<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1997 or
-------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------- ------------------
Commission file number 1-11016
ALLWASTE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 74-2427167
--------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
5151 SAN FELIPE, SUITE 1600
HOUSTON, TEXAS 77056-3609
(Address of Principal Executive Offices) (Zip Code)
(713) 623-8777
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that 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 Common Stock of the Registrant, par value $.01 per
share, outstanding at July 10, 1997, was 37,632,596.
<PAGE> 2
REPORT INDEX
<TABLE>
<S> <C>
PART AND ITEM NO. PAGE NO.
- ----------------- --------
PART I - Financial Information
Item 1 - Financial Statements
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Balance Sheets as of May 31, 1997 (unaudited)
and August 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Income for the Nine and Three Months
Ended May 31, 1997 and May 31, 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended May 31, 1997 and May 31, 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . 5
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II - Other Information
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 2 - Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
PART I, ITEM 1 - FINANCIAL INFORMATION
GENERAL INFORMATION
The condensed consolidated financial statements herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). As applicable under such
regulations, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes that the
presentation and disclosures herein are adequate to make the information not
misleading, and the financial statements reflect all elimination entries and
normal adjustments which are necessary for a fair statement of the results for
the nine and three months ended May 31, 1997 and May 31, 1996.
Operating results for interim periods are not necessarily indicative of
the results for full years. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements for the fiscal year ended August 31, 1996 and the related notes
thereto included in the Company's Annual Report on Form 10-K, filed with the
SEC, and the Company's Proxy Statement dated June 30, 1997, included in the
Registration Statement on Form F-4 of Philip Services Corp. ("Philip"),
formerly Philip Environmental Inc., filed with the SEC on April 22, 1997, in
connection with the acquisition of the Company by Philip.
-1-
<PAGE> 4
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
May 31, August 31,
1997 1996
---------- ----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,017 $ 2,436
Receivables, net 86,326 75,114
Prepaid expenses 9,105 3,796
Deferred income taxes and other assets 8,208 11,170
----------- -----------
Total current assets 105,656 92,516
----------- -----------
INVESTMENTS 16,986 11,030
PROPERTY AND EQUIPMENT, at cost 256,344 248,280
Less -- Accumulated depreciation (130,288) (119,307)
---------- ----------
126,056 128,973
----------- -----------
GOODWILL, net of accumulated amortization 85,529 88,032
NOTES RECEIVABLE 11,840 13,517
OTHER ASSETS 3,203 3,119
----------- -----------
Total assets $ 349,270 $ 337,187
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 22,394 $ 19,250
Accrued liabilities:
Income taxes payable 689 5,383
Other 35,987 42,892
Current maturities of long-term and convertible subordinated debt 2,447 6,249
----------- -----------
Total current liabilities 61,517 73,774
----------- -----------
LONG-TERM DEBT, net of current maturities 103,045 87,971
CONVERTIBLE SUBORDINATED DEBT, net of current maturities 32,259 33,924
DEFERRED INCOME TAXES AND OTHER LIABILITIES 12,796 10,572
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common Stock 404 398
Additional paid-in capital 62,196 55,699
Retained earnings 91,389 84,163
----------- -----------
153,989 140,260
Less:
Treasury Stock (13,756) (8,561)
Unearned compensation related to outstanding
restricted Common Stock (580) (753)
----------- -----------
Total shareholders' equity 139,653 130,946
----------- -----------
Total liabilities and shareholders' equity $ 349,270 $ 337,187
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-2-
<PAGE> 5
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
-------------------------------- --------------------------
May 31, May 31, May 31, May 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $295,392 $286,807 $105,374 $98,731
COST OF OPERATIONS 218,690 213,901 76,236 72,237
-------- -------- -------- -------
Gross profit 76,702 72,906 29,138 26,494
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 57,082 60,156 20,076 19,815
INTEREST EXPENSE (7,282) (7,327) (2,522) (2,506)
INTEREST INCOME 1,082 773 602 280
OTHER INCOME (EXPENSE), net 1,001 1,263 158 535
-------- -------- -------- -------
Income from continuing operations before
income tax provision and minority interest 14,421 7,459 7,300 4,988
INCOME TAX PROVISION (6,562) (3,580) (3,322) (2,443)
MINORITY INTEREST, net of taxes (117) 62 (16) 38
-------- -------- -------- -------
Income from continuing operations 7,742 3,941 3,962 2,583
Discontinued Operations
Gain on sale of glass recycling operations,
net of applicable income taxes -- 3,764 -- --
-------- -------- -------- -------
Net income $7,742 $7,705 $3,962 $2,583
======== ======== ======== =======
NET INCOME PER COMMON SHARE:
Continuing operations $.21 $.10 $.10 $.07
Discontinued operations -- .10 -- --
-------- -------- -------- -------
Net income per common share $.21 $.20 $.10 $.07
======== ======== ======== =======
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 37,592 39,262 38,678 39,063
======== ======== ======== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-3-
<PAGE> 6
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
For the Nine Months Ended
------------------------------
May 31, May 31,
1997 1996
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,742 $ 7,705
Reconciliation of net income to cash provided by operating activities:
Depreciation 20,848 21,537
Amortization 2,313 2,097
Gain on sale of glass recycling operations -- (3,764)
(Gain) loss on sale of property and equipment 365 (821)
Common Stock received in lawsuit settlement (854) --
Amortization of unearned compensation - restricted stock 173 95
Change in assets and liabilities, net of effect of acquisitions
accounted for as purchases:
Receivables, net (11,240) (1,176)
Prepaid expenses and other current assets (2,347) (2,108)
Notes receivable and other assets (759) 25
Accounts payable and accrued liabilities (8,081) (9,361)
Deferred income taxes and other non cash items 2,232 2,223
---------- ---------
Cash provided by operating activities 10,392 16,452
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of glass recycling operations -- 41,500
Additions to property and equipment (21,880) (23,265)
Purchase of long-term investment, net of debt issued (5,965) (2,619)
Proceeds from sales of property and equipment 4,903 2,893
Payments for acquisitions accounted for as purchases, net of
cash acquired -- (1,113)
---------- ---------
Cash provided by (used in) investing activities (22,942) 17,396
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of Common Stock 3,163 553
Net increase (decrease) in revolving credit facility 15,180 (28,370)
Net increase (decrease) in other long term borrowings 2,052 (850)
Purchases of convertible subordinated debentures (19) (3,264)
Increases in Treasury Stock (7,729) (5,482)
---------- ---------
Cash provided by (used in) financing activities 12,647 (37,413)
---------- ---------
EFFECT OF EXCHANGE RATE CHANGES (516) (144)
---------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (419) (3,709)
CASH AND CASH EQUIVALENTS, beginning of period 2,436 4,029
---------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 2,017 $ 320
========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE> 7
ALLWASTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Significant Accounting Policies --
The condensed consolidated financial statements include the accounts of
Allwaste, Inc. and its subsidiaries (the "Company"). There have been no
significant changes in the accounting policies of the Company during the
periods presented. For a description of these policies, see Note 1 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1996 and the Company's Proxy Statement
dated June 30, 1997, included in the Registration Statement on Form F-4 of
Philip Services Corp. ("Philip"), formerly Philip Environmental Inc., filed
with the SEC on April 22, 1997, in connection with the acquisition of the
Company by Philip. Certain prior period amounts have been reclassified to
conform with the current period presentation.
On March 6, 1997, the Company announced that a definitive agreement had
been reached to merge with Philip. The agreement is subject to stockholder
approval, regulatory approvals and certain other conditions. All necessary
regulatory approvals required by the agreement have been met. Upon receiving
stockholder approval and the satisfaction of certain other conditions, the
Company will become an indirect wholly-owned subsidiary of Philip. Under the
terms of the agreement, each share of Allwaste Common Stock will be exchanged
for 0.611 shares of Philip Common Stock.
(2) Acquisitions and Investments --
On January 31, 1997, the Company exercised warrants to purchase
additional shares of The Safe Seal Company, Inc. ("Safe Seal"). Consideration
for this increase in the investment from 10% to 36.5% included three
subordinated notes totaling $3.3 million and cash of $0.6 million. The Company
now owns 2,502,518 shares of common stock and 20,000 shares of redeemable Class
A preferred stock of Safe Seal for a total investment of $6.6 million
(including goodwill of $2.9 million). The Company appropriately changed its
method of accounting for the investment from the cost method to the equity
method. The effect of this change on the Company's financial statements for
prior periods presented is immaterial and accordingly they have not been
restated. The Company's equity in losses (net of goodwill amortization over 40
years) for the nine and three months ended May 31, 1997 was $9 thousand. The
Company also guarantees $17.8 million of indebtedness for Safe Seal and its
affiliates.
(3) Income Taxes --
With respect to continuing operations, income tax provisions for interim
periods are estimated based on projections of the annual effective tax rates.
Certain assumptions have been made in this regard in estimating the effective
tax rate for fiscal 1997, the outcome of which may not be resolved until the
end of the fiscal year. The effective tax rate of 46% for the nine months ended
May 31, 1997 reflects the estimated U.S. federal and state income taxes and
foreign taxes on the earnings of the Company's foreign subsidiaries.
Deferred tax assets and liabilities are determined based on the estimated
future tax effects of differences between the financial statement and tax bases
of assets and liabilities. On the accompanying Condensed Consolidated Balance
Sheets, deferred tax assets and liabilities are netted within each tax
jurisdiction. The following table sets forth the gross deferred tax assets
(liabilities) recorded (in thousands):
<TABLE>
<CAPTION>
May 31, August 31,
1997 1996
------------- -------------
<S> <C> <C>
Current deferred tax assets $ 7,262 $ 8,681
Non-current deferred tax assets 183 3,383
Valuation allowance (1,230) (1,230)
----------- ----------
Total deferred tax assets 6,215 10,834
----------- -----------
Non-current deferred tax liabilities $ (12,273) $ (13,238)
---------- ----------
Net deferred tax liabilities $ (6,058) $ (2,404)
========== ==========
</TABLE>
-5-
<PAGE> 8
The components of the net deferred tax assets (liabilities) are as
follows (in thousands):
<TABLE>
<CAPTION>
May 31, August 31,
1997 1996
------------- -------------
<S> <C> <C>
Depreciation and amortization $ (17,766) $ (15,753)
Financial reserves and accruals
not yet deductible 11,708 13,349
----------- -----------
Total $ (6,058) $ (2,404)
========== ==========
</TABLE>
(4) Long-Term Debt --
The Company's long-term debt consists of a revolving credit agreement
with a group of banks. The agreement, as last amended in January 1997, provides
for an unsecured $160 million revolving line of credit to the Company through
January 31, 1999, at which time any outstanding borrowings convert to a term
loan due in equal quarterly installments through January 31, 2003. At July 10,
1997, after utilizing $33.1 million of the credit facility for letters of
credit to secure certain insurance obligations and performance bonds, available
borrowing capacity under this agreement was $24.1 million. Management believes
that the Company was in compliance with all applicable covenants under the
revolving credit agreement as of May 31, 1997. Borrowing availability is
subject to the Company maintaining certain minimum financial ratios as set
forth in the agreement.
(5) Significant Non-cash Financing Activities --
During March 1997, the Company issued 79,904 shares of its Common Stock
and 959,277 shares of treasury stock in exchange for $7.6 million of
convertible subordinated notes which were issued as partial consideration to
former owners of certain acquired businesses. At May 31, 1997 and August 31,
1996, the Company had outstanding $1.9 million and $11.0 million, respectively,
of convertible subordinated notes issued as partial consideration to acquire
certain businesses.
(6) Net Income Per Common Share --
Net income per common share has been computed based on the weighted
average number of shares of Common Stock and Common Stock equivalents
outstanding. The calculation of fully-diluted net income per common share is
not materially different from the primary calculation. The following table
presents the primary weighted average number of shares outstanding for the nine
and three months ended May 31, 1997 and May 31, 1996 (in thousands):
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
--------------------------- -----------------------------
May 31, May 31, May 31, May 31,
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Common shares outstanding, beginning
of fiscal period 39,799 39,609 39,799 39,609
Weighted average number of common shares
outstanding:
Stock options, treasury stock method 586 73 1,321 30
Purchased companies -- 24 -- 25
Exercise of stock options 140 98 396 136
Treasury stock and other, net (2,933) (542) (2,838) (737)
------- ------- ------- --------
Total weighted average common shares
outstanding 37,592 39,262 38,678 39,063
======== ======== ======== =========
</TABLE>
-6-
<PAGE> 9
(7) Incentive Plans --
On October 26, 1995, the Company's Board of Directors adopted a
limited single-purpose incentive plan for certain key employees. Pursuant to
this plan, each participating key employee that purchased shares of the
Company's Common Stock, based on a designated percentage of his annual salary,
was granted a number of shares of restricted Common Stock equal to two times
the number of the shares purchased and an option to purchase a number of shares
of Common Stock equal to four times the number of shares purchased. Shares of
Common Stock issued under this incentive plan were treasury shares. At May 31,
1997, 206,826 shares of restricted Common Stock and options to purchase 423,464
shares of Common Stock had been granted in connection with this incentive plan.
The Company does not contemplate that any additional restricted shares will be
issued under this incentive plan or that any options to purchase shares of
Common Stock will be granted in connection with this plan.
The value of restricted shares awarded under this incentive plan through
May 31, 1997 was $0.9 million. These amounts were recorded as unearned
compensation related to outstanding restricted stock and are shown as a
separate component of Shareholders' Equity. Unearned compensation is being
amortized to expense over a four-year vesting period and amounted to $0.2
million and $0.1 million for the nine and three months ended May 31, 1997,
respectively.
Effective September 1, 1996, in connection with the implementation of the
Economic Value Added ("EVA(R)") integrated management system, the Compensation
Committee of the Board of Directors approved the adoption of the Allwaste EVA
Incentive Compensation Plan (the "EVA Plan"). The EVA Plan governs incentive
compensation available to the Company's executive officers and other key
employees. Under the EVA Plan, eligible participants are entitled to receive
incentive payments based on their meeting or exceeding certain thresholds as
established by the Compensation Committee in the case of executive management
and by executive management in the case of other participants. A portion of the
awards for each fiscal year (generally, one-third) carries forward to the
following year and is added to incentive awards earned for that succeeding
fiscal year.
(8) Discontinued Operations --
In September 1995, the Company sold its glass recycling operations to
Strategic Holdings, Inc. ("SHI"), a company formed by Equus II, Incorporated
("Equus"). In October 1996, the Company and Equus finalized an agreement with
respect to certain post-closing issues which were unresolved on the date of the
sales transaction. The total consideration, as adjusted, was $56.1 million,
including $41.5 million in cash, $8.0 million of redeemable Series A preferred
stock redeemable beginning in 2002, and a $6.6 million subordinated note
receivable due in 2002. The redeemable Series A preferred stock dividend is
$.065 per share for the period prior to September 1, 1996 and $.06 per share
thereafter. The subordinated note receivable interest rate is 11% for the
period prior to September 1, 1996 and 10.5% thereafter. The agreement also
provided that all dividends and interest due prior to August 31, 1997 will not
be paid when due, but "paid in kind" in the form of two 8.036% subordinated
notes issuable on September 30, 1996 and June 30, 1997 in the amounts of $1.3
million and $0.9 million, respectively. Principal on these two notes will be
due on November 30, 2002. As of May 31, 1997, the Company had accrued $0.9
million for dividends and $1.4 million for interest. For the nine months ended
May 31, 1997, the Company recognized $0.6 million as interest income and $0.4
million as dividend income which is reflected in other income (expense) in the
accompanying Consolidated Statements of Income. The Company also received
warrants to purchase shares of SHI common stock, providing the Company the
right to own up to approximately 33% of the outstanding stock of SHI. The
Company may receive additional consideration in the form of an adjustment to
the purchase price in the event that Equus' internal rate of return, as
defined, exceeds certain predetermined targets. The amount of such additional
consideration, if any, is not presently determinable. The Company recorded a
gain on the sale of its glass recycling operations of $3.8 million, net of
applicable income taxes of $1.6 million, in the first quarter of fiscal 1996.
-7-
<PAGE> 10
ALLWASTE, INC. AND SUBSIDIARIES
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For supplemental information, it is suggested that "Management's
Discussion and Analysis of Financial Condition and Results of Operations" be
read in conjunction with the corresponding section included in the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 1996 and the
Company's Proxy Statement dated June 30, 1997, included in the Registration
Statement on Form F-4 of Philip Services Corp. ("Philip"), formerly Philip
Environmental Inc., filed with the SEC on April 22, 1997, in connection with
the acquisition of the Company by Philip. Additionally, certain prior period
amounts have been reclassified to conform with the current period presentation.
On March 6, 1997, the Company announced that a definitive agreement had
been reached to merge with Philip. The agreement is subject to stockholder
approval, regulatory approvals and certain other conditions. Upon receiving
stockholder approvals and the satisfaction of certain other conditions, the
Company will become an indirect wholly-owned subsidiary of Philip. All necessary
regulatory approvals required by the agreement have been met. Under the terms of
the agreement, each share of Allwaste Common Stock will be exchanged for 0.611
shares of Philip Common Stock.
RESULTS OF OPERATIONS
Allwaste, Inc. provides integrated industrial and environmental services
and acts as an outsourcing provider of on-site facility processes and
services, primarily in the United States, Canada, Mexico, and Austria. With the
completion of the sale of the Company's glass recycling operations in September
1995, the Company combined the prior industry segments of environmental
services and container services into a single industrial services operation.
Net income from continuing operations for the nine and three months ended
May 31, 1997 was $7.7 million and $4.0 million, respectively, compared with
$3.9 million and $2.6 million, respectively, for the same periods in fiscal
1996. Net income per common share from continuing operations was $.21 and $.10
for the nine and three month periods ended May 31, 1997, respectively, and $.10
and $.07, respectively, for the same prior year periods.
The Company's revenues for the three months ended May 31, 1997 increased
to $105.4 million compared with $98.7 million in the three months ended May 31,
1996. The increase of 6.7% was internally generated. The Company's revenue
growth was 8.3% for the three months ended May 31, 1997, excluding certain less
profitable scaffolding and transportation services which were sold or
purposefully downsized. The Company's excavation/remediation activities
benefited from a continued increase in pulp and paper and quarry work through
the third quarter of fiscal 1997. Increased demand for services provided to
the Canadian and United States auto industries, increased services provided to
the power plant industry, and continuing increased demand for the Company's
services by the offshore oil and gas exploration industry in the Gulf of Mexico
area contributed to this growth. Revenues generated by the Company's operations
that service the Pacific and Gulf Coast refining and petrochemical industries
continued to stabilize. While Pacific and Gulf Coast revenues for the nine
month period are down from last fiscal year, the third quarter revenues
have improved to equal revenues of the three months ended May 31, 1996.
Revenues for the nine months ended May 31, 1997 increased 3% to $295.4
million compared with $286.8 million for the nine months ended May 31, 1996.
Continued growth in the Company's excavation/remediation activities, services
provided to the offshore oil and gas exploration industry in the Gulf of Mexico
area, and services provided to the Canadian and United States auto industries
were primarily responsible for a significant portion of the increase in
revenues. This growth was partially offset by decreases attributable to
operations that service the Pacific and Gulf Coast refining and petrochemical
industries, as noted above, and to scaffolding and transportation services that
were purposefully downsized.
Gross profit increased to $76.7 million and $29.1 million in the nine and
three months ended May 31, 1997, from $72.9 million and $26.5 million in the
nine and three months ended May 31, 1996, respectively. Gross profit, as a
percentage of revenues, increased slightly to 26.0% from 25.4% for the first
nine months of fiscal 1997 compared with the same prior year period and
increased to 27.7% in the third quarter of fiscal 1997 compared with 26.8% for
the third quarter of fiscal 1996. The Company experienced increases in gross
profit in a majority of its industry sectors. This improvement was generally
attributable to the implementation of ongoing cost reduction
-8-
<PAGE> 11
initiatives started in the first half of fiscal 1996 and revenue volume
increases. The cost reduction initiatives have focused on improvement of
profitability, the creation of shareholder value and enhanced efforts to
provide more cost-effective, value-added service to the Company's large
industrial customer base. The Company's container services line particularly
benefited from its cost reduction initiatives implemented in the second quarter
of fiscal 1996. Gross operating profit, as a percentage of revenues, was also
improved by the contraction and/or divestiture of lower margin businesses
subsequent to the second quarter of fiscal 1996.
Selling, general and administrative ("SG&A") expenses, as a percentage of
revenues, decreased 1.7% to 19.3% from 21.0% in the nine months ended, and 1.0%
to 19.1% from 20.1% in the three months ended, May 31, 1997. SG&A expenditures
decreased by $3.1 million to $57.1 million for the nine months ended May 31,
1997, compared with $60.2 million for the same period in fiscal 1996. A
significant portion of the improvement was attributable to the cost reduction
initiatives started in the first half of fiscal 1996. The Company incurred
severance costs related to this plan of $1.3 million in the first nine months of
1996. Excluding the effect of these severance costs, SG&A expenditures decreased
by $1.8 million in the first nine months of fiscal 1997 compared with the same
prior year period. For the three months ended May 31, 1997, SG&A expenditures
increased slightly by $0.3 million to $20.1 million compared with $19.8 million
for the same period ended May 31, 1996. This increase is primarily attributable
to the increased business volumes.
Interest expense remained constant at $7.3 million and $2.5 million in the
nine and three months ended May 31, 1997, respectively, compared with the same
periods in fiscal 1996.
Interest income and other income (expense), net was $2.1 million and $0.8
million in the nine and three months ended May 31, 1997, respectively, compared
with $2.0 million and $0.8 million in the nine and three months ended May 31,
1996, respectively. The income was primarily related to interest and dividends
earned on the subordinated note receivable and the preferred stock acquired in
the sale of the Company's glass recycling operations and the favorable
settlement of a lawsuit relating to a previously divested business and was
partially offset by losses recognized on sales of property and equipment.
The Company's effective income tax rate for the nine months ended May 31,
1997 was 46% compared with 48% for the nine months ended May 31, 1996. The
effective tax rate was higher than the statutory federal rate of 35% primarily
due to the effect of the nondeductibility of a portion of meal and
entertainment expenses, the nondeductible amortization of a portion of the
Company's goodwill, state income taxes and Canadian earnings which are taxed at
a higher statutory rate.
LIQUIDITY AND CAPITAL RESOURCES
At the end of the second quarter of fiscal 1996, the Company embarked on a
program to more strategically manage its capital resources. The program
culminated in the implementation of the Economic Value Added ("EVA(R)")
integrated management system in September 1996. The Company's EVA management
system recognizes enhanced capital management through a cost of capital charge
in its measurement of operating results.
Net cash provided by the Company's operating activities was $10.4 million
during the nine months ended May 31, 1997, compared with $16.5 million for the
same prior year period. For the nine months ended May 31, 1997, the Company had
net income of $7.7 million, which included $23.2 million in depreciation and
amortization. For the same period in fiscal 1996, net income was $7.7 million,
which included $23.6 million in depreciation and amortization and a gain on the
sale of the Company's glass recycling operation of $3.8 million in the first
quarter of fiscal 1996. Working capital was $44.1 million at May 31, 1997
compared with $25.9 million at May 31, 1996. Net working capital increases were
primarily attributable to increased accounts receivable due to increased sales
volumes during the quarter ended May 31, 1997 and decreases in accrued
liabilities from August 31, 1996 primarily due to payments of income taxes and
payments related to prior policy years under the Company's insurance programs
that were accrued and outstanding at August 31, 1996.
The Company used cash of $22.9 million in investing activities in the nine
months ended May 31, 1997, compared with cash of $17.4 million provided in the
nine months ended May 31, 1996. The $17.4 million cash provided in the nine
months ended May 31, 1996 included $41.5 million of cash received from the sale
of the Company's former glass recycling operations in September 1995. The use of
cash in the nine months ended May 31,
-9-
<PAGE> 12
1997 was primarily attributable to capital expenditures of $21.9 million
compared with $23.3 million of capital expenditures in the same prior year
period. The Company was able to reduce its capital spending in fiscal 1997
primarily due to increased monitoring of equipment utilization, transfers of
underutilized owned equipment from lower volume, lower margin locations to
higher volume, higher margin locations and the use of short-term equipment
rentals. Expenditures for the remainder of fiscal 1997 are anticipated to be
approximately $8.3 million. The Company's fiscal 1997 capital expenditure
program will be funded from cash flows from operating activities.
The Company paid $2.6 million in the first quarter of 1996 to acquire a
10% interest in The Safe Seal Company, Inc. ("Safe Seal") which specializes in
valve repair and leak sealing services. The Company increased its investment by
an additional $3.9 million in the second quarter of fiscal 1997, which
consisted of $0.6 million of cash and $3.3 million of subordinated notes, which
increased its equity interest in Safe Seal to 36.5%. The Company paid $1.7
million in the first quarter of fiscal 1997 for an additional cash investment
in the Company's previously owned glass recycling operation.
In the nine months ended May 31, 1997, the Company provided cash from
financing activities of $12.6 million, compared with cash used of $37.4 million
in the same prior year period. The Company's total short-term and long-term
debt increased by $9.6 million to $137.8 million at May 31, 1997 from $128.1
million at August 31, 1996. Included in the aforementioned long-term debt, the
Company's revolving credit facility increased by $15.2 million to $103.0
million at May 31, 1997 from $87.8 million at August 31, 1996. Significant
factors contributing to these increases included tax payments of $5.3 million
attributable to the sale in fiscal 1996 of the Company's glass recycling
division and current year earnings, $7.7 million used to repurchase shares of
the Company's Common Stock, the issuance of $3.3 million in subordinated notes
and $0.6 million in cash used to increase the Company's interest in Safe Seal.
These increases were offset by the retirement of $7.6 million of convertible
subordinated notes, which were originally issued as partial consideration to
former owners of certain acquired businesses, by issuing 79,904 shares of Common
Stock and 959,277 shares of treasury stock. Also, an additional $1.6 million of
convertible subordinated notes were retired by cash payments.
In July 1995, the Board of Directors authorized the Company to repurchase,
over a two year period, up to 5,000,000 shares of the Company's Common Stock,
either on the open market or in privately negotiated transactions. During the
nine months ended May 31, 1997, the Company spent $7.7 million to repurchase
1,649,500 shares of its Common Stock at an average cost of $4.67 per share.
Subsequent to May 31, 1997, the Company has repurchased no additional shares of
its Common Stock. As of May 31, 1997, 3,725,400 shares of Common Stock had been
repurchased under the plan at an average cost of $4.54 per share. At May 31,
1997, after issuing shares from treasury stock, predominately for the previously
mentioned conversion of convertible subordinated notes the Company held
2,866,976 shares of its Common Stock as treasury stock.
The Company's long-term debt consists of a revolving credit agreement with
a group of banks. The agreement, as last amended in January 1997, provides for
an unsecured $160 million revolving line of credit to the Company through
January 31, 1999, at which time any outstanding borrowings convert to a term
loan due in equal quarterly installments through January 31, 2003. At July 10,
1997, after utilizing $33.1 million of the credit facility for letters of
credit to secure certain insurance obligations and performance bonds, available
borrowing capacity under this agreement was $24.1 million. Borrowing
availability is subject to the Company maintaining certain minimum financial
ratios as set forth in the agreement. The Company believes that its cash flows
provided by operating activities and available funds under its revolving credit
agreement are adequate to fund its financing needs.
Management believes it has adequate capital resources available from
internally generated funds and from the Company's revolving credit agreement to
meet anticipated working capital needs, planned capital expenditures and to
take advantage of new opportunities requiring capital.
FLUCTUATIONS IN RESULTS OF OPERATIONS
Certain customers have varying levels of demand for the Company's services
based on the time of the year. Most of the Company's service lines tend to be
slowest in the winter (the Company's second fiscal quarter) and summer (the
Company's fourth fiscal quarter) months. Services provided to electric utility
customers are typically performed in the fall and spring when demand for
electricity is reduced and maintenance work can be performed more efficiently.
Likewise, services provided to refining and petrochemical customers tend to be
greater in the fall and spring when most
-10-
<PAGE> 13
planned turnarounds at customer plants occur. In addition, the Company's
acquisition program can affect not only future results and rates of growth but
also previously reported results because of restatements if acquisitions are
accounted for as poolings-of-interests.
The impact of inflation on the Company has been minimal.
OUTLOOK FOR 1997
On March 6, 1997, the Company announced that a definitive agreement had
been reached to merge with Philip. The agreement is subject to stockholder
approval, regulatory approvals and certain other conditions. Upon receiving
stockholder approval and the satisfaction of other certain conditions, the
Company will become an indirect wholly-owned subsidiary of Philip. All
regulatory approvals have been met. Under the terms of the agreement, each share
of Allwaste Common Stock will be exchanged for 0.611 shares of Philip Common
Stock.
The Company has clearly defined the industrial customer as the focus of
its business strategy. The Company's fiscal 1996 sale of its glass recycling
operations has allowed it to narrow its focus on providing services to the
industrial customer and provided additional capital for expansion of this core
business and for development of opportunities independently or through
partnering arrangements in the areas of water and wastewater management, energy
services, contract labor services and, through its investment in Safe Seal,
leak sealing and valve restoration services. The Company will continue to
evaluate its complement of services offered and allocate capital accordingly.
The Company has historically focused on achieving growth through
acquisitions; however, in recent years, the Company has placed added emphasis
on increased internal growth. Although the Company will continue to focus on
internal growth, it does intend to evaluate acquisitions that fit its strategic
goals. The Company has focused on realizing increased internal growth primarily
by developing new outsourcing and co-sourcing opportunities with its customers
and expanding the number of service lines offered to customers by each of its
operating locations, providing solution-oriented and preventive services that
focus on improving customer efficiency and profitability, transferring
technology and knowledge among the Company's various operating locations,
implementing national marketing programs that target major industries served by
the Company, introducing services in new geographic areas and developing
services that address environmental concerns associated with new products. The
Company's ALLIES(R) program stresses collaboration between the Company and its
customers by focusing on creating flexible and innovative solutions to a
customer's problems and emphasizing the Company's services as an
economically-efficient outsourcing alternative that can maximize a customer's
competitive role in the emerging global market.
The Company is also focusing on cost control and gross margin expansion
through fiscal 1997. The Company intends to implement selected price increases
when market conditions permit and as a by-product of value-added selling
efforts. The Company anticipates savings resulting from the cost reduction in
fiscal 1996 and ongoing cost-reduction initiatives to continue to positively
affect its results of operations in fiscal 1997.
A significant amount of the Company's revenues from its services are
generated on an as needed basis or from irregularly scheduled customer
turnarounds, outages and shutdowns. Although the Company may be chosen as the
vendor of choice, turnarounds, outages and shutdowns may, at the election of
the customers, be deferred or canceled without penalty. The Company is also
affected by business cycles experienced by its industrial customer bases and by
changes in environmental laws and regulations or by changes in the
interpretation or enforcement of such laws and regulations. The Company's
customers have a significant capacity in the short-term to defer industrial
cleaning, maintenance and disposal services. Deferrals can occur either due to
a reduction in maintenance or capital funds, customer budget restraints or,
conversely, increased demand for a customer's products that make it impractical
to perform cleaning and maintenance on anticipated schedules. These factors
make it difficult to predict, from quarter to quarter, the demand for the
Company's services.
NEW FINANCIAL ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" which is effective for years beginning after December
15, 1995 (fiscal 1997 for the Company). This statement established criteria for
recognizing, measuring and
-11-
<PAGE> 14
disclosing impairments of long-lived assets, identifiable intangibles and
goodwill. The Company has adopted SFAS No. 121 effective in fiscal year 1997.
Management does not expect that the adoption will have a material effect on the
Company's financial position or results of operations.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation" which is effective for years
beginning after December 15, 1995 (fiscal 1997 for the Company). This statement
allows entities to choose between a new fair value based method of accounting
for employee stock options or similar equity instruments and the current
intrinsic value-based method of accounting prescribed by Accounting Principles
Board Opinion No. 25. Entities electing to remain with the accounting in APB
Opinion No. 25 must make pro forma disclosures of net income and earnings per
share as if the fair value method of accounting had been applied. The Company
expects to continue accounting for employee stock options and similar equity
instruments in accordance with APB Opinion No. 25. The pro forma effect for
fiscal 1996 has not yet been determined.
In February 1997, the Financial Standards Accounting Board issued SFAS No.
128, "Earnings per Share" which is effective for years ending after December
15, 1997 (fiscal 1998 for the Company). This statement specifies the
computation, presentation, and disclosure requirements for earnings per share
("EPS") for entities with publicly held common stock or potential common stock
in order to simplify the computation of EPS and to make the U.S. standards
comparable to international EPS standards. The Company will adopt SFAS No. 128
in the first quarter of fiscal 1998. Upon adoption, all prior period earnings
per share data presented must be restated to conform with the new statement.
Management does not expect that the adoption will have a material effect on the
Company's EPS calculation.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Certain sections of this Report, specifically the section captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," may include "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 relating to management's
current expectations regarding the future results of operations or financial
condition of the Company. These forward-looking statements may be identified by
the use of forward-looking terminology such as "may," "will," "believe,"
"anticipate," "should," or comparable terms or the negative thereof. These
statements are based solely on data currently available, which data is subject
to change as a result of changes in conditions and should not therefore be
viewed as assurance regarding the Company's future performance. These
statements involve risks and uncertainties that could cause the actual results
to differ materially from those described in the statements. In addition to the
risks and uncertainties specifically described in the section captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Outlook for 1997," these forward-looking statements may also be
affected by the following risks and uncertainties: the effect of economic and
market conditions; the impact of costs, insurance recoveries and governmental,
judicial and other third party interpretation and determination in connection
with legal and environmental proceedings; and the impact of current, pending or
future legislation or regulations (collectively, the "Cautionary Statements").
Although the Company believes that the expectations reflected in any
forward-looking statements contained herein are reasonable, it can give no
assurance that such expectations will prove to have been correct. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements contained herein.
-12-
<PAGE> 15
ITEM 1 - LEGAL PROCEEDINGS
In November 1996, the West Virginia Division of Environmental Protection
(the "West Virginia DEP") issued a draft consent order against one of the
Company's subsidiaries, which order sought to impose an aggregate of
approximately $229,000 in fines against the Company relating to a
transportation-related spill in West Virginia in November 1995. The Company
had voluntarily remediated this spill in December 1995. The draft consent
order alleged that in remediating the spill, the Company did not comply with
certain technical West Virginia DEP remediation regulations relating to
recordkeeping and generator requirements. In July 1997, the Company finalized
negotiations with the West Virginia DEP of a final consent order, pursuant to
which the Company agreed to pay an aggregate of $137,750 to the West Virginia
DEP (consisting of $130,000 in penalties and $7,750 in costs incurred by the
West Virginia DEP).
ITEM 2 - CHANGES IN SECURITIES
The Company did not sell any unregistered securities during the third
quarter of fiscal 1997.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
No. Description
------- -----------
3.1 -- Amended and Restated Certificate of Incorporation of
Allwaste, Inc. ("Allwaste"), effective February 22, 1990.
(Exhibit 3.1 to the Allwaste Quarterly Report on Form 10-Q
(File No. 0- 15217) for the fiscal quarter ended February
28, 1990 is hereby incorporated by reference.)
3.2 -- Corrected Bylaws of Allwaste (Exhibit 3.2 to the Allwaste
Annual Report on Form 10-K (File No. 1-11008) for the
fiscal year ended August 31, 1992, filed November 27, 1992
(the "1992 10-K"), is hereby incorporated by reference.)
3.3 -- Certificate of Designation of Series One Junior
Participating Preferred Stock of Allwaste, Inc., effective
November 19, 1996. (Exhibit 3.3 to the Allwaste Annual
Report on Form 10-K for the fiscal year ended August 31,
1996 (the "1996 10-K") is hereby incorporated by
reference.)
4.1 -- Specimen Common Stock certificate (Exhibit 4.1 to the
Allwaste Quarterly Report on Form 10-Q (File No. 1-11016)
for the fiscal quarter ended February 29, 1996 (the
"February 10-Q") is hereby incorporated by reference.)
4.2 -- Specimen debenture certificate (Exhibit 4.2 to the 1992
10-K is hereby incorporated by reference.)
4.3 -- Form of Indenture between Allwaste and Texas Commerce Trust
Company of New York dated June 1, 1989, relating to certain
debentures of Allwaste. (Exhibit 4.1 to the Allwaste
Quarterly Report on Form 10-Q (File No. 0-15217) for the
fiscal quarter ended May 31, 1989 is hereby incorporated by
reference.)
4.4 -- Stockholder Rights Agreement dated August 5, 1996, between
Allwaste and American Stock Transfer & Trust Company as
Rights Agent. (Exhibit 1 to the Allwaste, Inc.
Registration Statement on Form 8-A, filed November 14,
1996, is hereby incorporated by reference.)
4.5 -- First Amendment to Stockholder Rights Agreement dated
effective as of March 5, 1997, by and between Allwaste and
American Stock Transfer and Trust Company as Rights Agent
(Exhibit 1.2 to Allwaste Registration Statement on Form
8-A/A-2 (File No. 1-11016), filed April 24, 1997, is hereby
incorporated by reference.)
-13-
<PAGE> 16
10.1 -- Employment Agreement dated October 23, 1986, between R.L.
Nelson, Jr. and Allwaste. (Exhibit 10.1 to the Allwaste
Annual Report on Form 10-K (File No. 1-11008) for the
fiscal year ended August 31, 1994, filed November 29, 1994
(the "1994 10-K"), is hereby incorporated by reference.)
10.2 -- Employment Agreement dated October 17, 1994, between Robert
M. Chiste and Allwaste. (Exhibit 10.6 to the 1994 10-K is
hereby incorporated by reference.)
10.3 -- Allwaste Amended and Restated 1989 Replacement
Non-Qualified Stock Option Plan. (Exhibit A to the Allwaste
proxy statement relating to its 1995 annual meeting of
stockholders, filed December 20, 1994, is hereby
incorporated by reference.)
10.4 -- Allwaste, Inc. Target 2000: One, Two, Four Plan. (Exhibit
10.4 to the Allwaste Quarterly Report on Form 10-Q (File
No. 1-11008) for the fiscal quarter ended February 29, 1996
(the "February 10-Q") is hereby incorporated by reference.)
10.5 -- Allwaste Employee Retirement Plan. (Exhibit 4.3 to the
Post-Effective Amendment No. 1 to Registration Statement on
Form S-8 (File No. 33-37684), filed August 7, 1995, is
hereby incorporated by reference.)
10.6 -- Credit Agreement dated as of November 30, 1993, as amended,
by and among Allwaste, the financial institutions signatory
thereto, and Texas Commerce Bank National Association, a
national banking association, as Agent. (Exhibit 10.10 to
the 1994 10-K is hereby incorporated by reference.)
10.7 -- Agreement and First Amendment to Credit Agreement dated
January 21, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.7 to the February 10-Q is hereby
incorporated by reference.)
10.8 -- Agreement and Second Amendment to Credit Agreement dated
March 20, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.8 to the February 10-Q is hereby
incorporated by reference.)
10.9 -- Agreement and Third Amendment to Credit Agreement dated
May 31, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.9 to the February 10-Q is hereby
incorporated by reference.)
10.10 -- Agreement and Fourth Amendment to Credit Agreement dated
October 18, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.10 to the February 10-Q is hereby
incorporated by reference.)
10.11 -- Agreement and Fifth Amendment to Credit Agreement dated
August 31, 1995, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.11 to the February 10-Q is hereby
incorporated by reference.)
10.12 -- First Amendment to Employment Agreement dated as of October
26, 1995, between Robert M. Chiste and Allwaste. (Exhibit
10.6 to the Allwaste Annual Report on Form 10-K (File No.
1-11016) for the fiscal year ended August 31, 1995, filed
November 30, 1995 (the "1995 Form 10-K"), is hereby
incorporated by reference.)
-14-
<PAGE> 17
10.13 -- Agreement and Sixth Amendment to Credit Agreement dated
February 29, 1996, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.13 to the Allwaste Quarterly Report on
Form 10-Q (File No. 1-11016) for the fiscal quarter ended
May 31, 1996 (the "May 10-Q") is hereby incorporated by
reference.)
10.14 -- Agreement and Seventh Amendment to Credit Agreement dated
August 1, 1996, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.14 to the 1996 10-K is hereby
incorporated by reference.)
10.15 -- First Amendment to Employment Agreement dated November 11,
1996, between R. L. Nelson, Jr. and Allwaste. (Exhibit
10.15 to the 1996 10-K is hereby incorporated by
reference.)
10.16 -- Second Amendment to Employment Agreement dated October 25,
1996, between Robert M. Chiste and Allwaste. (Exhibit
10.16 to the 1996 10-K is hereby incorporated by
reference.)
10.17 -- First Amendment to Employment Agreement dated November 11,
1996, between William L. Fiedler and Allwaste. (Exhibit
10.17 to the 1996 10-K is hereby incorporated by
reference.)
10.18 -- Employment Agreement dated November 11, 1996, between David
E. Fanta and Allwaste. (Exhibit 10.18 to the 1996 10-K is
hereby incorporated by reference.)
10.19 -- Employment Agreement dated November 11, 1996, between T.
Wayne Wren, Jr. and Allwaste. (Exhibit 10.19 to the 1996
10-K is hereby incorporated by reference.)
10.20 -- Employment Agreement dated November 11, 1996, between James
E. Rief and Allwaste. (Exhibit 10.20 to the 1996 10-K is
hereby incorporated by reference.)
10.21 -- Employment Agreement dated November 11, 1996, between
Michael W. Ramirez and Allwaste. (Exhibit 10.21 to the
1996 10-K is hereby incorporated by reference.)
10.22 -- Executive Severance Agreement dated November 11, 1996,
between R. L. Nelson, Jr. and Allwaste. (Exhibit 10.22 to
the 1996 10-K is hereby incorporated by reference.)
10.23 -- Executive Severance Agreement dated November 11, 1996,
between Robert M. Chiste and Allwaste. (Exhibit 10.23 to
the 1996 10-K is hereby incorporated by reference.)
10.24 -- Executive Severance Agreement dated November 11, 1996,
between David E. Fanta and Allwaste. (Exhibit 10.24 to the
1996 10-K is hereby incorporated by reference.)
10.25 -- Executive Severance Agreement dated November 11, 1996,
between T. Wayne Wren, Jr. and Allwaste. (Exhibit 10.25 to
the 1996 10-K is hereby incorporated by reference.)
10.26 -- Executive Severance Agreement dated November 11, 1996,
between James E. Rief and Allwaste. (Exhibit 10.26 to the
1996 10-K is hereby incorporated by reference.)
10.27 -- Executive Severance Agreement dated November 11, 1996,
between William L. Fiedler and Allwaste. (Exhibit 10.27 to
the 1996 10-K is hereby incorporated by reference.)
10.28 -- Executive Severance Agreement dated November 11, 1996,
between Michael W. Ramirez and Allwaste. (Exhibit 10.28 to
the 1996 10-K is hereby incorporated by reference.)
10.29 -- 1996 Interim Management Bonus Plan. (Exhibit 10.29 to the
1996 10-K is hereby incorporated by reference.)
-15-
<PAGE> 18
10.30 -- Third Amendment to Employment Agreement dated November 11,
1996, between Robert M. Chiste and Allwaste. (Exhibit
10.30 to the 1996 10-K is hereby incorporated by
reference.)
10.31 -- Allwaste EVA Incentive Compensation Plan. (Exhibit 10.31
to the 1996 10-K is hereby incorporated by reference.)
10.32 -- Agreement and Eighth Amendment to Credit Agreement dated
December 1, 1996, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.32 to the Allwaste Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 1997
(the "February 1997 10-Q" is hereby incorporated by
reference.)
10.33 -- Non-Employee Director Restricted Stock Plan. (Exhibit
10.33 to the February 1997 10-Q is hereby incorporated by
reference.)
10.34 -- Interim Deferred Compensation Plan. (Exhibit 10.34 to the
February 1997 10-Q is hereby incorporated by reference.)
10.35 -- Agreement and Ninth Amendment to Credit Agreement dated
January 10, 1997, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Filed herewith.)
10.36 -- Allwaste Deferred Compensation Plan Trust Agreement dated
effective as of May 15, 1997. (Filed herewith).
10.37 -- Allwaste Deferred Compensation Plan dated effective as of
May 15, 1997. (Filed herewith.)
10.38 -- Allwaste Supplemental Executive Retirement Plan dated
effective as of January 1, 1997. (Filed herewith.)
10.39 -- Agreement and Plan of Merger dated March 5, 1997, by and
among Philip Environmental Inc. (now known as Philip
Services Corp.), Taro Aggregates Ltd., Philip/Atlas Merger
Corp. and Allwaste. (Exhibit 99.2 to the Allwaste Current
Report on Form 8-K dated March 6, 1997, filed April 4,
1997, is hereby incorporated by reference.)
10.40 -- First Amendment to the Allwaste EVA Incentive Compensation
Plan. (Filed herewith.)
10.41 -- Corrective Amendment to the Allwaste, Inc. Amended and
Restated 1989 Replacement Non-Qualified Stock Option Plan.
(Filed herewith.)
10.42 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and Robert M. Chiste.
(Filed herewith.)
10.43 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and David E. Fanta.
(Filed herewith.)
10.44 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and William L.
Fiedler. (Filed herewith.)
10.45 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and R. L. Nelson, Jr.
(Filed herewith.)
10.46 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and Michael W.
Ramirez. (Filed herewith.)
-16-
<PAGE> 19
10.47 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and James E. Rief.
(Filed herewith.)
10.48 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and T. Wayne Wren, Jr.
(Filed herewith.)
27.1 -- Financial Data Schedule. (Filed herewith.)
(b) Reports on Form 8-K.
Allwaste, Inc. (the "Company") Current Report on Form 8-K dated
March 6, 1997, filed April 4, 1997, related to the proposed merger of
Philip/Atlas Merger Corp., an indirect wholly-owned subsidiary of
Philip Environmental Inc. (now known as Philip Services Corp.) and the
Company.
-17-
<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Allwaste, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALLWASTE, INC.
Dated: July 14, 1997 By: /s/ T. Wayne Wren, Jr.
-----------------------------------
T. Wayne Wren, Jr.
Senior Vice President - Chief
Financial Officer and Treasurer
-18-
<PAGE> 21
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
3.1 -- Amended and Restated Certificate of Incorporation of
Allwaste, Inc. ("Allwaste"), effective February 22, 1990.
(Exhibit 3.1 to the Allwaste Quarterly Report on Form 10-Q
(File No. 0- 15217) for the fiscal quarter ended February
28, 1990 is hereby incorporated by reference.)
3.2 -- Corrected Bylaws of Allwaste (Exhibit 3.2 to the Allwaste
Annual Report on Form 10-K (File No. 1-11008) for the
fiscal year ended August 31, 1992, filed November 27, 1992
(the "1992 10-K"), is hereby incorporated by reference.)
3.3 -- Certificate of Designation of Series One Junior
Participating Preferred Stock of Allwaste, Inc., effective
November 19, 1996. (Exhibit 3.3 to the Allwaste Annual
Report on Form 10-K for the fiscal year ended August 31,
1996 (the "1996 10-K") is hereby incorporated by
reference.)
4.1 -- Specimen Common Stock certificate (Exhibit 4.1 to the
Allwaste Quarterly Report on Form 10-Q (File No. 1-11016)
for the fiscal quarter ended February 29, 1996 (the
"February 10-Q") is hereby incorporated by reference.)
4.2 -- Specimen debenture certificate (Exhibit 4.2 to the 1992
10-K is hereby incorporated by reference.)
4.3 -- Form of Indenture between Allwaste and Texas Commerce Trust
Company of New York dated June 1, 1989, relating to certain
debentures of Allwaste. (Exhibit 4.1 to the Allwaste
Quarterly Report on Form 10-Q (File No. 0-15217) for the
fiscal quarter ended May 31, 1989 is hereby incorporated by
reference.)
4.4 -- Stockholder Rights Agreement dated August 5, 1996, between
Allwaste and American Stock Transfer & Trust Company as
Rights Agent. (Exhibit 1 to the Allwaste, Inc.
Registration Statement on Form 8-A, filed November 14,
1996, is hereby incorporated by reference.)
4.5 -- First Amendment to Stockholder Rights Agreement dated
effective as of March 5, 1997, by and between Allwaste and
American Stock Transfer and Trust Company as Rights Agent
(Exhibit 1.2 to Allwaste Registration Statement on Form
8-A/A-2 (File No. 1-11016), filed April 24, 1997, is hereby
incorporated by reference.)
<PAGE> 22
10.1 -- Employment Agreement dated October 23, 1986, between R.L.
Nelson, Jr. and Allwaste. (Exhibit 10.1 to the Allwaste
Annual Report on Form 10-K (File No. 1-11008) for the
fiscal year ended August 31, 1994, filed November 29, 1994
(the "1994 10-K"), is hereby incorporated by reference.)
10.2 -- Employment Agreement dated October 17, 1994, between Robert
M. Chiste and Allwaste. (Exhibit 10.6 to the 1994 10-K is
hereby incorporated by reference.)
10.3 -- Allwaste Amended and Restated 1989 Replacement
Non-Qualified Stock Option Plan. (Exhibit A to the Allwaste
proxy statement relating to its 1995 annual meeting of
stockholders, filed December 20, 1994, is hereby
incorporated by reference.)
10.4 -- Allwaste, Inc. Target 2000: One, Two, Four Plan. (Exhibit
10.4 to the Allwaste Quarterly Report on Form 10-Q (File
No. 1-11008) for the fiscal quarter ended February 29, 1996
(the "February 10-Q") is hereby incorporated by reference.)
10.5 -- Allwaste Employee Retirement Plan. (Exhibit 4.3 to the
Post-Effective Amendment No. 1 to Registration Statement on
Form S-8 (File No. 33-37684), filed August 7, 1995, is
hereby incorporated by reference.)
10.6 -- Credit Agreement dated as of November 30, 1993, as amended,
by and among Allwaste, the financial institutions signatory
thereto, and Texas Commerce Bank National Association, a
national banking association, as Agent. (Exhibit 10.10 to
the 1994 10-K is hereby incorporated by reference.)
10.7 -- Agreement and First Amendment to Credit Agreement dated
January 21, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.7 to the February 10-Q is hereby
incorporated by reference.)
10.8 -- Agreement and Second Amendment to Credit Agreement dated
March 20, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.8 to the February 10-Q is hereby
incorporated by reference.)
10.9 -- Agreement and Third Amendment to Credit Agreement dated
May 31, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.9 to the February 10-Q is hereby
incorporated by reference.)
10.10 -- Agreement and Fourth Amendment to Credit Agreement dated
October 18, 1994, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.10 to the February 10-Q is hereby
incorporated by reference.)
10.11 -- Agreement and Fifth Amendment to Credit Agreement dated
August 31, 1995, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.11 to the February 10-Q is hereby
incorporated by reference.)
10.12 -- First Amendment to Employment Agreement dated as of October
26, 1995, between Robert M. Chiste and Allwaste. (Exhibit
10.6 to the Allwaste Annual Report on Form 10-K (File No.
1-11016) for the fiscal year ended August 31, 1995, filed
November 30, 1995 (the "1995 Form 10-K"), is hereby
incorporated by reference.)
<PAGE> 23
10.13 -- Agreement and Sixth Amendment to Credit Agreement dated
February 29, 1996, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.13 to the Allwaste Quarterly Report on
Form 10-Q (File No. 1-11016) for the fiscal quarter ended
May 31, 1996 (the "May 10-Q") is hereby incorporated by
reference.)
10.14 -- Agreement and Seventh Amendment to Credit Agreement dated
August 1, 1996, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.14 to the 1996 10-K is hereby
incorporated by reference.)
10.15 -- First Amendment to Employment Agreement dated November 11,
1996, between R. L. Nelson, Jr. and Allwaste. (Exhibit
10.15 to the 1996 10-K is hereby incorporated by
reference.)
10.16 -- Second Amendment to Employment Agreement dated October 25,
1996, between Robert M. Chiste and Allwaste. (Exhibit
10.16 to the 1996 10-K is hereby incorporated by
reference.)
10.17 -- First Amendment to Employment Agreement dated November 11,
1996, between William L. Fiedler and Allwaste. (Exhibit
10.17 to the 1996 10-K is hereby incorporated by
reference.)
10.18 -- Employment Agreement dated November 11, 1996, between David
E. Fanta and Allwaste. (Exhibit 10.18 to the 1996 10-K is
hereby incorporated by reference.)
10.19 -- Employment Agreement dated November 11, 1996, between T.
Wayne Wren, Jr. and Allwaste. (Exhibit 10.19 to the 1996
10-K is hereby incorporated by reference.)
10.20 -- Employment Agreement dated November 11, 1996, between James
E. Rief and Allwaste. (Exhibit 10.20 to the 1996 10-K is
hereby incorporated by reference.)
10.21 -- Employment Agreement dated November 11, 1996, between
Michael W. Ramirez and Allwaste. (Exhibit 10.21 to the
1996 10-K is hereby incorporated by reference.)
10.22 -- Executive Severance Agreement dated November 11, 1996,
between R. L. Nelson, Jr. and Allwaste. (Exhibit 10.22 to
the 1996 10-K is hereby incorporated by reference.)
10.23 -- Executive Severance Agreement dated November 11, 1996,
between Robert M. Chiste and Allwaste. (Exhibit 10.23 to
the 1996 10-K is hereby incorporated by reference.)
10.24 -- Executive Severance Agreement dated November 11, 1996,
between David E. Fanta and Allwaste. (Exhibit 10.24 to the
1996 10-K is hereby incorporated by reference.)
10.25 -- Executive Severance Agreement dated November 11, 1996,
between T. Wayne Wren, Jr. and Allwaste. (Exhibit 10.25 to
the 1996 10-K is hereby incorporated by reference.)
10.26 -- Executive Severance Agreement dated November 11, 1996,
between James E. Rief and Allwaste. (Exhibit 10.26 to the
1996 10-K is hereby incorporated by reference.)
10.27 -- Executive Severance Agreement dated November 11, 1996,
between William L. Fiedler and Allwaste. (Exhibit 10.27 to
the 1996 10-K is hereby incorporated by reference.)
10.28 -- Executive Severance Agreement dated November 11, 1996,
between Michael W. Ramirez and Allwaste. (Exhibit 10.28 to
the 1996 10-K is hereby incorporated by reference.)
10.29 -- 1996 Interim Management Bonus Plan. (Exhibit 10.29 to the
1996 10-K is hereby incorporated by reference.)
<PAGE> 24
10.30 -- Third Amendment to Employment Agreement dated November 11,
1996, between Robert M. Chiste and Allwaste. (Exhibit
10.30 to the 1996 10-K is hereby incorporated by
reference.)
10.31 -- Allwaste EVA Incentive Compensation Plan. (Exhibit 10.31
to the 1996 10-K is hereby incorporated by reference.)
10.32 -- Agreement and Eighth Amendment to Credit Agreement dated
December 1, 1996, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Exhibit 10.32 to the Allwaste Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 1997
(the "February 1997 10-Q" is hereby incorporated by
reference.)
10.33 -- Non-Employee Director Restricted Stock Plan. (Exhibit
10.33 to the February 1997 10-Q is hereby incorporated by
reference.)
10.34 -- Interim Deferred Compensation Plan. (Exhibit 10.34 to the
February 1997 10-Q is hereby incorporated by reference.)
10.35 -- Agreement and Ninth Amendment to Credit Agreement dated
January 10, 1997, by and among Allwaste, the financial
institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent. (Filed herewith.)
10.36 -- Allwaste Deferred Compensation Plan Trust Agreement dated
effective as of May 15, 1997. (Filed herewith).
10.37 -- Allwaste Deferred Compensation Plan dated effective as of
May 15, 1997. (Filed herewith.)
10.38 -- Allwaste Supplemental Executive Retirement Plan dated
effective as of January 1, 1997. (Filed herewith.)
10.39 -- Agreement and Plan of Merger dated March 5, 1997, by and
among Philip Environmental Inc. (now known as Philip
Services Corp.), Taro Aggregates Ltd., Philip/Atlas Merger
Corp. and Allwaste. (Exhibit 99.2 to the Allwaste Current
Report on Form 8-K dated March 6, 1997, filed April 4,
1997, is hereby incorporated by reference.)
10.40 -- First Amendment to the Allwaste EVA Incentive Compensation
Plan. (Filed herewith.)
10.41 -- Corrective Amendment to the Allwaste, Inc. Amended and
Restated 1989 Replacement Non-Qualified Stock Option Plan.
(Filed herewith.)
10.42 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and Robert M. Chiste.
(Filed herewith.)
10.43 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and David E. Fanta.
(Filed herewith.)
10.44 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and William L.
Fiedler. (Filed herewith.)
10.45 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and R. L. Nelson, Jr.
(Filed herewith.)
10.46 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and Michael W.
Ramirez. (Filed herewith.)
<PAGE> 25
10.47 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and James E. Rief.
(Filed herewith.)
10.48 -- Amendment and Restatement of Executive Severance Agreement
dated March 5, 1997, between Allwaste and T. Wayne Wren, Jr.
(Filed herewith.)
27.1 -- Financial Data Schedule. (Filed herewith.)
<PAGE> 1
EXHIBIT 10.35
AGREEMENT AND NINTH AMENDMENT TO CREDIT AGREEMENT
(January 10, 1997)
THIS AGREEMENT AND NINTH AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") is made and entered into as of January 10, 1997, by and among
ALLWASTE, INC. (the "Company"), a Delaware corporation, EACH OF THE FINANCIAL
INSTITUTIONS SIGNATORY HERETO (individually, a "Bank" and collectively, the
"Banks"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national banking
association acting as agent for the Banks (in such capacity, together with its
successors in such capacity, the "Agent"), and NATIONSBANK OF TEXAS, N.A., a
national banking association, as co-agent under the Credit Agreement (as
defined hereinafter) (in such capacity, the "Co-Agent").
RECITALS:
A. The Company, the Agent and the Banks have entered into a
Credit Agreement dated as of November 30, 1993 (which such Credit Agreement, as
the same may have heretofore been amended, modified, supplemented and restated
from time to time, is hereinafter called the "Credit Agreement").
B. The Company, the Agent, the Co-Agent and the Banks now desire
to amend the Credit Agreement in certain respects as provided hereinbelow.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto do hereby agree as follows:
1. Definition Added. Section 1.1 of the Credit Agreement is
hereby amended by adding thereto a new definition for "Safe Seal Guaranties",
which shall be and read as follows:
" Safe Seal Guaranties shall mean one or more guaranties
executed by the Company in favor of third-party creditors of The Safe
Seal Company, Inc., a _____________ corporation, guaranteeing
Indebtedness of The Safe Seal Company, Inc. in an aggregate amount up
to, but not exceeding, at any time (a) $10,000,000 plus (b) the
difference of (i) the maximum amount of Indebtedness of the Company
which is permitted under Section 6.1(o) hereof and which is not
otherwise permitted under any other provision of Section 6.1 hereof
(other than Section 6.1(q) hereof) minus (ii) the actual amount of
such Indebtedness determined as of such time."
2. Section 6.1 Amended. Section 6.1 of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
<PAGE> 2
" 6.1 Indebtedness. Create, incur, suffer or permit to exist, or
assume or guarantee, directly or indirectly, or become or remain liable with
respect to any Indebtedness, whether direct, indirect, absolute, contingent or
otherwise, except the following:
" (a) Indebtedness to the Banks and the Agent pursuant hereto;
" (b) in addition to and cumulative of any other Indebtedness
permitted in this Section 6, in the case of the Company, only, Unsecured
Borrowed Debt (subject to the limitations set forth in Section 6.1 [l] below);
" (c) Indebtedness secured by Liens permitted by Section 6.2 hereof;
" (d) in addition to and cumulative of any other Indebtedness of the
Company's Subsidiaries permitted in this Section 6, Indebtedness of the
Company's Subsidiaries (including guaranties, endorsements, letters of credit
for the benefit of third parties and other contingent liabilities) not in
excess at any time of ten percent (10%) of the Net Worth of the Company and its
Subsidiaries on a consolidated basis as of such time;
" (e) current accounts payable and unsecured liabilities, not the
result of borrowings, to vendors, suppliers and persons providing services, for
expenditures on ordinary trade terms for goods and services normally required
by the Company or any of its Subsidiaries in the ordinary course of its
business;
" (f) agreements of intent to acquire a Person issued by the Company
or any of its Subsidiaries in anticipation of acquiring such Person if such
acquisition is permitted under the terms and conditions of this Amendment;
" (g) the Indebtedness of any Subsidiary of the Company to the
Company or any of the Company's other Subsidiaries or the Company to any of its
Subsidiaries, in each case, as permitted in Section 6.7(g) of this Amendment;
provided, that, upon the occurrence of a Default and so long as the same shall
be continuing, none of such Indebtedness owed by the Company or any other
Subsidiary which is also a Guarantor to a Non-Guaranteeing Subsidiary as of
such time may be repaid and no new extensions of credit shall be made by any
Guarantor to the Company or a Non-Guaranteeing Subsidiary as of such time,
unless such Indebtedness was incurred in the normal course of the borrowing
Person's business;
" (h) guarantees by the Company or any of its Subsidiaries of the
Indebtedness of any of their respective Subsidiaries permitted to be incurred,
<PAGE> 3
created or existing pursuant to this Section 6.1, provided, that such
guarantees are not directly secured by any Liens;
" (i) the Subordinated Indebtedness;
" (j) current and deferred taxes;
" (k) contingent liabilities under surety bonds;
" (l) Alternative Facilities Advances, provided, that the
Alternative Facilities Advances do not exceed at any time the Aggregate Unused
Commitment as of such time;
" (m) in addition to and cumulative of Indebtedness described
elsewhere in this Section 6.1, accrued liabilities related to insurance plans
of the Company or any of its Subsidiaries not the result of borrowings;
" (n) in addition to and cumulative of Indebtedness described
elsewhere in this Section 6.1, Rate Hedging Obligations arising under Rate
Hedging Agreements which have been approved in advance in writing by the
Majority Banks in their sole and absolute discretion, provided that the Rate
Hedging Agreements which give rise to such Rate Hedging Obligations are entered
into solely for the hedging of the Company's ongoing business operations;
" (o) in addition to and cumulative of Indebtedness described
elsewhere in this Section 6.1, other Indebtedness (including guaranties,
endorsements, the Resource Recovery Letter of Credit, other letters of credit
for the benefit of third parties and other contingent liabilities) of the
Company not to exceed at any time ten percent (10%) of the Net Worth of the
Company and its Subsidiaries determined on a consolidated basis as of such
time;
" (p) in addition to and cumulative of Indebtedness described
elsewhere in this Section 6.1, Indebtedness of the Company arising in
connection with the ARI Guaranty, and
" (q) in addition to and cumulative of Indebtedness described
elsewhere in this Section 6.1, Indebtedness of the Company arising in
connection with the Safe Seal Guaranties.
"The Company, the Agent, the Co-Agent, the Banks and each Guarantor (by its
execution of a Guaranty or a Joinder Agreement) agree that, notwithstanding
anything contained in this Section 6.1, in Section 6.7(g) or in any other
provision contained in this Amendment which may appear to be to the contrary,
any and
3
<PAGE> 4
all Indebtedness of (i) the Company or any of its Subsidiaries from
time to time owed to any other Subsidiary of the Company or of (ii)
any Subsidiary of the Company from time to time owed to the Company
(together with any and all Liens from time to time securing the same
as permitted by Section 6.7[g] hereof) is hereby made and at all times
hereafter shall be inferior and subordinate in all respects to the
Indebtedness from time to time owing to the Agent, the Co-Agent or any
Bank pursuant hereto and to any Lien from time to time hereafter
securing any of such Indebtedness pursuant to the terms hereof."
3. Release of Guaranty of AllScaff, Inc. The Agent and the Banks
hereby acknowledge and consent to the sale by the Company of the Stock of
AllScaff, Inc. ("AllScaff"), a Tennessee corporation, on January 10, 1997 for
the consideration of $675,000 to Southern Scaffold, Inc. and, further, the Agent
and the Banks do hereby agree that AllScaff is released from its liabilities
under the Guaranties effective as of the date of such sale.
4. Amendment Fee Provisions Amended. Section 2.16 of the Credit
Agreement is hereby amended by adding deleting the amount "$1,000" wherever it
appears therein and substituting therefor the amount "$3,000." Notwithstanding
Section 2.16 of the Credit Agreement, as amended by this Section, with respect
to this Amendment, only, in addition to the amendment fee to be paid by the
Company pursuant to Section 2.16 of the Credit Agreement (as amended hereby),
the Company shall pay to each Bank simultaneously with the execution and
delivery of this Amendment, a facility fee equal to 0.05% times such Bank's
Commitment as of the date hereof.
5. Delivery of Certificates of Existence, Good Standing, Etc.
With respect to each Guarantor, the Company hereby agrees to deliver to the
Agent, within thirty (30) days after the date hereof, certificates from the
appropriate public officials of each of the states where such Guarantor is
incorporated and conducts its business as to the continued existence, good
standing and authority to do business in those states.
6. Conditions. No part of this Amendment shall become effective
until the Company shall have delivered (or shall have caused to be delivered)
to the Agent each of the following, in Proper Form:
(a) a certificate from the Secretary of State or other appropriate
public official of the State of Delaware as to the continued
existence and good standing of the Company in the State of
Delaware;
(b) a certificate from the Secretary of State or other appropriate
public official of the State of Texas as to the qualification
of the Company to do business in the State of Texas;
4
<PAGE> 5
(c) a certificate from the Office of the Comptroller of the State
of Texas as to the good standing of the Company in the State
of Texas;
(d) a legal opinion from the general counsel for the Company and
the Current Guarantors acceptable to the Agent in its sole and
absolute discretion;
(e) certificates dated as of the date hereof of the Secretary or
any Assistant Secretary of the Company and each of the
Guarantors as of the date hereof, and such other documents and
information as the Banks may request;
(f) a Consent, in Proper Form, executed by of all of the
Guarantors to the execution and delivery of this Amendment and
such other related matters as the Banks may reasonably
require;
(g) a Notice of Entire Agreement and Release of Claims executed by
the Company and each of the Guarantors as of the date hereof,
and
(h) the amendment fee payable to each Bank as provided in Section
2.16 of the Credit Agreement.
7. Representations True; No Default. The Company represents and
warrants that the representations and warranties contained in Section 4 of the
Credit Agreement and in the other Loan Documents are true and correct in all
material respects on and as of the date hereof as though made on and as of such
date. The Company hereby certifies that no Default or Event of Default under
the Credit Agreement or any of the other Loan Documents has occurred and is
continuing as of the date hereof.
8. Ratification. Except as expressly amended hereby, the Credit
Agreement and the other Loan Documents shall remain in full force and effect.
In the event of any conflict between this Amendment and the Credit Agreement or
any of the other Loan Documents (or any earlier modification of any of them),
this Amendment shall control. The Credit Agreement, as hereby amended, and all
rights and powers created thereby or thereunder and under the other Loan
Documents are in all respects ratified and confirmed and remain in full force
and effect.
9. Definitions and References. Terms used herein which are
defined in the Credit Agreement or in the other Loan Documents shall have the
meanings therein ascribed to them. The term "Credit Agreement" as used in the
Credit Agreement, the other Loan Documents or any other instrument, document or
writing furnished to the Agent, the Co- Agent or any of the Banks by the
Company shall mean the Credit Agreement as hereby amended.
10. Miscellaneous. This Amendment (a) shall be binding upon and
inure to the benefit of the Company, the Banks, the Agent, the Co-Agent and
their respective successors, assigns, receivers and trustees (provided,
however, that the Company shall not assign its rights
5
<PAGE> 6
hereunder without the prior written consent of the Agent); (b) may be modified
or amended only by a writing signed by each party; (c) SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES OF AMERICA; (d) may be executed in several counterparts, and by the
parties hereto on separate counterparts, and each counterpart, when so executed
and delivered, shall constitute an original agreement, and all such separate
counterparts shall constitute but one and the same agreement; and (e) together
with the other Loan Documents, embodies the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes
all prior agreements, consents and understandings relating to such subject
matter. The headings herein shall be accorded no significance in interpreting
this Amendment.
IN WITNESS WHEREOF, the Company, the Banks, the Agent and the Co-Agent
have caused this Amendment to be signed by their respective duly authorized
officers, effective as of the date which first appears hereinabove.
ALLWASTE, INC.,
a Delaware corporation
By: /s/ T. WAYNE WREN
------------------------------------
T. Wayne Wren, Senior Vice President
ATTEST:
/s/ WILLIAM L. FIEDLER
- ------------------------------------------
William L. Fiedler, Secretary
Attachments:
Schedule I - Non-guaranteeing Subsidiaries
and Dormant Subsidiaries
6
<PAGE> 7
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national
banking association,
as a Bank and as Agent
By:
------------------------------------
Richard L. Esdorn
Senior Vice President
<PAGE> 8
NATIONSBANK OF TEXAS, N.A.,
a national banking association,
as a Bank and as Co-Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 9
BANK OF AMERICA TEXAS, N.A.,
a national banking association
By:
------------------------------------
Victor N. Tekell, Vice President
<PAGE> 10
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION (successor in
interest by merger to First Interstate
Bank of Texas, N.A.), a national
banking association
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 11
THE BANK OF NOVA SCOTIA
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 12
COMERICA BANK - TEXAS,
a Texas banking association
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 13
LTCB TRUST COMPANY, a New York
Trust Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 14
ABN AMRO BANK N.V., HOUSTON
AGENCY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 1
EXHIBIT 10.36
ALLWASTE, INC.
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - GENERAL TRUST PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 ESTABLISHMENT OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 SEPARATE SUB-TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 TRUST IRREVOCABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 NON-ALIENATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 ACCEPTANCE BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - GENERAL DUTIES OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 GENERAL DUTIES OF THE COMPANY AND THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 ADDITIONAL GENERAL DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - INVESTMENT, ADMINISTRATION AND DISBURSEMENT
OF TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 INVESTMENT OF TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 VALUATION OF TRUST FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 ADDITIONAL INVESTMENT POWERS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 ADMINISTRATIVE POWERS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 DEALINGS WITH TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 DISTRIBUTIONS FROM TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - SETTLEMENT OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V - TAXES, EXPENSES AND COMPENSATION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 EXPENSES AND COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI - FOR PROTECTION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 COMMUNICATIONS WITH THE COMPANY, THE PLAN ADMINISTRATOR
AND THE MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 ADVICE OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 FIDUCIARY RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII - INDEMNITY OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII - RESIGNATION AND REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 RESIGNATION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
8.3 SUCCESSOR TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 TRANSFER OF TRUST FUND TO SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX - DURATION AND TERMINATION OF TRUST AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.1 DURATION AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 DISTRIBUTION UPON TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.3 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE X - CLAIMS OF COMPANY'S CREDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.1 INSOLVENCY OF COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.2 TRUSTEE'S RESPONSIBILITIES IF COMPANY MAY BE INSOLVENT . . . . . . . . . . . . . . . . . . . . . . . 17
10.3 TRUST RECOVERY OF PAYMENTS TO CREDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE XI - ADOPTING ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE XII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.1 LAWS OF THE STATE OF TEXAS TO GOVERN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.2 TITLES AND HEADINGS NOT TO CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.3 CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.4 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.5 CONTROLLING DOCUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-ii-
<PAGE> 4
ALLWASTE, INC.
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
THIS AGREEMENT AND DECLARATION OF TRUST, made this ______ day of
__________________, 1997, by and between ALLWASTE, INC. and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION (hereinafter referred to as the "TRUSTEE").
WHEREAS, ALLWASTE, INC. has established the ALLWASTE, INC. DEFERRED
COMPENSATION PLAN (hereinafter referred to as the "PLAN") for the benefit of
certain individuals who are eligible for benefits under the terms of the Plan
(such individuals being referred to herein as the "MEMBERS"), which Plan
provides for the payment of certain deferred compensation benefits (the
"BENEFITS") to the Members and the beneficiaries of the respective Members who
may become entitled to any payments under the terms of the Plan in the event of
the Member's death ("BENEFICIARIES"); and
WHEREAS, other adopting entities may adopt the Plan (such other
adopting entities, if any, along with ALLWASTE, INC. hereinafter referred to as
the "COMPANY," jointly and severally); and
WHEREAS, the Plan contemplates that the Company will pay the entire
cost of the Benefits from its general assets; and
WHEREAS, ALLWASTE, INC. desires to establish the ALLWASTE, INC.
DEFERRED COMPENSATION PLAN TRUST AGREEMENT (the "TRUST") to aid the Company in
meeting the obligations under the Plan; and
WHEREAS, the Trust is intended to be a "grantor trust" with the corpus
and income of the Trust treated as assets and income of the Company for federal
income tax purposes; and
WHEREAS, the Company intends that the assets of the Trust shall at all
times be subject to the claims of general creditors of the Company as provided
in Article X; and
WHEREAS, the Company intends that the existence of the Trust shall not
alter the characterization of the Plan as "unfunded" for purposes of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
shall not be construed to provide income to any Member prior to actual payment
of Benefits under the Plan; and
WHEREAS, under the Trust, the Trustee covenants that it will hold all
property which it may receive hereunder, IN TRUST, for the uses and purposes
and upon the terms and conditions hereinafter stated;
-1-
<PAGE> 5
NOW, THEREFORE, the parties hereto adopt this Trust Agreement,
effective May 15, 1997, and agree, as follows:
ARTICLE I
GENERAL TRUST PROVISIONS
1.1 ESTABLISHMENT OF TRUST. Allwaste, Inc. hereby adopts the
Trust Agreement, establishing the Trust with the Trustee, consisting of such
sums of money and other property acceptable to the Trustee as from time to time
shall be paid or delivered to the Trustee by the Company. All such money and
other property, all investments and reinvestments made therewith or proceeds
thereof and all earnings and profits thereon, less all payments and charges as
authorized herein, shall constitute the "TRUST FUND." The Trust Fund shall at
all times be subject to the claims of general creditors of the Company as
provided in Article X. No Member or Beneficiary shall have any preferred claim
to, or any beneficial ownership interest in, any assets of the Trust Fund prior
to the time such assets are paid to such Member or Beneficiary as Benefits.
1.2 SEPARATE SUB-TRUSTS. Contrary provisions of the Trust
notwithstanding, except as provided in Article XI, the provisions of the Trust
shall apply separately and equally to Allwaste, Inc. and to each adopting
entity that has entered into this Trust Agreement pursuant to Article XI. Each
Company shall bear the cost of providing Benefits for its own Members and their
Beneficiaries, and the portion of the Trust Fund attributable to the
contributions of each Company shall be available only to provide benefits to
such Company's Members and their Beneficiaries or to satisfy claims of such
Company's Bankruptcy Creditors in the event such Company becomes Insolvent (as
such terms are defined in Section 10.1).
1.3 TRUST IRREVOCABLE. The Trust shall be irrevocable and shall
be held for the exclusive purpose of providing benefits under the Plan to
Members and their Beneficiaries and defraying expenses of the Trust in
accordance with the provisions of this Trust Agreement. Except as provided in
Sections 3.6(c) and 3.6(d) and Articles IX and X hereof, no part of the income
or corpus of the Trust Fund shall be recoverable by or for the Company.
1.4 NON-ALIENATION. No right or interest to receive benefits from
the Trust may be assigned, sold, anticipated, alienated or otherwise
transferred by any Member or Beneficiary.
1.5 ACCEPTANCE BY TRUSTEE. The Trustee accepts the Trust
established under this Trust Agreement on the terms and subject to the
provisions set forth herein, and it agrees to discharge and perform fully and
faithfully all of the duties and obligations imposed upon it under this Trust
Agreement.
-2-
<PAGE> 6
ARTICLE II
GENERAL DUTIES OF THE PARTIES
2.1 GENERAL DUTIES OF THE COMPANY AND THE TRUSTEE.
(a) The Company has provided or will provide the Trustee
with a copy of the Plan and shall provide the Trustee with a copy of any
amendment to the Plan promptly upon its adoption. The Plan, as of the date of
execution of this Trust Agreement, is hereby incorporated by reference into and
shall form a part of this Trust Agreement as fully as if set forth herein
verbatim. Any amendment to the Plan shall also be incorporated by reference
into and form a part of this Trust Agreement, effective as of the effective
date of such amendment. Schedule A to this Trust Agreement sets forth the name
and mailing address of each Member entitled to receive Benefits, the
Beneficiaries, if any, designated by each Member, each Member's aggregate
balance ("ACCOUNT BALANCE") in the accounts maintained under the Plan on his
behalf, and each Member's vested rights ("Vested Interest") in his Account
Balance. Such Schedule (as amended from time to time as provided herein) is
hereinafter referred to as the "BENEFIT SCHEDULE." The Company shall be
responsible for notifying the Trustee of any changes in the information set
forth on the Benefit Schedule, including, but not limited to, the addition of
new Members and a change in the mailing address of a Member.
(b) Subject to the provisions of Section 2.1(c), the
Trustee shall keep the Benefit Schedule accurate and current based entirely
upon information provided by the administrator established pursuant to the Plan
(the "PLAN ADMINISTRATOR"), including but not limited to, preparing within 90
days of the Company's fiscal year end a completely updated Benefit Schedule as
of such fiscal year end in order to permit distributions from the Trust Fund to
be made in accordance with the provisions of Section 3.6. The Company shall
keep accurate books and records with respect to the eligibility of individuals
to participate in the Plan and the Benefits payable under the Plan, and shall
provide such information to the Trustee and any independent third party
referred to in the immediately preceding sentence and shall also provide access
to such books and records at such time or times as the Trustee shall reasonably
request.
(c) If, at any time, the Company fails or refuses to give
the Trustee data or access to such books and records in accordance with Section
2.1(b), the Trustee shall deliver a written request to the Company to provide
access to books and records of the Company and to provide such data as required
in accordance with Section 2.1(b). If the Company fails or refuses to comply
with the Trustee's written request pursuant to the preceding sentence prior to
the expiration of thirty days from the date of delivery thereof by the Trustee,
the Trustee shall, after ten days written notice to the Company, immediately
pay to each Member an amount equal to such Member's Vested Interest in his
Account Balance as set forth on the most recent Benefit Schedule, reduced by
any taxes to be withheld pursuant to Section 3.6. Such payment shall be made
in accordance with the provisions of Section 3.6. For this purpose, the
Company shall be deemed to have complied with the Trustee's written request if,
in the Trustee's judgment, it
-3-
<PAGE> 7
shall have substantially complied at the end of the thirty-day period and is
endeavoring in good faith to complete compliance without delay.
(d) The Plan Administrator shall notify each Member and
Beneficiary of a then deceased Member in writing of any changes in the Benefit
Schedule with respect to such Member or Beneficiary. The Trustee shall notify
all Members and such Beneficiaries of any failure of the Company to provide
information required in this Section 2.1.
(e) It is intended that Benefits payable to Members shall
be determined under the provisions of the Plan and shall be calculated under
the provisions of the Plan as of the date of payment. The Company shall
contribute such amounts to the Trust Fund so as to provide the Benefits under
the Plan. Payment of Benefits shall be based upon the amounts set forth on the
Benefit Schedule only under the circumstances set forth in Section 2.1(c). If
the actual Benefits payable to a Member under the provisions of the Plan
exceeds the amount set forth on the Benefit Schedule which is paid pursuant to
Section 2.1(c), the Company shall be liable for payment of the remaining
portion of such Benefits.
(f) Trust provisions to the contrary notwithstanding, the
Company shall have the right at any time, and from time to time, in its sole
discretion, to substitute marketable securities of equal fair market value for
any asset held by the Trust. This right is exercisable by the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
2.2 ADDITIONAL GENERAL DUTIES OF TRUSTEE. The Trustee shall
manage, invest and reinvest the Trust Fund as the Trustee may determine in the
exercise of its fiduciary duties hereunder, consistent with the provisions of
Article III. The Trustee shall collect the income on the Trust Fund, and make
distributions therefrom, all as hereinafter provided.
ARTICLE III
INVESTMENT, ADMINISTRATION AND DISBURSEMENT OF TRUST FUND
3.1 INVESTMENT OF TRUST FUND. The following provisions shall
apply with respect to investment of the Trust Fund:
(a) At any time prior to the occurrence of a Change in
Control (as such term is defined in Section 12.3), the Trustee shall
invest and reinvest the assets of the Trust Fund in accordance with
the written directions received from time to time by the Trustee from
the Plan Administrator. Specifically, but not by way of limitation,
the Plan Administrator may, in its discretion, direct the Trustee to
follow the deemed investment directions of each Member or Beneficiary
of a deceased Member, whether written or telephonic, with respect to a
portion of the Trust Fund assets equal in value to the
-4-
<PAGE> 8
Account Balance maintained under the Plan on behalf of such
individual, within parameters established by, and as agent for, the
Plan Administrator;
(b) To the extent that the Trustee is directed by the
Plan Administrator, the Trustee may invest in securities (including
stock or rights to acquire stock) or obligations issued by the
Company;
(c) To the extent that the Trustee is directed by the
Plan Administrator, the Trustee may establish one or more separate
investment accounts within the Trust Fund, each separate account being
hereinafter referred to as an Investment Fund. Except as otherwise
provided, the Trustee shall transfer to each such Investment Fund such
portion of the assets of the Trust Fund as the Plan Administrator
directs. The Trustee shall be under no duty to question, and shall
not incur any liability on account of following, any direction of the
Plan Administrator. The Trustee shall be under no duty to review the
investment guidelines, objectives, and restrictions established, or
the specific investment directions given by the Plan Administrator for
any Investment Fund, or to make suggestions to the Plan Administrator
in connection therewith. To the extent that directions from the Plan
Administrator to the Trustee represent deemed investment elections of
the Members, the Trustee shall have no responsibility for such
investment elections and shall incur no liability on account of
investing the assets of the Trust Fund in accordance with such
directions. All interest, dividends, and other income received with
respect to, and any proceeds received from the sale or other
disposition of securities or other property held in, an Investment
Fund shall be credited to and reinvested in such Investment Fund. All
expenses of the Trust Fund which are allocable to a particular
Investment Fund shall be so allocated and charged. The Plan
Administrator may direct the Trustee to eliminate an Investment Fund
or Funds, and the Trustee shall thereupon dispose of the assets of
such Investment Fund and reinvest the proceeds thereof in accordance
with the directions of the Plan Administrator; and
(d) From and after the occurrence of a Change in Control,
or if the Plan Administrator fails to provide the Trustee with such
written directions, the Trustee shall have, with respect to the Trust
Fund, power in its discretion to invest and reinvest such assets in
(i) common and preferred stocks, bonds, notes and debentures
(including convertible stocks and securities but not including any
stock, debt instruments, or other securities of the Company, the
Trustee or their affiliates) which are readily marketable and listed
on a United States national securities exchange or the NASDAQ national
market, (ii) interest-bearing deposit accounts or certificates of
deposit maturing within one year after acquisition thereof, entered
into or issued by a United States national or state bank or trust
company having capital, surplus and undivided profits, at the holding
company level, of at least $75 million, (iii) direct obligations of,
and obligations fully guaranteed by, the United States of America or
any agency of the United States of America which is backed by the full
faith and credit of the United States of America (so long as such
obligations shall mature within one year after acquisition thereof),
(iv) any
-5-
<PAGE> 9
common, collective or commingled fund, including a fund maintained by
the Trustee, established and maintained primarily for the purpose of
investing and reinvesting in assets of the type described in (i), (ii)
and (iii) above, and (v) insurance contracts issued by one or more
insurance companies. Further, notwithstanding the provisions of the
preceding sentence, after the occurrence of a Change in Control or in
the event the Plan Administrator fails to provide the Trustee with
written directions pursuant to the first sentence of this Section, the
Trustee shall have the power in its discretion to retain, maintain,
continue, sell, or take any other actions relative to any assets then
held in the Trust Fund (including, without limitation, to take actions
in accordance with deemed investment directions obtained directly from
a Member or Beneficiary of a deceased Member with respect to a portion
of the Trust Fund assets equal in value to the Account Balance
maintained under the Plan on behalf of such individual).
3.2 VALUATION OF TRUST FUND. As soon as practicable after the
Company's fiscal year end and as of such other dates as may be specified by
the Company or the Plan Administrator, the Trustee shall report to the Company
and the Plan Administrator the assets held in the Trust Fund as of such day and
shall determine and include in such report the fair market value as of such day
of each such asset. In determining such fair market values, the Trustee shall
use such market quotations and other information as are available to it and may
in its discretion be appropriate. The report of any such valuation shall not
constitute a representation by the Trustee that the amounts reported as fair
market values would actually be realized upon the liquidation of the Trust
Fund. The Trustee shall not be accountable to the Company or to any other
person on the basis of any such valuation, but its accountability shall be in
accordance with the provisions of Article IV hereof.
3.3 ADDITIONAL INVESTMENT POWERS OF TRUSTEE. Subject to the
provisions of Sections 3.1, 3.6 and 9.2 hereof, the Trustee shall have, with
respect to the Trust Fund, the power in its discretion:
(a) To retain any property at any time received by it;
(b) To sell, exchange, convey, transfer or dispose of,
and to grant options for the purchase or exchange with respect to, any
property at any time held by it;
(c) To register and carry any securities or any other
property in the name of the Trustee, or in the name of the nominee of
the Trustee (or to hold any such property unregistered) without
increasing or decreasing the fiduciary liability of the Trustee, and
to exercise any option, right or privilege to convert any convertible
securities, including shares or fractional shares of the Trustee so
long as the conversion privilege is offered pro rata to all
shareholders;
(d) To cause any securities to be held in book-entry or
in bearer form;
-6-
<PAGE> 10
(e) To hold uninvested, without liability for interest
thereon, any moneys received by it until the same shall be invested or
disbursed; and
(f) To hold property for investment that may be
unproductive of income.
3.4 ADMINISTRATIVE POWERS OF TRUSTEE. The Trustee shall have the
power in its discretion:
(a) To exercise all voting rights with respect to the
shares of stock held in the Trust Fund and to grant proxies,
discretionary or otherwise; provided, however, voting rights with
respect to stock issued by the Company or its affiliates shall be
exercised by the Plan Administrator prior to the occurrence of a
Change in Control;
(b) To cause any shares of stock to be registered and
held in the name of one or more of its nominees, or one or more
nominees of any system for the central handling of securities, without
increase or decrease of liability;
(c) To collect and receive any and all money and other
property due to the Trust Fund and to give full discharge therefor;
(d) Subject to the provisions of Section 3.6 hereof: to
settle, compromise or submit to arbitration any claims, debts or
damages due or owing to or from the Trustee; to commence or defend
suits or legal proceedings to protect any interest of the Trust; and
to represent the Trust in all suits or legal proceedings in any court
or before any other body or tribunal;
(e) To organize under the laws of any state a corporation
or limited liability company for the purpose of acquiring and holding
title to any property which it is authorized to acquire under this
Trust Agreement and to exercise with respect thereto any or all of the
powers set forth in this Trust Agreement;
(f) To determine how all receipts and disbursements shall
be credited, charged or apportioned as between income and principal;
(g) To determine the amount and time of Benefit payments
in accordance with directions from the Plan Administrator or its
delegates and in compliance with the provisions of Section 3.6;
(h) To employ and compensate such attorneys, counsel,
brokers or other agents or employees and to delegate to them such of
the duties, rights and powers of the Trustee as may be deemed
advisable in handling and administering the Trust; and
-7-
<PAGE> 11
(i) Generally to do all acts, whether or not expressly
authorized, which the Trustee may deem necessary or desirable for the
protection of the Trust Fund.
3.5 DEALINGS WITH TRUSTEE. Persons dealing with the Trustee shall
be under no obligation to see to the proper application of any money paid or
property delivered to the Trustee or to inquire into the Trustee's authority as
to any transaction.
3.6 DISTRIBUTIONS FROM TRUST FUND.
(a) Except as set forth in Section 3.6(c), Section
3.6(d), Section 9.2 and Article X hereof, distributions from the Trust Fund
shall be made by the Trustee to the Members and Beneficiaries at the times and
in the amounts set forth in the Plan and, to the maximum extent permitted by
applicable law, the Trustee shall be fully protected in so doing. Any amounts
so paid shall be reduced by the amount of any federal, state, or local income
or other taxes that may be required by law to be withheld or paid by the
Trustee and the Trustee shall withhold, pay and report such amounts to the
appropriate governmental authorities; provided, that the Company shall
withhold, pay and report any FICA, or FUTA or other applicable taxes; and,
provided, further, that the Company, the Plan Administrator, the Members, and
the Beneficiaries shall provide the Trustee with all of the information
necessary for the Trustee to determine the amount of such taxes required to be
withheld or paid by the Trustee and the Trustee shall be fully protected in
relying upon such information. Notwithstanding any provision of this Trust
Agreement to the contrary, the Company shall be obligated to pay the Benefits.
To the extent that the Trust Fund is not sufficient to pay any Benefit when
due, the Company shall pay such Benefit directly. In the event Benefits are
due to more than one Member or Beneficiary on the same date and the Trust Fund
is not sufficient to pay all such Benefits, the Trust Fund shall be applied pro
rata among such Members and Beneficiaries on the basis of the Benefits due to
be paid such individuals on such date, as determined by the Plan Administrator
or its delegates. Nothing in this Trust Agreement shall relieve the Company of
its liabilities to pay Benefits except to the extent such liabilities are met
by application of Trust Fund assets.
(b) Prior to the occurrence of a Change in Control, the
Plan Administrator shall direct the Trustee in writing as to the time and
amount of Benefits to be distributed to the Members and Beneficiaries. From
and after the occurrence of a Change in Control, a Member or Beneficiary who
believes that he or she is entitled to Benefits may apply in writing directly
to the Trustee for payment of such Benefits. Such application shall advise the
Trustee of the circumstances which entitle such Member or Beneficiary to
payment of such Benefits. The Trustee shall, in such case, reach its own
independent determination as to the Member's or Beneficiary's entitlement to
Benefits, even though the Trustee may be informed from another source
(including the Company or the Plan Administrator) that payments are not due
under the Plan. If the Trustee so desires, it may, in its sole discretion,
make such additional inquiries and/or take such additional measures as it deems
necessary in order to enable it to determine whether Benefits are due and
payable, including, but not limited to, interviewing appropriate
-8-
<PAGE> 12
persons, requesting affidavits, soliciting oral or written testimony under
oath, or holding a hearing or other proceeding. After the occurrence of a
Change in Control, the Trustee shall determine whether Benefits are payable as
promptly as possible.
(c) If the Net Fair Market Value of the Trust Assets (as
such term is hereinafter defined) exceeds the aggregate Account Balances for
all Members and Beneficiaries, the Plan Administrator may, at such time or
times, direct the Trustee in writing to distribute to the Company cash held by
the Trustee as part of the Trust Fund in an amount equal to the Benefits
accrued under the Plan that have been forfeited under the terms of the Plan.
As soon as practicable after receipt of such a direction and, if such direction
is received by the Trustee after the occurrence of a Change in Control, the
Trustee's independent determination that such benefits have, in fact, been
forfeited in accordance with the terms of the Plan, the Trustee shall
distribute such amount to the Company.
(d) At any time and from time to time prior to the
occurrence of a Change in Control, the Company may apply in writing to the
Trustee for a distribution by the Trustee to the Company of assets held by the
Trustee as part of the Trust Fund ("TRUST ASSETS") in an amount (the "REFUND
AMOUNT") equal to or less than the difference, if any, between (i) the Net Fair
Market Value of the Trust Assets (as such term is hereinafter defined) as of
the last day of the month coincident with or immediately preceding the date of
such application, and (ii) 105% of the aggregate Account Balances for all
Members and Beneficiaries as of such date. Such application shall advise the
Trustee of the manner in which the Refund Amount was calculated. Upon the
receipt of such an application from the Company, the Trustee shall reach its
own independent determination as to the Company's entitlement to the Refund
Amount, even though the Trustee may be informed from another source (including
a Member) that the Company is not entitled to the Refund Amount. If the
Trustee so desires, it may, in its sole discretion, make such additional
inquiries and/or take such additional measures as it deems necessary in order
to enable it to determine whether the Company is entitled to the Refund Amount,
including, but not limited to, interviewing appropriate persons, requesting
affidavits, soliciting oral or written testimony under oath, or engaging such
independent third parties as the Trustee may deem necessary to assist in making
such determination. The Trustee shall determine whether the Company is
entitled to all or any portion of the Refund Amount as promptly as possible.
If the Trustee determines that the Company is entitled to all or any portion of
the Refund Amount, then the Trustee shall distribute such amount to the Company
in cash or in kind as determined by the Trustee in its sole discretion. As
used herein, the term "NET FAIR MARKET VALUE OF THE TRUST ASSETS" shall mean
the fair market value of the Trust Assets, as determined by the Trustee in its
sole discretion, reduced by all liabilities of the Trust, whether or not such
liabilities are secured by any or all of the Trust Assets, other than
liabilities to Members or Beneficiaries under the Plan. In determining such
fair market value, the Trustee shall use such market quotations and other
information as are available to it and may in its discretion be appropriate;
provided, however, that the fair market value of any life insurance contract
which constitutes a portion of the Trust Assets shall be its net cash surrender
value. The determination of the Net Fair Market Value of the Trust Assets by
the Trustee shall not constitute a representation by the
-9-
<PAGE> 13
Trustee that the amounts reported as fair market values would actually be
realized upon the liquidation of the Trust Assets. The Trustee shall not be
accountable to the Company or to any other person, including the Members or
Beneficiaries, on the basis of any such valuation except as otherwise provided
in this Trust Agreement.
(e) The Trustee shall not itself commence any legal
action, whether in the nature of an interpleader action, request for
declaratory judgment or otherwise, requesting a court to make a determination
under Section 3.6(a), (b), (c) or (d) hereof in the Trustee's stead without
first using its best efforts to make such determination.
(f) Notwithstanding any other provision of this Trust
Agreement, if any amounts held in the Trust are found in a "determination"
(within the meaning of Section 1313(a) of the Internal Revenue Code of 1986, as
amended) to have been includible in gross income of a Member or Beneficiary
prior to payment of such amounts from the Trust, the Trustee shall, as soon as
practicable, pay such amounts to such Member or Beneficiary, as applicable,
(but not in excess of such Member's or Beneficiary's Vested Interest in his
Account Balance at the time of such payment). For purposes of this Section
3.6, the Trustee shall be entitled to rely on an affidavit by a Member or
Beneficiary, as applicable, and a copy of the determination to the effect that
a determination described in the preceding sentence has occurred.
ARTICLE IV
SETTLEMENT OF ACCOUNTS
The Trustee shall keep full accounts of all of its receipts and
disbursements. Its books and records with respect to the Trust Fund shall be
open to inspection by the Company, any Member or any Beneficiary of a deceased
Member or their representatives at all times during business hours of the
Trustee. Within sixty days after the Company's fiscal year end, or any
termination of the duties of the Trustee, the Trustee shall prepare, sign and
mail to the Company and the Plan Administrator an account of its acts and
transactions as Trustee hereunder. If, within sixty days after the mailing of
the account or any amended account, the Company and the Plan Administrator have
not filed with the Trustee notice of any objection to any act or transaction of
the Trustee, the account or amended account shall become an account stated. If
any objection has been filed, and if the objecting party is satisfied that it
should be withdrawn or if the account is adjusted to the objecting party's
satisfaction, the objecting party shall in writing filed with the Trustee
signify its approval of the account and it shall become an account stated.
When an account becomes an account stated, such account shall be finally
settled, and the Trustee shall be completely discharged and released, as if
such account had been settled and allowed by a judgment or decree of a state or
federal court of competent jurisdiction in an action or proceeding in which the
Trustee, the Company and the Plan Administrator were parties. The Trustee, the
Company or the Plan Administrator shall have the right to apply at any time to
a state or federal court of competent jurisdiction for judicial settlement of
any account of the Trustee not previously settled as hereinabove provided. In
any such action or proceeding it shall
-10-
<PAGE> 14
be necessary to join as parties the Trustee, the Company and the Plan
Administrator and any judgment or decree entered therein shall be conclusive
upon all such parties.
ARTICLE V
TAXES, EXPENSES AND COMPENSATION OF TRUSTEE
5.1 TAXES. The Company agrees that all income, deductions and
credits of the Trust Fund belong to it as owner for income tax purposes and
will be included on the Company's income tax returns. The Company shall from
time to time pay taxes (references in this Trust Agreement to the payment of
taxes shall include interest and applicable penalties) of any and all kinds
whatsoever which at any time are lawfully levied or assessed upon or become
payable in respect of the Trust Fund, the income or any property forming a part
thereof, or any security transaction pertaining thereto. To the extent that
any taxes levied or assessed upon the Trust Fund are not paid by the Company or
contested by the Company pursuant to the last sentence of this Section 5.1, the
Trustee shall pay such taxes out of the Trust Fund and the Company shall upon
demand by the Trustee deposit into the Trust Fund an amount equal to the amount
paid from the Trust Fund to satisfy such tax liability. If requested by the
Company, the Trustee shall, at Company expense, contest the validity of such
taxes in any manner deemed appropriate by the Company or its counsel, but only
if it has received an indemnity bond or other security satisfactory to it to
pay any expenses of such contest. Alternatively, the Company may itself
contest the validity of any such taxes, but any such contest shall not affect
the Company's obligation to reimburse the Trust Fund for taxes paid from the
Trust Fund.
5.2 EXPENSES AND COMPENSATION. The Trustee shall be paid
compensation by the Company as the Company and the Trustee may from time to
time agree. The Trustee shall be reimbursed by the Company for its reasonable
expenses of management and administration of the Trust, including reasonable
compensation of counsel and any agent engaged by the Trustee to assist it in
such management and administration. In the event that the Company shall fail
or refuse to pay such compensation or make such reimbursement within sixty days
of demand, the Trustee may satisfy such obligations out of the assets of the
Trust Fund; in that event, the Company shall immediately upon demand by the
Trustee deposit into the Trust Fund a sum equal to the amount paid by the Trust
Fund for such fees and expenses.
-11-
<PAGE> 15
ARTICLE VI
FOR PROTECTION OF TRUSTEE
6.1 COMMUNICATIONS WITH THE COMPANY, THE PLAN ADMINISTRATOR AND
THE MEMBERS.
(a) The Company shall certify to the Trustee the name or
names of any person or persons authorized to act for the Company and for the
Plan Administrator. Such certification shall be signed by the President or a
Vice President and the Secretary or an Assistant Secretary of the Company.
Until the Company notifies the Trustee, in a similarly signed notice, that any
such person is no longer authorized to act for the Company or for the Plan
Administrator, as applicable, the Trustee may continue to rely upon the
authority of such person.
(b) The Trustee may rely upon any certificate, notice or
direction of the Company or the Plan Administrator which the Trustee reasonably
believes to have been signed by a duly authorized officer or agent of the
Company or the Plan Administrator, as applicable.
(c) Communications to the Trustee shall be sent in
writing to its principal address, Attention: Legal Department, or to such
other address as the Trustee may specify. No communication shall be binding
upon the Trust Fund or the Trustee until it is received by the Trustee and
unless it is in writing and signed by an authorized person.
(d) Communications to the Company shall be sent in
writing to the Company at 5151 San Felipe, Suite 1600, Houston, Texas 77056,
Attention: General Counsel, or to such other address as the Company may
specify in writing to the Trustee. Communications to the Plan Administrator
shall be sent in writing to the Company's address, Attention: Chief
Administrative Officer. Communications to a Member or Beneficiary shall be
sent in writing to the address of such person as stated on the Benefit
Schedule, or to such other address as such person may specify in writing to the
Trustee. No communication shall be binding upon the Company, the Plan
Administrator, or a Member or Beneficiary until it is received by such person.
6.2 ADVICE OF COUNSEL. The Trustee may consult with any legal
counsel with respect to the construction of this Trust Agreement, its duties
hereunder or any act which it proposes to take or omit, and shall not be liable
for any action taken or omitted in good faith pursuant to such advice.
Expenses of such counsel shall be deemed to be expenses of management and
administration of the Trust within the meaning of Section 5.2 hereof.
6.3 FIDUCIARY RESPONSIBILITY.
(a) The Trustee shall discharge its duties under this
Trust Agreement in effectuating the Plan in a manner consistent with the
objectives of this Trust Agreement and the
-12-
<PAGE> 16
Plan. The Trustee shall not be liable for any loss sustained by the Trust Fund
by reason of the purchase, retention, sale or exchange of any investment in
good faith and in accordance with the provisions of this Trust Agreement. The
Trustee shall have no responsibility or liability for any failure of the
Company to make contributions to the Trust Fund or for any insufficiency of
assets in the Trust Fund to pay Benefits when due. The Trustee shall not be
liable hereunder for any act taken or omitted to be taken in good faith, except
for its own negligence or misconduct.
(b) The Trustee shall not be responsible for any act or
failure to act of another fiduciary except to the extent otherwise provided by
law.
(c) No bond shall be required of the Trustee unless
otherwise required by law.
(d) The Trustee shall have no responsibility to negotiate
any insurance contracts respecting the Plan and Trust, nor shall the Trustee
have any responsibility to conduct any due diligence as to such insurance
contracts.
(e) The Trustee's duties and obligations shall be limited
to those expressly imposed upon it by this Trust Agreement.
(f) The Company at any time may employ as agent (to
perform any act, keep any records or accounts, or make any computations
required of the Company or the Plan Administrator by this Trust Agreement or
the Plan) the individual, corporation or association serving as Trustee
hereunder. Nothing done by said individual, corporation or association as such
agent shall affect its responsibilities or liability as Trustee hereunder.
ARTICLE VII
INDEMNITY OF TRUSTEE
The Company hereby indemnifies and holds the Trustee harmless from and
against any and all losses, damages, costs, expenses or liabilities (herein,
"LIABILITIES"), including reasonable attorneys' fees and other costs of
litigation, to which the Trustee may become subject pursuant to, arising out
of, occasioned by, incurred in connection with or in any way associated with
this Trust Agreement, including the acts or omissions of other fiduciaries,
except for any act or omission constituting negligence or misconduct of the
Trustee. If one or more Liabilities shall arise, or if the Company fails to
indemnify the Trustee as provided herein, or both, then the Trustee may engage
counsel of the Trustee's choice, but at the Company's expense, either to
conduct the defense against such Liabilities or to conduct such actions as may
be necessary to obtain the indemnity provided for herein, or to take both such
actions. The Trustee shall notify the Company within fifteen days after the
Trustee has so engaged counsel of the name and address of such counsel. If the
Trustee shall be entitled to indemnification by the Company pursuant to this
Article VII and the Company shall not provide such indemnification upon demand,
the Trustee may apply assets of the Trust Fund in full satisfaction of the
obligations for
-13-
<PAGE> 17
indemnity by the Company, and any legal proceeding by the Trustee against the
Company for such indemnification shall be on behalf of the Trust.
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
8.1 RESIGNATION OF TRUSTEE. The Trustee may resign upon sixty
days' prior written notice to the Board of Directors of Allwaste, Inc. (the
"BOARD"), the Plan Administrator, each Member and each Beneficiary of a
deceased Member, except that any such resignation shall not be effective until
the Board have appointed in writing a successor trustee, which must be a bank,
trust company, or an individual, and such successor has accepted the
appointment in writing; provided, however, that if such appointment is to
become effective at any time after the occurrence of a Change in Control, then
the consent of a majority of the Members to the appointment of such successor
trustee must be obtained. For all purposes of this Trust Agreement where the
consent of a majority of the Members is required, the determination of majority
consent shall be based upon receiving the consent of any combination of Members
whose sum of Account Balances as of the time of determination is greater than
fifty percent of the sum of Account Balances for all Members at such time,
rather than upon receiving the consent of a majority of the number of Members.
For purposes of this determination, Beneficiaries of deceased Members shall be
considered Members. The Board shall make a good faith effort, following
receipt of notice of resignation from the Trustee, to find and appoint a
successor Trustee who will adhere to the obligations imposed on such successor
under the terms of this Trust Agreement, and in particular, but without
limitation, the obligation to exercise judgment independent of the Company in
the circumstances described in Section 3.6 hereof. The appointment of a
successor trustee shall also be conditioned upon obtaining from such successor
a written statement that the successor has read the Trust Agreement and
understands its obligations thereunder. If the consent of a majority of the
Members is required for the appointment of a successor Trustee, then the
Trustee shall be responsible for securing such Member consents in a timely
fashion and, unless ordered by a court of competent jurisdiction, shall not
reveal to the Board, the Plan Administrator or any other person any information
concerning such consents, except whether the required majority has been
achieved. Any notice sent to Members by the Trustee canvassing the Members as
to their consent to a successor trustee, shall include the name and address of
the proposed successor trustee. Any consent of a Member required under this
Section 8.1 shall be deemed given if no written objection is received by the
Trustee from such Member within fourteen days after request for such consent is
sent postpaid by United States registered or certified mail with return receipt
requested to such Member. Provisions of the Trust Agreement to the contrary
notwithstanding, if the Trustee gives notice of resignation to the Plan
Administrator and no successor Trustee has been appointed within sixty days of
receipt of such written notice, the compensation of the Trustee then in effect
shall increase by 50%, effective as of the lapse of such sixty-day time period.
-14-
<PAGE> 18
8.2 REMOVAL OF TRUSTEE. The Board may remove the Trustee upon
sixty days' prior written notice to the Trustee, the Plan Administrator, each
Member and each Beneficiary of a deceased Member, except that any such removal
shall not be effective until the close of such notice period and (a) delivery
by the Board to the Trustee of an instrument in writing appointing a successor
trustee meeting the requirements of Section 8.1, and (b) an acceptance of such
appointment in writing executed by such successor. Notwithstanding the
provisions of the preceding sentence, if such appointment of a successor
trustee is to become effective at any time after the occurrence of a Change in
Control, then the removal of the Trustee and the appointment of a successor
trustee shall not be effective until the Trustee has received the consent of a
majority of the Members (as determined in accordance with the provisions of
Section 8.1 hereof) to such removal and such appointment. Upon the receipt by
the Trustee of a written notice of removal, the Trustee shall be responsible
for securing the Member consents (if such consents are required pursuant to the
preceding provisions of this Section 8.2) in a timely fashion and, unless
ordered by a court of competent jurisdiction, shall not reveal to the Board,
the Plan Administrator or any other person any information concerning such
consents, except whether the required majority has been achieved. Any notice
sent to Members by the Trustee canvassing the Members as to their consent to
removal of the Trustee and the appointment of a proposed successor trustee,
shall include the name and address of the proposed successor trustee. Any
consent of a Member required under this Section 8.2 shall be deemed given if no
written objection is received by the Trustee from such Member within fourteen
days after request for such consent is sent postpaid by United States
registered or certified mail with return receipt requested to such Member.
8.3 SUCCESSOR TRUSTEE. All of the provisions set forth herein
with respect to the Trustee shall relate to each successor with the same force
and effect as if such successor had been originally named as the Trustee
hereunder.
8.4 TRANSFER OF TRUST FUND TO SUCCESSOR. Upon the resignation or
removal of the Trustee and appointment of a successor, the Trustee shall
transfer and deliver the Trust Fund to such successor. Following the effective
date of the appointment of the successor, the Trustee's responsibility
hereunder shall be limited to managing the assets in its possession and
transferring such assets to the successor, and settling its final account.
Neither the Trustee nor the successor shall be liable for the acts of the
other.
ARTICLE IX
DURATION AND TERMINATION OF TRUST AND AMENDMENT
9.1 DURATION AND TERMINATION. The Trust is hereby declared to be
irrevocable and shall continue until (a) all payments required by Section 3.6
have been made or (b) until the Trust Fund contains no assets and retains no
claims to recover assets from the Company or any other person or entity,
whichever shall first occur. Notwithstanding the preceding provisions of this
Section 9.1, unless earlier terminated, the Trust shall terminate twenty-one
(21) years
-15-
<PAGE> 19
after the death of the last to die of all of the Members and their issue living
on the date of execution of this Trust Agreement; provided, however, that if at
that time the Trust may be continued in force without violating the rule
against perpetuities or any other law of the State of Texas, then the Trust
shall remain in effect until otherwise terminated as provided hereunder.
9.2 DISTRIBUTION UPON TERMINATION. If this Trust terminates under
the provisions of Section 9.1, the Trustee shall liquidate the Trust Fund and,
after its final account has been settled as provided in Article IV, shall
distribute to the Company the net balance of any assets of the Trust remaining
after all expenses have been paid and all Benefits, whether or not due and
payable under the terms of the Plan on the date of such termination, have been
paid to the Members and Beneficiaries. Upon making such distribution, the
Trustee shall be relieved from all further liability. The powers of the
Trustee hereunder shall continue so long as any assets of the Trust Fund remain
in its hands.
9.3 AMENDMENT. The Board may from time to time amend, in whole or
in part, any or all of the provisions of this Trust Agreement; provided,
however, that (a) no amendment will be made to this Trust Agreement or the Plan
which will cause this Trust Agreement, the Plan or the assets of the Trust Fund
to be governed by or subject to Part 2, 3 or 4 of Title I of ERISA, (b) no such
amendment shall adversely affect any Benefits to the date of such amendment in
respect of any Member or Beneficiary or the amount of assets of the Trust Fund
available to pay such Benefits, (c) no such amendment shall purport to alter
the irrevocable character of the Trust established under this Trust Agreement,
(d) no such amendment shall increase the duties or responsibilities of the
Trustee unless the Trustee consents thereto in writing, and (e) after the
occurrence of a Change in Control, no amendment will be made to this Trust
Agreement without the consent of a majority of the Members (as determined
pursuant to the provisions of Section 8.1 hereof). Upon receipt of a request
from the Board for an amendment which requires the consent of a majority of the
Members, the Trustee shall be responsible for securing Member consents in a
timely fashion, and unless ordered by a court of competent jurisdiction, shall
not reveal to the Board, the Plan Administrator or any other person any
information concerning such consents, except whether the required majority has
been achieved. Any consent of a Member required under this Section 9.3 shall
be deemed given if no written objection is received by the Trustee from such
Member within fourteen days after request for such consent is sent postpaid by
United States registered or certified mail with return receipt requested to
such Member. This Trust Agreement may be amended, to the extent permitted in
this Section 9.3, by an instrument in writing executed on behalf of Allwaste,
Inc. by its authorized representatives, consents to which instrument have been
obtained from the required majority of Members if such consents are required.
-16-
<PAGE> 20
ARTICLE X
CLAIMS OF COMPANY'S CREDITORS
10.1 INSOLVENCY OF COMPANY. As used in this Article X, the Company
shall be deemed to be "INSOLVENT" if (a) the Company is unable to pay its debts
as they come due, or (b) the Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code (or any successor federal
statute). In the event that the Company shall be deemed Insolvent, the assets
of the Trust Fund shall be held for the benefit of the general creditors of the
Company (hereinafter referred to as "BANKRUPTCY CREDITORS").
10.2 TRUSTEE'S RESPONSIBILITIES IF COMPANY MAY BE INSOLVENT.
(a) If at any time the Company or a person claiming to be
a creditor of the Company alleges in writing to the Trustee that the Company
has become Insolvent, the Trustee shall within thirty days independently
determine whether the Company is Insolvent and, pending such determination, the
Trustee shall discontinue any payment of Benefits under the Plan and this Trust
Agreement and shall hold the Trust Fund for the benefit of Bankruptcy
Creditors. As a condition of being a Member of the Plan and this Trust
Agreement, each Member hereby waives his priority credit position, if any,
under applicable state law. The Trustee shall resume payments of Benefits
under the Plan and this Trust Agreement in accordance with Section 3.6 hereof
only after the Trustee has determined that the Company is not Insolvent (or is
no longer Insolvent, if the Trustee initially determined the Company to be
Insolvent) or upon receipt of an order of a court of competent jurisdiction
requiring such payments. The Company, by its Chief Executive Officer and its
Board, shall further be obligated to give the Trustee prompt notice in writing
in the event that the Company becomes Insolvent, with the same consequences as
provided in the preceding two sentences. In determining whether the Company is
Insolvent, the Trustee may rely conclusively upon, and shall be protected in
relying upon, court records showing that the Company is Insolvent, or a current
report or statement from a nationally recognized credit reporting agency
showing that the Company is Insolvent. For purposes of this Trust Agreement,
knowledge and information concerning the Company which is not in the possession
of the Trustee, or its employees, shall not be imputed to the Trustee. The
Trustee shall have no duty or obligation to ascertain whether the Company is
Insolvent unless and until it receives a writing that the Company is Insolvent
as described in the first or third sentence of this Section 10.2(a).
(b) If the Trustee determines that the Company is
Insolvent, the Trustee shall hold the assets of the Trust Fund for the benefit
of the Bankruptcy Creditors, and shall disburse the assets of the Trust Fund to
satisfy such claims as a court of competent jurisdiction shall direct.
(c) If the Trustee discontinues payment of Benefits
pursuant to Section 10.2(a) and subsequently resumes such payments, the first
payment to a Member or Beneficiary
-17-
<PAGE> 21
following such discontinuance shall include an aggregate amount equal to the
difference between the payments that would have been made to such Member or
Beneficiary, as applicable, under this Trust Agreement but for this Section
10.2 and the aggregate payments actually made to such Member or Beneficiary, as
applicable, by the Company pursuant to the Plan during any such period of
discontinuance. In the event that upon resumption of payments pursuant to the
preceding sentence, the assets of the Trust Fund are insufficient to pay
Benefits in full, Benefit payments to the affected Members and Beneficiaries
shall be prorated so as to equitably apportion the assets of the Trust Fund
among all affected Members and Beneficiaries in proportion to their Benefits.
10.3 TRUST RECOVERY OF PAYMENTS TO CREDITORS. In the event that at
any time an amount is paid from the Trust Fund to Bankruptcy Creditors of the
Company, the Trustee shall demand that the Company deposit into the Trust Fund
a sum equal to the amount paid by the Trust Fund to such Bankruptcy Creditors
and, if such payment is not made within ninety days of such demand, the Trustee
shall take such action as it deems prudent or advisable to recover payment.
ARTICLE XI
ADOPTING ENTITIES
It is contemplated that other corporations, associations, partnerships
or proprietorships that have adopted the Plan may adopt this Trust Agreement
and thereby become the Company. Any such entity, whether or not presently
existing, may become a party hereto by appropriate action of its officers
without the need for approval of its board of directors or noncorporate
counterpart or of the Board. The provisions of the Trust Agreement shall apply
separately and equally to each Company and its Members and their Beneficiaries
in the same manner as is expressly provided for Allwaste, Inc. and its Members
and their Beneficiaries, except that (a) the power to appoint or otherwise
affect the Trustee and the power to amend the Trust Agreement shall be
exercised by the Board alone, and (b) the determination of whether a Change in
Control has occurred shall be based solely on Allwaste, Inc.
ARTICLE XII
MISCELLANEOUS
12.1 LAWS OF THE STATE OF TEXAS TO GOVERN. This Trust Agreement
and the Trust hereby created shall be construed and regulated by the laws of
the State of Texas.
12.2 TITLES AND HEADINGS NOT TO CONTROL. The titles to Articles
and headings of Sections in this Trust Agreement are placed herein for
convenience of reference only and, in
-18-
<PAGE> 22
case of any conflict, the text of this Trust Agreement, rather than such titles
or headings, shall control.
12.3 CHANGE IN CONTROL. As used in this Trust Agreement, the term
"CHANGE IN CONTROL" shall mean the occurrence of one or more of the following
events:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of either (1) the then
outstanding shares of Common Stock of Allwaste, Inc. (the "OUTSTANDING
COMPANY COMMON STOCK") or (2) the combined voting power of the then
outstanding voting securities of Allwaste, Inc. entitled to vote
generally in the election of directors (the "OUTSTANDING COMPANY
VOTING SECURITIES"); provided, however,that the following acquisitions
shall not constitute a Change in Control: (i) any acquisition
directly from Allwaste, Inc. (excluding an acquisition by virtue of
the exercise of a conversion privilege), (ii) any acquisition by
Allwaste, Inc., (iii) any acquisition by any employee benefit plan(s)
(or related trust(s)) sponsored or maintained by Allwaste, Inc. or any
corporation controlled by Allwaste, Inc., or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or consolidation,
if, immediately following such reorganization, merger or
consolidation, the conditions described in clauses (1), (2) and (3) of
subsection (c) below are satisfied; or
(b) Individuals who, as of the date hereof, constitute
the entire Board of Directors of Allwaste, Inc. (the "INCUMBENT
BOARD") cease for any reason to constitute at least a majority of the
Board of Directors of Allwaste, Inc.; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by Allwaste, Inc.'s stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either (1) an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act), or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors of Allwaste, Inc. or (2) a plan or
agreement to replace a majority of the members of the Board of
Directors of Allwaste, Inc. then comprising the Incumbent Board; or
(c) Approval by the stockholders of Allwaste, Inc. of a
reorganization, merger or consolidation, in each case unless,
immediately following such reorganization, merger or consolidation,
(1) more than 60% of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization,
merger or consolidation (including, without limitation, a corporation
which as a result of such
-19-
<PAGE> 23
transaction owns Allwaste, Inc. through one or more subsidiaries) and
the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation in substantially the same
proportions as their ownership immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (2) no Person (excluding Allwaste, Inc., any employee benefit
plan(s) (or related trust(s)) of Allwaste, Inc. and/or its
subsidiaries or any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly,
30% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 30% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (3) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization,
merger or consolidation; or
(d) Approval by the stockholders of Allwaste, Inc. of (1)
a complete liquidation or dissolution of Allwaste, Inc. or (2) the
sale or other disposition of all or substantially all of the assets of
Allwaste, Inc., other than to a corporation, with respect to which
immediately following such sale or other disposition, (A) more than
60% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entitles who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (B) no Person (excluding Allwaste, Inc. and any employee
benefit plan (or related trust) of Allwaste, Inc. and/or its
subsidiaries or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or
indirectly, 30% or more of the Outstanding Company Stock or
Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common stock of such
corporation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors, and (C) at least a majority of the members
of the board of
-20-
<PAGE> 24
directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the
Board of Directors of Allwaste, Inc. providing for such sale or other
disposition of assets of Allwaste, Inc.
Notwithstanding the foregoing, the merger of Allwaste, Inc. with and
into Philip Environmental Inc. shall not constitute a Change of Control for
purposes of this Trust Agreement.
Allwaste, Inc., by its Chief Executive Officer and its Board, shall be
obligated to give the Trustee prompt notice in writing of the occurrence of a
Change in Control. In the event the Trustee receives such a notice or if at
any time a Member or a Beneficiary of a deceased Member alleges in writing to
the Trustee that a Change in Control has occurred, the Trustee shall within
thirty days independently determine whether a Change in Control has occurred
and, pending such determination, the Trustee shall assume that a Change in
Control has occurred for all purposes of this Trust Agreement and the Plan.
The Trustee shall have no duty or obligation to ascertain whether a Change in
Control has occurred unless it receives a written notice as described in either
of the preceding two sentences. In determining whether a Change in Control has
occurred, the Trustee may, in its sole discretion, make such additional
inquiries and/or take such additional measures as it deems necessary,
including, but not limited to, interviewing appropriate persons, requesting
affidavits, soliciting oral or written testimony under oath, or engaging such
independent third parties as the Trustee may deem necessary to assist in making
such determination. Notwithstanding the foregoing, if at any time Allwaste,
Inc. notifies the Trustee in writing that the Trustee should interpret this
Trust Agreement and the Plan as if a Change in Control had occurred, then for
all purposes of this Trust Agreement and the Plan, the Trustee shall so
interpret this Trust Agreement and the Plan. Once the notice described in the
preceding sentence is received by the Trustee, it may not be rescinded by
Allwaste, Inc.
12.4 SUCCESSORS AND ASSIGNS. This Trust Agreement may not be
assigned by either party without the prior written consent of the other, and
any purported assignment without such prior written consent shall be null and
void. This Trust Agreement shall be binding upon the successors and permitted
assigns of each party hereto.
12.5 CONTROLLING DOCUMENT. Should an inconsistency or conflict
exist between the specific terms of this Trust Agreement and those of the Plan,
then the relevant terms of this Trust Agreement shall govern and control.
-21-
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be executed as of the day and year first above written.
ALLWASTE, INC.
BY: /s/ JAMES E. RIEF
-----------------------------------------
NAME: James E. Rief
---------------------------------------
TITLE: Sr. V.P. Technology & Admin.
--------------------------------------
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, TRUSTEE
BY: /s/ MARY GRACE GREENWOOD
-----------------------------------------
NAME: MARY GRACE GREENWOOD
---------------------------------------
TITLE: Vice President
--------------------------------------
-22-
<PAGE> 26
SCHEDULE A
BENEFITS SCHEDULE
[TO BE ADDED]
-23-
<PAGE> 1
EXHIBIT 10.37
ALLWASTE, INC.
DEFERRED COMPENSATION PLAN
Effective Date: May 15, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
I. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(1) ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(2) AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(3) BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(4) CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(5) COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(6) COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(7) DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(8) DIRECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(9) DISABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(10) EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(11) ELIGIBLE INDIVIDUAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(12) ENTRY DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(13) FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(14) INSIDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(15) MEMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(16) PAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(17) PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(18) PLAN ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(19) PLAN YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(20) RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(21) STOCK FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(22) TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(23) TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(24) TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(25) TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(26) UNFORESEEABLE FINANCIAL EMERGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(27) VALUATION DATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 NUMBER AND GENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
II. PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
III. ACCOUNT CREDITS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 ALLOCATION OF NET INCOME OR NET LOSS EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
IV. DEEMED INVESTMENT OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
V. VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
VI. WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 UNFORESEEABLE FINANCIAL EMERGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 ELECTIVE WITHDRAWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
VII. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 AMOUNT OF BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 TIME OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 ALTERNATIVE FORMS OF BENEFIT PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 DESIGNATION OF BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 CHANGE IN PAY-OUT OF CERTAIN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 ACCELERATED PAY-OUT DUE TO EMERGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 DEFERRED PAY-OUT DUE TO LOSS OF TAX DEDUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.9 UNCLAIMED BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
VIII. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.1 APPOINTMENT OF PLAN ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.2 RESIGNATION AND REMOVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.3 RECORDS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 SELF-INTEREST OF PLAN ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.5 COMPENSATION AND BONDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.6 PLAN ADMINISTRATOR POWERS AND DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.7 COMPANY TO SUPPLY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.8 CLAIMS REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.9 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
IX. ADMINISTRATION OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.1 PAYMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 TRUST FUND PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
X. NATURE OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
XI. ADOPTING ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
XII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.1NOT CONTRACT OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
12.2 ALIENATION OF INTEREST FORBIDDEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.3 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.4 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.5 AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.6 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.7 GOVERNING LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
(iii)
<PAGE> 5
ALLWASTE, INC.
DEFERRED COMPENSATION PLAN
W I T N E S S E T H :
WHEREAS, ALLWASTE, INC. and other adopting entities desire to adopt
the ALLWASTE, INC. DEFERRED COMPENSATION PLAN (the "PLAN") for the benefit of
certain eligible individuals; and
NOW THEREFORE, the Plan is hereby adopted as follows, effective as of
May 15, 1997:
I.
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. Where the following words and phrases appear in
the Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) ACCOUNT: An individual account for each Member to which is credited
the Deferrals made on his behalf pursuant to Section 3.1 and which is
credited or debited for such account's allocation of net income (or
net loss) equivalents as provided in Section 3.2.
(2) AFFILIATE: Each corporation or unincorporated entity, directly or
indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with Allwaste, Inc. For this
purpose, control shall be determined by a more than 50% ownership
standard.
(3) BOARD: The Board of Directors of Allwaste, Inc.
(4) CODE: The Internal Revenue Code of 1986, as amended.
(5) COMMITTEE: A committee of the Board that is composed solely of two or
more directors, none of whom (i) is an officer of Allwaste, Inc. or a
parent or subsidiary thereof or is otherwise employed by Allwaste,
Inc. or a parent or subsidiary thereof; (ii) receives compensation,
either directly or indirectly, from Allwaste, Inc. or a parent or
subsidiary thereof for services rendered as a consultant or in any
capacity other than as a director, except for an amount that does not
exceed the dollar amount for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K; (iii) possesses an interest
in any other transaction for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K; or (iv) is
-1-
<PAGE> 6
engaged in a business relationship for which disclosure would be
required pursuant to item 404(b) of Regulation S-K.
(6) COMPANY: Allwaste, Inc. and any other adopting entity which adopts
the Plan pursuant to the provisions of Article XI.
(7) DEFERRALS: Deferrals made by the Company on a Member's behalf
pursuant to Section 3.1.
(8) DIRECTOR: Any member of the Board of Directors of Allwaste, Inc.
and/or each corporation, directly or indirectly, through one or more
intermediaries, more than 50% controlled by Allwaste, Inc.
(9) DISABILITY: The total and permanent disability of a Member, as
determined in the sole discretion of the Plan Administrator, based on
a written medical opinion (unless waived by the Plan Administrator as
unnecessary), that such Member is permanently incapable of performing
his job for physical or mental reasons.
(10) EFFECTIVE DATE: May 15, 1997.
(11) ELIGIBLE INDIVIDUAL: Any individual (i) who is employed by the
Company and whose rate of base annual salary, as of his applicable
Deferral election date for a Plan Year, is at least $80,000, (ii) who
is a member of the Management Council of the Company, or (iii) who is
a Director. For all purposes herein, the "service" of an individual
as a Director shall be deemed to be equivalent to "employment" with
the Company. The $80,000 base annual salary threshold provided above
may be adjusted upward from time to time in the sole discretion of the
Plan Administrator. In the event an individual is disabled as of a
Deferral election date, his rate of base annual salary as of the
inception of such Disability shall be deemed to be his base annual
salary as of such Deferral election date.
(12) ENTRY DATE: The first day of each Plan Year and, with respect to an
Eligible Individual who becomes a Member on other than the first day
of a Plan Year, the date such Eligible Individual becomes a Member in
such Plan Year.
(13) FUNDS: The investment funds designated from time to time for the
deemed investment of Accounts pursuant to Article IV.
(14) INSIDER: An officer or director subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended.
(15) MEMBER: Each Eligible Individual who has met the eligibility
requirements for participation in the Plan and who has become a Member
pursuant to Article II.
-2-
<PAGE> 7
(16) PAY: The total of all amounts paid by the Company to or for the
benefit of a Member for services rendered or labor performed, which
are required to be reported on such Member's federal income tax
withholding statement(s) (Form W-2, 1099, or their subsequent
equivalents), excluding taxable income resulting from the exercise of
nonqualified stock options, the imputed value of group term life
insurance, relocation reimbursements and from non-cash executive
perquisites, deductions for supplemental life and medical coverages or
other similar payroll deductions, plus any amounts such Member could
have received in cash in lieu of Deferrals pursuant to Section 3.1.
(17) PLAN: The Allwaste, Inc. Deferred Compensation Plan, as amended from
time to time.
(18) PLAN ADMINISTRATOR: The Plan administrator appointed by the Chief
Executive Officer of Allwaste, Inc. pursuant to Section 8.1.
(19) PLAN YEAR: The short period commencing on the Effective Date and
ending on August 31, 1997, and thereafter, the twelve-consecutive
month period commencing September 1 of each year, which Plan Year may
be amended from time to time in the discretion of the Board so that
the Plan Year coincides with the fiscal year in effect for the
Company.
(20) RETIREMENT: As to a Member who is not a Director, termination of
employment with the Company and its Affiliates after attainment of age
fifty-five. As to a Member who is a Director, termination of
employment with the Company following the date which is at least five
years after the first day of the Plan Year in which he commenced
participation in the Plan.
(21) STOCK FUND: The Allwaste, Inc. Common Stock Fund.
(22) TRUST: The trust, if any, established under the Trust Agreement.
(23) TRUST AGREEMENT: The agreement, if any, entered into between the
Company and the Trustee pursuant to Article X.
(24) TRUST FUND: The funds and properties, if any, held pursuant to the
provisions of the Trust Agreement, together with all income, profits
and increments thereto.
(25) TRUSTEE: The trustee appointed by the Board who is qualified and
acting under the Trust Agreement at any time.
(26) UNFORESEEABLE FINANCIAL EMERGENCY: An unexpected need of a Member for
cash that (i) arises from an illness, casualty loss, sudden financial
reversal, or such other unforeseeable occurrence that is caused by an
event beyond the control of such Member, (ii) would result in severe
financial hardship to such Member if his Deferral election was not
reduced or cancelled pursuant to Section 3.1(g) and/or if a withdrawal
or benefit payment pursuant to
-3-
<PAGE> 8
Article VI or Section 7.6 was not permitted, and (iii) is not
reasonably satisfiable from other resources of such Member. Cash
needs arising from foreseeable events, such as the purchase of a house
or education expenses for children, shall not be considered to be the
result of an Unforeseeable Financial Emergency.
(27) VALUATION DATES: Each Entry Date and any other interim Valuation Date
designated by the Plan Administrator on a nondiscriminatory basis.
Notwithstanding the foregoing, an interim Valuation Date shall be
designated as the date next preceding the date a withdrawal or payment
of a Member's benefit is to be made or to commence pursuant to Article
VI or Article VII.
1.2 NUMBER AND GENDER. Wherever appropriate herein, words used in
the singular shall be considered to include the plural and words used in the
plural shall be considered to include the singular. The masculine gender,
where appearing in the Plan, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.
II.
PARTICIPATION
2.1 ELIGIBILITY. Any Eligible Individual shall be eligible to
become a Member of the Plan for any Plan Year by electing to make Deferrals
pursuant to Section 3.1.
2.2 PARTICIPATION.
(a) Prior to each Entry Date, the Plan Administrator
shall notify those Eligible Individuals who are determined by the Plan
Administrator to be eligible to initially become Members pursuant to Section
2.1 as of such Entry Date. Any such Eligible Individual may become a Member
for the Plan Year beginning on such Entry Date by effecting, prior to such
Entry Date and within the time period prescribed by the Plan Administrator, the
Deferral election prescribed by the Plan Administrator. Notwithstanding any
provision herein to the contrary, an Eligible Individual who first becomes an
Eligible Individual on other than the first day of a Plan Year may become a
Member on the first day of the calendar month coinciding with or next following
the date he first becomes an Eligible Individual for the remainder of such Plan
Year with respect to Deferrals pursuant to Section 3.1 by effecting, prior to
or within 30 days after the date he first becomes an Eligible Individual and
within the time period prescribed by the Plan Administrator, the Deferral
election prescribed by the Plan Administrator.
(b) Notwithstanding any provision herein to the contrary,
if an Eligible Individual becomes a Member of the Plan and has a reduction in
base annual salary below the applicable base annual salary threshold as of a
Deferral election date for a Plan Year, such Eligible Individual shall
-4-
<PAGE> 9
not be entitled to make Deferrals hereunder for such Plan Year. Any such
Eligible Individual may again become entitled to make Deferrals hereunder for
any subsequent Plan Year if, as of the Deferral election date for such Plan
Year, such Eligible Individual meets the applicable base annual salary
threshold.
(c) Notwithstanding any provision herein to the contrary,
an Eligible Individual who has become a Member of the Plan shall cease to be
entitled to make Deferrals hereunder effective as of any date designated by the
Plan Administrator. Any such Plan Administrator action shall be communicated
to the affected individual prior to the effective date of such action. Any
such Eligible Individual may again become entitled to make Deferrals hereunder
for any subsequent Plan Year selected by the Plan Administrator in its sole
discretion.
III.
ACCOUNT CREDITS AND ALLOCATIONS
3.1 DEFERRALS.
(a) A Member may:
(1) Elect to defer from his Pay a fixed amount
or an integral percentage of from 1% to 100% of his base annual salary
(or of his cash fees in the case of a Director) for a Plan Year;
and/or
(2) (A) Elect to defer from his Pay a fixed
amount or an integral percentage of from 1% to 100% of his commissions
and annual incentive bonus (or of his cash retainers in the case of a
Director) for a Plan Year; and/or
(B) Elect to defer from his Pay a fixed
amount or an integral percentage of from 1% to 100% of his retention
bonus for a Plan Year; and/or
(C) Elect to defer from his Pay a fixed
amount or an integral percentage of from 1% to 100% of his special
severance pay for a Plan Year.
Notwithstanding the foregoing, no Member may elect to defer less than $2,000 of
his Pay for any Plan Year (with such amounts prorated for any Plan Year of less
than twelve months with respect to any Member). Further, with respect to an
Eligible Individual who first becomes a Member on other than the first day of a
Plan Year, any such Deferrals pursuant to Section 3.1(a)(1) shall apply only
for the portion of such Plan Year commencing with the date he first becomes a
Member and ending on the last day of such Plan Year.
(b) Pay for a Plan Year not so deferred by such election
pursuant to this Section shall be received by such Member in cash. A Member's
election to defer an amount of his Pay pursuant to this Section shall be made
by effecting, in the form prescribed by the Plan Administrator, a Deferral
election pursuant to which the Member authorizes the Company to reduce his Pay
in the
-5-
<PAGE> 10
elected amount and the Company, in consideration thereof, agrees to credit an
equal amount to such Member's Account maintained under the Plan. The reduction
in a Member's Pay pursuant to Section 3.1(a)(1) shall be effected by equal Pay
reductions each pay period during the applicable portion of the Plan Year as
determined by the Plan Administrator following the effective date of such
election. The reduction in a Member's Pay pursuant to Section 3.1(a)(2) shall
be effected by a Pay reduction at the time such commissions, annual incentive
bonus, retention bonus or special severance pay (or cash retainer) is paid.
Such Pay reductions shall be within the Plan Year to which the Deferral
election relates, except that Pay reductions attributable to elections pursuant
to Section 3.1(a)(2) may be made within the next following Plan Year if the
commissions and/or annual incentive bonus (or cash retainer) to which the
Deferral election relates is paid in such next following Plan Year. Deferrals
made by a Member shall be credited to such Member's Account as of the date
deferred.
(c) Notwithstanding the foregoing, a Deferral election of
a Member pursuant to Section 3.1(a)(1) for a Plan Year shall be automatically
suspended during such Member's unpaid leave of absence, period of coverage
under the Company's short-term disability program or period of Disability and
upon termination of such Member's employment with the Company and its
Affiliates. A Deferral election of a Member pursuant to Section 3.1(a) may,
with the consent of the Plan Administrator, be suspended for the remainder of
the Plan Year in which such Member has an unpaid leave of absence, period of
coverage under the Company's short-term disability program or period of
Disability. Any such Member may again become entitled to make Deferrals
hereunder for any subsequent Plan Year following return to full-time
employment.
(d) A Deferral election shall indicate the applicable
time and form of payment, as provided in Sections 7.2 and 7.3, for the Pay
deferred thereunder for such Plan Year and the net income (or net loss)
equivalents allocated with respect thereto. A Member may make different time
and form of payment elections with respect to base annual salary (or cash fee)
Deferrals, commissions and annual incentive bonus (or cash retainer) Deferrals,
retention bonus Deferrals and special severance pay Deferrals for any Plan
Year. Each Member's Account shall be divided into subaccounts to reflect such
Member's various elections respecting time and form of payment.
(e) A Deferral election pursuant to Section 3.1(a) shall
become effective as of the Entry Date which is on or after the date the
election is effected by the Member. A Deferral election shall only remain in
force and effect for the entire (or partial, if applicable) Plan Year to which
such election relates.
(f) A Member who has made a Deferral election pursuant to
Section 3.1(a) for any Plan Year shall make a new Deferral election, which may
be a change in or cancellation of his prior Deferral election, as of the Entry
Date of each subsequent Plan Year, by effecting such new Deferral election
prior to such Entry Date and within the time period prescribed by the Plan
Administrator.
(g) In the event that the Plan Administrator, upon
written petition of a Member, determines in its sole discretion that such
Member has suffered an Unforeseeable Financial Emergency, the Deferral election
of such Member then in effect, if any, shall be reduced or terminated as soon
as administratively practicable after such determination. A Member whose
-6-
<PAGE> 11
Deferral election has been so reduced or terminated may again make a new
Deferral election for a subsequent Plan Year that begins after the effective
date of such termination, if he satisfies the eligibility requirements set
forth in Section 2.1, by effecting a new Deferral election for such Plan Year
and within the time period prescribed by the Plan Administrator.
3.2 ALLOCATION OF NET INCOME OR NET LOSS EQUIVALENTS.
(a) As of each Valuation Date, the Plan Administrator
shall determine the net income (or net loss) equivalents of each Fund for the
period elapsed since the next preceding Valuation Date. The net income (or net
loss) equivalent of each Fund since the next preceding Valuation Date shall be
ascertained by the Plan Administrator based upon changes in asset value in such
manner as it deems appropriate, which may include expenses of operating the
Fund.
(b) For purposes of allocations of net income (or net
loss) equivalents, each Member's Accounts shall be divided into subaccounts to
reflect such Member's deemed investment in a particular Fund or Funds pursuant
to Article IV. As of each Valuation Date, the net income (or net loss)
equivalent of each Fund, separately and respectively, shall be allocated among
the corresponding subaccounts of the Members who were deemed to have had such
corresponding subaccounts invested in such Funds since the next preceding
Valuation Date.
(c) So long as there is any balance in any Account, such
Account shall continue to receive allocations pursuant to this Section.
IV.
DEEMED INVESTMENT OF FUNDS
Each Member shall designate, in accordance with the procedures
established from time to time by the Plan Administrator, the manner in which
the amounts allocated to his Account shall be deemed to be invested from among
the Funds made available from time to time for such purpose by the Plan
Administrator. Such Funds may include the Stock Fund. Such Member may
designate one of such Funds for the deemed investment of all the amounts
allocated to his Account or he may split the deemed investment of the amounts
allocated to his Account among such Funds in whole percentage increments. If a
Member fails to make a proper designation, then his Account shall be deemed to
be invested in the Fund or Funds designated by the Plan Administrator from time
to time in a uniform and nondiscriminatory manner. Any such initial
designation by an Insider affecting the Stock Fund shall be approved in advance
of the effective date of such initial designation by either the Board or the
Committee.
A Member may change his deemed investment designation for future
amounts to be allocated to his Account. Any such change shall be made as of
the first day of any calendar quarter in accordance with the procedures
established by the Plan Administrator, and the frequency of such changes may be
limited by the Plan Administrator. Any such change in designation by an
Insider affecting the Stock Fund shall be approved in advance of the effective
date of such change of designation by either the Board or the Committee.
-7-
<PAGE> 12
A Member may elect to convert his deemed investment designation with
respect to the amounts already allocated to his Account. Any such conversion
shall be made as of the first day of any calendar quarter in accordance with
the procedures established by the Plan Administrator, and the frequency of such
conversions may be limited by the Plan Administrator. No election of a
conversion designation by an Insider which has the effect of increasing the
total amount allocated to the Stock Fund may be made on a date which is less
than six months following (i) the date of any prior election of a conversion
designation by such Insider which had the effect of decreasing the total amount
allocated to the Stock Fund or (ii) the date of any election by such Insider
with respect to any other plan of Allwaste, Inc. or any subsidiary thereof
which had the effect (directly or indirectly) of making a disposition on behalf
of such Insider of the same class of equity security as that which is the
subject of such Stock Fund. No election of a conversion designation by an
Insider which has the effect of decreasing the total amount allocated to the
Stock Fund may be made on a date which is less than six months following (i)
the date of any prior election of a conversion designation by such Insider
which had the effect of increasing the total amount allocated to the Stock Fund
or (ii) the date of any election by such Insider with respect to any other plan
of Allwaste, Inc. or any subsidiary thereof which had the effect (directly or
indirectly) of making an acquisition on behalf of the Insider of the same class
of equity security as that which is the subject of such Stock Fund.
The restrictions contained herein regarding investment designations,
changes, and/or conversions by Insiders respecting the Stock Fund are intended
to comply with, and enable Insiders to rely upon, the exemption provided by
Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Any future
amendment to Rule 16b-3 or any successor rule promulgated by the Securities and
Exchange Commission affecting the investment by Insiders in the Stock Fund
shall be incorporated by reference herein and be deemed to be an amendment to
the Plan in order that Insiders shall continue to be entitled to rely upon the
exemption provided by such rule without any interruption. Notwithstanding the
foregoing, the Plan Administrator may alter the designation, change and/or
conversion restrictions applicable to an Insider, as set forth in this Article
IV, as a result of changes in Rule 16b-3 under the Securities Exchange Act of
1934, as amended.
V.
VESTING
A Member shall be 100% vested in his Account at all times.
VI.
WITHDRAWALS
6.1 IN GENERAL. Except as provided in this Article VI and in
Article VII, Members shall not be permitted to make withdrawals from the Plan.
Members shall not, at any time, be permitted to borrow from the Plan.
-8-
<PAGE> 13
6.2 UNFORESEEABLE FINANCIAL EMERGENCY. In the event that the Plan
Administrator, upon written petition of a Member, determines in its sole
discretion that such Member has suffered an Unforeseeable Financial Emergency
that would not be remedied fully by the reduction or termination of the
Deferral pursuant to Section 3.1(g), such Member shall be entitled to a
benefit, determined as of any Valuation Date, in an amount not to exceed the
lesser of (1) the amount determined by the Plan Administrator as necessary to
meet such Member's needs created by the Unforeseeable Financial Emergency or
(2) the then value of such Member's Account. Such withdrawal benefit shall be
paid in a single lump sum, cash payment as soon as administratively practicable
after the Plan Administrator has made its determinations with respect to the
availability and amount of such benefit. If a Member's Account contains more
than one distribution subaccount, such withdrawal benefit shall be considered
to have been distributed, first, from the subaccount with respect to which the
earliest distribution would be made, then, from the subaccount with respect to
which the next earliest distribution would be made, and continuing in such
manner until all of such subaccounts necessary to satisfy the withdrawal
benefit have been exhausted. Moreover, within the applicable Account or
subaccount, such withdrawal benefit shall be considered to have been
distributed from Deferrals (including net income (or net loss) and additional
interest equivalents attributable thereto) on a first-in, first-out basis.
6.3 ELECTIVE WITHDRAWAL.
(a) A Member may elect at any time, by effecting the
election procedure prescribed by the Plan Administrator, to withdraw as a
benefit all, but not less than all, of his Account as of any Valuation Date,
subject to a withdrawal penalty of 10% of such Account as of such Valuation
Date. Upon any such withdrawal, the withdrawal penalty shall be forfeited to
the Company. Upon any such withdrawal, such Member's participation in the Plan
shall terminate and no further Deferrals shall be made under the Plan on behalf
of such Member.
(b) No election of a withdrawal of an amount allocated to
the Stock Fund may be made by an Insider on a date which is less than six
months following (i) the date of any prior election to convert such Insider's
deemed investment designation which had the effect of increasing the total
amount allocated to the Stock Fund or (ii) the date of any election by such
Insider with respect to any other plan of Allwaste, Inc. or any subsidiary
thereof which had the effect (directly or indirectly) of making an acquisition
on behalf of such Insider of the same class of equity security as that which is
the subject of such Stock Fund.
VII.
DISTRIBUTIONS
7.1 AMOUNT OF BENEFIT. A Member or, in the event of the death of
the Member, the Member's designated beneficiary, shall be entitled to a benefit
equal in value to the Member's Account as of the Valuation Date next preceding
the date the payment of such benefit is to be made or to commence pursuant to
Section 7.2 (plus any commissions and annual incentive bonus (or cash
retainer), retention bonus and/or special severance pay Deferral not previously
allocated to such Account).
-9-
<PAGE> 14
7.2 TIME OF PAYMENT. Payment of a Member's benefit under Section
7.1 shall be made or commence, with respect to such Member's Account, or with
respect to such Member's subaccounts established pursuant to Section 3.1(e)
separately and respectively, as soon as administratively practicable as of the
date irrevocably elected by such Member pursuant to Section 3.1(e). A Member
may, pursuant to Section 3.1(e), elect distribution with respect to all or a
part of his Deferrals for any Plan Year to be made as of an Entry Date which is
at least three years following the beginning of such Plan Year (but no more
than two such interim distribution dates may be elected with respect to
Deferrals for any Plan Year) or to be made or commenced after the first day of
the month following his Retirement. Notwithstanding the foregoing, payment of
a Member's benefit under Section 7.1 shall be made or commence as soon as
administratively practicable after the date the Member terminates his
employment with the Company and its Affiliates for any reason, including
Retirement, Disability or death. For this purpose, a Member on Disability for
a period of two years shall be deemed to have terminated his employment with
the Company and its Affiliates as of the end of such two-year period.
7.3 ALTERNATIVE FORMS OF BENEFIT PAYMENTS. A Member's benefit
under Section 7.1 payable prior to termination of employment with the Company
and its Affiliates shall be paid, with respect to such Member's Account, or
with respect to such Member's subaccounts established pursuant to Section
3.1(e) separately and respectively, in one lump sum payment. A Member's
benefit under Section 7.1 payable after termination of employment with the
Company and its Affiliates prior to a Member's Retirement shall be paid in one
lump sum payment. A Member's benefit under Section 7.1 payable after a
Member's Retirement (inclusive of termination due to Disability) shall be paid
in one of the following forms irrevocably elected by such Member pursuant to
Section 3.1(e):
(1) One lump sum payment; or
(2) Monthly, quarterly, or annual installment payments
for a term certain of either 5 or 10 years, payable to the Member or,
in the event of such Member's death prior to the end of such term
certain, to his designated beneficiary as provided in Section 7.4;
provided, that such beneficiary's share of the remaining installments
shall be paid in one lump sum.
With respect to any portion of a Member's Retirement benefit for which
no form of payment election is in effect, such amount shall be paid in
the 10-year annual installment payment form; provided, however, that
the Plan Administrator may, in its sole discretion, elect to make such
benefit payment in any other available form. If a Member dies prior
to the date the payment of his lump sum benefit is made, then such
lump sum benefit shall be made to the Member's designated beneficiary
or beneficiaries as provided in Section 7.4. Plan provisions to the
contrary notwithstanding, if payments are to be made in installments,
"installment valuation dates" shall be established as of each payment
date. As of each such "installment valuation date," net income (or
net loss) equivalents shall be allocated to the Member's Account. The
installment payment to be made on behalf of a Member as of each such
"installment valuation date" shall be determined by multiplying the
balance of such Member's Account as of such "installment valuation
date" (after allocation of net income (or net loss) equivalents) by a
fraction, the numerator of which is one and the denominator of which
is the number of installments remaining in the installment period.
-10-
<PAGE> 15
7.4 DESIGNATION OF BENEFICIARIES.
(a) Each Member shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the event of
his death. Each such designation shall be made by executing the beneficiary
designation form prescribed by the Plan Administrator and filing same with the
Plan Administrator. Any such designation may be changed at any time by
execution of a new designation in accordance with this Section.
(b) If no such designation is on file with the Plan
Administrator at the time of the death of the Member or such designation is not
effective for any reason as determined by the Plan Administrator, then the
designated beneficiary or beneficiaries to receive such benefit shall be as
follows:
(1) If a Member leaves a surviving spouse, his
benefit shall be paid to such surviving spouse;
(2) If a Member leaves no surviving spouse, his
benefit shall be paid to such Member's executor or administrator, or
to his heirs at law if there is no administration of such Member's
estate.
7.5 CHANGE IN PAY-OUT OF CERTAIN BENEFITS.
(a) Notwithstanding any provision in Section 7.3 to the
contrary, if a Member's Retirement benefit payments are to be paid in
installments and the aggregate amount to be paid with respect to such Member in
any particular Plan Year is less than $12,000 calculated at the beginning of
the Plan Year without adjustment for income (or loss) in the Plan Year, then
the Plan Administrator in its sole discretion may cause the installment
payments for such Plan Year with respect to such Member to be paid in one lump
sum payment.
(b) Notwithstanding any provision in Section 7.3 to the
contrary, if a Member's Retirement benefit payments respecting any one
subaccount established pursuant to Section 3.1(e) are to be paid in
installments and the aggregate amount remaining to be paid with respect to such
subaccount is less than $50,000 calculated at the beginning of the Plan Year
without adjustment for income (or loss) in the Plan Year, then the Plan
Administrator in its sole discretion may cause the remaining benefit payments
with respect to such subaccount to be paid in one lump sum payment.
7.6 ACCELERATED PAY-OUT DUE TO EMERGENCY. Notwithstanding any
provision in Sections 7.2 and 7.3 to the contrary, in the event that the Plan
Administrator, upon written petition of a Member, determines in its sole
discretion that such Member has suffered an Unforeseeable Financial Emergency,
such Member shall be entitled to an accelerated payout of his benefit pursuant
to Section 6.2. Any remaining amounts in such Member's Account following
payment of such emergency benefit shall be payable at the time(s) and in the
form(s) otherwise provided in Sections 7.2 and 7.3.
-11-
<PAGE> 16
7.7 DEFERRED PAY-OUT DUE TO LOSS OF TAX DEDUCTION. If the Company
determines in good faith that there is a reasonable likelihood that any
benefits paid to a Member pursuant to this Article VII would not be deductible
by the Company under applicable income tax provisions then in effect, then to
the extent deemed necessary by the Company to ensure that the entire amount of
any such distribution to a Member is deductible, the Company may defer payment
of all or any portion of such benefits. Any amount deferred pursuant to this
Section 7.7 shall continue to receive net income (or net loss) equivalents
pursuant to the Plan until distribution. The amounts so deferred shall be
distributed to the Member (or his beneficiary in the event of the Member's
death) at the earliest possible date, as determined by the Company in good
faith, as of which such deductibility will be ensured.
7.8 PAYMENT OF BENEFITS. To the extent the Trust Fund has
sufficient assets, the Trustee shall pay benefits to Members or their
beneficiaries, except to the extent the Company pays the benefits directly and
provides adequate evidence of such payment to the Trustee. To the extent the
Trustee does not or cannot pay benefits out of the Trust Fund, the benefits
shall be paid by the Company. Any benefit payments made to a Member or for his
benefit pursuant to any provision of the Plan shall be debited to such Member's
Account. All benefit payments shall be made in cash to the fullest extent
practicable.
7.9 UNCLAIMED BENEFITS. In the case of a benefit payable on
behalf of a Member, if, after exercising reasonable diligence, the Plan
Administrator is unable to locate the Member or beneficiary to whom such
benefit is payable, upon the Plan Administrator's determination thereof, such
benefit shall be forfeited to the Company. Notwithstanding the foregoing, if
subsequent to any such forfeiture the Member or beneficiary to whom such
benefit is payable makes a valid claim for such benefit, such forfeited benefit
shall be restored to the Plan by the Company.
VIII.
ADMINISTRATION OF THE PLAN
8.1 APPOINTMENT OF PLAN ADMINISTRATOR. The general administration
of the Plan shall be vested in the Plan Administrator (which may be an
individual or a committee of two or more persons) which shall be appointed by
the Chief Executive Officer of Allwaste, Inc.
8.2 RESIGNATION AND REMOVAL. At any time during his term of
office, the individuals comprising the Plan Administrator may resign by giving
written notice to the Board, such resignation to become effective upon the
appointment of a substitute or, if earlier, the lapse of thirty days after such
notice is given as herein provided. At any time during its term of office, and
for any reason, the individuals comprising the Plan Administrator may be
removed by the Board.
8.3 RECORDS AND PROCEDURES. The Plan Administrator shall keep
appropriate records of its proceedings and the administration of the Plan and
shall make available for examination during business hours to any Member or
beneficiary such records as pertain to that individual's interest in the Plan.
The Plan Administrator shall provide an annual statement to each Member or
beneficiary
-12-
<PAGE> 17
of his interest in the Plan. The Plan Administrator shall designate the person
or persons who shall be authorized to sign for the Plan Administrator and, upon
such designation, the signature of such person or persons shall bind the Plan
Administrator.
8.4 SELF-INTEREST OF PLAN ADMINISTRATOR. No individual comprising
the Plan Administrator shall have any right to vote or decide upon any matter
relating solely to himself under the Plan or to vote in any case in which his
individual right to claim any benefit under the Plan is particularly involved.
In any case in which an individual comprising the Plan Administrator is so
disqualified to act, the remaining individuals comprising the Plan
Administrator or, if none, the Board shall decide the matter in which he is
disqualified.
8.5 COMPENSATION AND BONDING. The Plan Administrator shall not
receive compensation with respect to its services as Plan Administrator. To
the extent required by applicable law, or required by the Company, the Plan
Administrator shall furnish bond or security for the performance of its duties
hereunder.
8.6 PLAN ADMINISTRATOR POWERS AND DUTIES. The Plan Administrator
shall supervise the administration and enforcement of the Plan according to the
terms and provisions hereof and shall have all powers necessary to accomplish
these purposes, including, but not by way of limitation, the right, power,
authority and duty:
(a) to make rules, regulations and bylaws for the
administration of the Plan which are not inconsistent with the terms
and provisions hereof, provided such rules, regulations and bylaws are
evidenced in writing and copies thereof are delivered to the Trustee
and to the Company;
(b) to construe all terms, provisions, conditions and
limitations of the Plan;
(c) to correct any defect or supply any omission or
reconcile any inconsistency that may appear in the Plan, in such
manner and to such extent as it shall deem expedient to carry the Plan
into effect for the greatest benefit of all interested parties;
(d) to employ and compensate such accountants, attorneys,
investment advisors and other agents and employees as the Plan
Administrator may deem necessary or advisable in the proper and
efficient administration of the Plan;
(e) to determine all questions relating to eligibility;
(f) to determine the amount, manner and time of payment
of any benefits and to prescribe procedures to be followed by Members
and their beneficiaries in obtaining benefits;
(g) to make a determination as to the right of any person
to a benefit under the Plan; and
-13-
<PAGE> 18
(h) to receive and review reports from the Trustee as to
the financial condition of the Trust Fund, including its receipts and
disbursements.
8.7 COMPANY TO SUPPLY INFORMATION. The Company shall supply full
and timely information to the Plan Administrator relating to the Pay of all
Members, their ages, their Retirement, Disability, death or other termination
of employment and such other pertinent facts as the Plan Administrator may
require. The Company shall advise the Trustee of such of the foregoing facts
as are deemed necessary for the Trustee to carry out the Trustee's duties under
the Plan. When making a determination in connection with the Plan, the Plan
Administrator shall be entitled to rely upon the aforesaid information
furnished by the Company.
8.8 CLAIMS REVIEW. In any case in which a claim for Plan benefits
of a Member or beneficiary is denied or modified, the Plan Administrator shall
furnish written notice to the claimant within ninety days (or within 180 days
if additional information requested by the Plan Administrator necessitates an
extension of the ninety-day period), which notice shall:
(a) State the specific reason or reasons for the denial
or modification;
(b) Provide specific reference to pertinent Plan
provisions on which the denial or modification is based;
(c) Provide a description of any additional material or
information necessary for the Member, his beneficiary, or
representative to perfect the claim and an explanation of why such
material or information is necessary; and
(d) Explain the Plan's claim review procedure as
contained herein.
In the event a claim for Plan benefits is denied or modified, if the Member,
his beneficiary, or a representative of such Member or beneficiary desires to
have such denial or modification reviewed, he must, within sixty days following
receipt of the notice of such denial or modification, submit a written request
for review by the Plan Administrator of its initial decision. In connection
with such request, the Member, his beneficiary, or the representative of such
Member or beneficiary may review any pertinent documents upon which such denial
or modification was based and may submit issues and comments in writing.
Within sixty days following such request for review the Plan Administrator
shall, after providing a full and fair review, render its final decision in
writing to the Member, his beneficiary or the representative of such Member or
beneficiary stating specific reasons for such decision and making specific
references to pertinent Plan provisions upon which the decision is based. If
special circumstances require an extension of such sixty-day period, the Plan
Administrator's decision shall be rendered as soon as possible, but not later
than 120 days after receipt of the request for review. If an extension of time
for review is required, written notice of the extension shall be furnished to
the Member, beneficiary, or the representative of such Member or beneficiary
prior to the commencement of the extension period.
8.9 INDEMNITY. To the extent permitted by applicable law, the
Company shall indemnify and save harmless the Board and any individual acting
as Plan Administrator against any and all
-14-
<PAGE> 19
expenses, liabilities and claims (including legal fees incurred to defend
against such liabilities and claims) arising out of their discharge in good
faith of responsibilities under or incident to the Plan. Expenses and
liabilities arising out of willful misconduct shall not be covered under this
indemnity. This indemnity shall not preclude such further indemnities as may
be available under insurance purchased by the Company or provided by the
Company under any bylaw, agreement, vote of stockholders or disinterested
Directors or otherwise, as such indemnities are permitted under applicable law.
IX.
ADMINISTRATION OF FUNDS
9.1 PAYMENT OF EXPENSES. All expenses incident to the
administration of the Plan and Trust, including but not limited to, legal,
accounting, Trustee fees, and expenses of the Plan Administrator, shall be paid
by the Company and, if not paid by the Company, shall be paid by the Trustee
from the Trust Fund, if any.
9.2 TRUST FUND PROPERTY. All income, profits, recoveries,
contributions, forfeitures and any and all moneys, securities and properties of
any kind at any time received or held by the Trustee, if any, shall be held as
a commingled Trust Fund pursuant to the terms of the Trust Agreement. The Plan
Administrator shall maintain an Account in the name of each Member, but the
maintenance of an Account designated as the Account of a Member shall not mean
that such Member shall have a greater or lesser interest than that due him by
operation of the Plan and shall not be considered as segregating any funds or
property from any other funds or property contained in the commingled fund. No
Member shall have any title to any specific asset in the Trust Fund, if any.
X.
NATURE OF THE PLAN
The Company intends and desires by the adoption of the Plan to
recognize the value to the Company of the past and present services of
individuals covered by the Plan and to encourage and assure their continued
service with the Company by making more adequate provision for their future
retirement security. The Plan is intended to constitute an unfunded, unsecured
plan of deferred compensation for a select group of management or highly
compensated employees of the Company and for Directors. Plan benefits herein
provided are a contractual obligation of the Company which may be paid out of
the Company's general assets or out of the Trust Fund. Subject to the terms
hereof and of the Trust Agreement, the Company may transfer money or other
property to the Trustee, and the Trustee shall pay Plan benefits to Members and
their beneficiaries out of the Trust Fund in accordance with the terms of the
Trust Agreement.
The Board, in its sole discretion, may establish the Trust and direct
the Company to enter into the Trust Agreement. In such event, the Company
shall remain the owner of all assets in the Trust Fund and the assets shall be
subject to the claims of Company creditors if the Company ever
-15-
<PAGE> 20
becomes insolvent. For purposes hereof, the Company shall be considered
"insolvent" if (a) the Company is unable to pay its debts as they become due,
or (b) the Company is subject to a pending proceeding as a debtor under the
United Sates Bankruptcy Code (or any successor federal statute). The Chief
Executive Officer of the Company and its Board shall have the duty to inform
the Trustee in writing if the Company becomes insolvent. Such notice given
under the preceding sentence by any party shall satisfy all of the parties'
duty to give notice. When so informed, the Trustee shall suspend payments to
the Members and hold the assets for the benefit of the Company's general
creditors. If the Trustee receives a written allegation that the Company is
insolvent, the Trustee shall suspend payments to the Members and hold the Trust
Fund for the benefit of the Company's general creditors, and shall determine
within the period specified in the Trust Agreement whether the Company is
insolvent. If the Trustee determines that the Company is not insolvent, the
Trustee shall resume payments to the Members. No Member or beneficiary shall
have any preferred claim to, or any beneficial ownership interest in, any
assets of the Trust Fund.
XI.
ADOPTING ENTITIES
It is contemplated that other corporations, associations,
partnerships or proprietorships may adopt this Plan and thereby become the
Company. Any such entity, whether or not presently existing, may become a
party hereto by appropriate action of its officers without the need for
approval of its board of directors or noncorporate counterpart or of the Board;
provided, however, that such entity must be an Affiliate. The provisions of
the Plan shall apply separately and equally to each Company and its employees
in the same manner as is expressly provided for Allwaste, Inc. and its
employees, except that the power to appoint or otherwise affect the Plan
Administrator or the Trustee and the power to amend or terminate the Plan or
amend the Trust Agreement shall be exercised by the Board alone. Transfer of
employment among Companies and Affiliates shall not be considered a termination
of employment hereunder. Any Company may, by appropriate action of its
officers without the need for approval of its board of directors or
noncorporate counterpart or the Board, terminate its participation in the Plan.
Moreover, the Board may, in their discretion, terminate a Company's Plan
participation at any time.
XII.
MISCELLANEOUS
12.1 NOT CONTRACT OF EMPLOYMENT. The adoption and maintenance of
the Plan shall not be deemed to be a contract between the Company and any
person or to be consideration for the employment of any person. Nothing herein
contained shall be deemed to give any person the right to remain under contract
with the Company or to be retained in the employ of the Company or to restrict
the right of the Company to discharge any person at any time nor shall the Plan
be deemed to give the Company the right to require any person to remain under
contract with the Company or remain in the employ of the Company or to restrict
any person's right to terminate his services at any time.
-16-
<PAGE> 21
12.2 ALIENATION OF INTEREST FORBIDDEN. The interest of a Member or
his beneficiary or beneficiaries hereunder may not be sold, transferred,
assigned, or encumbered in any manner, either voluntarily or involuntarily, and
any attempt so to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be null and void; neither shall the benefits
hereunder be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person to whom such benefits or funds are payable,
nor shall they be an asset in bankruptcy or subject to garnishment, attachment
or other legal or equitable proceedings.
12.3 WITHHOLDING. All Deferrals and payments provided for
hereunder shall be subject to applicable withholding and other deductions as
shall be required of the Company under any applicable local, state or federal
law.
12.4 GUARANTY. Plan provisions to the contrary notwithstanding, in
the event any Affiliate that adopts the Plan pursuant to Article XI fails to
make payment of the benefits due under the Plan on behalf of its Members,
whether directly or through the Trust, Allwaste, Inc. shall be liable for and
shall make payment of such benefits due as a guarantor of such entity's
obligations hereunder. The guaranty obligations provided herein shall be
satisfied directly and not through the Trust.
12.5 AMENDMENT AND TERMINATION. The Board may from time to time,
in their discretion, amend, in whole or in part, any or all of the provisions
of the Plan; provided, however, that no amendment may be made that would impair
the rights of a Member with respect to amounts already allocated to his
Account. The Board may terminate the Plan at any time. In the event that the
Plan is terminated, the balance in a Member's Account shall be paid to such
Member or his designated beneficiary in the manner specified by the Plan
Administrator, which may include one lump sum payment in full satisfaction of
all of such Member's or beneficiary's benefits hereunder.
12.6 SEVERABILITY. If any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions hereof; instead, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.
12.7 GOVERNING LAWS. ALL PROVISIONS OF THE PLAN SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF TEXAS EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL
LAW.
EXECUTED this 28th day of April 1997.
ALLWASTE, INC.
By: /s/ JAMES E. RIEF
------------------------------------------
Name: James E. Rief
-------------------------------------
Title: Sr. V.P. Technology & Admin.
------------------------------------
-17-
<PAGE> 1
EXHIBIT 10.38
ALLWASTE, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The purpose of the Allwaste, Inc. Supplemental Executive Retirement
Plan is to provide specified benefits to a select group of management and
highly compensated employees who contribute materially to the continued growth,
development and future business success of Allwaste, Inc. and its subsidiaries.
It is the intention of Allwaste, Inc. that this Plan be administered as an
unfunded pension benefit plan established and maintained for a select group of
management or highly compensated employees. This Plan is effective as of
January 1, 1997 (the "Effective Date").
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. For purposes of this Plan, the following phrases
or terms shall have the indicated meanings unless otherwise clearly apparent
from the context:
(a) "Actuarial Equivalent" shall mean a benefit of
equivalent value to the normal form of the benefit payable under the
Plan. The Actuarial Equivalent shall be determined by using the
following mortality table and interest rate:
Interest: the prevailing interest rate on 30-year
Treasury securities for the month ended
immediately prior to the date of the Change
of Control;
Mortality: 1971 Group Annuity Mortality Table for Males
set back one year.
This provision may not be amended at any time prior to that
date which is two years following such Change of Control.
(b) "Beneficiary" shall mean the person designated by the
Participant, if any, pursuant to Section 3.2, to receive benefits in
the event of the Participant's death.
(c) "Board of Directors" shall mean the Board of
Directors of Allwaste, Inc., unless otherwise indicated or the context
otherwise requires.
(d) "Cause" shall mean (i) the Employee willfully and
continually fails to perform substantially the Employee's duties with
the Company (other than any such failure resulting from the Employee's
incapacity due to physical or mental illness), which failure continues
unabated after a demand for substantial performance is delivered to
the Employee by the Board that specifically identifies the manner in
which the Board believes that the
<PAGE> 2
Employee has not substantially performed the Employee's duties, or
(ii) the Employee willfully engages in gross misconduct that is
materially and demonstrably injurious to the Company. For purposes of
this Section 1.1(d), an act or failure to act on the Employee's part
shall be considered "willful" if done or omitted to be done by the
Employee otherwise than in good faith and without reasonable belief
that the Employee's action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Employee shall not be
deemed to have been terminated by the Company for Cause unless and
until the Company shall have delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board, at a meeting of
the Board called and held for the purpose (after reasonable notice to
the Employee and an opportunity for the Employee, together with the
Employee's counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Employee was guilty of
conduct set forth in clauses (i) or (ii) of the second sentence of
this Section 1.1(d) and specifying the particulars thereof in
reasonable detail.
(e) "Change in Control" shall be deemed to have occurred
on, and shall mean:
(1) The acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgate under the Exchange Act) of
30% or more of either (a) the then outstanding shares of
Common Stock of the Company (the "Outstanding Company Common
Stock") or (b) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a
conversion privilege), (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan(s) (or
related trust(s)) sponsored or maintained by the Company or
any corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions
described in clauses (a), (b) and (c) of paragraph (3) of this
Section 1.1(e) are satisfied; or
(2) Individuals who, as of the date hereof,
constitute the entire Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual
2
<PAGE> 3
becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either (a) an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act), or an actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board or (b) a plan or agreement to
replace a majority of the members of the Board then comprising
the Incumbent Board; or
(3) Approval by the stockholders of the Company
of a reorganization, merger or consolidation in each case
unless, immediately following such reorganization, merger or
consolidation, (a) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a
result of such transaction owns the Company through one or
more subsidiaries) and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their
ownership immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (b)
no Person (excluding the Company, any employee benefit plan(s)
(or related trust(s)) of the Company and/or its subsidiaries
or any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 30% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 30% or more
of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors, and (c) at least
a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time
of the
3
<PAGE> 4
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(4) Approval by the stockholders of the Company
of (a) a complete liquidation or dissolution of the Company or
(b) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation,
with respect to which immediately following such sale or other
disposition, (i) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding the Company and any employee benefit
plan (or related trust) of the Company and/or its subsidiaries
or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly
or indirectly, 30% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 30% or more
of, respectively, the then outstanding shares of common stock
or such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors, and (iii) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of
assets of the Company.
(f) "Committee" shall mean the Compensation Committee of
the Board of Directors, which shall manage and administer the Plan in
accordance with the provisions of Article XIII hereof.
(g) "Company" shall mean Allwaste, Inc., which shall act
through its Board of Directors unless otherwise indicated.
(h) "Compensation" shall mean the base salary received by
a Participant during a Plan Year plus the cash value of the bonus
awarded or credited to such Participant which relates to such Plan
Year (whether or not actually paid during such Plan Year) under the
Company's EVA Incentive Compensation Plan (or any substitute or
successor bonus plan if such plan is
4
<PAGE> 5
not then in existence). Notwithstanding anything in this Plan to the
contrary, "Compensation" shall include amounts contributed on behalf
of a Participant by the Employer by salary reduction to a plan
described in Section 125 or Section 401(k) of the Internal Revenue
Code.
(i) "Deferred Benefit" shall mean an annual benefit for
the life of the Participant beginning as of the Participant's Normal
Retirement Date, equal to sixty percent (60%) of a Participant's Final
Average Compensation, reduced by (1) the Participant's Primary Social
Security Benefit, (2) the Actuarial Equivalent of the Participant's
Matching Contribution Account under the Allwaste, Inc. 401(k) Plan as
of the date of the Participant's Normal Retirement, Total Disability,
or death, whichever is applicable, and (3) the stock value reduction,
if applicable, in accordance with Section 4.8 below. Provided,
however, R. L. Nelson's Deferred Benefit shall be determined in
accordance with Schedule A attached hereto.
(j) "Employee" shall mean any person who is in the
regular full-time employment of the Company or a Subsidiary, as
determined by the personnel rules and practices of the Company or the
Subsidiary; the term does not include persons who are retained by the
Company or a Subsidiary solely as consultants.
(k) "Employer" shall mean the Company and any Subsidiary
that duly adopts the Plan as provided in Article XIV hereof. Where
the context dictates, the term "Employer" as used herein refers to the
particular Employer of a particular Participant.
(l) "Final Average Compensation" shall mean the result
obtained by dividing the total Compensation paid to a Participant
during a considered period by the number of years in the considered
period. The considered period shall be the three (3) consecutive,
full Plan Years preceding termination of employment which produces the
highest average Compensation. In the event the Participant was
employed for fewer then three (3) continuous, full Plan Years, the
considered period shall be all years in which Compensation was paid.
Provided, however, that in the event a Participant's employment
terminates within eighteen (18) months after a Change in Control
occurs, "Final Average Compensation" shall mean the result obtained by
dividing the total Compensation determined as follows, by 3:
Compensation for the two (2) consecutive, full Plan Years which
produce the highest average Compensation, plus the Participant's full
annual salary for the Plan Year in which the Change in Control occurs,
plus the greater of (i) the full amount of the Participant's maximum
bonus potential under the EVA Incentive Compensation Plan (or any
predecessor, substitute or successor bonus plan) for the Plan Year in
which the
5
<PAGE> 6
Change in Control occurs or (ii) the average bonus under such plan
awarded to the Participant for the two (2) most recently completed
Plan Years.
(m) "Normal Retirement Date" shall be the later of (1)
the date of the Participant's sixtieth (60th) birthday or (2) the date
the Participant completes ten (10) Years of Service.
(n) "Participant" shall mean an Employee who is selected
to participate in the Plan in accordance with the provisions of
Article II.
(o) "Plan" shall mean the Allwaste, Inc. Supplemental
Executive Retirement Plan, as amended from time to time.
(p) "Plan Year" shall mean the Company's fiscal year,
which is currently September 1 to August 31.
(q) "Primary Social Security Benefit" shall mean the
estimated annual amount of benefits which a Participant would be
entitled to receive at his Normal Retirement Date as his "primary
insurance amount" determined as of the January 1 of the year in which
the Participant's Normal Retirement Date occurs, regardless of whether
the Participant applies for his Social Security benefits and
regardless of whether, by virtue of remaining in covered employment or
otherwise, he is ineligible therefor or receives reduced benefits.
If a Participant dies before his Normal Retirement Date, his
Primary Social Security Benefit shall be the annual "primary insurance
amount" that would be payable to the Participant upon the later of (i)
the earliest date on which such Participant could elect to begin
receiving benefits under the Social Security Act, or (ii) the actual
date of his death.
If the Participant terminates due to Total Disability prior to
his Normal Retirement Date, his Primary Social Security Benefit shall
be the annual benefit payable as if his Social Security disability
insurance benefit were to be approved at the same time as his Total
Disability. As used in this subsection, the term "primary insurance
amount" shall have the meaning ascribed to it in the Federal Social
Security Act as amended and in effect on the affected Participant's
date of death, Total Disability, or Normal Retirement, whichever is
appropriate.
(r) "Retirement" and "Retire" shall mean termination of
employment with the Employer at or after the Participant's Normal
Retirement Date.
(s) "Subsidiary" shall mean any business organization in
which Allwaste, Inc. directly or indirectly, owns an interest,
excluding ownership
6
<PAGE> 7
interests Allwaste, Inc. or its subsidiaries may hold in their
fiduciary capacities as trustee or otherwise.
(t) "Total Disability" or "Totally Disabled" shall mean a
physical or mental condition which is expected to be of long,
continued duration and which, in the judgment of the Committee,
totally and presumably permanently prevents the Participant from
engaging in any substantial gainful employment with the Employer at
substantially the same compensation the Participant was receiving
prior to the onset of the described physical or mental condition.
(u) "Vested Deferred Benefit" shall mean the portion a
Participant's Deferred Benefit that is not forfeitable pursuant to the
provisions of Article V and this Section. A Participant shall be
fully vested (1) upon attaining at least age sixty (60) and completing
ten (10) Years of Service, or (2) upon a Change in control as provided
in Section 5.2 hereof.
(v) "Years of Service" shall mean each complete twelve-
month period that a Participant is employed by the Employer, beginning
on the Participant's first day of employment and ending on the date of
the Participant's Retirement, death, Total Disability, or other
termination of employment with the Employer; a Participant's Years of
Service shall be determined by the Committee and shall include periods
of time for which the Participant receives credit under this Plan (for
which no services are actually performed) in accordance with another
plan, agreement, or arrangement with Company (including the
Participant's employment agreement or severance agreement), or
pursuant to exercise of the Committee's discretion to credit
additional service to a Participant.
1.2 "Construction" shall mean the masculine gender when used
herein and shall be deemed to include the feminine gender, and the singular may
include the plural unless the context clearly indicates to the contrary. The
words "hereof," "herein," "hereunder," and other similar compounds of the word
"here" shall mean and refer to the entire Plan and not to any particular
provision or section. Whenever the words "Article" or "Section" are used in
this Plan, or a cross-reference to an "Article" or "Section" is made, the
Article or Section referred to shall be an Article or Section of this Plan
unless otherwise specified.
End of Article I
7
<PAGE> 8
ARTICLE II
ELIGIBILITY AND PARTICIPATION
In order to be eligible to participate in this Plan, an Employee must
be selected by the Committee. The Committee, in its sole and absolute
discretion, shall determine eligibility for participation in accordance with
the purposes of the Plan. Upon being selected to participate in the Plan, the
Committee shall request the Employee to execute a waiver of any right to a
preferential treatment over the general creditors of the Company in the event
of the Company's insolvency.
The initial Participants in the Plan, their credited Years of Service,
and Vesting (if any) as of the effective date of the Plan are set forth on the
attached Schedule B.
End of Article II
8
<PAGE> 9
ARTICLE III
DEATH BENEFITS
3.1 PRE-RETIREMENT DEATH BENEFIT. If a Participant dies after he
has attained age fifty-one (51) and completed at least one Year of Service, but
before termination of his employment with the Company, the Actuarial Equivalent
of the Participant's Vested Deferred Benefit shall be paid to his Beneficiary
in the form of a fifty percent (50%) survivor annuity as if the Participant had
retired on the date immediately preceding his death. Payment of such Vested
Deferred Benefit shall commence effective the first day of the month following
the Participant's date of death. The Committee, in its discretion, may at any
time accelerate the payment of benefits to a Beneficiary and distribute a
single lump sum to the Beneficiary equal to the Actuarial Equivalent of the
Beneficiary's remaining survivor annuity payable in accordance with this
Section 3.1.
3.2 POST-TERMINATION DEATH BENEFIT. If a Participant dies after
termination of his employment with the Company, a death benefit shall be
payable to the Participant's Beneficiary only if (i) the form of benefit under
Section 4.2 provides for a survivor annuity, or (ii) the Participant terminated
employment after a Change in Control.
End of Article III
9
<PAGE> 10
ARTICLE IV
RETIREMENT BENEFIT
4.1 NORMAL RETIREMENT. Upon reaching his Normal Retirement Date,
a Participant shall be entitled to his Deferred Benefit and shall be fully
vested in such benefit. Unless a lump sum payment is made in accordance with
Section 4.5 below, such benefit shall be paid in monthly installments on the
first day of each month beginning with the first month following the
Participant's Retirement, subject to Section 4.7 below. A Participant's
Deferred Benefit shall be paid in the form provided in section 4.2 hereof.
4.2 FORM OF BENEFIT PAYMENT. A Participant shall receive his
Vested Deferred Benefit in the form of a single life annuity unless, prior to
the date such benefit is to begin under Section 4.1, Section 4.3, Section 4.7,
or Article VI, such Participant has properly elected (on a form provided by the
Committee) to be paid (i) in the form of a fifty percent (50%) joint and
survivor annuity which is the Actuarial Equivalent of a single life annuity for
the Participant that can be provided by the Participant's Vested Deferred
Benefit or (ii) in the form of a lump sum payment under Section 4.5 below. The
Committee, in its discretion, may at any time accelerate the payment of
benefits and distribute a single lump sum to the Participant or the
Participant's Beneficiary equal to the Actuarial Equivalent of the Vested
Deferred Benefit which has not been paid.
4.3 TERMINATION OF EMPLOYMENT BEFORE NORMAL RETIREMENT DATE. If a
Participant's employment terminates, for any reason other than death, before
his Normal Retirement Date and he has a Vested Deferred Benefit, such
Participant's benefit payments shall begin on the later to occur of (i) the
first day of the month after his sixtieth (60th) birthday or (ii) the first day
of the month following the month in which such termination occurs.
4.4 CHANGE IN CONTROL. If a Participant's employment terminates
for any reason after a Change in Control, such Participant shall be entitled to
special vesting of his Deferred Benefit in accordance with Section 5.2 below,
and his benefits shall commence payment in accordance with Section 4.3.
4.5 LUMP SUM SETTLEMENT.
(a) NORMAL RETIREMENT. A Participant who becomes
entitled to payment of his Vested Deferred Benefit due to Normal
Retirement may, upon thirty (30) days written notice to the Company,
receive a settlement of his Deferred Benefit in a single lump sum
payment.
10
<PAGE> 11
If the Participant elects to receive a lump sum payment upon
Normal Retirement, the amount he shall receive shall be equal to the
present value of the portion of his Vested Deferred Benefit which has
not been paid reduced by a penalty in the amount of 40% of such
present value. In all such cases, such present value shall be equal
to the Actuarial Equivalent of the Vested Deferred Benefit which has
not been paid.
(b) PAYMENT. The Company shall make any lump sum
payment required under this Section 4.5 in one payment to the
Participant within sixty (60) days after the Company's receipt of the
applicable notice. In the event the Participant dies before the lump
sum is paid, the Company shall pay the lump sum amount to the
Participant's Beneficiary, or if no Beneficiary of the Participant is
then living, such amount shall be paid to the Participant's estate.
4.6 GOLDEN PARACHUTE EXCISE TAX. In addition to the
Participant's Vested Deferred Benefit payable under the Plan, the Company
hereby agrees to indemnify and hold harmless, on a net after-tax basis, the
Participant from and against any excise tax liability arising under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (in
accordance with Section 5 of the Participant's Executive Severance Agreement).
4.7 MANDATORY COMMENCEMENT AT AGE 65. If a Participant's benefits
have not commenced prior to the date such Participant attains age 65 and
becomes 100% Vested, the Participant's Deferred Benefit shall begin on such
date, payable in accordance with Section 4.2.
4.8 STOCK PRICE REDUCTION. The monthly payment being made to a
Participant or a Beneficiary under Section 4.1, 4.3, 4.7, Article III, or
Article VI shall be reduced in accordance with this Section 4.8 in the event
the "Stock Price" for the common stock of the Company increases after the
commencement of such payments, as provided below in this Section 4.8 (for all
purposes of this Section 4.8, "Stock Price" shall mean the closing price of
the Company's common stock on the securities exchange in which it is most
frequently traded). The calculations and determinations to be made under this
Section 4.8 shall be based on a twelve-month period which begins on the first
day of the month in which the first monthly payment is made to the Participant
or Beneficiary, which shall be known as the Participant's "Retirement Year".
Only one reduction in the amount of monthly benefit payments may be made during
any Retirement Year.
Upon commencement of payment to a Participant or Beneficiary, the
Committee shall determine a Participant's Retirement Year and the Stock Price
of the Company's common stock on the first day of such Retirement Year. The
Committee shall send to the Participant or Beneficiary a written notice setting
forth
11
<PAGE> 12
such Stock Price, and the thresholds for benefit payment reductions which will
apply to such Participant in increments of twenty percent (20%) increases; such
20% increases are the Participant's "Threshold Prices" of the Company's common
stock. If during any thirty-consecutive calendar day period, the Stock Price
of the Company's common stock is at least equal to the Threshold Price for such
Retirement Year, the monthly benefit payment shall be reduced by 20% in
accordance with this Section 4.8. For example, if the Stock Price of the
Company's common stock is $5.00 on the first day of the first Retirement Year
of a Participant, the notice would inform the Participant of the $5.00 initial
value, and shall establish the following Threshold Prices (twenty percent (20%)
incremental increases which will apply as thresholds for reduction under this
Section 4.8): $6.00 is the first Threshold Price; $7.20 is the second
Threshold Price; $8.64 is the third Threshold Price; $10.37 is the fourth
Threshold Price; and $11.90 is the fifth Threshold Price. After the first
Threshold Price has been reached and the first reduction has been made in the
Participant's monthly benefit, no further reduction shall be made until the
second Threshold Price has been reached in a subsequent Retirement Year; then,
no further reduction shall be made until the third Threshold Price has been
reached in a subsequent Retirement Year; and so on.
If the during a Retirement Year the Stock Price of the Company's
common stock is at least equal to the Threshold Price for such Retirement Year
for a thirty-consecutive calendar day period, a reduction shall be made in the
Participant's monthly benefit under this Section 4.8, and the Committee shall
send a written notice to the Participant or Beneficiary notifying such person
of the reduction required by this Section; such notice shall be sent to
Participant within thirty (30) days after the end of said thirty-day
computation period; and such notice shall inform the Participant of the date on
which the reduction shall take effect, which shall be no sooner than one
hundred twenty (120) days after the notice. After a reduction has taken place
in a Retirement Year, no additional reduction shall take place during the same
Retirement Year, and no additional reduction shall take place until, in a
subsequent Retirement Year, the Stock Price of the Company's common stock is
at least equal to the next Threshold Price for a thirty-consecutive calendar
day period.
Example: If the Stock Price of the Company's common
stock is $5.00 on the first day of the first Retirement Year of a
Participant, and it increases to $7.00 after six (6) months, and stays
above $6.00 for at least thirty (30) calendar days, the Participant's
monthly benefit payment will be subject to a 20% reduction. If the
stock value then increases to $8.00 and stays above $8.00 for the
remainder of the first Retirement Year, no further reduction would be
made for the first Retirement Year; if the Stock Price stays above
$7.20 for the first thirty (30) days of the second Retirement Year, a
second twenty percent (20%) reduction would be made during the second
Retirement Year; if the Stock Price then decreased during the second
Retirement Year to $5.00, there would not be any decrease in the
monthly benefit amount; if the
12
<PAGE> 13
stock value then increased again to $7.20 during the third Retirement
Year, but did not increase to at least $8.64 and remain at that level
for at least thirty (30) calendar days, then no additional reduction
would be made during the third Retirement Year.
However, in the event of a Change in Control, no reduction shall be
made in any Participant's monthly benefit under this Section 4.8 by reason of
any increase in the Stock Price after the Change in Control.
End of Article IV
13
<PAGE> 14
ARTICLE V
VESTING; FORFEITURE
5.1 VESTING SCHEDULE. Except as provided in Section 5.2 below in
the event of a Change in Control, if a Participant terminates employment prior
to his Normal Retirement Date, the Participant's Vested Deferred Benefit shall
be determined under this Section. A Participant shall be ten percent (10%)
vested in his Deferred Benefit upon attaining fifty-one (51) years of age and
completing one (1) Year of Service. A Participant's vested interest shall
increase ten percent (10%) thereafter on each subsequent birthday of the
Participant if he remains an Employee of the Company. A Participant shall be
fully vested on his Normal Retirement Date. The Deferred Benefit shall be paid
in accordance with Plan Section 4.2 hereof. For example, except as provided in
Section 5.2, if a Participant begins employment with the Company at age 48 and
is not entitled to additional service credit, on his 51st birthday he will be
10% vested, and he will be 20% vested on his 52nd birthday; if his employment
were to terminate before his 53rd birthday (for any reason other than voluntary
termination), he would be entitled to receive 20% of his Deferred Benefit,
commencing on the first day of the month after his 60th birthday.
5.2 CHANGE IN CONTROL. Notwithstanding any provision of this Plan
to the contrary, in the event that a Change in Control occurs, the vesting of
each Participant's in his Deferred Benefit shall be determined under this
Section 5.2 as follows: a Participant shall be 10% vested in his Deferred
Benefit for each Year of Service for which he is credited plus 8.333% vested
for each month of severance pay he receives under his employment agreement or
any other agreement or plan providing for severance payments, without regard to
his age. For example, if a Participant begins employment on January 1, 1993 at
age 45, a Change in Control occurs on June 1, 1998, he terminates employment on
December 31, 1998, and he is entitled to 18 months severance, he would be 65%
vested in his Deferred Benefit (5 Years of Service is 50%, plus 18 months
severance multiplied by 8.333 is 15%), and his benefit payments would begin (in
accordance with Section 4.3) after his 60th birthday.
5.3 FORFEITURE. If a Participant's employment terminates under
any of the following circumstances prior to a Change in Control, he shall
forfeit all benefits under this Plan and neither the Participant nor his
Beneficiary shall have any interest in this Plan: (a) termination of employment
for any reason prior to age 51; (b) termination of employment for any reason
after reaching age 51 but before accruing at least one Year of Service; (c)
termination of employment for Cause at any time; or (d) voluntary termination
by the Participant prior to attaining age 60.
If a Participant's employment terminates under any of the following
circumstances, the unvested portion of his Deferred Benefit shall be forfeited:
(a) termination of employment after attaining age 51 and accruing at least one
Year of
14
<PAGE> 15
Service, as a result of death, Total Disability, or termination by the Company
without Cause; (b) voluntary termination by the Participant after attaining age
60 and accruing at least one Year of Service; or (c) termination of employment
for any reason after a Change in Control.
End of Article V
15
<PAGE> 16
ARTICLE VI
DISABILITY
In the event that a Participant is Totally Disabled prior to his
Normal Retirement Date, such Participant's Vested Deferred Benefit (if any),
shall be paid in the form required under Section 4.2 hereof, and shall commence
effective on the first day of the month after the month in which he is
determined to be Totally Disabled. If a Participant's Total Disability ceases
prior to his Normal Retirement Date and he is reemployed by the Employer, the
payment of his Vested Deferred Benefit shall cease and the Deferred Benefit
payable to the Participant upon his Normal Retirement Date or to the
Participant's Beneficiary upon his death shall be reduced by the Actuarial
Equivalent of the aggregate payments previously received by the Participant due
to his Total Disability. If the Participant's Total Disability ceases and he
is not reemployed by the Employer, his benefits shall cease as of the date his
Total Disability ceases and such Participant's Deferred Benefit shall be paid
in accordance with this Plan beginning on the Participant's Normal Retirement
Date or to the Participant's Beneficiary upon his death, as applicable, reduced
by the Actuarial Equivalent of the aggregate payments previously received by
the Participant due to this Total Disability.
End of Article VI
16
<PAGE> 17
ARTICLE VII
BENEFICIARY
A Participant's Beneficiary shall be the person he has properly
designated at the date payments are to begin. The Participant shall, upon
becoming a Participant, designates a Beneficiary on a form provided by the
Committee, and the Participant may change his Beneficiary at any time on a form
provided by the Committee.
End of Article VII
17
<PAGE> 18
ARTICLE VIII
SOURCE OF BENEFITS
8.1 BENEFITS PAYABLE FROM GENERAL ASSETS. Amounts payable
hereunder shall be paid from the Allwaste, Inc. Supplemental Executive
Retirement Trust and the general assets of the Employer, and no person entitled
to payment hereunder shall have any claim, right, security interest, or other
interest in any fund, trust, account, or other asset of the Employer that may
be looked to for such payment. The Employer's liability for the payment of
benefits hereunder shall be evidenced only by this Plan.
8.2 INVESTMENTS TO FACILITATE PAYMENT OF BENEFITS. Although the
Employer is not obligated to invest in any specific asset or fund in order to
provide the means for the payment of any liabilities under this Plan, the
Employer may elect to do so and, in such event, no Participant shall have any
interest whatever in such asset or fund.
8.3 EMPLOYER OBLIGATION. The Employer shall have no obligation of
any nature whatsoever to a Participant under this Plan, except as otherwise
expressly provided herein.
8.4 WITHHOLDING OF INFORMATION, ETC. If, in connection with a
Participant's enrolling in the Plan, the Employer requests the Participant to
furnish evidence of insurability, the Participant dies, and it is determined
that the Participant withheld, knowingly concealed, or knowingly provided false
information about the bodily or mental condition or conditions that caused the
Participant's death, the Employer shall have no obligation to provide the
benefits contracted for on the basis of such withholding, concealment, or false
information.
8.5 CHANGE IN CONTROL. Upon a Change in Control, the
Company shall, as soon as possible, but in no event longer than FIFTEEN (15)
DAYS following the Change in Control, make an irrevocable contribution to the
Trust in an amount that is sufficient to pay each Plan Participant and
Beneficiary the benefits to which Plan Participants and their Beneficiaries
would be entitled pursuant to the terms of the Plan as of the date on which the
Change in Control occurred. In addition, within thirty (30) days following the
end of each Plan Year ending after the Trust has become irrevocable pursuant to
Section 2.2 hereof, the Company shall be required to irrevocably deposit
additional cash or other property to the Trust in an amount sufficient to pay
each Plan Participant and Beneficiary the benefits payable pursuant to the
terms of the Plan as of the close of such Plan Year.
End of Article VIII
18
<PAGE> 19
ARTICLE IX
TERMINATION OF EMPLOYMENT
This Plan does not in any way obligate the Employer to continue the
employment of a Participant with the Employer, nor does it limit the right of
the Employer at any time and for any reason to terminate the Participant's
employment. In no event shall this Plan, by its terms or implications,
constitute an employment contract of any nature whatsoever between the Employer
and a Participant. Termination of a Participant's employment with the Employer
for any reason, whether by action of the Employer or otherwise, shall
immediately terminate his participation in this Plan, and all further
obligations of either party thereunder, except as may be provided in Articles
IV and V.
End of Article IX
19
<PAGE> 20
ARTICLE X
TERMINATION, AMENDMENT, MODIFICATION OR
SUPPLEMENT OF PLAN
10.1 TERMINATION AMENDMENT, ETC. The Company reserves the right to
terminate, amend, modify or supplement this Plan, wholly or partially, at any
time and from time to time; provided, however, that:
(a) No action to terminate or amend this Plan shall be
taken except upon written notice to each Participant to be affected
thereby, which notice shall be given not less than thirty (30) days
prior to such action;
(b) The Company shall take no action to terminate or
amend this Plan with respect to a Participant or his Beneficiary after
the payment of any benefit has commenced in accordance with Articles
III, IV, or VI but has not been completed; and
(c) The Company shall take no action to amend the Plan in
a manner that results in the reduction of the Participant's Vested
Deferred Benefits.
10.2 RIGHTS AND OBLIGATIONS UPON TERMINATION. Upon the termination
of this Plan, this Plan shall not be of any further force and effect, and no
party shall have any further obligation under this Plan so terminated except as
may be provided for in this Article X. Upon termination of this Plan, the
Vested Deferred Benefit of a Participant shall be determined using the
Participant's Years of Service prior to the termination date and the
Participant shall not be credited with any additional Years of Service, and
Compensation earned after the termination of the Plan shall not be taken into
account. The Employer shall pay such Vested Deferred Benefit at such time and
in such manner as provided under Articles III, IV and VI as if the Plan had not
been terminated. Notwithstanding the preceding sentence, in the event that a
Change in Control occurs prior to or coincident with the termination of the
Plan, a Participant shall be fully vested in his Deferred Benefit and such
Benefit shall be determined and paid in accordance with Section 5.2 hereof.
End of Article X
20
<PAGE> 21
ARTICLE XI
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his Beneficiary hereunder
are in addition to any other benefits available to such Participant under any
other program or plan of the Employer for its employees, and, except as may
otherwise be expressly provided for, this Plan shall supplement and shall not
supersede, modify, or amend any other program or plan of the Employer or a
Participant. Moreover, benefits under this Plan shall not be considered
compensation for the purpose of computing contributions or benefits under any
plan maintained by the Employer that is qualified under section 401(a) of the
Internal Revenue Code of 1986, as amended.
End of Article XI
21
<PAGE> 22
ARTICLE XII
RESTRICTION ON ALIENATION OF BENEFITS
No right or benefit under this Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, assign, pledge, encumber, or charge the same
shall be void. No right or benefit hereunder shall in any manner be liable for
or subject to the debts, contracts, liabilities, or torts of the person
entitled to such benefit. If any Participant or Beneficiary under this Plan
should become bankrupt or attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge any right to a benefit hereunder, then such right
or benefit shall, in the discretion of the Company terminate, and, in such
event, the Company shall hold or apply the same or any part thereof for the
benefit of such Participant or Beneficiary, his or her spouse, children, or
other dependents, or any of them, in such manner and in such portion as the
Company, in its sole and absolute discretion, may deem proper.
End of Article XII
22
<PAGE> 23
ARTICLE XIII
ADMINISTRATION OF THIS PLAN
13.1 COMMITTEE. The general administration of this Plan, as well
as construction and interpretation thereof, shall be vested in the Committee,
the number and members of which shall be designated and appointed from time to
time by, and shall serve at the pleasure of, the Board of Directors; provided,
however, that a Committee member who is also a Participant hereunder shall not
have the power or authority to make any decision or interpret this Plan in any
manner which may affect the amount of benefits payable to him, the form of
benefits payable to him, or the timing of the payment of benefits to him. An
interested Committee member shall abstain from any decision which could affect
the amount, timing, or form of his Deferred Benefit. Any such member of the
Committee may resign by notice in writing filed with the secretary of the
Committee. Vacancies shall be filled promptly by the Board of Directors. Each
person appointed a member of the Committee shall signify his acceptance by
filing a written acceptance with the secretary of the Board of Directors.
13.2 COMMITTEE OFFICIALS. One of the members of the Committee
shall act as chairman and the Committee shall appoint a secretary, who need not
be a member of the Committee. The secretary shall keep minutes of the
Committee's proceedings and all data, records and documents relating to the
Committee's administration of this Plan. The Committee may appoint from its
number such subcommittees, with such powers, as the Committee shall determine,
and may authorize one or more of its members or any agent to execute or deliver
any instrument or make any payment on behalf of the Committee.
13.3 COMMITTEE ACTION. All resolutions or other actions taken by
the Committee shall be by the vote of a majority of those members present at a
meeting at which a majority of the members are present, or in writing by all
the members at the time in office if they act without a meeting.
13.4 COMMITTEE RULES AND POWERS - GENERAL. Subject to the
provisions of this Plan, the Committee shall from time to time establish rules,
forms, and procedures for the administration of this Plan.
13.5 RELIANCE ON CERTIFICATES, ETC. The members of the Committee
and the officers and directors of the Employer shall be entitled to rely on all
certificates and reports made by any duly appointed accountants, and on all
opinions given by any duly appointed legal counsel. Such legal counsel may be
counsel for the Employer.
13.6 LIABILITY OF COMMITTEE. No member of the Committee shall be
liable for any act or omission of any other member of the Committee, or for any
act or
23
<PAGE> 24
omission on his own part, excepting only his own willful misconduct. The
Employer shall indemnify and save harmless each member of the Committee against
any and all expenses and liabilities arising out of his membership on the
Committee, excepting only expenses and liabilities arising out of his own
willful misconduct. Expenses against which a member of the Committee shall be
indemnified hereunder shall include, without limitation, the amount of any
settlement or judgment, costs, counsel fees, and related charges reasonably
incurred in connection with a claim asserted, or a proceeding brought, or
settlement thereof. The foregoing right of indemnification shall be in
addition to any other rights to which any such member may be entitled as a
matter of law.
13.7 INFORMATION TO COMMITTEE. To enable the Committee to perform
its functions, the Employer shall supply full and timely information to the
Committee on all matters relating to the compensation of all Participants,
their retirement, death or other cause for termination of employment, and such
other pertinent facts as the Committee may require.
13.8 EXPENSES OF THE COMMITTEE. The members of the Committee shall
serve without compensation, but all expenses of the Committee shall be paid by
the Employer. Such expenses shall include all expenses incident to the
functioning of the Committee including, without limitation, fees of
accountants, counsel, and other specialists and other costs of administering
the Plan.
End of Article XIII
24
<PAGE> 25
ARTICLE XIV
ADOPTION OF PLAN BY SUBSIDIARY
AFFILIATED OR ASSOCIATED COMPANIES
Any corporation that is a subsidiary may, with the approval of the
Board of Directors, adopt this Plan and thereby come within the definition of
Employer in Article I hereof. Such adoption shall be effectuated by and
evidenced by a formal instrument executed by the adopting organization and
delivered to the Company. The sole, exclusive right of any amendment of
whatever kind or extent to this Plan is reserved by the Company. It shall not
be necessary or permitted for the adopting organization to sign or execute the
original, or then amended or subsequently amended, Plan documents. The
effective date of this Plan for any such adopting organization shall be that
stated in the instrument of adoption. The Company's administrative powers, and
the right to amend, appoint, and remove the Committee and their successors,
shall not be diminished by reason of the participation of any Employer in this
Plan.
End of Article XIV
25
<PAGE> 26
ARTICLE XV
MISCELLANEOUS
15.1 EXECUTION OF RECEIPTS AND RELEASES. Any payment to any
Participant, a Participant's legal representative, or a Beneficiary in
accordance with the provisions of this Plan, to the extent thereof, shall be in
full satisfaction of all claims hereunder against the Employer. The Employer
may require such Participant, legal representative, or Beneficiary, as a
condition precedent to such payment, to execute a receipt and release therefor
in such form as it may determine.
15.2 NO GUARANTEE OF INTERESTS. Neither the Committee nor any of
its members guarantees the payment of any amounts which may be, or become, due
to any person or entity under this Plan. The liability of the Employer to make
any payment under this Plan is limited to the assets available to general
creditors of the Employer, including the assets, if any, in the Allwaste, Inc.
Supplemental Executive Retirement Trust.
15.3 EMPLOYER RECORD. Records of the Employer as to a
Participant's employment, termination of employment and the reason therefor,
reemployment, authorized leaves of absence, and compensation shall be
conclusive on all persons and entities, unless determined to be incorrect.
15.4 EVIDENCE. Evidence required of anyone under this Plan may be
by certificate, affidavit, document, or other information which the person or
entity acting on it considers pertinent and reliable, and signed, made, or
presented by the proper party or parties.
15.5 NOTICE. Any notice which shall be or may be given under this
Plan shall be in writing and shall be mailed by United States mail, postage
prepaid. If notice is to be given to the Employer, such notice shall be
addressed to the Company at:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056-3609
marked to the attention of the Secretary, Administrative Committee, Allwaste,
Inc. Supplemental Executive Retirement Plan; or, if notice to a Participant,
addressed to the address shown on such Participant's Beneficiary designation
form.
15.6 CHANGE OF ADDRESS. Any party may, from time to time, change
the address to which notices shall be mailed by giving written notice of such
new address.
26
<PAGE> 27
15.7 EFFECT OF PROVISIONS. The provisions of this Plan shall be
binding upon the Employer and its successors and assigns, and upon a
Participant, his Beneficiary, assigns, heirs, executors, and administrators.
15.8 HEADINGS. The titles and headings of Articles and Sections are
included f or convenience of reference only and are not to be considered in the
construction of the provisions hereof.
15.9 GOVERNING LAW. All questions arising with respect to this
Plan shall be determined by reference to the laws of the State of Texas, as in
effect at the time of their adoption and execution, respectively.
End of Article XV
27
<PAGE> 28
ARTICLE XVI
CLAIMS PROCEDURE
16.1 CLAIMS PROCEDURE. Claims for benefits under this Plan shall
be filed on forms supplied by the Committee. Written notice of the disposition
of a claim shall normally be furnished the claimant within ninety (90) days
after the application therefor is filed. In the event the claim is denied, the
reasons for the denial shall be specifically set forth, pertinent provisions of
the Plan shall be cited and, where appropriate, an explanation as to how the
claimant can perfect the claim will be provided.
16.2 CLAIMS REVIEW PROCEDURE. Any Participant or Beneficiary who
has been denied a benefit, or feels aggrieved by any other action of the
Committee shall be entitled, upon request to the Board of Directors and if he
has not already done so, to receive a written notice of such action, together
with a full and clear statement of the reasons-for the action. If the claimant
wishes further consideration of his position, he may request a hearing from the
Board of Directors. Such form, together with written statement of the
claimant's position, shall be filed with the Board of Directors no later than
ninety (90) days after receipt of the written notification provided for above
or in Section 16.1. The Board of Directors shall normally schedule an
opportunity for a full and fair hearing of the issue within the next thirty
(30) days, if feasible. The decision following such hearing shall be made
within thirty (30) days and shall be communicated in writing to the claimant.
End of Article XVI
28
<PAGE> 29
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed pursuant to prior authority conferred by the Compensation Committee of
the Company's Board of Directors on July 19, 1996.
ALLWASTE, INC.
By: /s/ ROBERT M. CHISTE
---------------------------------
Robert M. Chiste
President and Chief Executive Officer
Date: January 21, 1997
-------------------------------
Attest:
WILLIAM L. FIEDLER
- --------------------
Secretary
29
<PAGE> 30
ALLWASTE, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WAIVER AND BENEFICIARY DESIGNATION FORM
I acknowledge that, as an employee of Allwaste, Inc., I have been offered an
opportunity to participate in the Allwaste, Inc. Supplemental Executive
Retirement Plan (the "Plan"), a copy of which is attached hereto. By my
signature below, I am waiving any preferential treatment that I may have now or
in the future over the general creditors of the Company to assets of the
Company in the event of the Company's insolvency. I acknowledge that I will be
a general creditor of the Company and will not be entitled to any specific
asset or fund of the Company in the event of the Company's insolvency.
I elect to receive my benefits in the following form:
----- Single Life Annuity -- monthly payments for my life
only
----- Joint and 50% Survivor Annuity -- a reduced monthly
payment for my life and 50% of my benefit payable to
my beneficiary for his or her life after my death
My beneficiary of the benefits payable under the Plan in the event of my death
before my benefits commence (and after my benefits commence if I have elected
the joint and survivor option) is as follows:
NAME OF BENEFICIARY:
----------------------------------
DATE OF BIRTH:
----------------------------------------
SOCIAL SECURITY NO.:
---------------------------------
ADDRESS:
----------------------------------------------
I understand that the Plan may be terminated at any time, in the sole
discretion of the Company, without any obligation of any nature whatsoever to
the Company, except I shall be entitled to my vested benefit under the Plan as
of the termination in accordance with Section 10.2 of the Plan.
PARTICIPANT:
--------------------------------------
(Signature)
--------------------------------------
(Type or print name)
--------------------------------------
--------------------------------------
--------------------------------------
(Address of Participant)
30
<PAGE> 31
SCHEDULE A
R. L. NELSON BENEFITS
R. L. NELSON's Deferred Benefit, expressed as annual payments, shall be as
follows, based on the Stock Price of the Company's common stock while he
remains an employee of the Company:
a) $195,000 (60% of $325,000) if Stock Price is not at $5.50 or above for
30 calendar days.
b) $180,000 (60% of $300,000) if Stock Price is at $5.50 or above for 30
calendar days, but is not at $6.50 or above for 30 calendar days.
c) $165,000 (60% of $275,000) if Stock Price is at $6.50 or above for 30
calendar days, but is not at $7.50 or above for 30 calendar days.
d) $150,000 (60% of $250,000) if Stock Price is at $7.50 or above for 30
calendar days but is not at $8.50 or above for 30 calendar days.
e) $135,000 (60% of $225,000) if Stock Price is at $8.50 or above for 30
calendar days but is not at $9.50 or above for 30 calendar days.
f) $120,000 (60% of $200,000) if Stock Price is at $9.50 or above for 30
calendar days.
Provided, however, that in the event of a Change in Control, the value of the
Company's Common Stock on the date of such Change in Control shall be the
determinative Stock Price for all future time periods, and no additional
reduction shall be made in Mr. Nelson's benefit.
31
<PAGE> 32
SCHEDULE B
INITIAL PARTICIPANTS AND STATUS ON EFFECTIVE DATE
1. R. L. Nelson
Founder & Chairman of the Board
Age 60; 20 Years of Service; 10 Years of Service Credit (100% vested
on Effective Date (could retire immediately with full benefit and no
risk of forfeiture)
2. Robert M. Chiste
President, Chief Executive Officer & Director
Age 49; 2 Years of Service; 0 Years of Service Credit.
3. David E. Fanta
Senior Vice President of Operations
Age 37; 10 Years of Service; 0 Years of Service Credit.
4. James E. Rief
Senior Vice President of Technology & Administration Age 54; 1.5 Years
of Service; 4 Years of Service credit. (40% vested on Effective Date)
5. T. Wayne Wren
Senior Vice President, Chief Financial Officer & Treasurer Age 48; 3.6
Years of Service; 0 Years of Service Credit.
6. William L. Fiedler
Vice President, General Counsel, Corporate Secretary & Corporate
Compliance Officer Age 38; 7 Years of Service; 0 Years of Service
Credit.
7. Michael W. Ramirez
Vice President - Controller
Age 39; 6 Years of Service; 0 Years of Service Credit
32
<PAGE> 1
EXHIBIT 10.40
FIRST AMENDMENT
TO THE
ALLWASTE EVA(R) INCENTIVE COMPENSATION PLAN
This First Amendment (the "Amendment") to the Allwaste EVA(R) Incentive
Compensation Plan (the "Plan") is executed pursuant to Section 5(B) of the the
Plan. All capitalized and undefined terms used herein shall have the meanings
ascribed to such terms in the Plan.
WHEREAS, Allwaste, Inc. (the "Company") entered into that certain
Agreement and Plan of Merger dated as of March 5, 1997, by and among Philip
Environmental Inc., an Ontario corporation (now known as Philip Services Corp.,
"Philip"), Taro Aggregates Ltd., an Ontario corporation and wholly-owned
subsidiary of Philip ("Taro"), and Philip/Atlas Merger Corp., a Delaware
corporation and wholly-owned subsidiary of Taro ("Sub"), pursuant to which Sub
will be merged with and into the Company and the Company will become an
indirect wholly-owned subsidiary of Philip (the "Merger"); and
WHEREAS, the Compensation Committee (the "Committee") of the Company's
Board of Directors (the "Board") is authorized by Section 5(B) of the Plan to
amend the Plan from time to time; and
WHEREAS, the Committee desires to amend the Plan to provide for
payment of a pro rata portion of any Incentive Declaration with respect to the
Plan Year ended August 31, 1997 to a Plan Participant whose employment is
involuntarily terminated other than for Cause subsequent to the Merger and
prior to payment of Incentive Payments with respect to such Plan Year.
NOW, THEREFORE, as authorized by the Committee, the Plan is hereby
amended as follows:
1. Section 4(B) of the Plan is hereby revised in its entirety to
read as follows:
B. TERMINATIONS
1. CURRENT PLAN YEAR INCENTIVE PAYMENT
Except as set forth below, a Plan Participant whose
employment with Allwaste terminates, for whatever
reason, before receipt of the Incentive Payment for a
Plan Year, will not be eligible to receive the
Incentive Payment for such Plan Year (even if an
Incentive Declaration has been made or determined at
the time of termination). Notwithstanding the
foregoing, any Plan Participant whose employment with
Allwaste is terminated by Allwaste without Cause
prior to the payment of Incentive Payments with
respect to the Plan Year ended August 31, 1997 (the
"1997 Plan Year") and subsequent to the Merger shall
be entitled to receive, at the time of termination, a
pro rata portion of the Incentive Declaration, if
any, that would have been added to such Plan
Participant's Incentive Bank with respect to the 1997
Plan Year. This pro rata portion shall be calculated
by multiplying such Plan Participant's
1
<PAGE> 2
Incentive Declaration for the 1997 Plan Year by a
fraction: (i) the numerator of which is the number of
months of the 1997 Plan Year in which such Plan
Participant was employed by Allwaste; and (ii) the
denominator of which is twelve.
2. INCENTIVE BANK BALANCES
a) If a Plan Participant's employment
with Allwaste was terminated as a
result of his death or disability or
by Allwaste without Cause, any
positive Incentive Bank Balance, as
of the end of the previous Plan
Year, attributable to such
terminated Plan Participant will be
paid in full at the time of
termination. Notwithstanding the
foregoing, if a Plan Participant's
employment with Allwaste is
terminated by Allwaste without Cause
prior to payment of Incentive
Payments for the 1997 Plan Year,
such terminated Plan Participant
shall be entitled to receive any
positive Incentive Bank Balance,
including the one- third portion of
any Incentive Declaration
attributable to the 1997 Plan Year
that would have been added to such
Plan Participant's Incentive Bank,
in full at the time of termination.
b) If a Plan Participant voluntarily
terminates his employment with
Allwaste, such Plan Participant
shall thereby forfeit all positive
Incentive Bank balances that have
not vested (in accordance with the
following paragraph) at the time of
termination.
c) Once a Plan Participant reaches the
age of 55 and has been employed by
Allwaste for ten years, he will be
vested in 50% of his positive
Incentive Bank balance for purposes
of distributions in connection with
his retirement, and shall vest in
the remaining 50% of any positive
Incentive Bank balance at the rate
of 10% per year until reaching the
age of 60, at which time he shall be
fully-vested in any positive
Incentive Bank balance. The Plan
Participant must in all cases have
completed the ten-year service
requirement before being entitled to
receive any retirement distribution
of any positive Incentive Bank
balances. Vested Incentive Bank
balances may increase or decrease as
a result of subsequent-year
Incentive Declarations, and are
subject to forfeiture pursuant to
the following paragraph.
d) If a Plan Participant is terminated
by Allwaste for Cause, such Plan
Participant shall thereby forfeit
all positive Incentive Bank
balances, whether or not vested.
2
<PAGE> 3
e) On a Change in Control (as defined
in Appendix A), all positive
Incentive Bank balances will be paid
to Plan Participants.
2. Except as amended hereby, the terms and provisions of the Plan
shall remain in full force and effect, and the Plan and this Amendment shall be
read, taken and construed as one and the same instrument.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing First Amendment to the Plan by the Compensation Committee of the
Board of Directors of the Company, the Company has caused this Amendment to be
duly executed in its name and behalf by its proper officers thereunto duly
authorized as of the 14th day of July, 1997.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
-------------------------------------
Name: Robert M. Chiste
Title: President and Chief Executive Officer
ATTEST:
By: /s/ William L. Fiedler
---------------------------------------------------
Name: William L. Fiedler
Title: Vice President, General Counsel, Secretary
and Corporate Compliance Officer
3
<PAGE> 1
EXHIBIT 10.41
CORRECTIVE AMENDMENT
TO THE
ALLWASTE, INC. AMENDED AND RESTATED
1989 REPLACEMENT NON-QUALIFIED STOCK OPTION PLAN
This Corrective Amendment to the Allwaste, Inc. (the "Company")
Amended and Restated 1989 Replacement Non- Qualified Stock Option Plan (the
"Amendment") is executed pursuant to Paragraph 15 of the Amended and Restated
1989 Replacement Non-Qualified Stock Option Plan (the "Plan"). All capitalized
and undefined terms used herein shall have the meanings ascribed to such terms
in the Plan.
WHEREAS, the Company's Board of Directors (the "Board") is authorized
by Paragraph 15 of the Plan to amend the Plan from time to time; and
WHEREAS, the Board previously approved an amendment to the Plan to
change the vesting schedule and option term for the annual grants of stock
options to the Company's non-employee directors, as set forth in Section 4(b)
of the Plan; and
WHEREAS, the Board has determined that Paragraph 14 of the Plan does
not clearly reflect the intent of the Company at the time the Plan was adopted,
and the Board deems it advisable to correct an ambiguity in Paragraph 14 of the
Plan as hereinbelow provided; and
WHEREAS, the Board has approved extending the post-termination
exercise period for Options as provided in Paragraph 14 of the Plan from three
months to twelve months.
NOW, THEREFORE, in order to clarify the provisions of the fourth
paragraph of Paragraph 14 of the Plan as authorized by the Board, Paragraph 14
of the Plan is hereby revised as follows, effective as of the date of adoption
of the Plan on January 13, 1989:
1. Paragraph 4(b) of the Plan is hereby revised in its entirety
to read as follows:
(b) GRANTS TO NON-EMPLOYEE DIRECTORS. Each
Non-Employee Director (meaning directors of the Company who
are not officers or full-time employees of the Company or any
of its subsidiaries) shall, on the August 1 coinciding with or
immediately following the date on which he or she is elected
or appointed a director of the Company, be granted an option
to purchase 10,000 shares of Common Stock of the Company,
exercisable for a period of eight (8) years from the date of
such Option grant, subject to the vesting schedule set forth
below and to Paragraphs 10 and 14 hereof. Thereafter, on
August 1 of each subsequent year in which the Non-Employee
Director is still serving as a director (whether or not the
Non-Employee Director has continually remained a director
since the initial granting of the Option to purchase 10,000
shares), he or she shall automatically be granted an option to
purchase an additional 7,500 shares of Common Stock of the
Company, exercisable for a period of eight (8) years from the
date of such Option grant, subject to the vesting schedule set
forth below and to Paragraphs 10 and 14 hereof. The total
amount of Common Stock with respect to which Options may be
granted under the Plan to Non-Employee Directors of the
Company as a group shall not exceed 400,000 shares in the
aggregate during any fiscal year; provided, however, that the
class and the aforesaid maximum number of shares shall be
subject to adjustments in accordance with the provisions of
Paragraph 14 hereof. Notwithstanding the foregoing, the
option to purchase 7,500 shares of Common Stock to be granted
automatically on
<PAGE> 2
August 1 of each year to each Non-Employee Director shall not
be adjusted in the event of a change in capital structure of
the Company as described in Paragraph 14 hereof. All Options
granted to Non- Employee Directors shall vest at a rate of 25%
per year for the first four years of the Option term, with the
first 25% installment vesting one year following the grant
date.
2. The fourth paragraph of Paragraph 14 of the Plan is hereby
revised in its entirety to read as follows:
"If the Company is merged into or consolidated with another
corporation under circumstances where the Company does not
survive as a publicly-traded corporation, or if the Company
sells or otherwise disposes of substantially all its assets to
another corporation while unexercised Options remain
outstanding under the Plan: (i) subject to the provisions of
subclause (iii) below, and so long as the acquiring or
successor entity, as the case may be, is willing to assume the
obligation to deliver shares of such stock or other
securities, after the effective date of such merger,
consolidation or sale, as the case may be, (a) each holder of
an outstanding Option shall be entitled, on exercise of such
Option, to receive, in lieu of shares of Common Stock, shares
of such stock or other securities as the holder of shares of
Common Stock received pursuant to the terms of the merger,
consolidation or sale, and if any Optionee's employment is
terminated without cause subsequent to the merger,
consolidation or sale, then he or she shall have the right, at
any time prior to twelve (12) months following the date of
such termination without cause to exercise the Option, in
whole (without regard to any limitations set forth in or
imposed pursuant to Paragraph 6 hereof) or in part, and (b) if
the Optionee is a Non-Employee Director who ceases to be a
Non-Employee Director of the Company as a result of such
merger, consolidation or sale, then he or she shall have the
right at any time prior to twelve (12) months following the
effective date of such merger, consolidation or sale to
exercise the Option, in whole (without regard to any
limitations set forth in or imposed pursuant to Paragraph 6
hereof) or in part; (ii) the Board of Directors may waive any
limitations set forth in or imposed pursuant to Paragraph 6
hereof so that all Options, from and after a date prior to the
effective date of such merger, consolidation or sale, as the
case may be, as specified by the Board of Directors, shall be
exercisable in full; or (iii) all outstanding Options may be
canceled by the Board of Directors as of the effective date of
any such merger, consolidation or sale provided that (x)
notice of any such cancellation shall be given to each holder
of an Option and (y) each holder of an Option shall have the
right to exercise such Option in full (without regard to any
limitations set forth in or imposed pursuant to Paragraph 6
hereof) during the thirty (30) day period preceding the
effective date of any such merger, consolidation or sale;
provided, however, that clauses (ii) and (iii) of this
sentence shall not apply with respect to the transactions
contemplated in the Agreement and Plan of Merger dated as of
March 5, 1997, among Philip Environmental Inc., Taro
Aggregates Ltd., Philip/Atlas Merger Corp., and Allwaste, Inc.
(Philip having agreed to assume the obligations of the Company
as set forth in clause (i) of this sentence)."
<PAGE> 3
3. Except as amended hereby, the terms and provisions of the Plan
shall remain in full force and effect, and the Plan and this Amendment shall be
read, taken and construed as one and the same instrument.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing Corrective Amendment to the Plan by the directors of the Company, the
Company has caused this Amendment to be duly executed in its name and behalf by
its proper officers thereunto duly authorized as of the 6th day of March, 1997
(with the modifications to Paragraph 4(b) being effective from July 19, 1996
and with the modifications to Paragraph 14 being effective for all purposes as
of the date of adoption of the Plan on January 13, 1989).
ALLWASTE, INC.
By: /s/ James E. Rief
----------------------------------
Name: James E. Rief
Title: Senior Vice President --
Technology & Administration
ATTEST:
By: /s/ William L. Fiedler
------------------------------------------
Name: William L. Fiedler
Title: Vice President, General Counsel, Secretary
and Corporate Compliance Officer
<PAGE> 1
EXHIBIT 10.42
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT, by
and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and Robert
M. Chiste (the "EMPLOYEE"), which was effective as of November 11, 1996 (as so
amended and restated, the "AGREEMENT"), is entered into this 5th day of March
1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are extremely
valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement dated October 17, 1994 governing the Employee's employment
with the Company, which Employment Agreement has been amended by that certain
First Amendment to Employment Agreement dated October 26, 1995, that certain
Second Amendment to Employment Agreement dated October 25, 1996, and that
certain Third Amendment to Employment Agreement dated November 11, 1996 (as
amended, the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
it imperative that the Company be able to rely on the Employee to continue his
services to the Company without concern that the Employee may be distracted by
the personal uncertainties and risks created by the possibility of a change in
control; and
WHEREAS, the Company is entering into this Agreement with the Employee
in order to ensure the Employee's continued services, dedication and
objectivity during such period as the Company may be susceptible to a change in
control and to define the nature and terms of the Employee's severance benefits
following a Change in Control (as defined in Section 9 below); and
WHEREAS, an Agreement and Plan of Merger is being executed currently
herewith among the Company, Philip Environmental Inc., Taro Aggregates Ltd.,
and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this Section 1,
this Agreement shall become effective (the "EFFECTIVE TIME") immediately
prior to (and subject to the occurrence of) approval of the Merger Agreement by
the Company's stockholders and shall continue until the expiration or
termination of the Employment Agreement, and to the extent that the Employment
Agreement is renewed for successive one-year periods, this Agreement shall
-1-
<PAGE> 2
be similarly renewed (the "TERM"). If this Agreement becomes effective, the
Employee's original Executive Severance Agreement (and any prior amendments
thereto) described in the preamble hereto shall simultaneously become null and
void; provided that, if the Merger Agreement is terminated, then, on the date
of such termination, this Agreement shall terminate and the Employee's original
Executive Severance Agreement shall remain in full force and effect.
Notwithstanding any provision of this Agreement to the contrary, termination of
this Agreement shall not alter or impair any rights of the Employee (or the
Employee's estate or beneficiaries) that have arisen under this Agreement prior
to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control which
occurs during the Term and ending 18 months following such Change in Control;
provided, however, if the Employee's employment with the Company terminates for
any reason (other than a termination (i) due to the Employee's death, (ii) by
the Company on account of the Employee's Disability as provided in Section 2.2
below, (iii) by the Company for Cause as provided in Section 2.3 below, or (iv)
by the Employee for other than Good Reason as provided in Section 2.4 below)
prior to, but within six months of, the date on which such a Change in Control
occurs, then, for all purposes of this Agreement: (A) the Employee shall be
deemed to have continued employment with the Company until the date of the
Change in Control and then terminated his employment on such date for Good
Reason, and (B) the Protected Period shall be deemed to have commenced
immediately prior to the Employee's actual termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a Change
in Control occurs during the Term, and if, as a result of the Employee's
illness, physical or mental disability, or other incapacity which continues for
an uninterrupted period in excess of three (3) months or a cumulative period of
six (6) months in any twelve (12) month period during the Protected Period, and
if, within 30 days after the Company has given the Employee written notice of
the Company's intention to terminate the Employee on account of such
incapacity, the Employee shall not have returned to the full-time performance
of the Employee's duties, then the Company may thereafter terminate the
Employee's employment on account of "DISABILITY"; provided, however, such
termination shall not by itself alter or impair the Employee's rights as a
"DISABLED EMPLOYEE" or otherwise under any of the Company's employee benefits
plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually fails
to perform substantially the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continues unabated after a demand for substantial
performance is delivered to the Employee by the Board that specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee's duties, or (b) the Employee willfully
engages in gross misconduct that is materially and demonstrably injurious to
the
-2-
<PAGE> 3
Company. For purposes of this Section 2.3, an act or failure to act on the
Employee's part shall be considered "WILLFUL" if done or omitted to be done by
the Employee otherwise than in good faith and without reasonable belief that
the Employee's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated by the Company for Cause unless and until the Company shall have
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board, at a meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Employee was guilty of conduct set
forth in clauses (a) or (b) of the second sentence of this Section 2.3 and
specifying the particulars thereof in reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company immediately prior
to the commencement of the Protected Period, or the Employee's status,
reporting responsibilities, titles or offices are materially
diminished from those in effect immediately prior to the commencement
of the Protected Period, or the Employee is removed from or is not
re-elected or appointed to any of such responsibilities, titles,
offices or positions, except in each case in connection with the
termination of the Employee's employment by the Company for Cause or
on account of Disability, or as a result of the Employee's death, or
by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an
insubstantial action not taken in bad faith and which is remedied by
the Company promptly after receipt of written notice from the
Employee; and provided further that Good Reason shall not be triggered
under this subsection (a) by any such alteration primarily
attributable to the fact that the Company may no longer be a public
company; or
(b) The Employee's annual rate of base salary is reduced
from that in effect immediately prior to the commencement of the
Protected Period or as the same may be increased from time to time
thereafter (such annual rate of base salary, as so increased (if
applicable) but prior to such reduction, is referred to hereinafter as
the "ANNUAL BASE SALARY"); provided, however, with respect to a
termination of employment prior to a Change in Control that is deemed
to have occurred on the date of the Change in Control, "ANNUAL BASE
SALARY" shall be the Employee's annual rate of base salary as in
effect immediately prior to the Employee's actual date of termination,
but disregarding any reduction therein made within 30 days of the
Employee's actual termination date; or
(c) The Company fails to continue in effect any benefit
or compensation plan (except the Supplemental Executive Retirement
Plan) which is material to the
-3-
<PAGE> 4
Employee's total compensation, including, but not limited to, the
Company's annual bonus plan, qualified retirement plan, executive life
insurance plan and/or health and accident plan, in which the Employee
is participating immediately prior to the commencement of the
Protected Period, or plans providing the Employee with substantially
similar benefits, or the Company takes any action that would
materially adversely affect the Employee's participation in or reduce
the Employee's benefits under any of such plans (excluding any such
action by the Company that is required by law); or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35 miles
from where such offices were located immediately prior to such Change
in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.5 below and, if
applicable, the procedures described in Section 2.3 above; or
(h) The Company shall violate or breach any obligation of
the Company in effect immediately prior to the commencement of the
Protected Period (regardless whether such obligation be set forth in
the Employment Agreement or any other separate agreement entered into
between the Company and the Employee) to indemnify the Employee
against any claim, loss, expense or liability sustained or incurred by
the Employee by reason, in whole or in part, of the fact that the
Employee is or was an officer or director of the Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period relating
to the Employee's employment with the Company, but only if such
violation or breach (if capable of being remedied) shall continue
unremedied for more than 15 days after written notice thereof is given
by the Employee to the Company; or
(j) The Board (or any nominating committee of the Board)
fails to recommend and support the Employee's re-election as a
director of the Company if the Employee is a director of the Company
immediately prior to the commencement of the Protected Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section 2.4
above shall be
-4-
<PAGE> 5
communicated by written Notice of Termination to the other party hereto;
provided, however, that in the case of events of Good Reason enumerated in
subsections (f), (h), (i) or (l) of Section 2.4 hereof, the Company shall have
the obligation to provide the Employee with written notice of the occurrence of
any of such events and the Employee shall then have the opportunity to provide
the Company with Notice of Termination if he so elects. The Employee shall
retain the ability to terminate his employment for Good Reason under
subsections (f), (h), (i) or (l) of Section 2.4 hereof, even if the Company
fails to provide written notice of the occurrence of any of the events
specified in such subsections as provided herein. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a notice that shall indicate
the specific termination provision in this Agreement relied on and, except in
the case of the termination referred to in the last subsection of Section 2.4
above, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated. Any purported termination of this Agreement not in
compliance with the requirements of this Section 2.5 or, if applicable, the
procedures described in Section 2.3 above shall be ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE OF
TERMINATION" shall mean: (a) if the Employee is terminated on account of
Disability pursuant to Section 2.2 above, 30 days after Notice of Termination
is given, provided that the Employee shall not have returned to the performance
of the Employee's duties on a full-time basis during such 30-day period; (b) if
the Employee's employment is terminated for Cause pursuant to Section 2.3
above, the date specified in the Notice of Termination; (c) with respect to a
termination of employment prior to a Change in Control that is deemed to have
occurred on the date of the Change in Control, the date of such Change in
Control; and (d) if the Employee's employment is terminated for any other
reason on or after a Change in Control, the date on which a Notice of
Termination is given; provided, however, in the event of any dispute or
controversy concerning the Employee's entitlement to payment under this
Agreement, solely for purposes of Section 3.3 and 3.4 below, concerning the
timing of the payment of amounts under this Agreement, the "DATE OF
TERMINATION" shall mean the date of final resolution of such dispute or
controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED PERIOD
OR ON TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any awards,
deferred and non-deferred, payable during such period of disability under the
Company's annual bonus plan, less any amounts paid to the Employee during such
period of Disability pursuant to the Company's sick-leave or disability program
until the Employee's employment is terminated on account of Disability pursuant
to Section 2.2 hereof, and (iii) all other applicable perquisites, insurance
and other employee benefits.
3.2 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee's employment shall be terminated by the
Company for Cause pursuant to Section 2.3 above, the Company shall pay the
Employee's earned but unpaid Annual Base Salary
-5-
<PAGE> 6
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, and the Company shall have no further obligations to the
Employee under this Agreement, except those arising hereunder prior to the Date
of Termination.
3.3 If a Change in Control occurs during the Term pursuant to the
Merger Agreement, then, subject to the conditions stated in the last sentence
of this Section 3.3, the Company shall pay the Employee the following amount by
certified or bank cashier's check on each of two dates:
An amount equal to 1.5 times the sum of the Annual Base Salary and an
annual target bonus of 90% of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the following
dates, if the conditions stated in the following sentence are met: (1) the
date (the "MERGER EFFECTIVE DATE") on which the Effective Time of the Merger as
defined in the Merger Agreement (the "MERGER EFFECTIVE TIME") occurs, and (2)
the later of January 1, 1998, or the six- month anniversary of the Merger
Effective Date. The amounts shall be paid on those two dates only if the
Employee is employed by the Company on the Merger Effective Date, or if the
Company shall have terminated the employment of the Employee during the
Protected Period prior to the Merger Effective Date other than pursuant to
Sections 2.2 or 2.3 hereof, or if the Employee shall have terminated the
Employee's employment during the Protected Period prior to the Merger Effective
Date for Good Reason in accordance with Section 2.4 hereof.
3.4 If a Change in Control occurs during the Term and if, during
the Protected Period, the Company shall terminate the Employee other than
pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected Period, the
Employee shall terminate the Employee's employment for Good Reason in
accordance with Section 2.4 hereof, then, subject to Section 5 below and the
following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within five
days of such Date of Termination, the sum of the amounts specified in clauses
(a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed by
the terms of such plan) or earned but not paid as of such date under
all Company incentive or deferred compensation plans or programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 36
months.
-6-
<PAGE> 7
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
4.1 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds outstanding unexercisable options under
the Company's stock option plan(s) immediately prior to the Merger Effective
Time (the "UNEXERCISABLE OPTIONS"), then, notwithstanding any provisions of
such plans or prior agreements between the Company and the Employee (and in
lieu of any exercisability or vesting schedules therein), each date on which a
portion of an Unexercisable Option would otherwise vest and become exercisable
(a "VESTING DATE") shall be accelerated by two years; provided, however, that
no accelerated Vesting Date shall be deemed to occur earlier than immediately
prior to the Merger Effective Time. Notwithstanding the foregoing provisions
of this Section 4.1, a portion of an Unexercisable Option shall become
exercisable on a projected accelerated Vesting Date only if the Employee is
employed by the Company on such date; provided, however, in the event the
employee's employment is terminated subsequent to the Effective Time of this
Agreement while the Employee holds Unexercisable Options, (i) due to the
Employee's death, (ii) by the Company on account of the Employee's Disability
as provided in Section 2.2 hereof, (iii) by the Company other than for Cause as
provided in Section 2.3 hereof, or (iv) by the Employee for Good Reason as
provided in Section 2.4 hereof, then, notwithstanding any provision of this
Agreement to the contrary, each Unexercisable Option shall become fully vested
and exercisable on the later of (x) the date of such termination or (y)
immediately prior to the Merger Effective Time.
4.2 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds any outstanding shares of restricted
stock issued by the Company to the Employee under the Company's stock plan(s)
(including those granted under the Company's Target 2000: One, Two, Four Plan)
which remain subject to restrictions and/or performance or other criteria
relating thereto (the "RESTRICTIONS") immediately prior to the Merger Effective
Time (the "RESTRICTED SHARES"), then, notwithstanding any provisions of such
plans or prior agreements between the Company and the Employee (and in lieu of
any schedules for the lapsing of restrictions contained therein), each date on
which Restrictions on a portion of the Restricted Shares would otherwise lapse
or be deemed satisfied in full, as applicable (a "Lapsing Date"), shall be
accelerated by two years; provided, however, that no accelerated Lapsing Date
shall be deemed to occur earlier than immediately prior to the Merger Effective
Time. Notwithstanding the foregoing provisions of this Section 4.2,
Restrictions shall lapse on such portion of the Restricted Shares on a
projected accelerated Lapsing Date only if the Employee is employed by the
Company on such date; provided, however, in the event the employee's employment
is terminated subsequent to the Effective Time of this Agreement while the
Employee holds Restricted Shares, (i) due to the Employee's death, (ii) by the
Company on account of the Employee's Disability as provided in Section 2.2
hereof, (iii) by the Company other than for Cause as provided in Section 2.3
hereof, or (iv) by the Employee for Good Reason as provided in Section 2.4
hereof, then, notwithstanding any provision of this Agreement to the contrary,
all Restrictions on all such Restricted Shares shall lapse or be deemed
satisfied in full, as applicable, on the later of (x) the date of such
termination or (y) immediately prior to the Merger Effective Time. No later
than the fifth day following any such lapse of Restrictions, the Company shall
cause the relevant unrestricted shares of stock to be delivered to the
Employee.
-7-
<PAGE> 8
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in connection
with his ongoing employment with the Company, this Agreement provides the
Employee with various benefits in the event of termination of the Employee's
employment with the Company during the Protected Period. If the Employee's
employment is terminated following a "CHANGE IN CONTROL" of the Company, within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "CODE"), a portion of those benefits could be characterized as "EXCESS
PARACHUTE PAYMENTS" within the meaning of Section 280G of the Code. The
parties hereto acknowledge that the protections set forth in this Section 5 are
important, and it is agreed that the Employee should not have to bear the
burden of any excise tax that might be levied under Section 4999 of the Code,
in the event that a portion of the benefits payable to the Employee pursuant to
this Agreement are treated as an excess parachute payment. The parties,
therefore, have agreed as set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding, if
it shall be determined that any payment or distribution by the Company or any
other person to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "PAYMENT") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"EXCISE TAX"), then the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an independent public accounting firm with a national reputation that is
selected by the Employee (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and to the Employee within 15
business days after each receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control of the Company, the
Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Company shall
indemnify and hold harmless the Employee, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed on the Employee as a result of such payment of fees and expenses. Any
Gross-Up Payment with respect to the respective Payment, as determined pursuant
to this Section 5, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the
-8-
<PAGE> 9
Employee with respect to the respective Payment, it shall furnish the Employee
with a written opinion that failure to report the Excise Tax on the Employee's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm shall
be binding on the Company and the Employee. As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments may not have been made by the Company which should have been made
("UNDERPAYMENT"), consistent with the calculations required to be made
hereunder. If the Company exhausts its remedies pursuant to Section 5.4 below
and the Employee thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any claim
(including any threatened tax lien related to or based on any such claim) by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is
informed in writing of such claim (or threatened lien) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due or such tax lien would be
imposed). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim (or threatened
lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any proceedings
relating to such claim (or threatened lien);
provided, however, that the Company 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 Employee harmless, on an
after- tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Subsection 5.4, the Company shall control all proceedings taken 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
-9-
<PAGE> 10
and may, at its sole option, either direct the Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and the
Employee 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 Employee shall determine (but in no event shall the
Company permit or direct the Employee to allow a tax lien to be imposed on the
Employee's property); provided, further, that if the Company directs the
Employee to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income 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
Employee with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. In addition, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
5.5 If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes entitled
to receive any refund with respect to such amount, the Employee shall (subject
to the Company's complying with the requirements of Section 5.4 above) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If after the receipt by
the Employee of an amount advanced by the Company pursuant to Section 5.2, 5.3
or 5.4 above, a determination is made that the Employee shall not be entitled
to any refund with respect to such amount and the Company does not notify the
Employee in writing of its intent to contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that the
Employee seek or accept other employment following a termination of employment
and, amounts payable and benefits provided under this Agreement to the Employee
shall not be reduced by the Employee's acceptance of (or failure to seek or
accept) employment with another person. The Company's obligations to make the
payments and provide the benefits required for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, rights or action that the
Company may have against the Employee or others.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of
-10-
<PAGE> 11
any such succession shall be a breach of this Agreement and shall entitle the
Employee to compensation from the Company in the same amount and on the same
terms as the Employee would be entitled hereunder if the Employee terminated
the Employee's employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"COMPANY" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid that executes and delivers the
agreement provided for in this Section 7.1 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or, if none, to
the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five days after deposit in
the United States mail, registered and return receipt requested, postage
prepaid, addressed to the respective addresses set forth below or to such other
address as either party shall have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
Robert M. Chiste
15834 Hidden Cove
Houston, Texas 77079
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred on the consummation of the
transactions contemplated by the Merger Agreement at the Effective Time of the
Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS.
Employment with the Company for purposes of this Agreement includes employment
with any entity (a "PARENT") which owns, directly or indirectly, 50% or more of
the total combined voting power of the Company's outstanding equity interests
and employment with any entity in
-11-
<PAGE> 12
which the Company or the Parent has a direct or indirect ownership interest of
50% or more of the total combined voting power of all outstanding equity
interests, it being understood that for purposes of clause (a) of Section 2.4
hereof, "GOOD REASON" shall be construed to refer to each of the Employee's
positions, duties, responsibilities (reporting and other), status, titles and
offices with the Company and each of its subsidiaries and parents.
SECTION 11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and by the Chairman of the
Compensation Committee of the Board or other authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been approved
by the Board of Directors, and has been duly executed and delivered by Employee
and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a "DISPUTE")
the parties agree to resolve such Dispute in accordance with the following
procedure:
(a) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) one or more individuals with
decision-making authority regarding the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the
parties agree to submit the Dispute to
-12-
<PAGE> 13
mediation in accordance with the Commercial Mediation Rules of the
American Arbitration Association.
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they have been unable to agree on
such appointment within 10 days following the 10-day period referred
to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse the
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by the Employee in connection with such dispute, together
with interest thereon at the prevailing legal rate of interest, such
interest to accrue from the date of Notice of Termination through the
date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Section 16 includes
a finding denying, in total, the Employee's claims in such dispute,
the Employee shall be required to reimburse the Company, over a period
determined by the Employee but not to exceed 12 months from the date
of such resolution, for all sums advanced to the Employee with respect
to such dispute pursuant to this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
16.2 In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts
may be submitted by either party to a court of law for final determination by
initiation of a civil action in the proper state or Federal court
-13-
<PAGE> 14
sitting in Harris County, Texas. Such action, to be valid, must be commenced
within 20 days after receipt of the arbitrators' decision. If no such civil
action is commenced within such 20-day period, the legal conclusion reached by
the arbitrators shall be conclusive and binding on the parties. Any such civil
action shall be submitted, heard and determined solely on the basis of the
facts found by the arbitrators. Neither of the parties shall, or shall be
entitled to, submit any additional or different facts for consideration by the
court. In the event any civil action is commenced under this Section 16.2, the
party who prevails or substantially prevails (as determined by the court) in
such civil action shall be entitled to recover from the other party all costs,
expenses and reasonable attorneys' fees incurred in connection with such action
and on appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced
to enforce the rights awarded in an arbitration proceeding, the party who
prevails or substantially prevails in such legal proceeding shall be entitled
to recover from the other party all costs, expenses and reasonable attorneys'
fees incurred in connection with such legal proceeding and on appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or program
of the Company or any employment contract or agreement with the Company.
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ James E. Rief
----------------------------------
EMPLOYEE
/s/ Robert M. Chiste
--------------------------------------
Robert M. Chiste
-14-
<PAGE> 1
EXHIBIT 10.43
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT, by
and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and DAVID
E. FANTA (the "EMPLOYEE"), which was effective as of November 11, 1996 (as so
amended and restated, the "AGREEMENT"), is entered into this 5th day of March
1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are extremely
valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement dated November 11, 1996 governing the Employee's
employment with the Company (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
it imperative that the Company be able to rely on the Employee to continue his
services to the Company without concern that the Employee may be distracted by
the personal uncertainties and risks created by the possibility of a change in
control; and
WHEREAS, the Company is entering into this Agreement with the Employee
in order to ensure the Employee's continued services, dedication and
objectivity during such period as the Company may be susceptible to a change in
control and to define the nature and terms of the Employee's severance benefits
following a Change in Control (as defined in Section 9 below); and
WHEREAS, an Agreement and Plan of Merger is being executed currently
herewith among the Company, Philip Environmental Inc., Taro Aggregates Ltd.,
and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this Section
1, this Agreement shall become effective (the "EFFECTIVE TIME") immediately
prior to (and subject to the occurrence of) approval of the Merger Agreement by
the Company's stockholders and shall continue until the expiration or
termination of the Employment Agreement, and to the extent that the Employment
Agreement is renewed for successive one-year periods, this Agreement shall be
similarly renewed (the "TERM"). If this Agreement becomes effective, the
Employee's original Executive Severance Agreement (and any prior amendments
thereto) described in the preamble hereto shall simultaneously become null and
void; provided that, if the Merger Agreement is terminated, then, on the date
of such termination, this Agreement shall terminate
-1-
<PAGE> 2
and the Employee's original Executive Severance Agreement shall remain in full
force and effect. Notwithstanding any provision of this Agreement to the
contrary, termination of this Agreement shall not alter or impair any rights of
the Employee (or the Employee's estate or beneficiaries) that have arisen under
this Agreement prior to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control which
occurs during the Term and ending 18 months following such Change in Control;
provided, however, if the Employee's employment with the Company terminates for
any reason (other than a termination (i) due to the Employee's death, (ii) by
the Company on account of the Employee's Disability as provided in Section 2.2
below, (iii) by the Company for Cause as provided in Section 2.3 below, or (iv)
by the Employee for other than Good Reason as provided in Section 2.4 below)
prior to, but within six months of, the date on which such a Change in Control
occurs, then, for all purposes of this Agreement: (A) the Employee shall be
deemed to have continued employment with the Company until the date of the
Change in Control and then terminated his employment on such date for Good
Reason, and (B) the Protected Period shall be deemed to have commenced
immediately prior to the Employee's actual termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a Change
in Control occurs during the Term, and if, as a result of the Employee's
illness, physical or mental disability, or other incapacity which continues for
an uninterrupted period in excess of three (3) months or a cumulative period of
six (6) months in any twelve (12) month period during the Protected Period, and
if, within 30 days after the Company has given the Employee written notice of
the Company's intention to terminate the Employee on account of such
incapacity, the Employee shall not have returned to the full-time performance
of the Employee's duties, then the Company may thereafter terminate the
Employee's employment on account of "DISABILITY"; provided, however, such
termination shall not by itself alter or impair the Employee's rights as a
"DISABLED EMPLOYEE" or otherwise under any of the Company's employee benefits
plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually fails
to perform substantially the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continues unabated after a demand for substantial
performance is delivered to the Employee by the Board that specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee's duties, or (b) the Employee willfully
engages in gross misconduct that is materially and demonstrably injurious to
the Company. For purposes of this Section 2.3, an act or failure to act on the
Employee's part shall be considered "WILLFUL" if done or omitted to be done by
the Employee otherwise than in good faith and without reasonable belief that
the Employee's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be deemed to
-2-
<PAGE> 3
have been terminated by the Company for Cause unless and until the Company
shall have delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board, at a meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Employee was guilty of conduct set
forth in clauses (a) or (b) of the second sentence of this Section 2.3 and
specifying the particulars thereof in reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company immediately prior
to the commencement of the Protected Period, or the Employee's status,
reporting responsibilities, titles or offices are materially
diminished from those in effect immediately prior to the commencement
of the Protected Period, or the Employee is removed from or is not
re-elected or appointed to any of such responsibilities, titles,
offices or positions, except in each case in connection with the
termination of the Employee's employment by the Company for Cause or
on account of Disability, or as a result of the Employee's death, or
by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an
insubstantial action not taken in bad faith and which is remedied by
the Company promptly after receipt of written notice from the
Employee; and provided further that Good Reason shall not be triggered
under this subsection (a) by any such alteration primarily
attributable to the fact that the Company may no longer be a public
company; or
(b) The Employee's annual rate of base salary is reduced
from that in effect immediately prior to the commencement of the
Protected Period or as the same may be increased from time to time
thereafter (such annual rate of base salary, as so increased (if
applicable) but prior to such reduction, is referred to hereinafter as
the "ANNUAL BASE SALARY"); provided, however, with respect to a
termination of employment prior to a Change in Control that is deemed
to have occurred on the date of the Change in Control, "ANNUAL BASE
SALARY" shall be the Employee's annual rate of base salary as in
effect immediately prior to the Employee's actual date of termination,
but disregarding any reduction therein made within 30 days of the
Employee's actual termination date; or
(c) The Company fails to continue in effect any benefit
or compensation plan (except the Supplemental Executive Retirement
Plan) which is material to the Employee's total compensation,
including, but not limited to, the Company's annual bonus plan,
qualified retirement plan, executive life insurance plan and/or health
and accident plan, in which the Employee is participating immediately
prior to the commencement of the Protected Period, or plans providing
the Employee with
-3-
<PAGE> 4
substantially similar benefits, or the Company takes any action that
would materially adversely affect the Employee's participation in or
reduce the Employee's benefits under any of such plans (excluding any
such action by the Company that is required by law); or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35 miles
from where such offices were located immediately prior to such Change
in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.5 below and, if
applicable, the procedures described in Section 2.3 above; or
(h) The Company shall violate or breach any obligation of
the Company in effect immediately prior to the commencement of the
Protected Period (regardless whether such obligation be set forth in
the Employment Agreement or any other separate agreement entered into
between the Company and the Employee) to indemnify the Employee
against any claim, loss, expense or liability sustained or incurred by
the Employee by reason, in whole or in part, of the fact that the
Employee is or was an officer or director of the Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period relating
to the Employee's employment with the Company, but only if such
violation or breach (if capable of being remedied) shall continue
unremedied for more than 15 days after written notice thereof is given
by the Employee to the Company; or
(j) The Board (or any nominating committee of the Board)
fails to recommend and support the Employee's re-election as a
director of the Company if the Employee is a director of the Company
immediately prior to the commencement of the Protected Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section 2.4
above shall be communicated by written Notice of Termination to the other party
hereto; provided, however, that in the case of events of Good Reason enumerated
in subsections (f), (h), (i) or (l) of Section 2.4 hereof, the Company shall
have the obligation to provide the Employee with written notice of the
occurrence of any of such events and the Employee shall then have the
opportunity
-4-
<PAGE> 5
to provide the Company with Notice of Termination if he so elects. The
Employee shall retain the ability to terminate his employment for Good Reason
under subsections (f), (h), (i) or (l) of Section 2.4 hereof, even if the
Company fails to provide written notice of the occurrence of any of the events
specified in such subsections as provided herein. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a notice that shall indicate
the specific termination provision in this Agreement relied on and, except in
the case of the termination referred to in the last subsection of Section 2.4
above, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated. Any purported termination of this Agreement not in
compliance with the requirements of this Section 2.5 or, if applicable, the
procedures described in Section 2.3 above shall be ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE OF
TERMINATION" shall mean: (a) if the Employee is terminated on account of
Disability pursuant to Section 2.2 above, 30 days after Notice of Termination
is given, provided that the Employee shall not have returned to the performance
of the Employee's duties on a full-time basis during such 30-day period; (b) if
the Employee's employment is terminated for Cause pursuant to Section 2.3
above, the date specified in the Notice of Termination; (c) with respect to a
termination of employment prior to a Change in Control that is deemed to have
occurred on the date of the Change in Control, the date of such Change in
Control; and (d) if the Employee's employment is terminated for any other
reason on or after a Change in Control, the date on which a Notice of
Termination is given; provided, however, in the event of any dispute or
controversy concerning the Employee's entitlement to payment under this
Agreement, solely for purposes of Section 3.3 and 3.4 below, concerning the
timing of the payment of amounts under this Agreement, the "DATE OF
TERMINATION" shall mean the date of final resolution of such dispute or
controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED PERIOD OR ON
TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any awards,
deferred and non-deferred, payable during such period of disability under the
Company's annual bonus plan, less any amounts paid to the Employee during such
period of Disability pursuant to the Company's sick-leave or disability program
until the Employee's employment is terminated on account of Disability pursuant
to Section 2.2 hereof, and (iii) all other applicable perquisites, insurance
and other employee benefits.
3.2 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee's employment shall be terminated by the
Company for Cause pursuant to Section 2.3 above, the Company shall pay the
Employee's earned but unpaid Annual Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, and the
Company shall have no further obligations to the Employee under this Agreement,
except those arising hereunder prior to the Date of Termination.
-5-
<PAGE> 6
3.3 If a Change in Control occurs during the Term pursuant to the
Merger Agreement, then, subject to the conditions stated in the last sentence
of this Section 3.3, the Company shall pay the Employee the following amount by
certified or bank cashier's check on each of two dates:
An amount equal to 1.5 times the sum of the Annual Base Salary and an
annual target bonus of 75% of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the following
dates, if the conditions stated in the following sentence are met: (1) the
date (the "MERGER EFFECTIVE DATE") on which the Effective Time of the Merger as
defined in the Merger Agreement (the "MERGER EFFECTIVE TIME") occurs, and (2)
the later of January 1, 1998, or the six- month anniversary of the Merger
Effective Date. The amounts shall be paid on those two dates only if the
Employee is employed by the Company on the Merger Effective Date, or if the
Company shall have terminated the employment of the Employee during the
Protected Period prior to the Merger Effective Date other than pursuant to
Sections 2.2 or 2.3 hereof, or if the Employee shall have terminated the
Employee's employment during the Protected Period prior to the Merger Effective
Date for Good Reason in accordance with Section 2.4 hereof.
3.4 If a Change in Control occurs during the Term and if, during
the Protected Period, the Company shall terminate the Employee other than
pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected Period, the
Employee shall terminate the Employee's employment for Good Reason in
accordance with Section 2.4 hereof, then, subject to Section 5 below and the
following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within five
days of such Date of Termination, the sum of the amounts specified in clauses
(a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed by
the terms of such plan) or earned but not paid as of such date under
all Company incentive or deferred compensation plans or programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 36
months.
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
4.1 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds outstanding unexercisable options under
the Company's stock option plan(s) immediately prior to the Merger Effective
Time (the "UNEXERCISABLE OPTIONS"), then, notwithstanding any provisions of
such plans or prior agreements between the Company and the Employee (and in
lieu of any exercisability or vesting schedules therein), each
-6-
<PAGE> 7
date on which a portion of an Unexercisable Option would otherwise vest and
become exercisable (a "VESTING DATE") shall be accelerated by two years;
provided, however, that no accelerated Vesting Date shall be deemed to occur
earlier than immediately prior to the Merger Effective Time. Notwithstanding
the foregoing provisions of this Section 4.1, a portion of an Unexercisable
Option shall become exercisable on a projected accelerated Vesting Date only if
the Employee is employed by the Company on such date; provided, however, in the
event the employee's employment is terminated subsequent to the Effective Time
of this Agreement while the Employee holds Unexercisable Options, (i) due to
the Employee's death, (ii) by the Company on account of the Employee's
Disability as provided in Section 2.2 hereof, (iii) by the Company other than
for Cause as provided in Section 2.3 hereof, or (iv) by the Employee for Good
Reason as provided in Section 2.4 hereof, then, notwithstanding any provision
of this Agreement to the contrary, each Unexercisable Option shall become fully
vested and exercisable on the later of (x) the date of such termination or (y)
immediately prior to the Merger Effective Time.
4.2 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds any outstanding shares of restricted
stock issued by the Company to the Employee under the Company's stock plan(s)
(including those granted under the Company's Target 2000: One, Two, Four Plan)
which remain subject to restrictions and/or performance or other criteria
relating thereto (the "RESTRICTIONS") immediately prior to the Merger Effective
Time (the "RESTRICTED SHARES"), then, notwithstanding any provisions of such
plans or prior agreements between the Company and the Employee (and in lieu of
any schedules for the lapsing of restrictions contained therein), each date on
which Restrictions on a portion of the Restricted Shares would otherwise lapse
or be deemed satisfied in full, as applicable (a "Lapsing Date"), shall be
accelerated by two years; provided, however, that no accelerated Lapsing Date
shall be deemed to occur earlier than immediately prior to the Merger Effective
Time. Notwithstanding the foregoing provisions of this Section 4.2,
Restrictions shall lapse on such portion of the Restricted Shares on a
projected accelerated Lapsing Date only if the Employee is employed by the
Company on such date; provided, however, in the event the employee's employment
is terminated subsequent to the Effective Time of this Agreement while the
Employee holds Restricted Shares, (i) due to the Employee's death, (ii) by the
Company on account of the Employee's Disability as provided in Section 2.2
hereof, (iii) by the Company other than for Cause as provided in Section 2.3
hereof, or (iv) by the Employee for Good Reason as provided in Section 2.4
hereof, then, notwithstanding any provision of this Agreement to the contrary,
all Restrictions on all such Restricted Shares shall lapse or be deemed
satisfied in full, as applicable, on the later of (x) the date of such
termination or (y) immediately prior to the Merger Effective Time. No later
than the fifth day following any such lapse of Restrictions, the Company shall
cause the relevant unrestricted shares of stock to be delivered to the
Employee.
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in connection
with his ongoing employment with the Company, this Agreement provides the
Employee with various benefits in the event of termination of the Employee's
employment with the Company during the Protected Period. If the Employee's
employment is terminated following a "CHANGE IN CONTROL" of the Company, within
the meaning of Section 280G of the Internal Revenue Code of 1986, as
-7-
<PAGE> 8
amended (the "CODE"), a portion of those benefits could be characterized as
"EXCESS PARACHUTE PAYMENTS" within the meaning of Section 280G of the Code.
The parties hereto acknowledge that the protections set forth in this Section 5
are important, and it is agreed that the Employee should not have to bear the
burden of any excise tax that might be levied under Section 4999 of the Code,
in the event that a portion of the benefits payable to the Employee pursuant to
this Agreement are treated as an excess parachute payment. The parties,
therefore, have agreed as set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding, if
it shall be determined that any payment or distribution by the Company or any
other person to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "PAYMENT") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"EXCISE TAX"), then the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an independent public accounting firm with a national reputation that is
selected by the Employee (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and to the Employee within 15
business days after each receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control of the Company, the
Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Company shall
indemnify and hold harmless the Employee, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed on the Employee as a result of such payment of fees and expenses. Any
Gross-Up Payment with respect to the respective Payment, as determined pursuant
to this Section 5, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Employee with respect to
the respective Payment, it shall furnish the Employee with a written opinion
that failure to report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding on the
Company and the Employee. As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments may not have
been made by the Company which should have been made ("UNDERPAYMENT"),
consistent with the
-8-
<PAGE> 9
calculations required to be made hereunder. If the Company exhausts its
remedies pursuant to Section 5.4 below and the Employee thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any claim
(including any threatened tax lien related to or based on any such claim) by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is
informed in writing of such claim (or threatened lien) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due or such tax lien would be
imposed). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim (or threatened
lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any proceedings
relating to such claim (or threatened lien);
provided, however, that the Company 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 Employee harmless, on an
after- tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Subsection 5.4, the Company shall control all proceedings taken 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 Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee 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 Employee shall
determine (but in no event shall the Company permit or direct the Employee to
allow a tax lien to be imposed on the Employee's property); provided, further,
that if the Company directs the Employee to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
-9-
<PAGE> 10
Employee, on an interest-free basis, and shall indemnify and hold the Employee
harmless on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income 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 Employee with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
5.5 If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes entitled
to receive any refund with respect to such amount, the Employee shall (subject
to the Company's complying with the requirements of Section 5.4 above) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If after the receipt by
the Employee of an amount advanced by the Company pursuant to Section 5.2, 5.3
or 5.4 above, a determination is made that the Employee shall not be entitled
to any refund with respect to such amount and the Company does not notify the
Employee in writing of its intent to contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that the
Employee seek or accept other employment following a termination of employment
and, amounts payable and benefits provided under this Agreement to the Employee
shall not be reduced by the Employee's acceptance of (or failure to seek or
accept) employment with another person. The Company's obligations to make the
payments and provide the benefits required for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, rights or action that the
Company may have against the Employee or others.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employee terminated the Employee's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "COMPANY" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that executes and delivers
the agreement provided for in
-10-
<PAGE> 11
this Section 7.1 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or, if none, to
the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five days after deposit in
the United States mail, registered and return receipt requested, postage
prepaid, addressed to the respective addresses set forth below or to such other
address as either party shall have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
David E. Fanta
27 Dumfries
Sugar Land, Texas 77479
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred upon the consummation of
the transactions contemplated by the Merger Agreement at the Effective Time of
the Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS. Employment
with the Company for purposes of this Agreement includes employment with any
entity (a "PARENT") which owns, directly or indirectly, 50% or more of the
total combined voting power of the Company's outstanding equity interests and
employment with any entity in which the Company or the Parent has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of all outstanding equity interests, it being understood that for purposes of
clause (a) of Section 2.4 hereof, "GOOD REASON" shall be construed to refer to
each of the Employee's positions, duties, responsibilities (reporting and
other), status, titles and offices with the Company and each of its
subsidiaries and parents.
-11-
<PAGE> 12
SECTION 11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and by the Chairman of the
Compensation Committee of the Board or other authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been approved
by the Board of Directors, and has been duly executed and delivered by Employee
and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a "DISPUTE")
the parties agree to resolve such Dispute in accordance with the following
procedure:
(a) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) one or more individuals with
decision-making authority regarding the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the
parties agree to submit the Dispute to mediation in accordance with
the Commercial Mediation Rules of the American Arbitration
Association.
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they
-12-
<PAGE> 13
have been unable to agree on such appointment within 10 days following
the 10-day period referred to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse the
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by the Employee in connection with such dispute, together
with interest thereon at the prevailing legal rate of interest, such
interest to accrue from the date of Notice of Termination through the
date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Section 16 includes
a finding denying, in total, the Employee's claims in such dispute,
the Employee shall be required to reimburse the Company, over a period
determined by the Employee but not to exceed 12 months from the date
of such resolution, for all sums advanced to the Employee with respect
to such dispute pursuant to this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
16.2 In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts
may be submitted by either party to a court of law for final determination by
initiation of a civil action in the proper state or Federal court sitting in
Harris County, Texas. Such action, to be valid, must be commenced within 20
days after receipt of the arbitrators' decision. If no such civil action is
commenced within such 20-day period, the legal conclusion reached by the
arbitrators shall be conclusive and binding on the parties. Any such civil
action shall be submitted, heard and determined solely on the basis of the
facts found by the arbitrators. Neither of the parties shall, or shall be
entitled to, submit
-13-
<PAGE> 14
any additional or different facts for consideration by the court. In the event
any civil action is commenced under this Section 16.2, the party who prevails
or substantially prevails (as determined by the court) in such civil action
shall be entitled to recover from the other party all costs, expenses and
reasonable attorneys' fees incurred in connection with such action and on
appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced
to enforce the rights awarded in an arbitration proceeding, the party who
prevails or substantially prevails in such legal proceeding shall be entitled
to recover from the other party all costs, expenses and reasonable attorneys'
fees incurred in connection with such legal proceeding and on appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or program
of the Company or any employment contract or agreement with the Company.
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
------------------------------
EMPLOYEE
/s/ David E. Fanta
----------------------------------
David E. Fanta
-14-
<PAGE> 1
EXHIBIT 10.44
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT, by
and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and WILLIAM
L. FIEDLER (the "EMPLOYEE"), which was effective as of November 11, 1996 (as so
amended and restated, the "AGREEMENT"), is entered into this 5th day of March
1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are extremely
valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement dated February 11, 1994 governing the Employee's
employment with the Company, which Employment Agreement has been amended by
that certain First Amendment to Employment Agreement dated November 11, 1996
(as amended, the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
it imperative that the Company be able to rely on the Employee to continue his
services to the Company without concern that the Employee may be distracted by
the personal uncertainties and risks created by the possibility of a change in
control; and
WHEREAS, the Company is entering into this Agreement with the Employee
in order to ensure the Employee's continued services, dedication and
objectivity during such period as the Company may be susceptible to a change in
control and to define the nature and terms of the Employee's severance benefits
following a Change in Control (as defined in Section 9 below); and
WHEREAS, an Agreement and Plan of Merger is being executed currently
herewith among the Company, Philip Environmental Inc., Taro Aggregates Ltd.,
and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this Section
1, this Agreement shall become effective (the "EFFECTIVE TIME") immediately
prior to (and subject to the occurrence of) approval of the Merger Agreement by
the Company's stockholders and shall continue until the expiration or
termination of the Employment Agreement, and to the extent that the Employment
Agreement is renewed for successive one-year periods, this Agreement shall be
similarly renewed (the "TERM"). If this Agreement becomes effective, the
Employee's original Executive Severance Agreement (and any prior amendments
thereto) described in the
-1-
<PAGE> 2
preamble hereto shall simultaneously become null and void; provided that, if
the Merger Agreement is terminated, then, on the date of such termination, this
Agreement shall terminate and the Employee's original Executive Severance
Agreement shall remain in full force and effect. Notwithstanding any provision
of this Agreement to the contrary, termination of this Agreement shall not
alter or impair any rights of the Employee (or the Employee's estate or
beneficiaries) that have arisen under this Agreement prior to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control which
occurs during the Term and ending 18 months following such Change in Control;
provided, however, if the Employee's employment with the Company terminates for
any reason (other than a termination (i) due to the Employee's death, (ii) by
the Company on account of the Employee's Disability as provided in Section 2.2
below, (iii) by the Company for Cause as provided in Section 2.3 below, or (iv)
by the Employee for other than Good Reason as provided in Section 2.4 below)
prior to, but within six months of, the date on which such a Change in Control
occurs, then, for all purposes of this Agreement: (A) the Employee shall be
deemed to have continued employment with the Company until the date of the
Change in Control and then terminated his employment on such date for Good
Reason, and (B) the Protected Period shall be deemed to have commenced
immediately prior to the Employee's actual termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a Change
in Control occurs during the Term, and if, as a result of the Employee's
illness, physical or mental disability, or other incapacity which continues for
an uninterrupted period in excess of three (3) months or a cumulative period of
six (6) months in any twelve (12) month period during the Protected Period, and
if, within 30 days after the Company has given the Employee written notice of
the Company's intention to terminate the Employee on account of such
incapacity, the Employee shall not have returned to the full-time performance
of the Employee's duties, then the Company may thereafter terminate the
Employee's employment on account of "DISABILITY"; provided, however, such
termination shall not by itself alter or impair the Employee's rights as a
"DISABLED EMPLOYEE" or otherwise under any of the Company's employee benefits
plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually fails
to perform substantially the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continues unabated after a demand for substantial
performance is delivered to the Employee by the Board that specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee's duties, or (b) the Employee willfully
engages in gross misconduct that is materially and demonstrably injurious to
the Company. For purposes of this Section 2.3, an act or failure to act on the
Employee's part shall be considered "WILLFUL" if done or omitted to be done by
the Employee otherwise than in good
-2-
<PAGE> 3
faith and without reasonable belief that the Employee's action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated by the Company for Cause
unless and until the Company shall have delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board, at a meeting of the Board called and
held for the purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Employee was guilty of conduct set forth in clauses (a) or (b) of the second
sentence of this Section 2.3 and specifying the particulars thereof in
reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company immediately prior
to the commencement of the Protected Period, or the Employee's status,
reporting responsibilities, titles or offices are materially
diminished from those in effect immediately prior to the commencement
of the Protected Period, or the Employee is removed from or is not
re-elected or appointed to any of such responsibilities, titles,
offices or positions, except in each case in connection with the
termination of the Employee's employment by the Company for Cause or
on account of Disability, or as a result of the Employee's death, or
by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an
insubstantial action not taken in bad faith and which is remedied by
the Company promptly after receipt of written notice from the
Employee; and provided further that Good Reason shall not be triggered
under this subsection (a) by any such alteration primarily
attributable to the fact that the Company may no longer be a public
company; or
(b) The Employee's annual rate of base salary is reduced
from that in effect immediately prior to the commencement of the
Protected Period or as the same may be increased from time to time
thereafter (such annual rate of base salary, as so increased (if
applicable) but prior to such reduction, is referred to hereinafter as
the "ANNUAL BASE SALARY"); provided, however, with respect to a
termination of employment prior to a Change in Control that is deemed
to have occurred on the date of the Change in Control, "ANNUAL BASE
SALARY" shall be the Employee's annual rate of base salary as in
effect immediately prior to the Employee's actual date of termination,
but disregarding any reduction therein made within 30 days of the
Employee's actual termination date; or
(c) The Company fails to continue in effect any benefit
or compensation plan (except the Supplemental Executive Retirement
Plan) which is material to the Employee's total compensation,
including, but not limited to, the Company's annual bonus plan,
qualified retirement plan, executive life insurance plan and/or health
and
-3-
<PAGE> 4
accident plan, in which the Employee is participating immediately
prior to the commencement of the Protected Period, or plans providing
the Employee with substantially similar benefits, or the Company takes
any action that would materially adversely affect the Employee's
participation in or reduce the Employee's benefits under any of such
plans (excluding any such action by the Company that is required by
law); or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35 miles
from where such offices were located immediately prior to such Change
in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.5 below and, if
applicable, the procedures described in Section 2.3 above; or
(h) The Company shall violate or breach any obligation of
the Company in effect immediately prior to the commencement of the
Protected Period (regardless whether such obligation be set forth in
the Employment Agreement or any other separate agreement entered into
between the Company and the Employee) to indemnify the Employee
against any claim, loss, expense or liability sustained or incurred by
the Employee by reason, in whole or in part, of the fact that the
Employee is or was an officer or director of the Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period relating
to the Employee's employment with the Company, but only if such
violation or breach (if capable of being remedied) shall continue
unremedied for more than 15 days after written notice thereof is given
by the Employee to the Company; or
(j) The Board (or any nominating committee of the Board)
fails to recommend and support the Employee's re-election as a
director of the Company if the Employee is a director of the Company
immediately prior to the commencement of the Protected Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section 2.4
above shall be communicated by written Notice of Termination to the other party
hereto; provided, however, that in the case of events of Good Reason enumerated
in subsections (f), (h), (i) or (l) of
-4-
<PAGE> 5
Section 2.4 hereof, the Company shall have the obligation to provide the
Employee with written notice of the occurrence of any of such events and the
Employee shall then have the opportunity to provide the Company with Notice of
Termination if he so elects. The Employee shall retain the ability to
terminate his employment for Good Reason under subsections (f), (h), (i) or (l)
of Section 2.4 hereof, even if the Company fails to provide written notice of
the occurrence of any of the events specified in such subsections as provided
herein. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
notice that shall indicate the specific termination provision in this Agreement
relied on and, except in the case of the termination referred to in the last
subsection of Section 2.4 above, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated. Any purported termination of this
Agreement not in compliance with the requirements of this Section 2.5 or, if
applicable, the procedures described in Section 2.3 above shall be ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE OF
TERMINATION" shall mean: (a) if the Employee is terminated on account of
Disability pursuant to Section 2.2 above, 30 days after Notice of Termination
is given, provided that the Employee shall not have returned to the performance
of the Employee's duties on a full-time basis during such 30-day period; (b) if
the Employee's employment is terminated for Cause pursuant to Section 2.3
above, the date specified in the Notice of Termination; (c) with respect to a
termination of employment prior to a Change in Control that is deemed to have
occurred on the date of the Change in Control, the date of such Change in
Control; and (d) if the Employee's employment is terminated for any other
reason on or after a Change in Control, the date on which a Notice of
Termination is given; provided, however, in the event of any dispute or
controversy concerning the Employee's entitlement to payment under this
Agreement, solely for purposes of Section 3.3 and 3.4 below, concerning the
timing of the payment of amounts under this Agreement, the "DATE OF
TERMINATION" shall mean the date of final resolution of such dispute or
controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED
PERIOD OR ON TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any awards,
deferred and non-deferred, payable during such period of disability under the
Company's annual bonus plan, less any amounts paid to the Employee during such
period of Disability pursuant to the Company's sick-leave or disability program
until the Employee's employment is terminated on account of Disability pursuant
to Section 2.2 hereof, and (iii) all other applicable perquisites, insurance
and other employee benefits.
3.2 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee's employment shall be terminated by the
Company for Cause pursuant to Section 2.3 above, the Company shall pay the
Employee's earned but unpaid Annual Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given,
-5-
<PAGE> 6
and the Company shall have no further obligations to the Employee under this
Agreement, except those arising hereunder prior to the Date of Termination.
3.3 If a Change in Control occurs during the Term pursuant to the
Merger Agreement, then, subject to the conditions stated in the last sentence
of this Section 3.3, the Company shall pay the Employee the following amount by
certified or bank cashier's check on each of two dates:
An amount equal to the sum of the Annual Base Salary and an annual
target bonus of 60% of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the following
dates, if the conditions stated in the following sentence are met: (1) the
date (the "MERGER EFFECTIVE DATE") on which the Effective Time of the Merger as
defined in the Merger Agreement (the "MERGER EFFECTIVE TIME") occurs, and (2)
the later of January 1, 1998, or the six- month anniversary of the Merger
Effective Date. The amounts shall be paid on those two dates only if the
Employee is employed by the Company on the Merger Effective Date, or if the
Company shall have terminated the employment of the Employee during the
Protected Period prior to the Merger Effective Date other than pursuant to
Sections 2.2 or 2.3 hereof, or if the Employee shall have terminated the
Employee's employment during the Protected Period prior to the Merger Effective
Date for Good Reason in accordance with Section 2.4 hereof.
3.4 If a Change in Control occurs during the Term and if, during
the Protected Period, the Company shall terminate the Employee other than
pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected Period, the
Employee shall terminate the Employee's employment for Good Reason in
accordance with Section 2.4 hereof, then, subject to Section 5 below and the
following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within five
days of such Date of Termination, the sum of the amounts specified in clauses
(a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed by
the terms of such plan) or earned but not paid as of such date under
all Company incentive or deferred compensation plans or programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 24
months.
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
4.1 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds outstanding unexercisable options under
the Company's
-6-
<PAGE> 7
stock option plan(s) immediately prior to the Merger Effective Time (the
"UNEXERCISABLE OPTIONS"), then, notwithstanding any provisions of such plans or
prior agreements between the Company and the Employee (and in lieu of any
exercisability or vesting schedules therein), each date on which a portion of
an Unexercisable Option would otherwise vest and become exercisable (a "VESTING
DATE") shall be accelerated by two years; provided, however, that no
accelerated Vesting Date shall be deemed to occur earlier than immediately
prior to the Merger Effective Time. Notwithstanding the foregoing provisions
of this Section 4.1, a portion of an Unexercisable Option shall become
exercisable on a projected accelerated Vesting Date only if the Employee is
employed by the Company on such date; provided, however, in the event the
employee's employment is terminated subsequent to the Effective Time of this
Agreement while the Employee holds Unexercisable Options, (i) due to the
Employee's death, (ii) by the Company on account of the Employee's Disability
as provided in Section 2.2 hereof, (iii) by the Company other than for Cause as
provided in Section 2.3 hereof, or (iv) by the Employee for Good Reason as
provided in Section 2.4 hereof, then, notwithstanding any provision of this
Agreement to the contrary, each Unexercisable Option shall become fully vested
and exercisable on the later of (x) the date of such termination or (y)
immediately prior to the Merger Effective Time.
4.2 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds any outstanding shares of restricted
stock issued by the Company to the Employee under the Company's stock plan(s)
(including those granted under the Company's Target 2000: One, Two, Four Plan)
which remain subject to restrictions and/or performance or other criteria
relating thereto (the "RESTRICTIONS") immediately prior to the Merger Effective
Time (the "RESTRICTED SHARES"), then, notwithstanding any provisions of such
plans or prior agreements between the Company and the Employee (and in lieu of
any schedules for the lapsing of restrictions contained therein), each date on
which Restrictions on a portion of the Restricted Shares would otherwise lapse
or be deemed satisfied in full, as applicable (a "Lapsing Date"), shall be
accelerated by two years; provided, however, that no accelerated Lapsing Date
shall be deemed to occur earlier than immediately prior to the Merger Effective
Time. Notwithstanding the foregoing provisions of this Section 4.2,
Restrictions shall lapse on such portion of the Restricted Shares on a
projected accelerated Lapsing Date only if the Employee is employed by the
Company on such date; provided, however, in the event the employee's employment
is terminated subsequent to the Effective Time of this Agreement while the
Employee holds Restricted Shares, (i) due to the Employee's death, (ii) by the
Company on account of the Employee's Disability as provided in Section 2.2
hereof, (iii) by the Company other than for Cause as provided in Section 2.3
hereof, or (iv) by the Employee for Good Reason as provided in Section 2.4
hereof, then, notwithstanding any provision of this Agreement to the contrary,
all Restrictions on all such Restricted Shares shall lapse or be deemed
satisfied in full, as applicable, on the later of (x) the date of such
termination or (y) immediately prior to the Merger Effective Time. No later
than the fifth day following any such lapse of Restrictions, the Company shall
cause the relevant unrestricted shares of stock to be delivered to the
Employee.
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in connection
with his ongoing employment with the Company, this Agreement provides the
Employee with various
-7-
<PAGE> 8
benefits in the event of termination of the Employee's employment with the
Company during the Protected Period. If the Employee's employment is
terminated following a "CHANGE IN CONTROL" of the Company, within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the "CODE"),
a portion of those benefits could be characterized as "EXCESS PARACHUTE
PAYMENTS" within the meaning of Section 280G of the Code. The parties hereto
acknowledge that the protections set forth in this Section 5 are important, and
it is agreed that the Employee should not have to bear the burden of any excise
tax that might be levied under Section 4999 of the Code, in the event that a
portion of the benefits payable to the Employee pursuant to this Agreement are
treated as an excess parachute payment. The parties, therefore, have agreed as
set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding, if
it shall be determined that any payment or distribution by the Company or any
other person to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "PAYMENT") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"EXCISE TAX"), then the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an independent public accounting firm with a national reputation that is
selected by the Employee (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and to the Employee within 15
business days after each receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control of the Company, the
Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Company shall
indemnify and hold harmless the Employee, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed on the Employee as a result of such payment of fees and expenses. Any
Gross-Up Payment with respect to the respective Payment, as determined pursuant
to this Section 5, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Employee with respect to
the respective Payment, it shall furnish the Employee with a written opinion
that failure to report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding on the
Company and the Employee. As a result of
-8-
<PAGE> 9
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments may not have been made by the Company which should have been
made ("UNDERPAYMENT"), consistent with the calculations required to be made
hereunder. If the Company exhausts its remedies pursuant to Section 5.4 below
and the Employee thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any claim
(including any threatened tax lien related to or based on any such claim) by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is
informed in writing of such claim (or threatened lien) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due or such tax lien would be
imposed). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim (or threatened
lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any proceedings
relating to such claim (or threatened lien);
provided, however, that the Company 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 Employee harmless, on an
after- tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Subsection 5.4, the Company shall control all proceedings taken 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 Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee 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 Employee shall
determine (but in no
-9-
<PAGE> 10
event shall the Company permit or direct the Employee to allow a tax lien to be
imposed on the Employee's property); provided, further, that if the Company
directs the Employee to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Employee, on an interest-free basis,
and shall indemnify and hold the Employee harmless on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income 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 Employee with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. In addition, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and the Employee shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
5.5 If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes entitled
to receive any refund with respect to such amount, the Employee shall (subject
to the Company's complying with the requirements of Section 5.4 above) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If after the receipt by
the Employee of an amount advanced by the Company pursuant to Section 5.2, 5.3
or 5.4 above, a determination is made that the Employee shall not be entitled
to any refund with respect to such amount and the Company does not notify the
Employee in writing of its intent to contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that the
Employee seek or accept other employment following a termination of employment
and, amounts payable and benefits provided under this Agreement to the Employee
shall not be reduced by the Employee's acceptance of (or failure to seek or
accept) employment with another person. The Company's obligations to make the
payments and provide the benefits required for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, rights or action that the
Company may have against the Employee or others.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employee terminated the Employee's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such
-10-
<PAGE> 11
succession becomes effective shall be deemed the Date of Termination. As used
in this Agreement, "COMPANY" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid that executes and
delivers the agreement provided for in this Section 7.1 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or, if none, to
the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five days after deposit in
the United States mail, registered and return receipt requested, postage
prepaid, addressed to the respective addresses set forth below or to such other
address as either party shall have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
William L. Fiedler
3000 Bissonnet #8101
Houston, Texas 77005
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred upon the consummation of
the transactions contemplated by the Merger Agreement at the Effective Time of
the Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS. Employment
with the Company for purposes of this Agreement includes employment with any
entity (a "PARENT") which owns, directly or indirectly, 50% or more of the
total combined voting power of the Company's outstanding equity interests and
employment with any entity in which the Company or the Parent has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of all outstanding equity interests, it being understood that for purposes of
clause (a) of Section 2.4 hereof, "GOOD REASON" shall be construed to refer to
each
-11-
<PAGE> 12
of the Employee's positions, duties, responsibilities (reporting and other),
status, titles and offices with the Company and each of its subsidiaries and
parents.
SECTION 11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and by the Chairman of the
Compensation Committee of the Board or other authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been approved
by the Board of Directors, and has been duly executed and delivered by Employee
and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a "DISPUTE")
the parties agree to resolve such Dispute in accordance with the following
procedure:
(a) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) one or more individuals with
decision-making authority regarding the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the
parties agree to submit the Dispute to mediation in accordance with
the Commercial Mediation Rules of the American Arbitration
Association.
-12-
<PAGE> 13
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they have been unable to agree on
such appointment within 10 days following the 10-day period referred
to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse the
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by the Employee in connection with such dispute, together
with interest thereon at the prevailing legal rate of interest, such
interest to accrue from the date of Notice of Termination through the
date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Section 16 includes
a finding denying, in total, the Employee's claims in such dispute,
the Employee shall be required to reimburse the Company, over a period
determined by the Employee but not to exceed 12 months from the date
of such resolution, for all sums advanced to the Employee with respect
to such dispute pursuant to this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
16.2 In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts
may be submitted by either party to a court of law for final determination by
initiation of a civil action in the proper state or Federal court sitting in
Harris County, Texas. Such action, to be valid, must be commenced within 20
days after receipt of the arbitrators' decision. If no such civil action is
commenced within such 20-day period, the legal conclusion reached by the
arbitrators shall be conclusive and binding on
-13-
<PAGE> 14
the parties. Any such civil action shall be submitted, heard and determined
solely on the basis of the facts found by the arbitrators. Neither of the
parties shall, or shall be entitled to, submit any additional or different
facts for consideration by the court. In the event any civil action is
commenced under this Section 16.2, the party who prevails or substantially
prevails (as determined by the court) in such civil action shall be entitled to
recover from the other party all costs, expenses and reasonable attorneys' fees
incurred in connection with such action and on appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced
to enforce the rights awarded in an arbitration proceeding, the party who
prevails or substantially prevails in such legal proceeding shall be entitled
to recover from the other party all costs, expenses and reasonable attorneys'
fees incurred in connection with such legal proceeding and on appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or program
of the Company or any employment contract or agreement with the Company.
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
-----------------------------------------
EMPLOYEE
/s/ William L. Fiedler
---------------------------------------------
William L. Fiedler
-14-
<PAGE> 1
EXHIBIT 10.45
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT, by
and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and R. L.
NELSON, JR. (the "EMPLOYEE"), which was effective as of November 11, 1996 (as
so amended and restated, the "AGREEMENT"), is entered into this 5th day of
March 1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are extremely
valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement dated October 23, 1986 governing the Employee's employment
with the Company, which Employment Agreement has been amended by that certain
First Amendment to Employment Agreement dated November 11,1996 (as amended, the
"EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
it imperative that the Company be able to rely on the Employee to continue his
services to the Company without concern that the Employee may be distracted by
the personal uncertainties and risks created by the possibility of a change in
control; and
WHEREAS, the Company is entering into this Agreement with the Employee
in order to ensure the Employee's continued services, dedication and
objectivity during such period as the Company may be susceptible to a change in
control and to define the nature and terms of the Employee's severance benefits
following a Change in Control (as defined in Section 9 below); and
WHEREAS, an Agreement and Plan of Merger is being executed currently
herewith among the Company, Philip Environmental Inc., Taro Aggregates Ltd.,
and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this Section
1, this Agreement shall become effective (the "EFFECTIVE TIME") immediately
prior to (and subject to the occurrence of) approval of the Merger Agreement by
the Company's stockholders and shall continue until the expiration or
termination of the Employment Agreement, and to the extent that the Employment
Agreement is renewed for successive one-year periods, this Agreement shall be
similarly renewed (the "TERM"). If this Agreement becomes effective, the
Employee's original Executive Severance Agreement (and any prior amendments
thereto) described in the
-1-
<PAGE> 2
preamble hereto shall simultaneously become null and void; provided that, if
the Merger Agreement is terminated, then, on the date of such termination, this
Agreement shall terminate and the Employee's original Executive Severance
Agreement shall remain in full force and effect. Notwithstanding any provision
of this Agreement to the contrary, termination of this Agreement shall not
alter or impair any rights of the Employee (or the Employee's estate or
beneficiaries) that have arisen under this Agreement prior to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control which
occurs during the Term and ending 18 months following such Change in Control;
provided, however, if the Employee's employment with the Company terminates for
any reason (other than a termination (i) due to the Employee's death, (ii) by
the Company on account of the Employee's Disability as provided in Section 2.2
below, (iii) by the Company for Cause as provided in Section 2.3 below, or (iv)
by the Employee for other than Good Reason as provided in Section 2.4 below)
prior to, but within six months of, the date on which such a Change in Control
occurs, then, for all purposes of this Agreement: (A) the Employee shall be
deemed to have continued employment with the Company until the date of the
Change in Control and then terminated his employment on such date for Good
Reason, and (B) the Protected Period shall be deemed to have commenced
immediately prior to the Employee's actual termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a Change
in Control occurs during the Term, and if, as a result of the Employee's
illness, physical or mental disability, or other incapacity which continues for
an uninterrupted period in excess of three (3) months or a cumulative period of
six (6) months in any twelve (12) month period during the Protected Period, and
if, within 30 days after the Company has given the Employee written notice of
the Company's intention to terminate the Employee on account of such
incapacity, the Employee shall not have returned to the full-time performance
of the Employee's duties, then the Company may thereafter terminate the
Employee's employment on account of "DISABILITY"; provided, however, such
termination shall not by itself alter or impair the Employee's rights as a
"DISABLED EMPLOYEE" or otherwise under any of the Company's employee benefits
plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually fails
to perform substantially the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continues unabated after a demand for substantial
performance is delivered to the Employee by the Board that specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee's duties, or (b) the Employee willfully
engages in gross misconduct that is materially and demonstrably injurious to
the Company. For purposes of this Section 2.3, an act or failure to act on the
Employee's part shall be considered "WILLFUL" if done or omitted to be done by
the Employee otherwise than in good
-2-
<PAGE> 3
faith and without reasonable belief that the Employee's action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated by the Company for Cause
unless and until the Company shall have delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board, at a meeting of the Board called and
held for the purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Employee was guilty of conduct set forth in clauses (a) or (b) of the second
sentence of this Section 2.3 and specifying the particulars thereof in
reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company immediately prior
to the commencement of the Protected Period, or the Employee's status,
reporting responsibilities, titles or offices are materially
diminished from those in effect immediately prior to the commencement
of the Protected Period, or the Employee is removed from or is not
re-elected or appointed to any of such responsibilities, titles,
offices or positions, except in each case in connection with the
termination of the Employee's employment by the Company for Cause or
on account of Disability, or as a result of the Employee's death, or
by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an
insubstantial action not taken in bad faith and which is remedied by
the Company promptly after receipt of written notice from the
Employee; and provided further that Good Reason shall not be triggered
under this subsection (a) by any such alteration primarily
attributable to the fact that the Company may no longer be a public
company; or
(b) The Employee's annual rate of base salary is reduced
from that in effect immediately prior to the commencement of the
Protected Period or as the same may be increased from time to time
thereafter (such annual rate of base salary, as so increased (if
applicable) but prior to such reduction, is referred to hereinafter as
the "ANNUAL BASE SALARY"); provided, however, with respect to a
termination of employment prior to a Change in Control that is deemed
to have occurred on the date of the Change in Control, "ANNUAL BASE
SALARY" shall be the Employee's annual rate of base salary as in
effect immediately prior to the Employee's actual date of termination,
but disregarding any reduction therein made within 30 days of the
Employee's actual termination date; or
(c) The Company fails to continue in effect any benefit
or compensation plan (except the Supplemental Executive Retirement
Plan) which is material to the Employee's total compensation,
including, but not limited to, the Company's annual bonus plan,
qualified retirement plan, executive life insurance plan and/or health
and
-3-
<PAGE> 4
accident plan, in which the Employee is participating immediately
prior to the commencement of the Protected Period, or plans providing
the Employee with substantially similar benefits, or the Company takes
any action that would materially adversely affect the Employee's
participation in or reduce the Employee's benefits under any of such
plans (excluding any such action by the Company that is required by
law); or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35 miles
from where such offices were located immediately prior to such Change
in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.5 below and, if
applicable, the procedures described in Section 2.3 above; or
(h) The Company shall violate or breach any obligation of
the Company in effect immediately prior to the commencement of the
Protected Period (regardless whether such obligation be set forth in
the Employment Agreement or any other separate agreement entered into
between the Company and the Employee) to indemnify the Employee
against any claim, loss, expense or liability sustained or incurred by
the Employee by reason, in whole or in part, of the fact that the
Employee is or was an officer or director of the Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period relating
to the Employee's employment with the Company, but only if such
violation or breach (if capable of being remedied) shall continue
unremedied for more than 15 days after written notice thereof is given
by the Employee to the Company; or
(j) The Board (or any nominating committee of the Board)
fails to recommend and support the Employee's re-election as a
director of the Company if the Employee is a director of the Company
immediately prior to the commencement of the Protected Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section 2.4
above shall be communicated by written Notice of Termination to the other party
hereto; provided, however, that in the case of events of Good Reason enumerated
in subsections (f), (h), (i) or (l) of
-4-
<PAGE> 5
Section 2.4 hereof, the Company shall have the obligation to provide the
Employee with written notice of the occurrence of any of such events and the
Employee shall then have the opportunity to provide the Company with Notice of
Termination if he so elects. The Employee shall retain the ability to
terminate his employment for Good Reason under subsections (f), (h), (i) or (l)
of Section 2.4 hereof, even if the Company fails to provide written notice of
the occurrence of any of the events specified in such subsections as provided
herein. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
notice that shall indicate the specific termination provision in this Agreement
relied on and, except in the case of the termination referred to in the last
subsection of Section 2.4 above, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated. Any purported termination of this
Agreement not in compliance with the requirements of this Section 2.5 or, if
applicable, the procedures described in Section 2.3 above shall be ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE OF
TERMINATION" shall mean: (a) if the Employee is terminated on account of
Disability pursuant to Section 2.2 above, 30 days after Notice of Termination
is given, provided that the Employee shall not have returned to the performance
of the Employee's duties on a full-time basis during such 30-day period; (b) if
the Employee's employment is terminated for Cause pursuant to Section 2.3
above, the date specified in the Notice of Termination; (c) with respect to a
termination of employment prior to a Change in Control that is deemed to have
occurred on the date of the Change in Control, the date of such Change in
Control; and (d) if the Employee's employment is terminated for any other
reason on or after a Change in Control, the date on which a Notice of
Termination is given; provided, however, in the event of any dispute or
controversy concerning the Employee's entitlement to payment under this
Agreement, solely for purposes of Section 3.3 and 3.4 below, concerning the
timing of the payment of amounts under this Agreement, the "DATE OF
TERMINATION" shall mean the date of final resolution of such dispute or
controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED PERIOD OR ON
TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any awards,
deferred and non-deferred, payable during such period of disability under the
Company's annual bonus plan, less any amounts paid to the Employee during such
period of Disability pursuant to the Company's sick-leave or disability program
until the Employee's employment is terminated on account of Disability pursuant
to Section 2.2 hereof, and (iii) all other applicable perquisites, insurance
and other employee benefits.
3.2 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee's employment shall be terminated by the
Company for Cause pursuant to Section 2.3 above, the Company shall pay the
Employee's earned but unpaid Annual Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given,
-5-
<PAGE> 6
and the Company shall have no further obligations to the Employee under this
Agreement, except those arising hereunder prior to the Date of Termination.
3.3 If a Change in Control occurs during the Term pursuant to the
Merger Agreement, then, subject to the conditions stated in the last sentence
of this Section 3.3, the Company shall pay the Employee the following amount by
certified or bank cashier's check on each of two dates:
An amount equal to 1.5 times the sum of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the following
dates, if the conditions stated in the following sentence are met: (1) the
date (the "MERGER EFFECTIVE DATE") on which the Effective Time of the Merger as
defined in the Merger Agreement (the "MERGER EFFECTIVE TIME") occurs, and (2)
the later of January 1, 1998, or the six- month anniversary of the Merger
Effective Date. The amounts shall be paid on those two dates only if the
Employee is employed by the Company on the Merger Effective Date, or if the
Company shall have terminated the employment of the Employee during the
Protected Period prior to the Merger Effective Date other than pursuant to
Sections 2.2 or 2.3 hereof, or if the Employee shall have terminated the
Employee's employment during the Protected Period prior to the Merger Effective
Date for Good Reason in accordance with Section 2.4 hereof.
3.4 If a Change in Control occurs during the Term and if, during
the Protected Period, the Company shall terminate the Employee other than
pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected Period, the
Employee shall terminate the Employee's employment for Good Reason in
accordance with Section 2.4 hereof, then, subject to Section 5 below and the
following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within five
days of such Date of Termination, the sum of the amounts specified in clauses
(a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed by
the terms of such plan) or earned but not paid as of such date under
all Company incentive or deferred compensation plans or programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 36
months.
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
If a Change in Control occurs during the Term pursuant to the Merger
Agreement and the Employee holds outstanding unexercisable options under the
Company's stock option plan(s) immediately prior to the Merger Effective Time
(the "UNEXERCISABLE OPTIONS"), then,
-6-
<PAGE> 7
notwithstanding any provisions of such plans or prior agreements between the
Company and the Employee (and in lieu of any exercisability or vesting
schedules therein), each Unexercisable Option shall become fully vested and
exercisable immediately prior to the Merger Effective Time.
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in connection
with his ongoing employment with the Company, this Agreement provides the
Employee with various benefits in the event of termination of the Employee's
employment with the Company during the Protected Period. If the Employee's
employment is terminated following a "CHANGE IN CONTROL" of the Company, within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "CODE"), a portion of those benefits could be characterized as "EXCESS
PARACHUTE PAYMENTS" within the meaning of Section 280G of the Code. The
parties hereto acknowledge that the protections set forth in this Section 5 are
important, and it is agreed that the Employee should not have to bear the
burden of any excise tax that might be levied under Section 4999 of the Code,
in the event that a portion of the benefits payable to the Employee pursuant to
this Agreement are treated as an excess parachute payment. The parties,
therefore, have agreed as set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding, if
it shall be determined that any payment or distribution by the Company or any
other person to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "PAYMENT") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"EXCISE TAX"), then the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an independent public accounting firm with a national reputation that is
selected by the Employee (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and to the Employee within 15
business days after each receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control of the Company, the
Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne
-7-
<PAGE> 8
solely by the Company. The Company shall indemnify and hold harmless the
Employee, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed on the Employee as a
result of such payment of fees and expenses. Any Gross-Up Payment with respect
to the respective Payment, as determined pursuant to this Section 5, shall be
paid by the Company to the Employee within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Employee with respect to the respective Payment,
it shall furnish the Employee with a written opinion that failure to report the
Excise Tax on the Employee's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any determination
by the Accounting Firm shall be binding on the Company and the Employee. As a
result of uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments may not have been made by the Company which
should have been made ("UNDERPAYMENT"), consistent with the calculations
required to be made hereunder. If the Company exhausts its remedies pursuant
to Section 5.4 below and the Employee thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any claim
(including any threatened tax lien related to or based on any such claim) by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is
informed in writing of such claim (or threatened lien) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due or such tax lien would be
imposed). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim (or threatened
lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any proceedings
relating to such claim (or threatened lien);
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall
-8-
<PAGE> 9
indemnify and hold the Employee harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Subsection 5.4, the
Company shall control all proceedings taken 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 Employee
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Employee 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 Employee shall
determine (but in no event shall the Company permit or direct the Employee to
allow a tax lien to be imposed on the Employee's property); provided, further,
that if the Company directs the Employee to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the Employee,
on an interest-free basis, and shall indemnify and hold the Employee harmless
on an after- tax basis, from any Excise Tax or income tax (including interest
or penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income 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 Employee with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
5.5 If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes entitled
to receive any refund with respect to such amount, the Employee shall (subject
to the Company's complying with the requirements of Section 5.4 above) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If after the receipt by
the Employee of an amount advanced by the Company pursuant to Section 5.2, 5.3
or 5.4 above, a determination is made that the Employee shall not be entitled
to any refund with respect to such amount and the Company does not notify the
Employee in writing of its intent to contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that the
Employee seek or accept other employment following a termination of employment
and, amounts payable and benefits provided under this Agreement to the Employee
shall not be reduced by the Employee's acceptance of (or failure to seek or
accept) employment with another person. The Company's obligations to make the
payments and provide the benefits required for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, rights or action that the
Company may have against the Employee or others.
-9-
<PAGE> 10
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employee terminated the Employee's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "COMPANY" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that executes and delivers
the agreement provided for in this Section 7.1 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or, if none, to
the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five days after deposit in
the United States mail, registered and return receipt requested, postage
prepaid, addressed to the respective addresses set forth below or to such other
address as either party shall have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
R.L. Nelson, Jr.
5520 Woodway
Houston, Texas 77056
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred upon the consummation of
the
-10-
<PAGE> 11
transactions contemplated by the Merger Agreement at the Effective Time of the
Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS. Employment
with the Company for purposes of this Agreement includes employment with any
entity (a "PARENT") which owns, directly or indirectly, 50% or more of the
total combined voting power of the Company's outstanding equity interests and
employment with any entity in which the Company or the Parent has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of all outstanding equity interests, it being understood that for purposes of
clause (a) of Section 2.4 hereof, "GOOD REASON" shall be construed to refer to
each of the Employee's positions, duties, responsibilities (reporting and
other), status, titles and offices with the Company and each of its
subsidiaries and parents.
SECTION 11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and by the Chairman of the
Compensation Committee of the Board or other authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been approved
by the Board of Directors, and has been duly executed and delivered by Employee
and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a "DISPUTE")
the parties agree to resolve such Dispute in accordance with the following
procedure:
-11-
<PAGE> 12
(a) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) one or more individuals with
decision-making authority regarding the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the
parties agree to submit the Dispute to mediation in accordance with
the Commercial Mediation Rules of the American Arbitration
Association.
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they have been unable to agree on
such appointment within 10 days following the 10-day period referred
to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse the
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by the Employee in connection with such dispute, together
with interest thereon at the prevailing legal rate of interest, such
interest to accrue from the date of Notice of Termination through the
date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Section 16 includes
a finding denying, in total, the Employee's claims in such dispute,
the Employee shall be required to reimburse the Company, over a period
determined by the Employee but not to exceed 12 months from the date
of such resolution, for all sums advanced to the Employee with respect
to such dispute pursuant to this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
-12-
<PAGE> 13
16.2 In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts
may be submitted by either party to a court of law for final determination by
initiation of a civil action in the proper state or Federal court sitting in
Harris County, Texas. Such action, to be valid, must be commenced within 20
days after receipt of the arbitrators' decision. If no such civil action is
commenced within such 20-day period, the legal conclusion reached by the
arbitrators shall be conclusive and binding on the parties. Any such civil
action shall be submitted, heard and determined solely on the basis of the
facts found by the arbitrators. Neither of the parties shall, or shall be
entitled to, submit any additional or different facts for consideration by the
court. In the event any civil action is commenced under this Section 16.2, the
party who prevails or substantially prevails (as determined by the court) in
such civil action shall be entitled to recover from the other party all costs,
expenses and reasonable attorneys' fees incurred in connection with such action
and on appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced
to enforce the rights awarded in an arbitration proceeding, the party who
prevails or substantially prevails in such legal proceeding shall be entitled
to recover from the other party all costs, expenses and reasonable attorneys'
fees incurred in connection with such legal proceeding and on appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or program
of the Company or any employment contract or agreement with the Company.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
---------------------------------------
EMPLOYEE
/s/ R.L. Nelson, Jr.
-------------------------------------------
R.L. Nelson, Jr.
-14-
<PAGE> 1
EXHIBIT 10.46
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT, by
and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and MICHAEL
W. RAMIREZ (the "EMPLOYEE"), which was effective as of November 11, 1996 (as so
amended and restated, the "AGREEMENT"), is entered into this 5th day of March
1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are extremely
valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement dated November 11, 1996 governing the Employee's
employment with the Company (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
it imperative that the Company be able to rely on the Employee to continue his
services to the Company without concern that the Employee may be distracted by
the personal uncertainties and risks created by the possibility of a change in
control; and
WHEREAS, the Company is entering into this Agreement with the Employee
in order to ensure the Employee's continued services, dedication and
objectivity during such period as the Company may be susceptible to a change in
control and to define the nature and terms of the Employee's severance benefits
following a Change in Control (as defined in Section 9 below); and
WHEREAS, an Agreement and Plan of Merger is being executed currently
herewith among the Company, Philip Environmental Inc., Taro Aggregates Ltd.,
and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this Section
1, this Agreement shall become effective (the "EFFECTIVE TIME") immediately
prior to (and subject to the occurrence of) approval of the Merger Agreement by
the Company's stockholders and shall continue until the expiration or
termination of the Employment Agreement, and to the extent that the Employment
Agreement is renewed for successive one-year periods, this Agreement shall be
similarly renewed (the "TERM"). If this Agreement becomes effective, the
Employee's original Executive Severance Agreement (and any prior amendments
thereto) described in the preamble hereto shall simultaneously become null and
void; provided that, if the Merger Agreement is terminated, then, on the date
of such termination, this Agreement shall terminate
-1-
<PAGE> 2
and the Employee's original Executive Severance Agreement shall remain in full
force and effect. Notwithstanding any provision of this Agreement to the
contrary, termination of this Agreement shall not alter or impair any rights of
the Employee (or the Employee's estate or beneficiaries) that have arisen under
this Agreement prior to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control which
occurs during the Term and ending 18 months following such Change in Control;
provided, however, if the Employee's employment with the Company terminates for
any reason (other than a termination (i) due to the Employee's death, (ii) by
the Company on account of the Employee's Disability as provided in Section 2.2
below, (iii) by the Company for Cause as provided in Section 2.3 below, or (iv)
by the Employee for other than Good Reason as provided in Section 2.4 below)
prior to, but within six months of, the date on which such a Change in Control
occurs, then, for all purposes of this Agreement: (A) the Employee shall be
deemed to have continued employment with the Company until the date of the
Change in Control and then terminated his employment on such date for Good
Reason, and (B) the Protected Period shall be deemed to have commenced
immediately prior to the Employee's actual termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a Change
in Control occurs during the Term, and if, as a result of the Employee's
illness, physical or mental disability, or other incapacity which continues for
an uninterrupted period in excess of three (3) months or a cumulative period of
six (6) months in any twelve (12) month period during the Protected Period, and
if, within 30 days after the Company has given the Employee written notice of
the Company's intention to terminate the Employee on account of such
incapacity, the Employee shall not have returned to the full-time performance
of the Employee's duties, then the Company may thereafter terminate the
Employee's employment on account of "DISABILITY"; provided, however, such
termination shall not by itself alter or impair the Employee's rights as a
"DISABLED EMPLOYEE" or otherwise under any of the Company's employee benefits
plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually fails
to perform substantially the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continues unabated after a demand for substantial
performance is delivered to the Employee by the Board that specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee's duties, or (b) the Employee willfully
engages in gross misconduct that is materially and demonstrably injurious to
the Company. For purposes of this Section 2.3, an act or failure to act on the
Employee's part shall be considered "WILLFUL" if done or omitted to be done by
the Employee otherwise than in good faith and without reasonable belief that
the Employee's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be deemed to
-2-
<PAGE> 3
have been terminated by the Company for Cause unless and until the Company
shall have delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board, at a meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Employee was guilty of conduct set
forth in clauses (a) or (b) of the second sentence of this Section 2.3 and
specifying the particulars thereof in reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company immediately prior
to the commencement of the Protected Period, or the Employee's status,
reporting responsibilities, titles or offices are materially
diminished from those in effect immediately prior to the commencement
of the Protected Period, or the Employee is removed from or is not
re-elected or appointed to any of such responsibilities, titles,
offices or positions, except in each case in connection with the
termination of the Employee's employment by the Company for Cause or
on account of Disability, or as a result of the Employee's death, or
by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an
insubstantial action not taken in bad faith and which is remedied by
the Company promptly after receipt of written notice from the
Employee; and provided further that Good Reason shall not be triggered
under this subsection (a) by any such alteration primarily
attributable to the fact that the Company may no longer be a public
company; or
(b) The Employee's annual rate of base salary is reduced
from that in effect immediately prior to the commencement of the
Protected Period or as the same may be increased from time to time
thereafter (such annual rate of base salary, as so increased (if
applicable) but prior to such reduction, is referred to hereinafter as
the "ANNUAL BASE SALARY"); provided, however, with respect to a
termination of employment prior to a Change in Control that is deemed
to have occurred on the date of the Change in Control, "ANNUAL BASE
SALARY" shall be the Employee's annual rate of base salary as in
effect immediately prior to the Employee's actual date of termination,
but disregarding any reduction therein made within 30 days of the
Employee's actual termination date; or
(c) The Company fails to continue in effect any benefit
or compensation plan (except the Supplemental Executive Retirement
Plan) which is material to the Employee's total compensation,
including, but not limited to, the Company's annual bonus plan,
qualified retirement plan, executive life insurance plan and/or health
and accident plan, in which the Employee is participating immediately
prior to the commencement of the Protected Period, or plans providing
the Employee with
-3-
<PAGE> 4
substantially similar benefits, or the Company takes any action that
would materially adversely affect the Employee's participation in or
reduce the Employee's benefits under any of such plans (excluding any
such action by the Company that is required by law); or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35 miles
from where such offices were located immediately prior to such Change
in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.5 below and, if
applicable, the procedures described in Section 2.3 above; or
(h) The Company shall violate or breach any obligation of
the Company in effect immediately prior to the commencement of the
Protected Period (regardless whether such obligation be set forth in
the Employment Agreement or any other separate agreement entered into
between the Company and the Employee) to indemnify the Employee
against any claim, loss, expense or liability sustained or incurred by
the Employee by reason, in whole or in part, of the fact that the
Employee is or was an officer or director of the Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period relating
to the Employee's employment with the Company, but only if such
violation or breach (if capable of being remedied) shall continue
unremedied for more than 15 days after written notice thereof is given
by the Employee to the Company; or
(j) The Board (or any nominating committee of the Board)
fails to recommend and support the Employee's re-election as a
director of the Company if the Employee is a director of the Company
immediately prior to the commencement of the Protected Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section 2.4
above shall be communicated by written Notice of Termination to the other party
hereto; provided, however, that in the case of events of Good Reason enumerated
in subsections (f), (h), (i) or (l) of Section 2.4 hereof, the Company shall
have the obligation to provide the Employee with written notice of the
occurrence of any of such events and the Employee shall then have the
opportunity
-4-
<PAGE> 5
to provide the Company with Notice of Termination if he so elects. The
Employee shall retain the ability to terminate his employment for Good Reason
under subsections (f), (h), (i) or (l) of Section 2.4 hereof, even if the
Company fails to provide written notice of the occurrence of any of the events
specified in such subsections as provided herein. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a notice that shall indicate
the specific termination provision in this Agreement relied on and, except in
the case of the termination referred to in the last subsection of Section 2.4
above, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated. Any purported termination of this Agreement not in
compliance with the requirements of this Section 2.5 or, if applicable, the
procedures described in Section 2.3 above shall be ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE OF
TERMINATION" shall mean: (a) if the Employee is terminated on account of
Disability pursuant to Section 2.2 above, 30 days after Notice of Termination
is given, provided that the Employee shall not have returned to the performance
of the Employee's duties on a full-time basis during such 30-day period; (b) if
the Employee's employment is terminated for Cause pursuant to Section 2.3
above, the date specified in the Notice of Termination; (c) with respect to a
termination of employment prior to a Change in Control that is deemed to have
occurred on the date of the Change in Control, the date of such Change in
Control; and (d) if the Employee's employment is terminated for any other
reason on or after a Change in Control, the date on which a Notice of
Termination is given; provided, however, in the event of any dispute or
controversy concerning the Employee's entitlement to payment under this
Agreement, solely for purposes of Section 3.3 and 3.4 below, concerning the
timing of the payment of amounts under this Agreement, the "DATE OF
TERMINATION" shall mean the date of final resolution of such dispute or
controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED
PERIOD OR ON TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any awards,
deferred and non-deferred, payable during such period of disability under the
Company's annual bonus plan, less any amounts paid to the Employee during such
period of Disability pursuant to the Company's sick-leave or disability program
until the Employee's employment is terminated on account of Disability pursuant
to Section 2.2 hereof, and (iii) all other applicable perquisites, insurance
and other employee benefits.
3.2 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee's employment shall be terminated by the
Company for Cause pursuant to Section 2.3 above, the Company shall pay the
Employee's earned but unpaid Annual Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, and the
Company shall have no further obligations to the Employee under this Agreement,
except those arising hereunder prior to the Date of Termination.
-5-
<PAGE> 6
3.3 If a Change in Control occurs during the Term pursuant to the
Merger Agreement, then, subject to the conditions stated in the last sentence
of this Section 3.3, the Company shall pay the Employee the following amount by
certified or bank cashier's check on each of two dates:
An amount equal to the sum of the Annual Base Salary and an annual
target bonus of 60% of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the following
dates, if the conditions stated in the following sentence are met: (1) the
date (the "MERGER EFFECTIVE DATE") on which the Effective Time of the Merger as
defined in the Merger Agreement (the "MERGER EFFECTIVE TIME") occurs, and (2)
the later of January 1, 1998, or the six- month anniversary of the Merger
Effective Date. The amounts shall be paid on those two dates only if the
Employee is employed by the Company on the Merger Effective Date, or if the
Company shall have terminated the employment of the Employee during the
Protected Period prior to the Merger Effective Date other than pursuant to
Sections 2.2 or 2.3 hereof, or if the Employee shall have terminated the
Employee's employment during the Protected Period prior to the Merger Effective
Date for Good Reason in accordance with Section 2.4 hereof.
3.4 If a Change in Control occurs during the Term and if, during
the Protected Period, the Company shall terminate the Employee other than
pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected Period, the
Employee shall terminate the Employee's employment for Good Reason in
accordance with Section 2.4 hereof, then, subject to Section 5 below and the
following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within five
days of such Date of Termination, the sum of the amounts specified in clauses
(a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed by
the terms of such plan) or earned but not paid as of such date under
all Company incentive or deferred compensation plans or programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 24
months.
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
4.1 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds outstanding unexercisable options under
the Company's stock option plan(s) immediately prior to the Merger Effective
Time (the "UNEXERCISABLE OPTIONS"), then, notwithstanding any provisions of
such plans or prior agreements between the Company and the Employee (and in
lieu of any exercisability or vesting schedules therein), each
-6-
<PAGE> 7
date on which a portion of an Unexercisable Option would otherwise vest and
become exercisable (a "VESTING DATE") shall be accelerated by two years;
provided, however, that no accelerated Vesting Date shall be deemed to occur
earlier than immediately prior to the Merger Effective Time. Notwithstanding
the foregoing provisions of this Section 4.1, a portion of an Unexercisable
Option shall become exercisable on a projected accelerated Vesting Date only if
the Employee is employed by the Company on such date; provided, however, in the
event the employee's employment is terminated subsequent to the Effective Time
of this Agreement while the Employee holds Unexercisable Options, (i) due to
the Employee's death, (ii) by the Company on account of the Employee's
Disability as provided in Section 2.2 hereof, (iii) by the Company other than
for Cause as provided in Section 2.3 hereof, or (iv) by the Employee for Good
Reason as provided in Section 2.4 hereof, then, notwithstanding any provision
of this Agreement to the contrary, each Unexercisable Option shall become fully
vested and exercisable on the later of (x) the date of such termination or (y)
immediately prior to the Merger Effective Time.
4.2 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds any outstanding shares of restricted
stock issued by the Company to the Employee under the Company's stock plan(s)
(including those granted under the Company's Target 2000: One, Two, Four Plan)
which remain subject to restrictions and/or performance or other criteria
relating thereto (the "RESTRICTIONS") immediately prior to the Merger Effective
Time (the "RESTRICTED SHARES"), then, notwithstanding any provisions of such
plans or prior agreements between the Company and the Employee (and in lieu of
any schedules for the lapsing of restrictions contained therein), each date on
which Restrictions on a portion of the Restricted Shares would otherwise lapse
or be deemed satisfied in full, as applicable (a "Lapsing Date"), shall be
accelerated by two years; provided, however, that no accelerated Lapsing Date
shall be deemed to occur earlier than immediately prior to the Merger Effective
Time. Notwithstanding the foregoing provisions of this Section 4.2,
Restrictions shall lapse on such portion of the Restricted Shares on a
projected accelerated Lapsing Date only if the Employee is employed by the
Company on such date; provided, however, in the event the employee's employment
is terminated subsequent to the Effective Time of this Agreement while the
Employee holds Restricted Shares, (i) due to the Employee's death, (ii) by the
Company on account of the Employee's Disability as provided in Section 2.2
hereof, (iii) by the Company other than for Cause as provided in Section 2.3
hereof, or (iv) by the Employee for Good Reason as provided in Section 2.4
hereof, then, notwithstanding any provision of this Agreement to the contrary,
all Restrictions on all such Restricted Shares shall lapse or be deemed
satisfied in full, as applicable, on the later of (x) the date of such
termination or (y) immediately prior to the Merger Effective Time. No later
than the fifth day following any such lapse of Restrictions, the Company shall
cause the relevant unrestricted shares of stock to be delivered to the
Employee.
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in connection
with his ongoing employment with the Company, this Agreement provides the
Employee with various benefits in the event of termination of the Employee's
employment with the Company during the Protected Period. If the Employee's
employment is terminated following a "CHANGE IN CONTROL" of the Company, within
the meaning of Section 280G of the Internal Revenue Code of 1986, as
-7-
<PAGE> 8
amended (the "CODE"), a portion of those benefits could be characterized as
"EXCESS PARACHUTE PAYMENTS" within the meaning of Section 280G of the Code.
The parties hereto acknowledge that the protections set forth in this Section 5
are important, and it is agreed that the Employee should not have to bear the
burden of any excise tax that might be levied under Section 4999 of the Code,
in the event that a portion of the benefits payable to the Employee pursuant to
this Agreement are treated as an excess parachute payment. The parties,
therefore, have agreed as set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding, if
it shall be determined that any payment or distribution by the Company or any
other person to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "PAYMENT") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"EXCISE TAX"), then the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an independent public accounting firm with a national reputation that is
selected by the Employee (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and to the Employee within 15
business days after each receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control of the Company, the
Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Company shall
indemnify and hold harmless the Employee, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed on the Employee as a result of such payment of fees and expenses. Any
Gross-Up Payment with respect to the respective Payment, as determined pursuant
to this Section 5, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Employee with respect to
the respective Payment, it shall furnish the Employee with a written opinion
that failure to report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding on the
Company and the Employee. As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments may not have
been made by the Company which should have been made ("UNDERPAYMENT"),
consistent with the
-8-
<PAGE> 9
calculations required to be made hereunder. If the Company exhausts its
remedies pursuant to Section 5.4 below and the Employee thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any claim
(including any threatened tax lien related to or based on any such claim) by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is
informed in writing of such claim (or threatened lien) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due or such tax lien would be
imposed). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim (or threatened
lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any proceedings
relating to such claim (or threatened lien);
provided, however, that the Company 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 Employee harmless, on an
after- tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Subsection 5.4, the Company shall control all proceedings taken 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 Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee 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 Employee shall
determine (but in no event shall the Company permit or direct the Employee to
allow a tax lien to be imposed on the Employee's property); provided, further,
that if the Company directs the Employee to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
-9-
<PAGE> 10
Employee, on an interest-free basis, and shall indemnify and hold the Employee
harmless on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income 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 Employee with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
5.5 If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes entitled
to receive any refund with respect to such amount, the Employee shall (subject
to the Company's complying with the requirements of Section 5.4 above) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If after the receipt by
the Employee of an amount advanced by the Company pursuant to Section 5.2, 5.3
or 5.4 above, a determination is made that the Employee shall not be entitled
to any refund with respect to such amount and the Company does not notify the
Employee in writing of its intent to contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that the
Employee seek or accept other employment following a termination of employment
and, amounts payable and benefits provided under this Agreement to the Employee
shall not be reduced by the Employee's acceptance of (or failure to seek or
accept) employment with another person. The Company's obligations to make the
payments and provide the benefits required for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, rights or action that the
Company may have against the Employee or others.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employee terminated the Employee's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "COMPANY" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that executes and delivers
the agreement provided for in
-10-
<PAGE> 11
this Section 7.1 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or, if none, to
the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five days after deposit in
the United States mail, registered and return receipt requested, postage
prepaid, addressed to the respective addresses set forth below or to such other
address as either party shall have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
Michael W. Ramirez
3146 Confederate South Drive
Missouri City, Texas 77459
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred upon the consummation of
the transactions contemplated by the Merger Agreement at the Effective Time of
the Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS. Employment
with the Company for purposes of this Agreement includes employment with any
entity (a "PARENT") which owns, directly or indirectly, 50% or more of the
total combined voting power of the Company's outstanding equity interests and
employment with any entity in which the Company or the Parent has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of all outstanding equity interests, it being understood that for purposes of
clause (a) of Section 2.4 hereof, "GOOD REASON" shall be construed to refer to
each of the Employee's positions, duties, responsibilities (reporting and
other), status, titles and offices with the Company and each of its
subsidiaries and parents.
-11-
<PAGE> 12
SECTION 11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and by the Chairman of the
Compensation Committee of the Board or other authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been approved
by the Board of Directors, and has been duly executed and delivered by Employee
and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a "DISPUTE")
the parties agree to resolve such Dispute in accordance with the following
procedure:
(a) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) one or more individuals with
decision-making authority regarding the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the
parties agree to submit the Dispute to mediation in accordance with
the Commercial Mediation Rules of the American Arbitration
Association.
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they
-12-
<PAGE> 13
have been unable to agree on such appointment within 10 days following
the 10-day period referred to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse the
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by the Employee in connection with such dispute, together
with interest thereon at the prevailing legal rate of interest, such
interest to accrue from the date of Notice of Termination through the
date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Section 16 includes
a finding denying, in total, the Employee's claims in such dispute,
the Employee shall be required to reimburse the Company, over a period
determined by the Employee but not to exceed 12 months from the date
of such resolution, for all sums advanced to the Employee with respect
to such dispute pursuant to this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
16.2 In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts
may be submitted by either party to a court of law for final determination by
initiation of a civil action in the proper state or Federal court sitting in
Harris County, Texas. Such action, to be valid, must be commenced within 20
days after receipt of the arbitrators' decision. If no such civil action is
commenced within such 20-day period, the legal conclusion reached by the
arbitrators shall be conclusive and binding on the parties. Any such civil
action shall be submitted, heard and determined solely on the basis of the
facts found by the arbitrators. Neither of the parties shall, or shall be
entitled to, submit
-13-
<PAGE> 14
any additional or different facts for consideration by the court. In the event
any civil action is commenced under this Section 16.2, the party who prevails
or substantially prevails (as determined by the court) in such civil action
shall be entitled to recover from the other party all costs, expenses and
reasonable attorneys' fees incurred in connection with such action and on
appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced
to enforce the rights awarded in an arbitration proceeding, the party who
prevails or substantially prevails in such legal proceeding shall be entitled
to recover from the other party all costs, expenses and reasonable attorneys'
fees incurred in connection with such legal proceeding and on appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or program
of the Company or any employment contract or agreement with the Company.
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
-----------------------------------------
EMPLOYEE
/s/ Michael W. Ramirez
---------------------------------------------
Michael W. Ramirez
-14-
<PAGE> 1
EXHIBIT 10.47
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT, by
and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and JAMES
E. RIEF (the "EMPLOYEE"), which was effective as of November 11, 1996 (as so
amended and restated, the "AGREEMENT"), is entered into this 5th day of March
1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are extremely
valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement dated November 11, 1996 governing the Employee's
employment with the Company (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") believes
it imperative that the Company be able to rely on the Employee to continue his
services to the Company without concern that the Employee may be distracted by
the personal uncertainties and risks created by the possibility of a change in
control; and
WHEREAS, the Company is entering into this Agreement with the Employee
in order to ensure the Employee's continued services, dedication and
objectivity during such period as the Company may be susceptible to a change in
control and to define the nature and terms of the Employee's severance benefits
following a Change in Control (as defined in Section 9 below); and
WHEREAS, an Agreement and Plan of Merger is being executed currently
herewith among the Company, Philip Environmental Inc., Taro Aggregates Ltd.,
and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this Section
1, this Agreement shall become effective (the "EFFECTIVE TIME") immediately
prior to (and subject to the occurrence of) approval of the Merger Agreement by
the Company's stockholders and shall continue until the expiration or
termination of the Employment Agreement, and to the extent that the Employment
Agreement is renewed for successive one-year periods, this Agreement shall be
similarly renewed (the "TERM"). If this Agreement becomes effective, the
Employee's original Executive Severance Agreement (and any prior amendments
thereto) described in the preamble hereto shall simultaneously become null and
void; provided that, if the Merger Agreement is terminated, then, on the date
of such termination, this Agreement shall terminate
-1-
<PAGE> 2
and the Employee's original Executive Severance Agreement shall remain in full
force and effect. Notwithstanding any provision of this Agreement to the
contrary, termination of this Agreement shall not alter or impair any rights of
the Employee (or the Employee's estate or beneficiaries) that have arisen under
this Agreement prior to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control which
occurs during the Term and ending 18 months following such Change in Control;
provided, however, if the Employee's employment with the Company terminates for
any reason (other than a termination (i) due to the Employee's death, (ii) by
the Company on account of the Employee's Disability as provided in Section 2.2
below, (iii) by the Company for Cause as provided in Section 2.3 below, or (iv)
by the Employee for other than Good Reason as provided in Section 2.4 below)
prior to, but within six months of, the date on which such a Change in Control
occurs, then, for all purposes of this Agreement: (A) the Employee shall be
deemed to have continued employment with the Company until the date of the
Change in Control and then terminated his employment on such date for Good
Reason, and (B) the Protected Period shall be deemed to have commenced
immediately prior to the Employee's actual termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a Change
in Control occurs during the Term, and if, as a result of the Employee's
illness, physical or mental disability, or other incapacity which continues for
an uninterrupted period in excess of three (3) months or a cumulative period of
six (6) months in any twelve (12) month period during the Protected Period, and
if, within 30 days after the Company has given the Employee written notice of
the Company's intention to terminate the Employee on account of such
incapacity, the Employee shall not have returned to the full-time performance
of the Employee's duties, then the Company may thereafter terminate the
Employee's employment on account of "DISABILITY"; provided, however, such
termination shall not by itself alter or impair the Employee's rights as a
"DISABLED EMPLOYEE" or otherwise under any of the Company's employee benefits
plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually fails
to perform substantially the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continues unabated after a demand for substantial
performance is delivered to the Employee by the Board that specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee's duties, or (b) the Employee willfully
engages in gross misconduct that is materially and demonstrably injurious to
the Company. For purposes of this Section 2.3, an act or failure to act on the
Employee's part shall be considered "WILLFUL" if done or omitted to be done by
the Employee otherwise than in good faith and without reasonable belief that
the Employee's action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be deemed to
-2-
<PAGE> 3
have been terminated by the Company for Cause unless and until the Company
shall have delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board, at a meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Employee was guilty of conduct set
forth in clauses (a) or (b) of the second sentence of this Section 2.3 and
specifying the particulars thereof in reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company immediately prior
to the commencement of the Protected Period, or the Employee's status,
reporting responsibilities, titles or offices are materially
diminished from those in effect immediately prior to the commencement
of the Protected Period, or the Employee is removed from or is not
re-elected or appointed to any of such responsibilities, titles,
offices or positions, except in each case in connection with the
termination of the Employee's employment by the Company for Cause or
on account of Disability, or as a result of the Employee's death, or
by the Employee for other than Good Reason; provided, however, that
Good Reason shall not be triggered under this subsection (a) by an
insubstantial action not taken in bad faith and which is remedied by
the Company promptly after receipt of written notice from the
Employee; and provided further that Good Reason shall not be triggered
under this subsection (a) by any such alteration primarily
attributable to the fact that the Company may no longer be a public
company; or
(b) The Employee's annual rate of base salary is reduced
from that in effect immediately prior to the commencement of the
Protected Period or as the same may be increased from time to time
thereafter (such annual rate of base salary, as so increased (if
applicable) but prior to such reduction, is referred to hereinafter as
the "ANNUAL BASE SALARY"); provided, however, with respect to a
termination of employment prior to a Change in Control that is deemed
to have occurred on the date of the Change in Control, "ANNUAL BASE
SALARY" shall be the Employee's annual rate of base salary as in
effect immediately prior to the Employee's actual date of termination,
but disregarding any reduction therein made within 30 days of the
Employee's actual termination date; or
(c) The Company fails to continue in effect any benefit
or compensation plan (except the Supplemental Executive Retirement
Plan) which is material to the Employee's total compensation,
including, but not limited to, the Company's annual bonus plan,
qualified retirement plan, executive life insurance plan and/or health
and accident plan, in which the Employee is participating immediately
prior to the commencement of the Protected Period, or plans providing
the Employee with
-3-
<PAGE> 4
substantially similar benefits, or the Company takes any action that
would materially adversely affect the Employee's participation in or
reduce the Employee's benefits under any of such plans (excluding any
such action by the Company that is required by law); or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35 miles
from where such offices were located immediately prior to such Change
in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as contemplated
in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.5 below and, if
applicable, the procedures described in Section 2.3 above; or
(h) The Company shall violate or breach any obligation of
the Company in effect immediately prior to the commencement of the
Protected Period (regardless whether such obligation be set forth in
the Employment Agreement or any other separate agreement entered into
between the Company and the Employee) to indemnify the Employee
against any claim, loss, expense or liability sustained or incurred by
the Employee by reason, in whole or in part, of the fact that the
Employee is or was an officer or director of the Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period relating
to the Employee's employment with the Company, but only if such
violation or breach (if capable of being remedied) shall continue
unremedied for more than 15 days after written notice thereof is given
by the Employee to the Company; or
(j) The Board (or any nominating committee of the Board)
fails to recommend and support the Employee's re-election as a
director of the Company if the Employee is a director of the Company
immediately prior to the commencement of the Protected Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section 2.4
above shall be communicated by written Notice of Termination to the other party
hereto; provided, however, that in the case of events of Good Reason enumerated
in subsections (f), (h), (i) or (l) of Section 2.4 hereof, the Company shall
have the obligation to provide the Employee with written notice of the
occurrence of any of such events and the Employee shall then have the
opportunity
-4-
<PAGE> 5
to provide the Company with Notice of Termination if he so elects. The
Employee shall retain the ability to terminate his employment for Good Reason
under subsections (f), (h), (i) or (l) of Section 2.4 hereof, even if the
Company fails to provide written notice of the occurrence of any of the events
specified in such subsections as provided herein. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a notice that shall indicate
the specific termination provision in this Agreement relied on and, except in
the case of the termination referred to in the last subsection of Section 2.4
above, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated. Any purported termination of this Agreement not in
compliance with the requirements of this Section 2.5 or, if applicable, the
procedures described in Section 2.3 above shall be ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE OF
TERMINATION" shall mean: (a) if the Employee is terminated on account of
Disability pursuant to Section 2.2 above, 30 days after Notice of Termination
is given, provided that the Employee shall not have returned to the performance
of the Employee's duties on a full-time basis during such 30-day period; (b) if
the Employee's employment is terminated for Cause pursuant to Section 2.3
above, the date specified in the Notice of Termination; (c) with respect to a
termination of employment prior to a Change in Control that is deemed to have
occurred on the date of the Change in Control, the date of such Change in
Control; and (d) if the Employee's employment is terminated for any other
reason on or after a Change in Control, the date on which a Notice of
Termination is given; provided, however, in the event of any dispute or
controversy concerning the Employee's entitlement to payment under this
Agreement, solely for purposes of Section 3.3 and 3.4 below, concerning the
timing of the payment of amounts under this Agreement, the "DATE OF
TERMINATION" shall mean the date of final resolution of such dispute or
controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED PERIOD
OR ON TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any awards,
deferred and non-deferred, payable during such period of disability under the
Company's annual bonus plan, less any amounts paid to the Employee during such
period of Disability pursuant to the Company's sick-leave or disability program
until the Employee's employment is terminated on account of Disability pursuant
to Section 2.2 hereof, and (iii) all other applicable perquisites, insurance
and other employee benefits.
3.2 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee's employment shall be terminated by the
Company for Cause pursuant to Section 2.3 above, the Company shall pay the
Employee's earned but unpaid Annual Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, and the
Company shall have no further obligations to the Employee under this Agreement,
except those arising hereunder prior to the Date of Termination.
-5-
<PAGE> 6
3.3 If a Change in Control occurs during the Term pursuant to the
Merger Agreement, then, subject to the conditions stated in the last sentence
of this Section 3.3, the Company shall pay the Employee the following amount by
certified or bank cashier's check on each of two dates:
An amount equal to 1.25 times the sum of the Annual Base Salary and an
annual target bonus of 75% of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the following
dates, if the conditions stated in the following sentence are met: (1) the
date (the "MERGER EFFECTIVE DATE") on which the Effective Time of the Merger as
defined in the Merger Agreement (the "MERGER EFFECTIVE TIME") occurs, and (2)
the later of January 1, 1998, or the six- month anniversary of the Merger
Effective Date. The amounts shall be paid on those two dates only if the
Employee is employed by the Company on the Merger Effective Date, or if the
Company shall have terminated the employment of the Employee during the
Protected Period prior to the Merger Effective Date other than pursuant to
Sections 2.2 or 2.3 hereof, or if the Employee shall have terminated the
Employee's employment during the Protected Period prior to the Merger Effective
Date for Good Reason in accordance with Section 2.4 hereof.
3.4 If a Change in Control occurs during the Term and if, during
the Protected Period, the Company shall terminate the Employee other than
pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected Period, the
Employee shall terminate the Employee's employment for Good Reason in
accordance with Section 2.4 hereof, then, subject to Section 5 below and the
following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within five
days of such Date of Termination, the sum of the amounts specified in clauses
(a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed by
the terms of such plan) or earned but not paid as of such date under
all Company incentive or deferred compensation plans or programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 30
months.
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
4.1 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds outstanding unexercisable options under
the Company's stock option plan(s) immediately prior to the Merger Effective
Time (the "UNEXERCISABLE OPTIONS"), then, notwithstanding any provisions of
such plans or prior agreements between the Company and the Employee (and in
lieu of any exercisability or vesting schedules therein), each
-6-
<PAGE> 7
date on which a portion of an Unexercisable Option would otherwise vest and
become exercisable (a "VESTING DATE") shall be accelerated by two years;
provided, however, that no accelerated Vesting Date shall be deemed to occur
earlier than immediately prior to the Merger Effective Time. Notwithstanding
the foregoing provisions of this Section 4.1, a portion of an Unexercisable
Option shall become exercisable on a projected accelerated Vesting Date only if
the Employee is employed by the Company on such date; provided, however, in the
event the employee's employment is terminated subsequent to the Effective Time
of this Agreement while the Employee holds Unexercisable Options, (i) due to
the Employee's death, (ii) by the Company on account of the Employee's
Disability as provided in Section 2.2 hereof, (iii) by the Company other than
for Cause as provided in Section 2.3 hereof, or (iv) by the Employee for Good
Reason as provided in Section 2.4 hereof, then, notwithstanding any provision
of this Agreement to the contrary, each Unexercisable Option shall become fully
vested and exercisable on the later of (x) the date of such termination or (y)
immediately prior to the Merger Effective Time.
4.2 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds any outstanding shares of restricted
stock issued by the Company to the Employee under the Company's stock plan(s)
(including those granted under the Company's Target 2000: One, Two, Four Plan)
which remain subject to restrictions and/or performance or other criteria
relating thereto (the "RESTRICTIONS") immediately prior to the Merger Effective
Time (the "RESTRICTED SHARES"), then, notwithstanding any provisions of such
plans or prior agreements between the Company and the Employee (and in lieu of
any schedules for the lapsing of restrictions contained therein), each date on
which Restrictions on a portion of the Restricted Shares would otherwise lapse
or be deemed satisfied in full, as applicable (a "Lapsing Date"), shall be
accelerated by two years; provided, however, that no accelerated Lapsing Date
shall be deemed to occur earlier than immediately prior to the Merger Effective
Time. Notwithstanding the foregoing provisions of this Section 4.2,
Restrictions shall lapse on such portion of the Restricted Shares on a
projected accelerated Lapsing Date only if the Employee is employed by the
Company on such date; provided, however, in the event the employee's employment
is terminated subsequent to the Effective Time of this Agreement while the
Employee holds Restricted Shares, (i) due to the Employee's death, (ii) by the
Company on account of the Employee's Disability as provided in Section 2.2
hereof, (iii) by the Company other than for Cause as provided in Section 2.3
hereof, or (iv) by the Employee for Good Reason as provided in Section 2.4
hereof, then, notwithstanding any provision of this Agreement to the contrary,
all Restrictions on all such Restricted Shares shall lapse or be deemed
satisfied in full, as applicable, on the later of (x) the date of such
termination or (y) immediately prior to the Merger Effective Time. No later
than the fifth day following any such lapse of Restrictions, the Company shall
cause the relevant unrestricted shares of stock to be delivered to the
Employee.
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in connection
with his ongoing employment with the Company, this Agreement provides the
Employee with various benefits in the event of termination of the Employee's
employment with the Company during the Protected Period. If the Employee's
employment is terminated following a "CHANGE IN CONTROL" of the Company, within
the meaning of Section 280G of the Internal Revenue Code of 1986, as
-7-
<PAGE> 8
amended (the "CODE"), a portion of those benefits could be characterized as
"EXCESS PARACHUTE PAYMENTS" within the meaning of Section 280G of the Code.
The parties hereto acknowledge that the protections set forth in this Section 5
are important, and it is agreed that the Employee should not have to bear the
burden of any excise tax that might be levied under Section 4999 of the Code,
in the event that a portion of the benefits payable to the Employee pursuant to
this Agreement are treated as an excess parachute payment. The parties,
therefore, have agreed as set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding, if
it shall be determined that any payment or distribution by the Company or any
other person to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "PAYMENT") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"EXCISE TAX"), then the Company shall pay an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an independent public accounting firm with a national reputation that is
selected by the Employee (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and to the Employee within 15
business days after each receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control of the Company, the
Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Company shall
indemnify and hold harmless the Employee, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed on the Employee as a result of such payment of fees and expenses. Any
Gross-Up Payment with respect to the respective Payment, as determined pursuant
to this Section 5, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Employee with respect to
the respective Payment, it shall furnish the Employee with a written opinion
that failure to report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding on the
Company and the Employee. As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments may not have
been made by the Company which should have been made ("UNDERPAYMENT"),
consistent with the
-8-
<PAGE> 9
calculations required to be made hereunder. If the Company exhausts its
remedies pursuant to Section 5.4 below and the Employee thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any claim
(including any threatened tax lien related to or based on any such claim) by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is
informed in writing of such claim (or threatened lien) and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Employee gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due or such tax lien would be
imposed). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim (or threatened
lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any proceedings
relating to such claim (or threatened lien);
provided, however, that the Company 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 Employee harmless, on an
after- tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Subsection 5.4, the Company shall control all proceedings taken 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 Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee 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 Employee shall
determine (but in no event shall the Company permit or direct the Employee to
allow a tax lien to be imposed on the Employee's property); provided, further,
that if the Company directs the Employee to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
-9-
<PAGE> 10
Employee, on an interest-free basis, and shall indemnify and hold the Employee
harmless on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income 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 Employee with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
5.5 If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes entitled
to receive any refund with respect to such amount, the Employee shall (subject
to the Company's complying with the requirements of Section 5.4 above) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If after the receipt by
the Employee of an amount advanced by the Company pursuant to Section 5.2, 5.3
or 5.4 above, a determination is made that the Employee shall not be entitled
to any refund with respect to such amount and the Company does not notify the
Employee in writing of its intent to contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that the
Employee seek or accept other employment following a termination of employment
and, amounts payable and benefits provided under this Agreement to the Employee
shall not be reduced by the Employee's acceptance of (or failure to seek or
accept) employment with another person. The Company's obligations to make the
payments and provide the benefits required for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, rights or action that the
Company may have against the Employee or others.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would have been required if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employee terminated the Employee's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "COMPANY" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that executes and delivers
the agreement provided for in
-10-
<PAGE> 11
this Section 7.1 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or, if none, to
the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five days after deposit in
the United States mail, registered and return receipt requested, postage
prepaid, addressed to the respective addresses set forth below or to such other
address as either party shall have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
James E. Rief
1414 Kelliwood Oaks
Katy, Texas 77450
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred upon the consummation of
the transactions contemplated by the Merger Agreement at the Effective Time of
the Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS. Employment
with the Company for purposes of this Agreement includes employment with any
entity (a "PARENT") which owns, directly or indirectly, 50% or more of the
total combined voting power of the Company's outstanding equity interests and
employment with any entity in which the Company or the Parent has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of all outstanding equity interests, it being understood that for purposes of
clause (a) of Section 2.4 hereof, "GOOD REASON" shall be construed to refer to
each of the Employee's positions, duties, responsibilities (reporting and
other), status, titles and offices with the Company and each of its
subsidiaries and parents.
-11-
<PAGE> 12
SECTION 11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and by the Chairman of the
Compensation Committee of the Board or other authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been approved
by the Board of Directors, and has been duly executed and delivered by Employee
and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a "DISPUTE")
the parties agree to resolve such Dispute in accordance with the following
procedure:
(a) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) one or more individuals with
decision-making authority regarding the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the
parties agree to submit the Dispute to mediation in accordance with
the Commercial Mediation Rules of the American Arbitration
Association.
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they
-12-
<PAGE> 13
have been unable to agree on such appointment within 10 days following
the 10-day period referred to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse the
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by the Employee in connection with such dispute, together
with interest thereon at the prevailing legal rate of interest, such
interest to accrue from the date of Notice of Termination through the
date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Section 16 includes
a finding denying, in total, the Employee's claims in such dispute,
the Employee shall be required to reimburse the Company, over a period
determined by the Employee but not to exceed 12 months from the date
of such resolution, for all sums advanced to the Employee with respect
to such dispute pursuant to this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
16.2 In the event there is any disputed question of law involved in
any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts
may be submitted by either party to a court of law for final determination by
initiation of a civil action in the proper state or Federal court sitting in
Harris County, Texas. Such action, to be valid, must be commenced within 20
days after receipt of the arbitrators' decision. If no such civil action is
commenced within such 20-day period, the legal conclusion reached by the
arbitrators shall be conclusive and binding on the parties. Any such civil
action shall be submitted, heard and determined solely on the basis of the
facts found by the arbitrators. Neither of the parties shall, or shall be
entitled to, submit
-13-
<PAGE> 14
any additional or different facts for consideration by the court. In the event
any civil action is commenced under this Section 16.2, the party who prevails
or substantially prevails (as determined by the court) in such civil action
shall be entitled to recover from the other party all costs, expenses and
reasonable attorneys' fees incurred in connection with such action and on
appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced
to enforce the rights awarded in an arbitration proceeding, the party who
prevails or substantially prevails in such legal proceeding shall be entitled
to recover from the other party all costs, expenses and reasonable attorneys'
fees incurred in connection with such legal proceeding and on appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or program
of the Company or any employment contract or agreement with the Company.
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
----------------------------------
EMPLOYEE
/s/ James E. Rief
--------------------------------------
James E. Rief
-14-
<PAGE> 1
EXHIBIT 10.48
AMENDMENT AND RESTATEMENT OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF EXECUTIVE SEVERANCE AGREEMENT,
by and between ALLWASTE, INC., a Delaware corporation (the "COMPANY"), and
T. WAYNE WREN, JR. (the "EMPLOYEE"), which was effective as of November 11,
1996 (as so amended and restated, the "AGREEMENT"), is entered into this 5th
day of March 1997, to become effective only as provided in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, and the
Employee's experience and knowledge of the affairs of the Company are
extremely valuable to the Company; and
WHEREAS, the Company and the Employee have entered into that
certain Employment Agreement dated November 11, 1996 governing the Employee's
employment with the Company (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Board of Directors of the Company (the "BOARD")
believes it imperative that the Company be able to rely on the Employee to
continue his services to the Company without concern that the Employee may be
distracted by the personal uncertainties and risks created by the possibility
of a change in control; and
WHEREAS, the Company is entering into this Agreement with the
Employee in order to ensure the Employee's continued services, dedication
and objectivity during such period as the Company may be susceptible to a
change in control and to define the nature and terms of the Employee's
severance benefits following a Change in Control (as defined in Section 9
below); and
WHEREAS, an Agreement and Plan of Merger is being executed
currently herewith among the Company, Philip Environmental Inc., Taro
Aggregates Ltd., and Philip/Atlas Merger Corp. (the "MERGER AGREEMENT");
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, the Company and the
Employee hereby agree as follows.
SECTION 1. TERM. Subject to the second sentence of this
Section 1, this Agreement shall become effective (the "EFFECTIVE TIME")
immediately prior to (and subject to the occurrence of) approval of the
Merger Agreement by the Company's stockholders and shall continue until the
expiration or termination of the Employment Agreement, and to the extent that
the Employment Agreement is renewed for successive one-year periods, this
Agreement shall be similarly renewed (the "TERM"). If this Agreement
becomes effective, the Employee's original Executive Severance Agreement (and
any prior amendments thereto) described in the preamble hereto shall
simultaneously become null and void; provided that, if the Merger Agreement is
terminated, then, on the date of such termination, this Agreement shall
terminate
-1-
<PAGE> 2
and the Employee's original Executive Severance Agreement shall remain in
full force and effect. Notwithstanding any provision of this Agreement to
the contrary, termination of this Agreement shall not alter or impair any
rights of the Employee (or the Employee's estate or beneficiaries) that have
arisen under this Agreement prior to such termination.
SECTION 2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL.
2.1 GENERAL. For purposes of this Agreement, the "PROTECTED
PERIOD" shall mean the period of time beginning with a Change in Control
which occurs during the Term and ending 18 months following such Change in
Control; provided, however, if the Employee's employment with the Company
terminates for any reason (other than a termination (i) due to the
Employee's death, (ii) by the Company on account of the Employee's Disability
as provided in Section 2.2 below, (iii) by the Company for Cause as provided
in Section 2.3 below, or (iv) by the Employee for other than Good Reason as
provided in Section 2.4 below) prior to, but within six months of, the date on
which such a Change in Control occurs, then, for all purposes of this
Agreement: (A) the Employee shall be deemed to have continued employment
with the Company until the date of the Change in Control and then terminated
his employment on such date for Good Reason, and (B) the Protected Period
shall be deemed to have commenced immediately prior to the Employee's actual
termination of employment.
2.2 TERMINATION BY COMPANY ON ACCOUNT OF DISABILITY. If a
Change in Control occurs during the Term, and if, as a result of the
Employee's illness, physical or mental disability, or other incapacity which
continues for an uninterrupted period in excess of three (3) months or a
cumulative period of six (6) months in any twelve (12) month period during
the Protected Period, and if, within 30 days after the Company has given the
Employee written notice of the Company's intention to terminate the Employee
on account of such incapacity, the Employee shall not have returned to the
full-time performance of the Employee's duties, then the Company may
thereafter terminate the Employee's employment on account of "DISABILITY";
provided, however, such termination shall not by itself alter or impair
the Employee's rights as a "DISABLED EMPLOYEE" or otherwise under any of the
Company's employee benefits plans.
2.3 TERMINATION BY COMPANY FOR CAUSE. If a Change in Control
occurs during the Term, the Company may, at any time during the Protected
Period, terminate the Employee's employment for Cause. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate the Employee's
employment hereunder only if: (a) the Employee willfully and continually
fails to perform substantially the Employee's duties with the Company (other
than any such failure resulting from the Employee's incapacity due to physical
or mental illness), which failure continues unabated after a demand for
substantial performance is delivered to the Employee by the Board that
specifically identifies the manner in which the Board believes that the
Employee has not substantially performed the Employee's duties, or (b) the
Employee willfully engages in gross misconduct that is materially and
demonstrably injurious to the Company. For purposes of this Section 2.3,
an act or failure to act on the Employee's part shall be considered "WILLFUL"
if done or omitted to be done by the Employee otherwise than in good faith
and without reasonable belief that the Employee's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the Employee
shall not be deemed to
-2-
<PAGE> 3
have been terminated by the Company for Cause unless and until the Company
shall have delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire
membership of the Board, at a meeting of the Board called and held for
the purpose (after reasonable notice to the Employee and an opportunity for
the Employee, together with the Employee's counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Employee
was guilty of conduct set forth in clauses (a) or (b) of the second
sentence of this Section 2.3 and specifying the particulars thereof in
reasonable detail.
2.4 TERMINATION BY EMPLOYEE FOR GOOD REASON. If a Change in
Control occurs during the Term, the Employee may terminate the Employee's
employment for Good Reason at any time during the Protected Period. For
purposes of this Agreement "GOOD REASON" shall mean any of the following:
(a) The Employee is assigned any duties materially
inconsistent with, or diminished from, the Employee's positions,
duties, responsibilities and status with the Company
immediately prior to the commencement of the Protected Period, or
the Employee's status, reporting responsibilities, titles or offices
are materially diminished from those in effect immediately prior to
the commencement of the Protected Period, or the Employee is
removed from or is not re-elected or appointed to any of such
responsibilities, titles, offices or positions, except in each
case in connection with the termination of the Employee's employment
by the Company for Cause or on account of Disability, or as a result
of the Employee's death, or by the Employee for other than Good
Reason; provided, however, that Good Reason shall not be triggered
under this subsection (a) by an insubstantial action not taken in
bad faith and which is remedied by the Company promptly after
receipt of written notice from the Employee; and provided further
that Good Reason shall not be triggered under this subsection (a) by
any such alteration primarily attributable to the fact that the
Company may no longer be a public company; or
(b) The Employee's annual rate of base salary is
reduced from that in effect immediately prior to the commencement of
the Protected Period or as the same may be increased from time to
time thereafter (such annual rate of base salary, as so increased
(if applicable) but prior to such reduction, is referred to
hereinafter as the "ANNUAL BASE SALARY"); provided, however, with
respect to a termination of employment prior to a Change in Control
that is deemed to have occurred on the date of the Change in
Control, "ANNUAL BASE SALARY" shall be the Employee's annual rate
of base salary as in effect immediately prior to the Employee's
actual date of termination, but disregarding any reduction therein
made within 30 days of the Employee's actual termination date; or
(c) The Company fails to continue in effect any
benefit or compensation plan (except the Supplemental Executive
Retirement Plan) which is material to the Employee's total
compensation, including, but not limited to, the Company's annual
bonus plan, qualified retirement plan, executive life insurance
plan and/or health and accident plan, in which the Employee is
participating immediately prior to the commencement of the Protected
Period, or plans providing the Employee with
-3-
<PAGE> 4
substantially similar benefits, or the Company takes any action
that would materially adversely affect the Employee's participation
in or reduce the Employee's benefits under any of such plans
(excluding any such action by the Company that is required by law);
or
(d) The Company's principal executive offices are
relocated at any time following a Change in Control more than 35
miles from where such offices were located immediately prior to such
Change in Control; or
(e) The Company requires the Employee at any time
following a Change in Control to relocate more than 35 miles from
where the Company's principal executive offices were located
immediately prior to such Change in Control; or
(f) The Company fails to obtain the assumption of the
obligation to perform this Agreement by any successor as
contemplated in Section 7.1 hereof; or
(g) Any purported termination of the Employee's
employment by the Company that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 2.5
below and, if applicable, the procedures described in Section 2.3
above; or
(h) The Company shall violate or breach any obligation
of the Company in effect immediately prior to the commencement of
the Protected Period (regardless whether such obligation be set forth
in the Employment Agreement or any other separate agreement entered
into between the Company and the Employee) to indemnify the
Employee against any claim, loss, expense or liability sustained
or incurred by the Employee by reason, in whole or in part, of the
fact that the Employee is or was an officer or director of the
Company; or
(i) The Company shall violate or breach any other
material obligation of the Company owing to the Employee in effect
immediately prior to the commencement of the Protected Period
relating to the Employee's employment with the Company, but only if
such violation or breach (if capable of being remedied) shall
continue unremedied for more than 15 days after written notice thereof
is given by the Employee to the Company; or
(j) The Board (or any nominating committee of the
Board) fails to recommend and support the Employee's re-election
as a director of the Company if the Employee is a director of the
Company immediately prior to the commencement of the Protected
Period.
2.5 NOTICE OF TERMINATION. Any termination by the Company
pursuant to Section 2.2 or 2.3 above or by the Employee pursuant to Section
2.4 above shall be communicated by written Notice of Termination to the other
party hereto; provided, however, that in the case of events of Good
Reason enumerated in subsections (f), (h), (i) or (l) of Section 2.4
hereof, the Company shall have the obligation to provide the Employee with
written notice of the occurrence of any of such events and the Employee shall
then have the opportunity
-4-
<PAGE> 5
to provide the Company with Notice of Termination if he so elects. The
Employee shall retain the ability to terminate his employment for Good Reason
under subsections (f), (h), (i) or (l) of Section 2.4 hereof, even if the
Company fails to provide written notice of the occurrence of any of the
events specified in such subsections as provided herein. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a notice that shall indicate
the specific termination provision in this Agreement relied on and, except in
the case of the termination referred to in the last subsection of Section 2.4
above, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment
under the provision so indicated. Any purported termination of this Agreement
not in compliance with the requirements of this Section 2.5 or, if
applicable, the procedures described in Section 2.3 above shall be
ineffective.
2.6 DATE OF TERMINATION. For purposes of this Agreement, "DATE
OF TERMINATION" shall mean: (a) if the Employee is terminated on account
of Disability pursuant to Section 2.2 above, 30 days after Notice of
Termination is given, provided that the Employee shall not have returned to
the performance of the Employee's duties on a full-time basis during such
30-day period; (b) if the Employee's employment is terminated for Cause
pursuant to Section 2.3 above, the date specified in the Notice of
Termination; (c) with respect to a termination of employment prior to a
Change in Control that is deemed to have occurred on the date of the Change
in Control, the date of such Change in Control; and (d) if the Employee's
employment is terminated for any other reason on or after a Change in Control,
the date on which a Notice of Termination is given; provided, however, in the
event of any dispute or controversy concerning the Employee's entitlement to
payment under this Agreement, solely for purposes of Section 3.3 and 3.4
below, concerning the timing of the payment of amounts under this Agreement,
the "DATE OF TERMINATION" shall mean the date of final resolution of such
dispute or controversy.
SECTION 3. COMPENSATION DURING DISABILITY, DURING PROTECTED
PERIOD OR ON TERMINATION.
3.1 If a Change in Control occurs during the Term and if, during
the Protected Period, the Employee fails to perform the Employee's normal
duties as a result of Disability (as defined in Section 2.2 hereof), the
Employee shall continue during the period of Disability to receive: (i) the
Employee's full Annual Base Salary at the rate then in effect, (ii) any
awards, deferred and non-deferred, payable during such period of disability
under the Company's annual bonus plan, less any amounts paid to the Employee
during such period of Disability pursuant to the Company's sick-leave or
disability program until the Employee's employment is terminated on account
of Disability pursuant to Section 2.2 hereof, and (iii) all other applicable
perquisites, insurance and other employee benefits.
3.2 If a Change in Control occurs during the Term and if,
during the Protected Period, the Employee's employment shall be terminated
by the Company for Cause pursuant to Section 2.3 above, the Company shall
pay the Employee's earned but unpaid Annual Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
and the Company shall have no further obligations to the Employee under this
Agreement, except those arising hereunder prior to the Date of Termination.
-5-
<PAGE> 6
3.3 If a Change in Control occurs during the Term pursuant to
the Merger Agreement, then, subject to the conditions stated in the last
sentence of this Section 3.3, the Company shall pay the Employee the
following amount by certified or bank cashier's check on each of two dates:
An amount equal to 1.25 times the sum of the Annual Base Salary and
an annual target bonus of 75% of the Annual Base Salary
The foregoing amount shall be paid to the Employee on each of the
following dates, if the conditions stated in the following sentence are met:
(1) the date (the "MERGER EFFECTIVE DATE") on which the Effective Time of
the Merger as defined in the Merger Agreement (the "MERGER EFFECTIVE TIME")
occurs, and (2) the later of January 1, 1998, or the six- month anniversary
of the Merger Effective Date. The amounts shall be paid on those two dates
only if the Employee is employed by the Company on the Merger Effective
Date, or if the Company shall have terminated the employment of the Employee
during the Protected Period prior to the Merger Effective Date other than
pursuant to Sections 2.2 or 2.3 hereof, or if the Employee shall have
terminated the Employee's employment during the Protected Period prior to
the Merger Effective Date for Good Reason in accordance with Section 2.4
hereof.
3.4 If a Change in Control occurs during the Term and if,
during the Protected Period, the Company shall terminate the Employee other
than pursuant to Sections 2.2 or 2.3 hereof or if, during the Protected
Period, the Employee shall terminate the Employee's employment for Good Reason
in accordance with Section 2.4 hereof, then, subject to Section 5 below and
the following provisions of this Section 3.4, the Company shall pay to the
Employee, in a single lump sum by certified or bank cashier's check within
five days of such Date of Termination, the sum of the amounts specified in
clauses (a) and (b) below:
(a) an amount equal to that portion of the Annual Base
Salary earned, but not paid, and vacation earned, but not taken, in
each case, to the Date of Termination, and all other amounts
previously deferred by the Employee (except any amounts in any
tax-qualified retirement or savings plan, which shall be governed
by the terms of such plan) or earned but not paid as of such
date under all Company incentive or deferred compensation plans or
programs; and
(b) an amount equal to (i) the amount of the maximum
monthly premium payment that may be charged to continue coverage for
the Employee and the Employee's eligible dependents under the
Company's health insurance plan under COBRA, multiplied by (ii) 30
months.
SECTION 4. ACCELERATION OF OPTION AND RESTRICTED STOCK GRANTS
4.1 If a Change in Control occurs during the Term pursuant to
the Merger Agreement and the Employee holds outstanding unexercisable options
under the Company's stock option plan(s) immediately prior to the Merger
Effective Time (the "UNEXERCISABLE OPTIONS"), then, notwithstanding any
provisions of such plans or prior agreements between the Company and the
Employee (and in lieu of any exercisability or vesting schedules therein), each
-6-
<PAGE> 7
date on which a portion of an Unexercisable Option would otherwise vest and
become exercisable (a "VESTING DATE") shall be accelerated by two years;
provided, however, that no accelerated Vesting Date shall be deemed to occur
earlier than immediately prior to the Merger Effective Time. Notwithstanding
the foregoing provisions of this Section 4.1, a portion of an Unexercisable
Option shall become exercisable on a projected accelerated Vesting Date
only if the Employee is employed by the Company on such date; provided,
however, in the event the Employee's employment is terminated subsequent to
the Effective Time of this Agreement while the Employee holds Unexercisable
Options, (i) due to the Employee's death, (ii) by the Company on account of
the Employee's Disability as provided in Section 2.2 hereof, (iii) by the
Company other than for Cause as provided in Section 2.3 hereof, or (iv)
by the Employee for Good Reason as provided in Section 2.4 hereof, then,
notwithstanding any provision of this Agreement to the contrary, each
Unexercisable Option shall become fully vested and exercisable on the later of
(x) the date of such termination or (y) immediately prior to the Merger
Effective Time.
4.2 If a Change in Control occurs during the Term pursuant to the
Merger Agreement and the Employee holds any outstanding shares of restricted
stock issued by the Company to the Employee under the Company's stock
plan(s) (including those granted under the Company's Target 2000: One, Two,
Four Plan) which remain subject to restrictions and/or performance or other
criteria relating thereto (the "RESTRICTIONS") immediately prior to the
Merger Effective Time (the "RESTRICTED SHARES"), then, notwithstanding any
provisions of such plans or prior agreements between the Company and the
Employee (and in lieu of any schedules for the lapsing of restrictions
contained therein), each date on which Restrictions on a portion of the
Restricted Shares would otherwise lapse or be deemed satisfied in full, as
applicable (a "Lapsing Date"), shall be accelerated by two years; provided,
however, that no accelerated Lapsing Date shall be deemed to occur earlier
than immediately prior to the Merger Effective Time. Notwithstanding the
foregoing provisions of this Section 4.2, Restrictions shall lapse on such
portion of the Restricted Shares on a projected accelerated Lapsing Date
only if the Employee is employed by the Company on such date; provided,
however, in the event the Employee's employment is terminated subsequent to
the Effective Time of this Agreement while the Employee holds Restricted
Shares, (i) due to the Employee's death, (ii) by the Company on account of
the Employee's Disability as provided in Section 2.2 hereof, (iii) by the
Company other than for Cause as provided in Section 2.3 hereof, or (iv) by the
Employee for Good Reason as provided in Section 2.4 hereof, then,
notwithstanding any provision of this Agreement to the contrary, all
Restrictions on all such Restricted Shares shall lapse or be deemed satisfied
in full, as applicable, on the later of (x) the date of such termination or
(y) immediately prior to the Merger Effective Time. No later than the fifth
day following any such lapse of Restrictions, the Company shall cause the
relevant unrestricted shares of stock to be delivered to the Employee.
SECTION 5. GROSS-UP OF PARACHUTE PAYMENT.
5.1 To provide the Employee with adequate protection in
connection with his ongoing employment with the Company, this Agreement
provides the Employee with various benefits in the event of termination of
the Employee's employment with the Company during the Protected Period. If the
Employee's employment is terminated following a "CHANGE IN CONTROL" of the
Company, within the meaning of Section 280G of the Internal Revenue Code of
1986, as
-7-
<PAGE> 8
amended (the "CODE"), a portion of those benefits could be characterized as
"EXCESS PARACHUTE PAYMENTS" within the meaning of Section 280G of the Code.
The parties hereto acknowledge that the protections set forth in this Section
5 are important, and it is agreed that the Employee should not have to bear
the burden of any excise tax that might be levied under Section 4999 of the
Code, in the event that a portion of the benefits payable to the Employee
pursuant to this Agreement are treated as an excess parachute payment. The
parties, therefore, have agreed as set forth in this Section 5.
5.2 Anything in this Agreement to the contrary notwithstanding,
if it shall be determined that any payment or distribution by the Company or
any other person to or for the benefit of the Employee (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional
payments required under this Section 5) (a "PAYMENT") would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "EXCISE TAX"), then the Company shall pay
an additional payment (a "GROSS-UP PAYMENT") in an amount such that after
payment by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed on the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed on the Payments.
5.3 Subject to the provisions of Section 5.4 below, all
determinations required to be made under this Section 5, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by an independent public accounting firm with a national
reputation that is selected by the Employee (the "ACCOUNTING FIRM") which
shall provide detailed supporting calculations both to the Company and to
the Employee within 15 business days after each receipt of notice from the
Employee that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the change in
control of the Company, the Employee shall appoint another nationally
recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely
by the Company. The Company shall indemnify and hold harmless the Employee,
on an after-tax basis, for any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed on the Employee as a result of
such payment of fees and expenses. Any Gross-Up Payment with respect to the
respective Payment, as determined pursuant to this Section 5, shall be
paid by the Company to the Employee within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Employee with respect to the respective
Payment, it shall furnish the Employee with a written opinion that failure to
report the Excise Tax on the Employee's applicable federal income tax return
would not result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding on the Company and the
Employee. As a result of uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments may not have been made by
the Company which should have been made ("UNDERPAYMENT"), consistent with the
-8-
<PAGE> 9
calculations required to be made hereunder. If the Company exhausts its
remedies pursuant to Section 5.4 below and the Employee thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the Employee.
5.4 The Employee shall notify the Company in writing of any
claim (including any threatened tax lien related to or based on any such
claim) by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than 10 business days after the
Employee is informed in writing of such claim (or threatened lien) and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Employee shall not pay such claim prior
to the expiration of the 30-day period following the date on which the
Employee gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due or such
tax lien would be imposed). If the Company notifies the Employee in writing
prior to the expiration of such period that it desires to contest such claim
(or threatened lien), the Employee shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim (or threatened lien);
(b) take such action in connection with contesting such
claim (or threatened lien) as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company;
(c) cooperate with the Company in good faith in
order effectively to contest such claim (or threatened lien); and
(d) permit the Company to participate in any
proceedings relating to such claim (or threatened lien);
provided, however, that the Company 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 Employee
harmless, on an after- tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Subsection 5.4, the Company shall control
all proceedings taken 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 Employee to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the
Employee 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 Employee shall determine (but in no event shall
the Company permit or direct the Employee to allow a tax lien to be imposed on
the Employee's property); provided, further, that if the Company directs the
Employee to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the
-9-
<PAGE> 10
Employee, on an interest-free basis, and shall indemnify and hold the Employee
harmless on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income 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 Employee with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. In addition, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder, and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
5.5 If, after the receipt by the Employee of an amount advanced
by the Company pursuant to Section 5.2, 5.3 or 5.4, the Employee becomes
entitled to receive any refund with respect to such amount, the Employee shall
(subject to the Company's complying with the requirements of Section 5.4
above) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If after the receipt by the Employee of an amount advanced by the Company
pursuant to Section 5.2, 5.3 or 5.4 above, a determination is made that the
Employee shall not be entitled to any refund with respect to such amount and
the Company does not notify the Employee in writing of its intent to
contest such denial of refund prior to 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.
SECTION 6. NO MITIGATION OF DAMAGES. The provisions of this
Agreement are not intended to, nor shall they be construed to, require that
the Employee seek or accept other employment following a termination of
employment and, amounts payable and benefits provided under this Agreement
to the Employee shall not be reduced by the Employee's acceptance of (or
failure to seek or accept) employment with another person. The Company's
obligations to make the payments and provide the benefits required for in
this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set off, counterclaim, recoupment, defense or other
claim, rights or action that the Company may have against the Employee or
others.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
7.1 The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the
same extent as the Company would have been required if no such succession
had taken place. Failure of the Company to obtain such agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Employee to compensation from the Company in the same
amount and on the same terms as the Employee would be entitled hereunder if
the Employee terminated the Employee's employment for Good Reason, except
that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination.
As used in this Agreement, "COMPANY" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid that
executes and delivers the agreement provided for in
-10-
<PAGE> 11
this Section 7.1 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
7.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Employee should die while any amounts would still be payable to the
Employee hereunder if the Employee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee, legatee or other designee
or, if none, to the Employee's estate.
SECTION 8. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and
shall be deemed to have been duly given when delivered or five days after
deposit in the United States mail, registered and return receipt requested,
postage prepaid, addressed to the respective addresses set forth below or to
such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only on receipt.
If to the Company:
Allwaste, Inc.
5151 San Felipe, Suite 1600
Houston, Texas 77056
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Employee:
T. Wayne Wren, Jr.
11311 Williamsburg
Houston, Texas 77024
SECTION 9. CHANGE IN CONTROL. For purposes of this Agreement,
a "CHANGE IN CONTROL" shall be deemed to have occurred upon the consummation
of the transactions contemplated by the Merger Agreement at the Effective
Time of the Merger (as defined in the Merger Agreement).
SECTION 10. EMPLOYMENT WITH SUBSIDIARIES AND PARENTS.
Employment with the Company for purposes of this Agreement includes
employment with any entity (a "PARENT") which owns, directly or indirectly,
50% or more of the total combined voting power of the Company's outstanding
equity interests and employment with any entity in which the Company or the
Parent has a direct or indirect ownership interest of 50% or more of the
total combined voting power of all outstanding equity interests, it being
understood that for purposes of clause (a) of Section 2.4 hereof, "GOOD
REASON" shall be construed to refer to each of the Employee's positions,
duties, responsibilities (reporting and other), status, titles and offices with
the Company and each of its subsidiaries and parents.
-11-
<PAGE> 12
SECTION 11. MISCELLANEOUS. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and by the
Chairman of the Compensation Committee of the Board or other authorized
officer of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Employee has agreed.
SECTION 12. VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
SECTION 14. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement.
SECTION 15. CORPORATE APPROVAL. This Agreement has been
approved by the Board of Directors, and has been duly executed and delivered
by Employee and on behalf of the Company by its duly authorized representative.
SECTION 16. DISPUTE RESOLUTION.
16.1 In the event a dispute shall arise between the parties as to
whether the provisions of this Agreement have been complied with (a
"DISPUTE") the parties agree to resolve such Dispute in accordance with
the following procedure:
(a) A meeting shall be held promptly between the
parties, attended by (in the case of the Company) one or more
individuals with decision-making authority regarding the Dispute,
to attempt in good faith to negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the
parties have not succeeded in negotiating a resolution of the
Dispute, the parties agree to submit the Dispute to mediation
in accordance with the Commercial Mediation Rules of the American
Arbitration Association.
(c) The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the
American Arbitration Association if they
-12-
<PAGE> 13
have been unable to agree on such appointment within 10 days
following the 10-day period referred to in clause (b) above.
(d) On appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(e) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties
agree that the Dispute shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
(f) The fees and expenses of the mediator/arbitrators
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, shall be borne by the Company.
(g) If any dispute shall arise under this Agreement
involving termination of the Employee's employment with the
Company or involving the failure or refusal of the Company to fully
perform in accordance with the terms hereof, the Company shall
reimburse the Employee, on a current basis, for all legal fees and
expenses, if any, incurred by the Employee in connection with such
dispute, together with interest thereon at the prevailing legal rate
of interest, such interest to accrue from the date of Notice of
Termination through the date of payment thereof; provided, however,
that in the event the resolution of such dispute in accordance with
this Section 16 includes a finding denying, in total, the Employee's
claims in such dispute, the Employee shall be required to reimburse
the Company, over a period determined by the Employee but not to
exceed 12 months from the date of such resolution, for all sums
advanced to the Employee with respect to such dispute pursuant to
this clause (g).
(h) Except as provided above, each party shall pay its
own costs and expenses (including, without limitation, reasonable
attorneys' fees) relating to any mediation/arbitration proceeding
conducted under this Section 16.
(i) All mediation/arbitration conferences and hearings
will be held in Houston, Texas.
16.2 In the event there is any disputed question of law involved
in any arbitration proceeding, such as the proper legal interpretation of
any provision of this Agreement, the arbitrators shall make separate and
distinct findings of all facts material to the disputed question of law to be
decided and, on the basis of the facts so found, express their conclusion of
the question of law. The facts so found shall be conclusive and binding on
the parties, but any legal conclusion reached by the arbitrators from such
facts may be submitted by either party to a court of law for final
determination by initiation of a civil action in the proper state or
Federal court sitting in Harris County, Texas. Such action, to be valid,
must be commenced within 20 days after receipt of the arbitrators' decision.
If no such civil action is commenced within such 20-day period, the legal
conclusion reached by the arbitrators shall be conclusive and binding on the
parties. Any such civil action shall be submitted, heard and determined
solely on the basis of the facts found by the arbitrators. Neither of the
parties shall, or shall be entitled to, submit
-13-
<PAGE> 14
any additional or different facts for consideration by the court. In the
event any civil action is commenced under this Section 16.2, the party who
prevails or substantially prevails (as determined by the court) in such civil
action shall be entitled to recover from the other party all costs, expenses
and reasonable attorneys' fees incurred in connection with such action and on
appeal.
16.3 Except as limited by Section 16.2 above, the parties agree
that judgment on the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are
commenced to enforce the rights awarded in an arbitration proceeding, the
party who prevails or substantially prevails in such legal proceeding shall be
entitled to recover from the other party all costs, expenses and reasonable
attorneys' fees incurred in connection with such legal proceeding and on
appeal.
16.4 Except as provided above, no legal action may be brought by
either party with respect to any Dispute. All Disputes shall be determined
only in accordance with the procedures set forth above.
SECTION 17. NO OTHER SEVERANCE BENEFITS. In the event the
Employee becomes entitled to severance payments under Section 3.3 or 3.4 of
this Agreement, then the amounts payable under this Agreement to the Employee
shall be in lieu of, and not in addition to, any similar severance amounts to
which the Employee may otherwise be entitled under a severance plan or
program of the Company or any employment contract or agreement with the
Company.
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Agreement as of the day and year first above written.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
----------------------------------------
Robert M. Chiste
EMPLOYEE
/s/ T. Wayne Wren, Jr.
--------------------------------------------
T. Wayne Wren, Jr.
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> MAY-31-1997
<CASH> 2,017
<SECURITIES> 0
<RECEIVABLES> 88,338
<ALLOWANCES> 2,012
<INVENTORY> 1,637
<CURRENT-ASSETS> 105,656
<PP&E> 256,344
<DEPRECIATION> 130,288
<TOTAL-ASSETS> 349,270
<CURRENT-LIABILITIES> 61,517
<BONDS> 135,304
0
0
<COMMON> 404
<OTHER-SE> 139,249
<TOTAL-LIABILITY-AND-EQUITY> 349,270
<SALES> 295,392
<TOTAL-REVENUES> 295,392
<CGS> 218,690
<TOTAL-COSTS> 218,690
<OTHER-EXPENSES> 57,082
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,282
<INCOME-PRETAX> 14,304
<INCOME-TAX> 6,562
<INCOME-CONTINUING> 7,742
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,742
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
