<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule
14a-11(c) or Rule 14a-12
</TABLE>
Allied Waste Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
ALLIED WASTE INDUSTRIES, INC.
15880 NORTH GREENWAY-HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 1999
Notice is hereby given that the annual meeting (the "Annual Meeting") of
the stockholders of Allied Waste Industries, Inc., a Delaware corporation (the
"Company"), will be held at the Company's corporate headquarters (the "Corporate
Headquarters"), 15880 North Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona
85260, on Wednesday, May 26, 1999 at 9:00 a.m., Mountain Standard Time, for the
following purposes:
1. To elect ten directors to hold office until the 2000 Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified.
2. To approve an amendment to the 1994 Amended and Restated
Non-Employee Director Stock Option Plan (the "Director Plan") to increase
the maximum number of shares of Common Stock of the Company which may be
subject to outstanding options issued under the Director Plan from 750,000
to 1,150,000.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
A record of the stockholders has been taken as of the close of business on
April 28, 1999, and only those stockholders of record on that date will be
entitled to notice of and to vote at the Annual Meeting. A list of such
stockholders will be available commencing April 30, 1999, and may be inspected
prior to the Annual Meeting, during normal business hours at the Corporate
Headquarters.
Your participation in the Company's Annual Meeting is important. To ensure
your representation, if you do not expect to be present at the meeting, please
sign and date the enclosed proxy and return it promptly in the enclosed
postage-prepaid envelope which has been provided for your convenience. The
prompt return of proxies will ensure a quorum and save the Company the expense
of further solicitation.
By Order of the Board of Directors,
/s/ Thomas H. Van Weelden
Thomas H. Van Weelden
Chairman of the Board,
President and Chief Executive Officer
April 30, 1999
<PAGE> 3
ALLIED WASTE INDUSTRIES, INC.
15880 NORTH GREENWAY-HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
PROXY STATEMENT
REGARDING
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 26, 1999
------------------------
This proxy statement is being mailed to stockholders commencing on or about
May 10, 1999, in connection with the solicitation by the Board of Directors (the
"Board of Directors" or the "Board") of Allied Waste Industries Inc., a Delaware
corporation (the "Company"), of proxies to be voted at the annual meeting of
stockholders (the "Annual Meeting") to be held in Scottsdale, Arizona on
Wednesday, May 26, 1999, and upon any adjournment thereof, for the purposes set
forth in the accompanying notice. Proxies will be voted in accordance with the
directions specified thereon and otherwise in accordance with the judgment of
the persons designated as the holder of the proxies. Abstentions and broker
non-votes will be treated as present at the meeting for purposes of determining
a quorum, but will be disregarded in the calculation of a plurality or of total
votes cast. Broker non-votes will be treated as not present and not entitled to
vote on any matter as to which the broker has indicated that it does not have
authority to vote. Any proxy on which no direction is specified will be voted
(1) FOR the ten nominees for director of the Company named herein and in the
accompanying proxy (the "Nominees"), (2) FOR the approval of the amendment to
the 1994 Amended and Restated Non-Employee Director Stock Option Plan (the
"Director Plan") to increase the maximum number of shares of Common Stock which
may be subject to outstanding options issued under the Director Plan from
750,000 to 1,150,000 shares, and (3) otherwise in accordance with the judgment
of the persons specified thereon. A stockholder may revoke a proxy by: (1)
delivering to the Company written notice of revocation, (2) delivering to the
Company a proxy signed on a later date or (3) appearing at the Annual Meeting
and voting in person.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may, if necessary to
assure the presence of a quorum, solicit proxies in person or by telephone. The
persons designated to vote shares covered by Board of Directors' proxies intend
to exercise their judgment in voting such shares on other matters that may
properly come before the meeting. The Company's management does not expect that
any matters other than those referred to in this proxy statement will be
presented for action at the meeting.
OUTSTANDING VOTING SECURITIES
As of April 28, 1999, the record date (the "Record Date") for the
determination of stockholders entitled to vote at the Annual Meeting, there were
issued, outstanding and entitled to vote 187,612,014 shares of the common stock,
par value $.01 per share (the "Common Stock"). Delaware law, the Company's
Restated Certificate of Incorporation (the "Certificate") and the Company's
Bylaws (the "Bylaws") provide that each share of Common Stock entitles the
holder thereof to one vote for each of the matters presented at the Annual
Meeting.
<PAGE> 4
ELECTION OF DIRECTORS
At the Annual Meeting, ten directors of the Company are to be elected, each
director to hold office until his successor is elected and qualified. The number
of members of the Board is currently fixed at eleven, with one vacancy resulting
from the death of Alan Shepard, who will be missed by the Company and the
remaining Board members. The Nominees have been nominated by the Board of
Directors and have previously served as directors of the Company ("Directors").
If any Nominee should become unavailable for election, the proxy may be voted
for a substitute nominee selected by the persons named in the proxy or the Board
of Directors may be reduced accordingly. The Board of Directors is not aware of
any circumstances likely to render any Nominee unavailable.
The ten Nominees who receive a plurality of votes cast by the holders of
the Common Stock represented at the Annual Meeting shall be the duly elected
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL TEN NOMINEES OF THE
COMPANY TO THE BOARD OF DIRECTORS
INFORMATION REGARDING THE NOMINEES
Certain information regarding each of the Nominees is set forth in the
following table:
<TABLE>
<CAPTION>
DIRECTOR NAME POSITIONS HELD AGE SINCE
- ------------- -------------- --- -----
<S> <C> <C> <C>
Thomas H. Van Weelden....................... Chairman of the Board of Directors, 44 1992
President and Chief Executive
Officer
Roger A. Ramsey............................. Director 60 1989
Nolan Lehmann............................... Director 54 1990
Michael Gross............................... Director 37 1997
David B. Kaplan............................. Director 31 1997
Antony P. Ressler........................... Director 38 1997
Howard A. Lipson............................ Director 35 1997
Dennis Hendrix.............................. Director 59 1997
Warren B. Rudman............................ Director 68 1997
Vincent Tese................................ Director 56 1997
</TABLE>
For certain information regarding the beneficial ownership of the Common
Stock by each of the Nominees, see "Other Information -- Principal
Stockholders."
Thomas H. Van Weelden joined the Company in January 1992 as its Vice
President -- Development, and was promoted to President and Chief Operating
Officer in December 1992. Mr. Van Weelden was promoted to Chief Executive
Officer in July 1997 and was appointed Chairman of the Board of Directors in
December 1998. He was first elected a Director in March 1992.
Roger A. Ramsey has served as a Director since October 1989, Chairman of
the Board of Directors from October 1989 through December 1998, and Chief
Executive Officer of the Company from October 1989 through July 1997. Mr. Ramsey
was employed by the international accounting firm, Arthur Andersen LLP ("Arthur
Andersen"), beginning in 1960. In 1968, Mr. Ramsey co-founded Browning-Ferris
Industries, Inc. ("BFI") and served as its Vice President and Chief Financial
Officer until 1976. In 1976, Mr. Ramsey formed and became president of Criterion
Capital Corporation, a venture capital investment company. He also became
chairman and chief executive officer of Criterion Group, Inc., a portfolio
company of Criterion Capital, until its sale to Transamerica in 1989. Mr. Ramsey
is also a member of the Board of Trustees of Texas Christian University and U.S.
Liquids, Inc.
Nolan Lehmann has served as a Director since October 1990. Since 1983, Mr.
Lehmann has served as President and a director of Equus Capital Management
Corporation, a registered investment advisor, and Equus II Incorporated
("Equus"), a registered public investment company whose stock is traded on the
New
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York Stock Exchange. Mr. Lehmann also serves as a director of American
Residential Services, Inc., Brazos Sportswear, Inc., Drypers Corporation and
Paracelsus Healthcare Corporation. Mr. Lehmann is a certified public accountant.
Michael Gross has served as a Director since May 1997. Mr. Gross is one of
the founding principals of Apollo Advisors, L.P. ("Apollo") which, together with
its affiliates, serves as managing general partner of the Apollo investment
funds. Mr. Gross is also a director of Alliance Imaging, Inc., Breuners Home
Furnishings Corporation, Building One Services Corporation, Converse, Inc.,
Florsheim Group, Inc., Saks Incorporated and United Rentals, Inc.
David B. Kaplan has served as a Director since May 1997. Since 1991, Mr.
Kaplan has been associated with and is a limited partner of Apollo. Prior to
1991, Mr. Kaplan was a member of the Investment Banking Department of Donaldson,
Lufkin & Jenrette Securities Corporation. Mr. Kaplan is also a director of
Prandium, Inc. and WMC Finance Co.
Antony P. Ressler has served as a Director since May 1997. Mr. Ressler is
one of the founding principals of Apollo, Ares Management, L.P. (the managing
general partner of the Ares Leveraged Investment Funds) and Lion Advisors, L.P.,
which, together with its affiliates act as financial advisor to and
representative for certain institutional investors with respect to securities
investments. Mr. Ressler is also a director of Berlitz International, Inc.,
Prandium, Inc., United International Holdings, Inc., and Vail Resorts, Inc. and
a member of the Board of Supervisory Directors of United Pan-Europe
Communications, N.V.
Howard A. Lipson has served as a Director since May 1997. Mr. Lipson
currently serves as senior managing director of the Blackstone Group which he
joined in 1988. Prior to joining the Blackstone Group, Mr. Lipson was a member
of the Mergers and Acquisition Group of Salomon Brothers Inc. Mr. Lipson is a
director of AMF Group, Inc., Ritvik Holdings Inc., Prime Succession Inc., Roses,
Inc., Volume Services America, Inc. and is a member of the Advisory Committee of
Graham Packaging Company.
Dennis Hendrix has served as a Director since July 1997. Mr. Hendrix serves
as a director of Chase Bank of Texas, Duke Energy Corporation, National Power,
PLC, Newfield Exploration Company and Pool Energy Services Company. From
November 1990 until April 1997, he served as Chairman of the Board of Directors
of PanEnergy Corp. and as PanEnergy's Chief Executive Officer from November 1990
until April 1995. Mr. Hendrix was President and Chief Executive Officer of Texas
Eastern Corporation from 1986 to 1989.
Warren B. Rudman has served as a Director since July 1997. Mr. Rudman has
been a partner in the law firm of Paul, Weiss, Rifkind, Wharton and Garrison
since 1993. From 1980 until 1992, Mr. Rudman served as a United States Senator
from New Hampshire. While in the Senate, Mr. Rudman was Chairman and Vice
Chairman of the Ethics Committee and also served on the Appropriations
Committee, the Intelligence Committee, the Governmental Affairs Committee and
the Permanent Subcommittee on Investigations. He also serves on the board of
directors of the Chubb Corporation, Collins & Aikman, Prime Succession, the
American Stock Exchange, several funds of the Dreyfus Corporation and the
Raytheon Company. Mr. Rudman currently serves as Chairman of the President's
Foreign Intelligence Advisory Board and on the board of trustees of Valley Forge
Military Academy, the Council on Foreign Relations and the Brookings
Institution.
Vincent Tese has served as a Director since July 1997. Mr. Tese is a member
of the board of directors of Bear Stearns & Co., Inc. ("Bear Stearns"), a
national investment bank and brokerage company, which he joined in December
1994. Prior to Bear Stearns, he served the government of New York state from
1983 to December 1994 in several positions, including Director of Economic
Development, Chairman and Chief Executive Officer of the Urban Development
Corporation, and Commissioner of the Department of Economic Development. Mr.
Tese has also served as a Commissioner of the Port Authority of New York and New
Jersey. In 1976, Mr. Tese co-founded Cross Country Cable, Inc. and has also
served as Chairman of Cross Country Wireless, Inc., which was sold to Pacific
Telesis in 1995. He currently serves on the board of directors of Bowne & Co.,
Inc., Cablevision, Inc., and Key Span Energy. In addition, Mr. Tese is a Trustee
of New York University School of Law and the New York Presbyterian Hospital.
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<PAGE> 6
VOTING AGREEMENTS REGARDING THE ELECTION OF DIRECTORS
Pursuant to a Shareholders Agreement, dated May 15, 1997 (the "Shareholders
Agreement"), between the Company and certain private securities investment funds
affiliated with either: (i) Apollo Advisors II, L.P. or (ii) Blackstone Capital
Partners II Merchant Banking Fund L.P. (collectively the "Apollo/Blackstone
Investors"), the Company has agreed, until the earlier to occur of the sixth
anniversary of the Shareholders Agreement or the date upon which the
Apollo/Blackstone Investors own, collectively, less than 20% of the shares (the
"Apollo/Blackstone Shares") of Common Stock acquired from TPG Partners, L.P.,
TPG Parallel I, L.P. and Laidlaw Transportation, Inc., to nominate and support
the election to the Board of Directors of certain individuals (the "Shareholder
Designees") designated by the Apollo/Blackstone Investors. For so long as the
Apollo/Blackstone Investors beneficially own: (i) 75% or more of the
Apollo/Blackstone Shares, they shall be entitled to designate four Shareholder
Designees; (ii) 50% or more but less than 75% of the Apollo/Blackstone Shares,
they shall be entitled to designate three Shareholder Designees; (iii) 25% or
more but less than 50% of the Apollo/Blackstone Shares, they shall be entitled
to designate two Shareholder Designees; and (iv) 20% or more but less than 25%
of the Apollo/Blackstone Shares, they shall be entitled to designate one
Shareholder Designee; provided, that if, at any time as a result of the
Company's issuance of voting securities, the Apollo/Blackstone Investors
beneficially own 9% or less of the total voting power of voting securities then
outstanding, the Apollo/Blackstone Investors shall only be entitled to one
Shareholder Designee. Messrs. Gross, Kaplan, Ressler and Lipson are the
Shareholder Designees designated by the Apollo/Blackstone Investors.
In the Shareholders Agreement, the Company agreed to: (i) limit the number
of executive officers of the Company that serve on the Board of Directors to
two; and (ii) nominate persons to the remaining positions on the Board of
Directors who are recommended by the Nominating Committee and are not employees,
officers or outside counsel of the Company or partners, employees, directors,
officers, affiliates or associates of any Apollo/Blackstone Investors (the
"Unaffiliated Directors"). Unaffiliated Directors shall be nominated only upon
the approval of a majority vote of the Nominating Committee, which shall consist
of not more than four Directors, at least two of whom shall be Shareholder
Designees, or such lesser number of Shareholder Designees as then serves on the
Board of Directors. If the Apollo/Blackstone Investors beneficially own less
than 50% of the Apollo/Blackstone Shares, the Nominating Committee shall contain
only one member who is a Shareholder Designee.
In the Shareholders Agreement, each Apollo/Blackstone Investor has agreed
that, until the earlier to occur of the seventh anniversary of the Shareholders
Agreement or the date upon which the Apollo/ Blackstone Investors own,
collectively, voting securities of the Company which represent less than 10% of
the total voting power of all voting securities on a fully diluted basis, such
Apollo/Blackstone Investor and its affiliates shall vote all voting securities
beneficially owned by such persons to elect the individuals nominated to the
Board of Directors in accordance with the appropriate provisions of the
Shareholders Agreement.
Certain amendments to the Shareholders Agreement will be effective if
shares of a new series of preferred stock are issued to investors, including
parties related to the Apollo/Blackstone Investors, in connection with the
financing for the Company's pending acquisition of Browning Ferris Industries,
Inc. ("BFI"). See "Recent Developments" and "Certain Relationships and Related
Transactions."
RECENT DEVELOPMENTS
On March 8, 1999, the Company announced that it had entered into a
definitive merger agreement under which it will acquire BFI at $45 per BFI
common share in cash, subject to the terms and conditions of the agreement. In
order to finance this acquisition, the Company has obtained commitments from a
bank group led by The Chase Manhattan Bank for $9.5 billion and commitments (the
"Equity Commitment") from a group of investors led by affiliates of the
Apollo/Blackstone Investors (the "Apollo/Blackstone Group") to purchase for $1
billion in cash one million shares of a newly created senior convertible
preferred stock, Series A Senior Convertible Preferred Stock (the "Senior
Convertible Preferred Stock"). The Company has agreed to issue and sell and the
Apollo/Blackstone Group has agreed to purchase Senior Convertible Preferred
Stock, subject to certain conditions, including the simultaneous consummation of
the acquisition of
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<PAGE> 7
BFI and the bank financing arranged by the Company for the BFI acquisition, the
completion of definitive documentation, and other customary conditions.
The Equity Commitment resulted from negotiations between representatives of
the Apollo/Blackstone Group, on the one hand, and members of the Board without a
relationship or financial interest in the Apollo/Blackstone Group
("Disinterested Directors") and the advisors and representatives of the
Disinterested Directors, on the other hand. The Disinterested Directors were
advised by independent legal and financial advisors. In connection with their
approval of the Equity Commitment Letter on March 7, 1999, the Disinterested
Directors were fully aware of the material facts relating to the interests of
the designees of the Apollo/Blackstone Investors on the Board of Directors in
the transactions contemplated by the Equity Commitment Letter, the Equity
Commitment Letter was separately discussed and approved by the Disinterested
Directors, and the Disinterested Directors concluded that the transactions
contemplated by the Equity Commitment Letter were fair to the Company as of
March 7, 1999. (In connection with their deliberations, the Disinterested
Directors received an opinion to the effect that the sale of the Senior
Convertible Preferred Stock was fair from a financial point of view to the
Company from its independent financial advisor.)
A summary of the terms of the Senior Convertible Preferred Stock follows:
The shares of Senior Convertible Preferred Stock will have a par value
of $.10 per share; have a preference with respect to dividend payments or
distributions upon the voluntary or involuntary liquidation of the Company
senior, prior and superior to all other shares of capital stock of the
Company, including, but not limited to, shares of Common Stock, Junior
Preferred Stock (as defined below) or any other series of preferred stock
of the Company. The Senior Convertible Preferred Stock will entitle the
holders to the payment of cumulative dividends quarterly in an amount equal
to the greater of (A) the dividends payable on the shares of Common Stock
issued upon the assumed conversion of the Senior Convertible Preferred
Stock (the "Common Equivalent Dividend Amount") or (B) 6.5% of the sum of
the liquidation preference of the shares plus accrued but unpaid dividends
(provided, however, that unless any necessary stockholder approval for the
issuance of Common Stock (the "Common Stock Conversion Stockholder
Approval") is obtained within six months after the issuance of the Senior
Convertible Preferred Stock, then the dividend rate on the Senior
Convertible Preferred Stock will increase by 1% per annum for each six
month period until such stockholder approval is obtained, up to a maximum
rate of 12% per annum, and provided, further, that in any event, the rate
for dividends accruing after the fifth anniversary of the issuance of the
Senior Convertible Preferred Stock which are not paid in cash and dividends
accruing after the tenth anniversary of the issuance of the Senior
Convertible Preferred Stock, will be 12% per annum).
The Senior Convertible Preferred Stock will have an initial liquidation
preference of $1,000 per share, which liquidation preference shall be increased
by accrued and unpaid dividends. The holders of Senior Convertible Preferred
Stock shall be entitled to receive upon any liquidation, dissolution or other
winding-up of the Company, before any distribution or payment shall be made to
holders of any other classes of stock, the greater of (a) the liquidation
preference, plus dividends accrued thereon with respect to the period from the
most recent dividend payment date through and including the date of
determination, and (b) the amount that would be payable to holders of Senior
Convertible Preferred Stock if such holders had converted all outstanding shares
of Senior Convertible Preferred Stock into shares of Common Stock immediately
prior to such liquidation, dissolution or other winding-up; in addition to any
voting rights provided by law, have the number of votes equal to the number of
shares of Common Stock (or Junior Preferred Stock) issuable upon conversion of
such shares.
The Senior Convertible Preferred Stock will vote on all matters submitted
to stockholders, together with all such stockholders as one class. The holders
of Senior Convertible Preferred Stock will vote as a separate class with respect
to amendments to the Certificate, that adversely affect the rights of the Senior
Convertible Preferred Stock and for the election of the number of directors that
the Apollo/Blackstone Investors are then entitled to elect under the terms of
the Shareholders Agreement, as amended.
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<PAGE> 8
The Senior Convertible Preferred Stock may be redeemed in whole but not in
part by the Company, if the Common Stock Conversion Stockholder Approval has
been received prior thereto, at any time on or after the fifth anniversary of
the initial issuance of the Senior Convertible Preferred Stock (and, on or after
the third anniversary of such issuance, if the average closing price of the
Common Stock for the thirty consecutive trading days preceding the redemption
exceeds 150% of the conversion price then in effect, upon at least 30 days
notice).
The Senior Convertible Preferred Stock may, at the holder's option, be sold
back to the Company at 101% of liquidation preference plus accrued but unpaid
dividends following a change of control of the Company.
In addition, the shares of Senior Convertible Preferred Stock will have
certain conversion rights. If the Common Stock Conversion Stockholder Approval
is obtained, the Senior Convertible Preferred Stock will be convertible at the
option of the holders into the number of shares of Common Stock obtained by
dividing the liquidation preference plus accrued but unpaid dividends by the
conversion price, initially $18.00. Until the Common Stock Conversion
Stockholder Approval is obtained, shares of Senior Convertible Preferred Stock
will be convertible at the option of the holders into the number of units
("Units") of one ten-thousandth of a share of a newly created series of junior
preferred stock, Series B Junior Preferred Stock (the "Junior Preferred Stock")
obtained by dividing the liquidation preference plus accrued but unpaid
dividends by the conversion price (initially $18.00), subject to customary
anti-dilutive adjustments. Each Unit will have a par value of $.10, have a
preference upon liquidation of the Company of $1.00 (plus accrued but unpaid
dividends) over all shares of capital stock of the Company junior to shares of
Junior Preferred Stock, including shares of Common Stock, and, once holders of
shares of Common Stock have received the equivalent of $1.00 per share, holders
of Units shall receive the same distributions made in respect of shares of
Common Stock; have one vote per Unit (subject to adjustment for changes in the
Common Stock) and vote with shares of Common Stock as one class except that such
Units will vote separately as a class on amendments to the Certificate that
adversely affect the rights of the Junior Preferred Stock; will be junior in
respect of preferences of any other series of preferred stock of the Company;
will be entitled to receive dividends and distributions in the same amount as
declared on Common Stock, but shall have a claim prior to the Common Stock on
such distributions; may not be redeemed; subject to the receipt of any necessary
stockholder approval, be convertible into shares of Common Stock on a one
Unit-for-one Share basis; and, in the event of a sale or merger of the Company
in which shares of Common Stock are exchanged for cash, stock or property, shall
represent the right to receive the same consideration per Unit as one share of
the Common Stock is entitled to receive. The conversion rights of the Senior
Convertible Preferred Stock and the Junior Preferred Stock will contain
customary antidilution provisions.
The Equity Commitment Letter and a related agreement also provide for the
grant to the Apollo/Blackstone Group of certain registration rights in respect
of Common Stock, Senior Convertible Preferred Stock, and Junior Preferred Stock
in addition to the rights they currently have, effective upon completion of the
sale of the Senior Convertible Preferred Stock. In addition, upon completion of
the sale of the Senior Convertible Preferred Stock, certain amendments to the
Shareholders Agreement will become effective. Among other things, these
amendments provide that, upon issuance of the Senior Convertible Preferred
Stock, the Apollo/Blackstone Group shall be entitled to designate five directors
on the Company's Board of Directors out of a maximum of 13 directors (as
compared to the current four designees out of a maximum of 11 directors),
subject to decrease if the Apollo/Blackstone Investors decrease their stock
ownership by specified percentages or if their ownership is diluted below
certain levels by the Company (the Apollo/Blackstone Investors shall lose the
right to elect one director for each reduction of 20% of the aggregate number of
shares they own as of the date of issuance of the Senior Convertible Preferred
Stock and if issuances by the Company reduce their ownership to less than 9% of
the voting power then they will be entitled to no more than three board
designees); and the voting and standstill provisions of the Shareholders
Agreement shall apply to the Senior Convertible Preferred Stock and any shares
of Common Stock and Junior Preferred Stock issued upon conversion of the Senior
Convertible Preferred Stock and shall be extended to last until ten years after
the issuance of the Senior Convertible Preferred Stock (subject to earlier
termination under certain circumstances set forth in the current terms of the
Shareholders Agreement).
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<PAGE> 9
AMENDMENT TO NON-EMPLOYEE DIRECTOR OPTION PLAN
In 1994, the Board adopted the Director Plan and the Director Plan was
approved by the Company's stockholders at the Annual Meeting of Stockholders
held on May 23, 1994.
The Director Plan currently provides that the maximum number of shares of
Common Stock which may at any time be subject to options issued under the
Director Plan is 750,000 shares. As of April 28, 1999, only approximately 62,097
shares remain available for grants under the Director Plan. The proposed
amendment to the Director Plan will increase the maximum number of shares which
may be subject to options issued under the Director Plan to 1,150,000. No other
terms of the Director Plan will be affected by the proposed amendment.
The proposed amendment is intended to assure that the Company will have a
sufficient number of shares of Common Stock to provide existing non-employee
directors and any new non-employee directors with the option grants and stock
issuances contemplated by the existing option grant and cash fee conversion
provisions of the Director Plan.
The Board believes that the approval of the proposed amendment to the
Director Plan is necessary to assure the effectiveness of the Director Plan and,
thereby, to continue to attract and retain qualified non-employee directors. The
Board believes that the Director Plan permits the Company to offer attractive
equity and cash compensation packages to non-employee directors comparable to
compensation packages offered by other competitive and growing companies in the
industry. The Board believes that emphasizing equity-based compensation for
non-employee directors serves the Company's interests by increasing the
proprietary interest of such non-employee directors in the success of the
Company.
The Director Plan entitled directors in office on February 28, 1994 who
were not employees of the Company or any of its subsidiaries during their time
of service ("Existing Directors") to an initial grant of an option to purchase
12,500 shares as of February 28, 1994. At the time of adoption of the Director
Plan there were two Existing Directors. The Director Plan also entitled each
director elected after February 28, 1994 who is neither (i) an employee of the
Company or any of its subsidiaries nor (ii) appointed or elected to the Board in
connection with or as a result of the completion of a financing or acquisition
transaction in which the appointment or election of such person is a condition
of or to the obligation of any party to complete the transaction (a "New
Director"), to receive an option to purchase up to 25,000 shares of Common Stock
(together, the Existing Directors and the New Directors are sometimes referred
to herein as the "Eligible Directors"). Further, the Director Plan also entitles
each Eligible Director to receive an option to purchase 10,000 shares on each
date he is reelected to serve as a member of the Board (beginning with those
directors reelected at the Company's 1995 annual meeting of stockholders). Only
non-qualified stock options ("NQOs") may be granted under the Director Plan.
As of April 28, 1999, there were nine Eligible Directors. In addition, it
is currently expected that the size of the Board will be increased, at or
shortly after the time of the acquisition of BFI by the Company, from the
current ten directors to thirteen directors in connection with the sale of the
Senior Convertible Preferred Stock to the Apollo/Blackstone Group. Of the three
non-employee directors expected to be added to the Board, two directors are
anticipated to be New Directors eligible for grants under the Director Plan.
(The one additional director to be appointed by the Apollo/Blackstone Group
under the terms of an amended Shareholders Agreement would be appointed as part
of a financing transaction and, therefore, would not qualify as New Director.
See "Common Stock Issuance" and "Certain Relationships and Related
Transactions". At the current time the identity of the three new directors has
not been determined.) Upon election to the Board, each of the two New Directors
would be entitled to receive an option to purchase 25,000 shares of Common
Stock. Furthermore, upon each date he is reelected to serve as a member of the
Board, the two New Directors would be entitled to receive the annual grant made
to each Eligible Director of an option to purchase 10,000 shares of Common
Stock.
The Company provides cash compensation to its Eligible Directors consisting
of (i) a quarterly cash fee of $3,000, (ii) a cash fee of $1,000 for each
regular or special Board meeting attended and (iii) a cash fee of $500 for each
meeting of any committee of the Board attended (as such fees are set by the
Company from
7
<PAGE> 10
time to time, the "Cash Fee Awards"). Under the Director Plan, each Eligible
Director may elect, on the date of each annual meeting of the stockholders, to
have his Cash Fee Awards for the next succeeding year paid to him in shares of
common stock in lieu of cash (the "Conversion Election"). If an Eligible
Director makes a Conversion Election for a given year, he receives that number
of shares of common stock equal to dividing a Cash Fee Award by the fair market
value of a share of common stock on the last day of the calendar quarter in
which the Cash Fee Award is paid.
The Director Plan is administered by the Management Development and
Compensation Committee (the "Compensation Committee") of the Board. The
Compensation Committee has no discretion as to the selection of the non-employee
directors to whom NQOs are to be granted or Cash Fee Awards paid, the number of
shares subject to any NQO granted, the exercise price of any NQO granted or the
ten-year maximum term of any NQO granted thereunder. The Compensation Committee
has the authority to interpret and construe any provision of the Director Plan
and to adopt such rules and regulations for administering the Director Plan as
it deems necessary. All decisions and determinations of the Compensation
Committee are final and binding on all parties. The Company indemnifies each
member of the Compensation Committee against any cost, expenses or liability
arising out of any action, omission or determination relating to the Director
Plan, unless such action, omission or determination was taken or made in bad
faith and without reasonable belief that it was in the best interest of the
Company.
The Board may at any time amend the Director Plan in any respect; provided,
that without the approval of the Company's stockholders, no amendment may (i)
materially increase the benefits accruing to Eligible Directors, (ii) materially
increase the number of shares of common stock that may be issued under the
Director Plan or (iii) materially modify the requirements as to eligibility for
participation in the Director Plan.
The Director Plan provides for an adjustment in the number of shares of
common stock available to be issued under the Director Plan and the number of
shares subject to NQOs on a change in the capitalization of the Company, a stock
dividend or split, a merger or combination of shares and certain other similar
extraordinary corporate transactions. The Director Plan also provides for the
termination of NQOs on the occurrence of certain corporate events (and either
the substitution of new options or the payment of the cash value of the
options).
The Director Plan provides that, at the election of an Eligible Director,
an unrelated broker-dealer acting on behalf of the Eligible Director may
exercise NQOs granted to the Eligible Director and immediately sell the shares
acquired on account of the exercise to raise funds to pay the exercise price of
the NQO and the amount of any withholding tax which may be due on account of the
exercise.
The Director Plan provides that no option may be granted under the Plan on
or after February 28, 2004.
A summary of the most significant features of the NQOs and the tax
consequences to recipients thereof, follows.
Non-Qualified Stock Options. The exercise price of each NQO granted under
the Director Plan is the fair market value (as defined) of a share of Common
Stock on the date on which such NQO is granted. Each NQO is exercisable for a
period not to exceed ten years. For each NQO, the Committee will establish the
time or period of time in which the NQO will vest. The exercise price shall be
paid in cash, certified check, bank draft or postal or express money order.
Except in the event of the death of an Eligible Director, NQOs are
exercisable only while an Eligible Director is a member of the Board of
Directors or within three months after he has ceased to be a director (to the
extent that the NQOs were exercisable on the date he ceased to be a director).
In the event of the death of an Eligible Director, NQOs are exercisable within
six months after such death to the extent that such NQOs were exercisable on the
date of death. NQOs are not transferable other than by will or by the laws of
descent and distribution.
An Eligible Director will not recognize any income for federal tax purposes
at the time an NQO is granted, nor will the Company be entitled to a deduction
at that time. However, when any part of an NQO is exercised, the Eligible
Director will recognize ordinary income in an amount equal to the difference
between
8
<PAGE> 11
the fair market value of the shares received and the exercise price of the NQO,
and the Company will generally recognize a tax deduction in the same amount.
Approval of the amendment to the Director Plan requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock. The
Apollo/Blackstone Investors and the directors and executive officers of the
Company currently intend to vote the shares of Common Stock they own,
representing approximately 15.3% of the Common Stock outstanding on the Record
Date, in favor of this proposal.
If approved by the stockholders of the Company, the amendment to the
Director Plan will become effective immediately.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE 1994 AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
ACTIVITY, STRUCTURE, AND COMPENSATION OF THE BOARD OF DIRECTORS AND CERTAIN
COMMITTEES
The Company's operations are managed under the broad supervision of the
Board, which has responsibility for the establishment and implementation of the
Company's general operating philosophy, objectives, goals and policies. During
1998, the Board convened on four regularly scheduled and four specially
scheduled occasions, and each Director, attended at least 75% of the meetings
held by the Board and any committees on which he served during the time he has
served as a Director.
Employee Directors do not receive additional compensation for service on
the Board of Directors or its committees. The Company currently pays each
non-employee Director a cash fee of $3,000 at the end of each calendar quarter
of service, $1,000 for each regular and special meeting of the Board of
Directors attended and $500 for each meeting of any committee of the Board of
Directors attended plus travel expenses if appropriate. Under the Director Plan,
pursuant to an annual election by the Director, these cash fees may be converted
into shares of Common Stock at the market price (as defined in the Director
Plan) on the last day of the quarter in which the fees are paid.
The Director Plan entitles each Director who is not an employee of the
Company to receive an option to purchase 25,000 shares of Common Stock on his
initial election to the Board. Further, the Director Plan also entitles each
non-employee Director to receive an option to purchase 10,000 shares on each
date he is re-elected. Employee Directors are eligible to participate in the
Company's 1991, 1993 and 1994 Incentive Stock Plans (collectively, the
"Incentive Plans"). See "Other Information -- Management Development and
Compensation Committee Report."
The Board currently has four standing committees, which, pursuant to
delegated authority, perform various duties on behalf of and report to the
Board: (i) the Executive Committee, (ii) the Compensation Committee, (iii) the
Audit Committee and (iv) the Nominating Committee. The Executive Committee is
authorized to exercise, to the extent permitted by law, the power of the full
Board of Directors when a meeting of the full Board of Directors is not
practicable or necessary. The current members of the Executive Committee are
Messrs. Van Weelden, Ramsey, Kaplan and Ressler. The Executive Committee
convened on three occasions in 1998 and acted by unanimous consent on several
other occasions. The Compensation Committee sets the compensation for the
officers of the Company and administers the Company's compensation plans. The
current members of the Compensation Committee are Messrs. Lehmann, Lipson and
Ressler. During 1998, the Compensation Committee convened on four occasions. The
Audit Committee reviews with the auditors the scope of and matters pertaining to
the audit of the Company's financial statements. The current members of the
Audit Committee are Messrs. Hendrix, Lehmann and Lipson. The Audit Committee met
on six occasions during 1998. The Nominating Committee evaluates and recommends
nominees for Director to the Board of Directors. The current members of the
Nominating Committee are Messrs. Van Weelden, Ramsey, Lipson and Ressler. The
Nominating Committee, met on one occasion during 1998.
9
<PAGE> 12
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, derived from filings
with the Securities and Exchange Commission and other public information,
regarding the beneficial ownership of the Common Stock at April 6, 1999 by: (i)
each person who is known by the Company to beneficially own more than five
percent of the outstanding shares of Common Stock, (ii) each of the current
Directors, and the executive officers named in the Summary Compensation Table
(see "Executive Compensation"), and (iii) all current Directors and executive
officers as a group. Except as otherwise indicated below and subject to
applicable community property laws, each owner has sole voting and sole
investment powers with respect to the stock listed.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME OF PERSON OR IDENTITY OF GROUP(1) NUMBER PERCENTAGE
- -------------------------------------- ----------- -----------
<S> <C> <C>
Thomas H. Van Weelden....................................... 1,859,991(2) 1.0%
Roger A. Ramsey............................................. 1,319,609(3) *
Apollo Investment Fund III, L.P.
Apollo Overseas Partners III, L.P.
Apollo (UK) Partners III, L.P.
c/o Apollo Advisors, II, L.P.(4).......................... 17,119,579(4) 9.1%
Two Manhattanville Road
Purchase, New York 10577
Blackstone Capital Partners II Merchant Banking Fund L.P.
Blackstone Offshore Capital Partners II L.P.
Blackstone Family Investment Partnership II L.P.
c/o Blackstone Management Associates II L.L.C.(5)......... 9,231,868(5) 4.9%
345 Park Avenue, 31st Floor
New York, New York 10154
Steven M. Helm.............................................. 119,913(6) *
Larry D. Henk............................................... 363,401(7) *
Henry L. Hirvela............................................ 201,667(8) *
Donald W. Slager............................................ 93,480(9) *
Michael Gross............................................... 17,155,910(10) 9.1%
David B. Kaplan............................................. 17,156,367(10) 9.1%
Antony P. Ressler........................................... 17,156,352(10) 9.1%
Nolan Lehmann............................................... 1,078,795(11) *
Howard A. Lipson............................................ 9,266,868(12) 4.9%
Dennis Hendrix.............................................. 41,445(13) *
Warren B. Rudman............................................ 36,236(13) *
Vincent Tese................................................ 36,238(13) *
All Directors and executive officers as a group(16 31,814,751 14.6%
persons)(2)-(3),(6)-(14)..................................
</TABLE>
- ---------------
* Does not exceed one percent.
(1) Unless otherwise indicated, the address of each person or group listed
above is 15880 North Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona
85260.
(2) Includes 979,972 shares of Common Stock that may be acquired on the
exercise of options.
(3) Includes 987,472 shares of Common Stock that may be acquired on the
exercise of options.
(4) Apollo Advisors II, L.P. ("Apollo Advisors") serves as general partner for
each of Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P. and Apollo (UK) Partners III, L.P. (collectively, the "Apollo
Investors"), which directly own 15,609,142, 932,982 and 577,455 shares of
Common Stock, respectively, representing 8.3%, 0.5% and 0.3% of the
outstanding Common Stock, respectively. Messrs. Gross, Kaplan and Ressler
are principals of Apollo Advisors and each disclaims beneficial
10
<PAGE> 13
ownership of the indicated shares. Also see the Schedule 13D, as amended,
filed on behalf of the Apollo Investors with the Securities and Exchange
Commission.
(5) Blackstone Management Associates II L.L.C. ("Blackstone Associates") serves
as general partner for each of Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II L.P. and
Blackstone Family Investment Partnership II L.P. (collectively, the
"Blackstone Investors"), which directly own 6,611,545, 1,962,385 and
657,938 shares of the outstanding Common Stock, respectively, representing
3.5%, 1.0% and 0.4% of the outstanding Common Stock, respectively. Mr.
Lipson is Senior Managing Director of Blackstone Associates and disclaims
beneficial ownership of the indicated shares. Messrs. Peter G. Peterson and
Stephen A. Schwarzman are the founding members of Blackstone Associates and
as such may be deemed to share beneficial ownership of the shares owned by
the Blackstone Investors. Also see the Schedule 13D, as amended, filed on
behalf of the Blackstone Investors with the Securities and Exchange
Commission.
(6) Includes 119,413 shares of Common Stock that may be acquired on the
exercise of options.
(7) Includes 343,514 shares of Common Stock that may be acquired on the
exercise of options.
(8) Includes 196,667 shares of Common Stock that may be acquired on the
exercise of options.
(9) Includes 92,180 shares of Common Stock that may be acquired on the exercise
of options.
(10) Includes (i) 17,119,579 shares beneficially owned by the Apollo Investors,
and (ii) 35,000 shares that may be acquired on the exercise of options by
each of Messrs. Gross, Kaplan and Ressler. Each of Messrs. Gross, Kaplan
and Ressler disclaims beneficial ownership of shares owned by Apollo.
(11) Includes (i) 1,000,000 shares of Common Stock that are beneficially owned
by an affiliate of Mr. Lehmann and (ii) 52,500 shares of Common Stock that
may be acquired on the exercise of options.
(12) Includes (i) 9,231,868 shares beneficially owned by the Blackstone
Investors, and (ii) 35,000 shares that may be acquired on the exercise of
options. Mr. Lipson disclaims beneficial ownership of such shares.
(13) Includes 35,000 shares of Common Stock that may be acquired on the exercise
of options.
(14) Includes 166,187 shares of Common Stock that may be acquired on the
exercise of options by two executive officers who are not a named officers.
The above table does not reflect the proposed issuance of shares of Senior
Convertible Preferred Stock to the Apollo/Blackstone Group in connection with
the pending acquisition of BFI.
Apollo Management IV, L.P. ("Apollo Management"), an affiliate of the
Apollo Investors, has agreed to purchase 440,000 shares of the Senior
Convertible Preferred Stock, subject to the terms and conditions of the
commitment for such purchase. It is expected that Apollo Management will
allocate all or a portion of this purchase among the Apollo Investors and other
related investment funds. Based upon an initial conversion price of $18.00 per
share for the Senior Convertible Preferred Stock, in addition to their other
voting rights, these 440,000 shares would have an aggregate of 24,444,444 votes
on all matters presented for a vote by the holders of Common Stock, including
the election of directors, and would vote with the Common Stock as if they were
a single class. These shares represent 44% of all shares of Senior Convertible
Preferred Stock expected to be issued and, together with the 17,119,579 shares
of Common Stock currently beneficially owned by the Apollo Investors, would
represent approximately 19.6% of the aggregate voting power of all Company
voting securities outstanding as of April 6, 1999 (after giving effect to the
issuance of these 440,000 shares of Senior Convertible Preferred Stock) and
approximately 17.0% of such voting power (after giving effect to the issuance of
one million shares of Senior Convertible Preferred Stock to various parties,
including parties unrelated to the Apollo Investors). Beneficial ownership of
these 440,000 shares of Senior Convertible Preferred Stock is expected to be
disclaimed by Messrs. Gross, Kaplan and Ressler, but, if they were included in
the above table for such individuals, would also increase the reported ownership
for such persons.
Blackstone Capital Partners III Merchant Banking Fund L.P. ("BCP III"), an
affiliate of the Blackstone Investors, has agreed to purchase 350,000 shares of
the Senior Convertible Preferred Stock, subject to the terms and conditions of
the commitment for such purchase. It is expected that BCP III will allocate all
or a portion of this purchase among the related investment funds. Based upon an
initial conversion price of $18.00
11
<PAGE> 14
per share, these 350,000 shares, in addition to their other voting rights, would
have an aggregate of 19,444,444 votes on all matters presented for a vote by the
holders of Common Stock, including the election of directors, and would vote
with the Common Stock as if they were a single class. These shares represent 35%
of all shares of Senior Convertible Preferred Stock expected to be issued and,
together with the 9,231,868 shares of Common Stock currently beneficially owned
by the Blackstone Investors, would represent approximately 13.8% of the
aggregate voting power of all Company voting securities outstanding as of April
6, 1999 (after giving effect to the issuance of these 350,000 shares of Senior
Convertible Preferred Stock) and approximately 11.8% of such voting power (after
giving effect to the issuance of one million shares of Senior Convertible
Preferred Stock to various parties, including parties unrelated to the
Blackstone Investors). Beneficial ownership of these 350,000 shares of Senior
Convertible Preferred Stock is expected to be disclaimed by Mr. Lipson, but, if
they were included in the above table for him, would also increase his reported
beneficial ownership.
If the 790,000 shares of Senior Convertible Preferred Stock were included
in the above table as being beneficially owned by all directors and executive
officers as a group, the group would beneficially own 79% of all shares of
Senior Convertible Preferred Stock expected to be issued, representing
approximately 32.2% of the aggregate voting power of all Company voting
securities on April 6, 1999 (after giving effect to the issuance of these
790,000 shares) and approximately 30.7% of such aggregate voting power (after
giving effect to all one million shares of Senior Convertible Preferred Stock
expected to be issued to various parties).
12
<PAGE> 15
EXECUTIVE OFFICERS
The executive officers of the Company serve at the pleasure of the Board
and are subject to annual appointment by the Board of Directors at its first
meeting following the annual meeting of stockholders. All of the Company's
executive officers are listed in the following table, and certain information
concerning those officers who are not also members of the Board follows the
table:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
- ---- --- -------------
<S> <C> <C>
Thomas H. Van Weelden..................... 44 Chairman of the Board of Directors, President and
Chief Executive Officer
Michael G. Hannon......................... 44 Vice President -- Mergers & Acquisitions
Peter S. Hathaway......................... 43 Vice President and Chief Accounting Officer
Steven M. Helm............................ 51 Vice President -- Legal and Corporate Secretary
Larry D. Henk............................. 39 Vice President and Chief Operating Officer
Henry L. Hirvela.......................... 47 Vice President and Chief Financial Officer
Donald W. Slager.......................... 37 Vice President -- Operations
</TABLE>
Biographical information regarding Mr. Van Weelden appears in the
biographical information regarding the Nominees. See "-- Election of
Directors-Nominees."
Michael G. Hannon has served as Vice President -- Mergers & Acquisitions
since April 1994. From 1975 to 1993, Mr. Hannon was employed by Laidlaw Waste
Systems, Inc. ("Laidlaw") where he held a variety of management positions. His
most recent position at Laidlaw was that of Regional Vice President, with
overall responsibility for Laidlaw's 24 Midwestern waste service operations
having annual revenues in excess of $100 million. Prior to holding that
position, Mr. Hannon held positions in Mergers & Acquisitions and served as
Controller.
Peter S. Hathaway has served as Chief Accounting Officer since February
1995 and Vice President since May 1996. From May 1996 through April 1997, Mr.
Hathaway also served as Treasurer. From September 1991 through 1994 he was
employed by BFI as Controller and Finance Director for certain Italian
operations holding responsibilities for the acquisition, reorganization and
integration, controller, and financing functions of a $100 million joint
venture. From 1979 through September 1991, Mr. Hathaway served in the audit
division of Arthur Andersen in Colorado, Italy and Connecticut, most recently in
the position of Senior Manager.
Steven M. Helm has served as Vice President -- Legal and Corporate
Secretary of the Company since May 1996. Prior to joining the Company, Mr. Helm
was an attorney in private practice in Illinois.
Larry D. Henk has served as Vice President of Operations since June 1994.
Mr. Henk was promoted to Chief Operating Officer in February 1998. Mr. Henk
joined the Company in January 1992, as General Manager of R.18, when it was
acquired by the Company. Prior to joining the Company, Mr. Henk served as
General Manager of R.18 since 1991 and General Manager of Environmental
Development Corporation from 1987 until its acquisition by the Company in July
1992.
Henry L. Hirvela has served as Vice President and Chief Financial Officer
of the Company since May 1996. From September 1995 through February 1996 he
served as Chief Financial Officer for Power Computing Corporation. Prior to
joining Power Computing, Mr. Hirvela was employed by BFI since 1988 as Vice
President -- Treasurer with responsibilities for the company's global finance
and cash management functions. From 1981 until 1988 Mr. Hirvela worked for Texas
Eastern Corporation, a diversified international energy company, in a number of
management positions including Assistant Treasurer and Manager -- Corporate
Development. Prior to joining Texas Eastern Corporation, Mr. Hirvela worked for
Bank of America as an operations officer in San Diego, California.
Donald W. Slager has served as Vice President -- Operations of the Company
since his promotion from Assistant Vice President -- Operations in February
1998. Prior to this, Mr. Slager served as Regional Vice President of the West
Region from June 1996 to June 1997. Mr. Slager also served as District Manager
for the Chicago Metro District since 1993. Before Allied's acquisition of
National Waste Services in 1993, he served as General Manager from 1991-1993 and
in other management positions since 1986.
13
<PAGE> 16
EXECUTIVE COMPENSATION
Summary of Compensation. The following table provides certain summary
information concerning compensation paid or accrued during the fiscal years
ended December 31, 1998, 1997 and 1996 to the Company's Chief Executive Officer
and to each of the five other most highly compensated executive officers serving
at the end of the fiscal year ended December 31, 1998 (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION SARS(1)(#) COMPENSATION
- ----------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Van Weelden................. 1998 $700,000 $573,000 $ -- -- $ 152,572(2)
Chairman of the Board of Directors, 1997 500,000 523,000 -- 477,825 152,573(2)
President and Chief Executive 1996 357,345 120,000 -- 600,000 --
Officer
Roger A. Ramsey....................... 1998 710,769 700,000 -- -- 4,648,352(3)
Former Chairman of the Board of 1997 500,000 640,000 -- 240,325 148,352(2)
Directors 1996 348,803 120,000 -- 600,000 --
Steven M. Helm........................ 1998 275,000 220,000 -- 40,000 --
Vice President -- Legal and 1997 225,000 215,000 -- 187,090 --
Corporate
Secretary 1996 180,000 85,000 -- 20,000 --
Larry D. Henk......................... 1998 337,500 337,500 -- 200,000 --
Vice President and Chief Operating 1997 260,000 265,000 -- 155,200 --
Officer 1996 197,700 85,000 -- 40,000 --
Henry L. Hirvela...................... 1998 337,500 337,500 -- 150,000 --
Vice President and Chief Financial 1997 275,000 255,000 -- 225,000 100,005(4)
Officer 1996 157,827 85,000 -- 100,000 --
Donald W. Slager...................... 1998 225,000 180,000 -- 110,000 --
Vice President -- Operations 1997 174,262 197,657 -- 96,533 96,650(4)
1996 132,904 40,000 -- 20,000 --
</TABLE>
- ---------------
(1) See "-- Option Grants in Last Fiscal Year," for certain information
regarding options granted during the fiscal year ended December 31, 1998.
(2) Consists of interest forgiven by the Company related to promissory notes
issued in 1996. See "Certain Relationships and Related Transactions."
(3) In connection with his resignation as Executive Chairman of the Board of
Directors in December 1998, Allied bought out Mr. Ramsey's employment
agreement with the Company for $4.5 million ($3 million was paid in December
1998 and the remaining $1.5 million of this amount will be paid ratably over
the next five years). In addition, this amount includes $148,352 of interest
forgiven by the Company related to promissory notes issued in 1996 (see
"Certain Relationships and Related Transactions").
(4) Consists of reimbursement for certain relocation expenses paid by the
Company.
Supplemental Executive Retirement Plan. The Company maintains a
Supplemental Retirement Plan for Roger A. Ramsey, which provides for the payment
of a monthly benefit (expressed in the form of a joint and 100% survivor life
annuity) beginning July 1, 1999 in the amount of $25,000 per month. Upon the
request of Mr. Ramsey, and with the consent of the Company, the benefit may be
paid on any other date, and in any other form (including a lump sum) which is
the actuarial equivalent of the joint and survivor form. To facilitate the
funding of its obligations under the Plan, the company implemented a
Supplemental Retirement Trust, of which a national bank is the current Trustee.
The Trust is to become irrevocable in the event of a change of control.
14
<PAGE> 17
Option Grants in Last Fiscal Year. The following table provides certain
information with respect to options granted to the Chief Executive Officer and
to each of the Named Executive Officers during the fiscal year ended December
31, 1998 under the Incentive Plans:
<TABLE>
<CAPTION>
REALIZABLE VALUE AT
ASSUMED ANNUAL RATES
PERCENT OF OF STOCK PRICE
NUMBER OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS/SARS EXERCISE OPTION TERM(2)
UNDERLYING GRANTED TO OR BASE ---------------------
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME AND POSITION GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE ($) ($)
----------------- ------------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Van Weelden............... -- -- -- -- -- --
President and Chief Executive
Officer
Roger A. Ramsey..................... -- -- -- -- -- --
Former Chairman of the Board of
Directors
Steven M. Helm...................... 40,000(3) 2% 21.063 12/29/08 529,844 1,342,728
Vice President -- Legal and
Corporate Secretary
Larry D. Henk....................... 150,000(3) 6% 21.063 12/29/08 1,986,914 5,035,230
Vice President and 50,000(4) 2% 21.188 02/26/08 666,235 1,688,371
Chief Operating Officer
Henry L. Hirvela.................... 150,000(3) 6% 21.063 12/29/08 1,986,914 5,035,230
Vice President and Chief Financial
Officer
Donald W. Slager.................... 80,000(3) 3% 21.063 12/29/08 1,059,687 2,685,456
Vice President -- Operations 30,000(4) 1% 21.188 02/26/08 399,741 1,013,023
</TABLE>
- ---------------
(1) Each option granted under the Incentive Plans becomes immediately
exercisable on the occurrence of a Change in Control (as defined in the
Incentive Plans). No stock appreciation rights were granted during 1998.
(2) Because the exercise price of all options equals or exceeds the market price
per share of Common Stock on the date of grant, the potential realizable
value of the options assuming 0% stock price appreciation is zero.
(3) These options vest in three equal annual installments beginning on December
29, 1999.
(4) These options vest in three equal annual installments beginning on February
26, 1999.
15
<PAGE> 18
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year Ended
Option Values. The following table provides certain information with respect to
options exercised during the fiscal year ended December 31, 1998 by the Chief
Executive Officer and each of the Named Executive Officers listed in the
preceding tables:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS AT
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) FISCAL YEAR-END(1)
NAME EXERCISE(#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------- ------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Van Weelden......... -- -- 884,407 515,593 $14,399,088 $7,091,621
Roger A. Ramsey............... 85,000 $2,055,938 939,407 375,593 15,576,589 5,296,621
Steven M. Helm................ -- -- 71,994 193,006 1,055,854 2,216,375
Larry D. Henk................. -- -- 279,140 334,160 5,073,758 2,384,179
Henry L. Hirvela.............. -- -- 115,000 360,000 1,629,375 3,283,125
Donald W. Slager.............. -- -- 54,207 191,893 890,183 1,419,752
</TABLE>
- ---------------
(1) Calculated by multiplying the number of shares underlying outstanding
in-the-money options by the difference between the closing sales price of
the Common Stock on December 31, 1998 ($23.63 per share) and the exercise
price, which ranges between $4.27 and $21.19 per share. Options are in-the-
money if the fair market value of the underlying Common Stock exceeds the
exercise price of the option.
Employment Agreements. The Company has entered into Executive Employment
Agreements with certain Named Executive Officers. The Executive Employment
Agreement of Mr. Van Weelden provides a base salary of $900,000 and a primary
term from January 1, 1999 to January 1, 2002 and is automatically extended after
each year of employment such that three years remain on the term of the
agreement on each anniversary date. The Executive Employment Agreements of
Messrs. Helm, Henk, Hirvela and Slager provide for base salaries ranging from
$225,000 to $275,000, and a primary term which expires in 2000 that is
automatically renewed for successive two-year terms. If the Executive Employment
Agreements are terminated by the employee for Good Reason (as defined in the
Executive Employment Agreement), or by the Company without Cause (as defined in
the Executive Employment Agreement), the base salary on the date of termination
and an amount equal to the largest annual bonus paid to the employee out of the
last three years preceding the date of termination will be paid until expiration
of the term of the Executive Employment Agreement. If the Executive Employment
Agreements are terminated by the employee for Good Reason or by the Company
without Cause and a Change in Control (as defined in the Executive Employment
Agreement) has occurred within the two years preceding the date of termination,
the Company is obligated to pay an amount equal to the sum of two times the base
salary on the date of termination and the bonus paid for the previous year. The
Company has also entered into Employment Agreements with Michael G. Hannon and
Peter S. Hathaway which provide for base salaries ranging from $190,000 to
$195,000, as well as terms and severance arrangements similar to those found in
the Executive Employment Agreements of the Named Executive Officers.
Compensation Committee Interlocks and Insider Participation. Messrs.
Lehmann, Lipson and Ressler served on the Compensation Committee in 1998. No
member of the Compensation Committee has ever served as an executive officer of
the Company.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
Under the supervision of the Compensation Committee, the Company has
developed and implemented compensation policies, plans and programs designed to
enhance the profitability of the Company, and therefore stockholder value, by
aligning closely the financial interests of the Company's senior executives with
those of its stockholders. Therefore, executive compensation is related to the
financial performance of the Company and consists of the following elements:
base compensation, cash bonus and incentive stock benefits ("Incentive Awards").
Executive base compensation for senior executives (including the Chief
Executive Officer and the Named Executive Officers) is intended to be
competitive with that paid in comparably situated industries and
16
<PAGE> 19
to provide a reasonable degree of financial security and flexibility to those
individuals who the Board regards as adequately performing the duties associated
with the various senior executive positions. In furtherance of this objective,
the Compensation Committee periodically, though not necessarily annually,
reviews the salary levels of a sampling of solid waste management companies that
are regarded by the Compensation Committee as having sufficiently similar
financial and operational characteristics to provide a reasonable basis for
comparison. Although the Compensation Committee does not attempt to specifically
tie executive base pay to that offered by any particular sampling of companies,
the review provides a useful gauge in administering the Company's base
compensation policy. In general, however, the Compensation Committee considers
the credentials, length of service, experience, and consistent performance of
each individual senior executive when setting compensation levels. To ensure
retention of qualified management, the Company has entered into employment
agreements with its key management personnel. The employment agreements
establish annual base salary amounts that the Compensation Committee may
increase, based on the foregoing criteria.
The Compensation Committee evaluated the experience, length of service and
the general success of the Company's operations in determining the Chief
Executive Officer's compensation for 1999. The Compensation Committee also
considered the Company's growth through its acquisition strategy, revenues, and
realization of operational efficiencies in 1998. The Compensation Committee
noted that the Company achieved significant growth in revenues, cash flow,
earnings per share and shareholder return on equity, before consideration of
extraordinary items and acquisition related charges in 1998. Based on these
factors, the Committee increased the salary of the Chief Executive Officer to
$900,000 for 1999.
Annual cash bonuses reflect a policy of requiring a certain level of
Company financial performance for the year before any cash bonuses are earned by
senior executives. In setting such performance criteria, the Compensation
Committee considers the total compensation payable or potentially available to
the Chief Executive Officer and other senior executives, including the Named
Executive Officers. The Compensation Committee has tied potential bonus
compensation to performance factors, including the officer's efforts and
contributions towards obtaining Company goals, the Company's overall growth, and
the results of the officer's efforts in achieving Company growth. Based on the
Company's significantly improved financial performance in 1998, as reflected in
significant increases in revenues, cash flow, earnings per share and shareholder
return on equity, before consideration of extraordinary items, acquisition
related and unusual costs and asset impairments, the Compensation Committee
awarded a bonus of $573,000 to the Chief Executive Officer.
The Incentive Plans are intended to provide key employees, including the
Chief Executive Officer and the other executive officers of the Company and its
subsidiaries with a continuing proprietary interest in the Company, with a view
to increasing the interest in the Company's welfare of those personnel who share
the primary responsibility for the management and growth of the Company.
Moreover, the Incentive Plans provide a significant non-cash form of
compensation, which is intended to benefit the Company by enabling it to
continue to attract and to retain qualified personnel.
The Compensation Committee is authorized to make Incentive Awards under the
Incentive Plans to key employees, including officers (whether or not they are
also directors) of the Company and its subsidiaries. Although the Incentive
Awards are not based on any one criteria, the Committee considers:
(i) management's ability to implement the Company's strategy of
geographic expansion through acquisition followed by successful integration
and assimilation of the acquired companies;
(ii) margin maintenance and improvements achieved through management's
realization of operational efficiencies, as well as revenue and earnings
growth; and
(iii) the attainment of personal performance goals established for
certain employees as well as district and company-wide performance goals.
17
<PAGE> 20
The Compensation Committee also uses Incentive Awards as a form of
compensation in lieu of providing salary increases, based on its view that
Incentive Awards provide a more effective incentive for management performance
than cash payments and the salaries and bonuses paid to the Company's executives
are somewhat lower than those paid by other companies in the industry.
The Management Development and Compensation Committee of the Board of
Directors.
Nolan Lehmann
Howard Lipson
Antony P. Ressler
18
<PAGE> 21
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the Nasdaq Composite Index, the Standard & Poor's 500 Stock Index and
to an index of peer companies selected by the Company. The graph covers the
period from December 31, 1993 to December 31, 1998. The graph assumes that the
value of the investment in the Common Stock and each index was $100 at December
31, 1993 and that all dividends were reinvested.
Performance Graph
<TABLE>
<CAPTION>
ALLIED WASTE NASDAQ COMPOSITE STANDARD & POORS 500
INDUSTRIES, INC. INDEX INDEX STOCK INDEX PEER GROUP INDEX
---------------------- ---------------- -------------------- ----------------
<S> <C> <C> <C> <C>
'1993' 100.0 100.0 100.0 100.0
'1994' 76.2 97.6 101.3 104.7
'1995' 135.7 137.1 139.4 149.0
'1996' 176.2 168.9 171.4 218.3
'1997' 444.1 206.7 228.6 276.8
'1998' 450.0 289.9 293.9 307.0
</TABLE>
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Allied Waste Industries, Inc. ......... $ 5.25 $ 4.00 $ 7.13 $ 9.25 $ 23.31 $ 23.63
Index.................................. 100.0 76.2 135.7 176.2 444.1 450.0
------- ------- ------- ------- ------- ---------
Nasdaq Composite Index................. $343.61 $335.24 $471.17 $580.39 $710.36 $ 996.16
Index.................................. 100.0 97.6 137.1 168.9 206.7 289.9
------- ------- ------- ------- ------- ---------
Standard & Poor's 500 Stock Index...... $466.45 $459.27 $615.93 $740.74 $970.43 $1,229.23
Index.................................. 100.0 101.3 139.4 171.4 228.6 293.9
------- ------- ------- ------- ------- ---------
Peer Group:
BFI.................................... $ 25.75 $ 28.38 $ 29.38 $ 26.25 $ 37.00 $ 28.44
Waste Management, Inc.(1).............. 11.38 11.38 18.88 31.88 39.25 46.63
------- ------- ------- ------- ------- ---------
Total.................................. $ 37.13 $ 39.76 $ 48.26 $ 58.13 $ 76.25 $ 75.07
------- ------- ------- ------- ------- ---------
Index.................................. 100.0 104.7 149.0 218.3 276.8 307.0
------- ------- ------- ------- ------- ---------
</TABLE>
- ---------------
(1) During 1998, USA Waste Services, Inc. acquired Waste Management, Inc. in a
business combination accounted for as a pooling-of-interests and changed the
name of the newly formed company to Waste Management, Inc. The stock prices
used in the performance graph are the quoted price for USA Waste Services,
Inc. for 1993 through 1997 and for Waste Management, Inc. for 1998. As a
result of its acquisition, the former Waste Management, Inc. has been
removed from the Company's peer group.
During 1998, the Company was added to the Standard & Poor's 500 Stock
Index, and, as a result of the Company's listing on the NYSE, the Company is no
longer included in the Nasdaq Composite Index. Therefore, the Company will
compare its total return to the Standard & Poor's 500 Stock Index and, in the
future, not the Nasdaq Composite Index. The Nasdaq Composite Index is included
in the 1998 performance graph for comparative purposes.
19
<PAGE> 22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company enters into transactions with related parties only with the
approval of a majority of the independent and disinterested members of the Board
and only on terms the Company believes to be comparable to or better than those
that would be available from unaffiliated parties. In the Company's view, all of
the transactions described below meet that standard.
In consideration of the acquisition of R.18 in January 1992, the Company
and Thomas H. Van Weelden entered into a non-competition agreement which
provided for the payment to Mr. Van Weelden of an annual fee of $25,000 through
February 1997. Prior to the Company's acquisition of Environmental Development
Corporation ("EDC"), Mr. Van Weelden, certain of his affiliates and certain
other persons entered into an agreement with EDC pursuant to which EDC is
obligated to pay an aggregate of $5.6 million on the issuance of a permit
entitling EDC or its subsidiaries to operate a non-hazardous solid waste
landfill comprising at least 7 million cubic yards of airspace on a tract of
land formerly owned by such parties. In April 1995, this permit was issued and
the $5.6 million obligation was remitted to the aforementioned parties in the
form of cash and promissory notes. Thomas H. Van Weelden, Larry D. Henk and
James G. Van Weelden received $1,204,875, $187,250 and $655,375, respectively,
in four-year promissory notes bearing interest at 12% per year. All promissory
notes issued in connection with this permit were repaid in April 1998.
Thomas H. Van Weelden and Roger A. Ramsey have loans of $2.3 million and
$2.2 million, respectively, from the Company pursuant to promissory notes which
are due in June 2001, bearing interest at a rate of 6.625% per year and are
secured by the pledge of 246,154 shares of Common Stock purchased from the
Company at the then market price with the proceeds from the loans in 1996. In
connection with these loans, the Company forgave interest due from Mr. Thomas H.
Van Weelden and Mr. Roger A. Ramsey in 1997 and 1998.
James G. Van Weelden is employed by the Company and received $311,600 in
employment compensation for the year ended December 31, 1998. James G. Van
Weelden is a brother of Thomas H. Van Weelden.
Edward L. Van Weelden was employed by the Company through July 1998 and
received $176,943 in salary and commissions through that date. In August 1998,
Edward L. Van Weelden resigned and entered in to a separation agreement with the
Company (which included certain non-competition arrangements), pursuant to which
the Company paid him $651,900. In addition, the Company sold certain assets to
Edward L. Van Weelden for approximately $1.5 million, which approximated the
fair value of these assets. No gain or loss was recognized on this transaction.
Edward L. Van Weelden is a brother of Thomas H. Van Weelden.
In December 1998, Roger A. Ramsey resigned as Executive Chairman of the
Board of Directors. In connection with his resignation, Allied bought out Mr.
Ramsey's employment agreement with the Company for $4.5 million ($1.5 million of
this amount will be paid ratably over the next five years). Additionally, the
Board determined that Mr. Ramsey's current options to buy Common Stock will
continue to vest under the terms which they were initially granted.
As noted previously, the Company has various agreements with the
Apollo/Blackstone Investors relating to their original investment in the Company
in 1997 and with the Apollo/Blackstone Group relating to their proposed purchase
of equity securities of the Company in connection with the pending acquisition
of BFI in 1999. These agreements, among other things, grant the
Apollo/Blackstone Investors and the Apollo/ Blackstone Group rights to
representation on the Board and to register the securities of the Company they
hold, and also govern the voting of these Company securities.
AUDITORS
Arthur Andersen, certified public accountants, have served as the
independent auditors of the Company for a number of years. While management
anticipates that this relationship will continue to be maintained during 1999
and subsequent years, it is not proposed that any formal action be taken at the
meeting with respect to the continued employment of Arthur Andersen.
Representatives of Arthur Andersen plan to attend the Annual Meeting and will be
available to answer appropriate questions. These representatives will also have
20
<PAGE> 23
an opportunity to make a statement at the meeting if they so desire, although it
is not expected that any statement will be made.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% stockholders are required to furnish
the Company with copies of all Section 16(a) reports they file.
Based solely on a review of the forms the Company has received or prepared,
the Company believes that during the year ended December 31, 1998, all filing
requirements applicable to the Directors, officers and greater than 10%
stockholders were met except Brian A. O'Leary, who was a Director through May
27, 1998, was late in filing one report on Form 5.
MISCELLANEOUS MATTERS
The annual report to stockholders covering the fiscal year ended December
31, 1998 is included with this proxy statement. Any stockholder who wishes to
submit a proposal for action to be included in the proxy statement and form of
proxy relating to the 2000 Annual Meeting of stockholders is required to submit
such proposals to the Company on or before December 31, 1999.
The Company's Board of Directors is not aware of any other business to be
considered or acted upon at the Annual Meeting other than those described above.
If other business requiring a vote of stockholders is properly presented at the
Annual Meeting, proxies will be voted in accordance with the judgment on such
matters of the person or persons acting as proxy. If any matter not appropriate
for action at the Annual Meeting should be presented, the holders of the proxies
will vote against consideration thereof or action thereon.
By Order of the Board of Directors,
/s/ Thomas H. Van Weelden
Thomas H. Van Weelden
Chairman of the Board,
President and
Chief Executive Officer
21
<PAGE> 24
ALLIED WASTE INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 26 1999
The undersigned hereby appoints Thomas H. Van Weelden and Steven M.
Helm as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of this
proxy card, all shares of Common Stock of Allied Waste Industries, Inc. (the
"Company") held of record by the undersigned on April 28, 1999, at the Annual
Meeting of Stockholders to be held on May 26, 1999, or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 25
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ALLIED WASTE INDUSTRIES, INC.
May 26, 1999
--Please Detach and Mail in the Envelope Provided--
PLEASE MARK YOUR PROXY CARD AS IN THIS EXAMPLE.
A /x/ VOTES
1. Election of Directors
NOMINEES: Thomas H. Van Weelden, Roger A. Ramsey, Nolan Lehmann, Michael Gross,
David B. Kaplan, Antony P. Ressler, Howard A. Lipson, Dennis Hendrix, Warren B.
Rudman, Vincent Tese
/ /___________________________ FOR / /__________________________WITHHELD
For, except vote withheld from the following nominees:
_____________________________
2. Amendment to the 1994 Amended and Restated Non-Employee Director Stock
Option Plan
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. THIS
PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE
VOTED FOR THE NAMED DIRECTORS AND IN FAVOR OF PROPOSAL 2.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
SIGNATURE(S) DATE
___________________________________ ________________________________
NOTE: Please sign exactly as name or names hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
