required to be paid. Any contest of a denial of refund shall be controlled by
Section 7.6.
7.8 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VII. In the event of any assertion of liability
under this Section 7.8 against whichever of the Company or Services is not the
Employer, the party against which such liability is asserted shall succeed to
all of the rights and obligations of the Employer under Article VII.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
a. If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel and the accounting and other fees and expenses
in connection with the delivery of the Opinion referred to in Article
VII), regardless of whether the Executive ultimately prevails, the
Employer shall reimburse the Executive on a monthly basis upon the written
request for such fees and expenses to the extent not reimbursed under the
Company's and Services' officers and directors liability insurance policy,
if any. The existence of any controlling case or controlling regulatory
law which is directly inconsistent with the position taken by the
Executive shall be evidence that the Executive did not act in good faith.
b. Reimbursement of legal fees and expenses shall be made monthly
upon the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Employer shall have reimbursed the Executive for
legal fees and expenses and it is later determined that the Executive was
not acting in good faith, all amounts paid on behalf of, or reimbursed to,
the Executive shall be promptly refunded to the Employer.
8.2 Interest. If the Employer does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and owing,
interest shall accrue on such amount from the date it became due and owing until
the date of payment at a
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annual rate equal to two percent (2.0%) above the base commercial lending rate
announced by The Bank of America in effect from time to time during the period
of such nonpayment.
8.3 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the obligations of
the Employer under this Article VIII. The right of refund referred to in the
last sentence of Section 8.1 b. shall inure to whichever of the Company or
Services originally paid the reimbursement to the Executive.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company or Services. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and subject to no set-off, counterclaim or legal or
equitable defense. Time is of the essence in the performance by the Company and
Services of their obligations under this Agreement. Any claim which the Company
or Services may have against the Executive, whether for a breach of this
Agreement or otherwise, shall be brought in a separate action or proceeding and
not as part of any action or proceeding brought by the Executive to enforce any
rights against the Company or Services under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company or Services under this Agreement by seeking new
employment following termination. Except as specifically otherwise provided in
this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary, compensation or other
amounts which may be paid or payable to the Executive as the result of the
Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NON-COMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its Subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its Subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its Subsidiaries a competitive advantage
in the businesses in which the Company and its Subsidiaries are engaged
("Confidential Information"). Executive recognizes that all such Confidential
Information is the sole and exclusive property of the Company and its
Subsidiaries, and that disclosure of Confidential Information would cause damage
to the Company and its Subsidiaries. Executive agrees that, except as required
by the duties of his employment with the Company and/or its Subsidiaries and
except in connection with enforcing the Executive's rights under this Agreement
or if compelled by a court or governmental agency, he will not, without the
consent of the Company, disseminate or otherwise disclose any Confidential
Information obtained during his employment with the Company and/or its
Subsidiaries for so long as such information is valuable and unique.
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10.2 Non-competition/ Non-solicitation.
a. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
b. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock
is listed on a national securities exchange or actively traded in the
over-the-counter market; provided that (1) such investment does not give
Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
c. Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to the
termination of employment.
d. For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any entity and any branch, office or operation thereof,
which is a direct and material competitor of the Company and/ or its
Subsidiaries wherever the Company and/ or its Subsidiaries does business,
in the United States or abroad.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any
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manner or degree whatsoever limit, reduce or otherwise affect the obligations of
the Company and Services under this Agreement, and in no event shall an asserted
breach of the Executive's obligations under this Article X constitute a basis
for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company and Services shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company, Services and their respective successors and assigns.
The Company and Services will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
their respective businesses or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company or
Services, as applicable, would be required to perform it if no such succession
had taken place. Any successor to the business and/or assets of the Company or
Services which assumes or agrees to perform this Agreement by operation of law,
contract, or otherwise shall be jointly and severally liable with the Company
and Services under this Agreement as if such successor were the Company or
Services, as applicable.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
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11.6 Amendments. Except as provided in Sections 2.2 and 11.14 hereof, this
Agreement shall not be altered, amended or modified except by written instrument
executed by the Company, Services and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
(First Name) (Last Name)
(Address)
(City) (State) (Postal Code)
If to the Company:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
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If to Services:
Safety-Kleen Services, Inc.
1301 Gervais Street, Suite 300
Columbia, South Carolina 29201
Attention: Vice President, Administration
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of South Carolina without regard to its
choice of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company and Services may withhold from any
amounts payable under this Agreement any federal, state or local taxes that are
required to be withheld pursuant to any applicable law or regulation.
11.12 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
11.13 Entire Agreement. This Agreement contains the entire understanding
of the Company and Services and the Executive with respect to its subject
matter.
11.14 Cancellation. The Company and Services may, at any time prior to a
Change in Control, unilaterally cancel this Agreement on behalf of all parties
hereto by both of them (and not only one of them) notifying the Executive of
such cancellation in writing at least twelve (12) months prior to the effective
date of the cancellation, provided however that no such notice may be given
after an Imminent Change of Control Date.
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IN WITNESS WHEREOF, the Executive, Services and the Company have
executed this Agreement as of the date first above written.
-----------------------------------
(name) (the Executive)
SAFETY-KLEEN CORP.
By:--------------------------------
Kenneth W. Winger
President & Chief Executive Officer
SAFETY-KLEEN SERVICES, INC.
By:--------------------------------
Kenneth W. Winger
President
22
EXHIBIT 11
Safety-Kleen Corp.
Statement of Computation of Per Share Earnings
($ in thousands, except per share data)
(Unaudited)
Three Months Ended
November 30,
1999 1998
Basic:
Income available to common stockholders ........ $ 24,707 $ 27,772
========= ========
Weighted average common stock outstanding (000s) 100,637 87,844
========= ========
Basic income per share ......................... $ 0.25 $ 0.32
========= ========
Diluted:
Net income ..................................... $ 24,707 $ 27,772
Add back: interest expense on conversion of
subordinated convertible debenture ........... -- 2,625
Income available to common stockholders, plus
assumed conversions .......................... $ 24,707 $ 30,397
========= ========
Weighted average common stock outstanding (000s) 100,637 87,844
Dilutive effect of stock options ............... -- 65
Dilutive effect of conversion of $350,000,000
subordinated convertible debenture at $15.00 . -- 23,333
--------- --------
Diluted average shares outstanding ............. 100,637 111,242
========= ========
Diluted income per share ....................... $ 0.25 $ 0.27
========= ========
EXHIBIT 12
Safety-Kleen Corp.
Ratio of Earnings to Fixed Charges
($ in thousands)
(Unaudited)
Three Months Ended
November 30
1999 1998
Income before income tax expense ......................... $43,926 $47,092
Add:
Portions of rents representative of the interest factor 4,539 5,499
Interest on indebtedness, including amortization of
deferred financing charges .......................... 40,229 46,234
------- -------
Income as adjusted ....................................... $88,694 $98,825
======= =======
Fixed charges:
Portions of rents representative of the interest factor $ 4,539 $ 5,499
Interest on indebtedness, including amortization of
deferred financing charges .......................... 40,229 45,260
------- -------
Total fixed charges ...................................... $44,768 $50,759
======= =======
Ratio of earnings to fixed charges ....................... 1.98x 1.95x
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0
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