<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AMERICAN DISPOSAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 transaction applies:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO]
May 22, 1998
Dear Stockholder:
It is my pleasure to invite you to the 1998 Annual Meeting of Stockholders of
American Disposal Services, Inc. (the "Company") to be held on Tuesday, June 23,
1998, at 11:00 A.M., local time, at the offices of the Company, 745 McClintock
Drive, Suite 230, Burr Ridge, Illinois 60521.
Whether or not you plan to attend and regardless of the number of shares you
own, it is important that your shares be represented at the meeting.
Accordingly, you are urged to sign, date and return your proxy promptly in the
enclosed envelope, which requires no postage if mailed in the United States.
I sincerely hope you will be able to join us at the meeting. The officers and
directors of the Company look forward to seeing you at that time.
Sincerely,
/s/ Richard De Young
Richard De Young
Chairman, President and
Chief Executive Officer
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
745 McClintock Drive
Suite 230
Burr Ridge, Illinois 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of AMERICAN DISPOSAL SERVICES, INC. (the
"Company") will be held at the offices of the Company, 745 McClintock Drive,
Suite 230, Burr Ridge, Illinois 60521, on Tuesday, June 23, 1998, at 11:00
A.M., local time, for the following purposes:
1. To elect directors of the Company for the ensuing year;
2. To approve the amended and restated 1996 Stock Option Plan as more
fully described in Proposal 2 of the accompanying Proxy Statement;
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company; and
4. To transact any such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on May 21, 1998 are
entitled to vote at the meeting and at any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ann L. Straw
Ann L. Straw
Secretary
Burr Ridge, Illinois
May 22, 1998
2
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
745 McClintock Drive
Suite 230
Burr Ridge, Illinois 60521
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 23, 1998
The accompanying proxy is solicited by and on behalf of the Board of
Directors of American Disposal Services, Inc., a Delaware corporation (the
"Company"), to be used at the Annual Meeting of Stockholders to be held at the
offices of the Company, 745 McClintock Drive, Suite 230, Burr Ridge, Illinois
60521, on Tuesday, June 23, 1998, at 11:00 A.M., local time, and at any
adjournments thereof.
When the accompanying proxy is properly executed and returned, the shares
of common stock of the Company, par value $.01 per share (the "Common Stock"),
it represents will be voted at the meeting in accordance with any directions
noted thereon and, if no direction is indicated, the shares it represents will
be voted: (i) FOR the election of the nominees for directors of the Company
listed herein; (ii) FOR the approval of the amended and restated 1996 Stock
Option Plan as more fully described in Proposal 2 of this Proxy Statement; (iii)
FOR the ratification of the appointment of Ernst & Young LLP as the independent
auditors of the Company for the current fiscal year; and (iv) in the discretion
of the holders of the proxy with respect to any other business that may properly
come before the meeting and at any adjournments thereof. Any stockholder
signing and delivering a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Company a written revocation or a duly
executed proxy bearing a date later than the date of the proxy being revoked.
Any stockholder attending the meeting in person may withdraw his proxy and vote
his shares.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made primarily by mail; however, officers and regular
employees of the Company may solicit proxies personally or by telephone or by
telegram. Those persons will not be compensated specially for such services.
The Company may reimburse brokers, banks, custodians, nominees, and fiduciaries
holding shares of Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
material to the beneficial owners of such shares. In addition, the Company has
engaged Innisfree M & A Incorporated to assist it in soliciting proxies.
Innisfree M & A Incorporated will receive a fee of approximately $7,500.
3
<PAGE>
A copy of the Notice of Annual Meeting of Stockholders accompanies this
Proxy Statement. The approximate date on which this Proxy Statement first will
be mailed to stockholders of the Company is May 22, 1998.
VOTING RIGHTS
Only holders of record of shares of Common Stock at the close of business
on May 21, 1998 will be entitled to notice of and to vote at the Annual Meeting
of Stockholders. On that date, the Company had outstanding 22,858,403 shares of
Common Stock, the holders of which are entitled to one vote per share on each
matter to come before the Annual Meeting. Voting rights are non-cumulative.
The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Directors will be elected at the Annual Meeting by a plurality of the
votes cast. For each other item to be acted upon at the Annual Meeting, the
affirmative vote of a majority of the votes cast will be required for approval.
Abstentions and broker non-votes (which occur when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner) are counted for purposes of
determining the presence or absence of a quorum at the meeting. Abstentions are
counted in tabulations of the votes cast on proposals presented to stockholders,
but broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
SECURITY OWNERSHIP
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of May 1, 1998 by: (i) each person
known by the Company to be the beneficial owner of more than 5% of the Common
Stock; (ii) each of the Company's directors and nominees for directors; (iii)
the Company's Chief Executive Officer and each of the Company's other current
executive officers; and (iv) the Company's directors and executive officers as a
group.
4
<PAGE>
<TABLE>
<CAPTION>
Number of shares of
Common Stock
Name and Address beneficially owned Percent of
of Beneficial Owners as of May 1, 1998 Common Stock
-------------------- ------------------- ------------
<S> <C> <C>
Pilgrim Baxter & Associates, Ltd. (1) 1,754,020 7.7%
Nicholas-Applegate Capital Mgmt. (2) 1,173,600 5.2%
Richard De Young (3)(4)(5) 216,900 *
David C. Stoller (3)(6) 171,271 *
Merril M. Halpern (6) -- --
A. Lawrence Fagan (6) -- --
Richard T. Henshaw, III (6) -- --
G.T. Blankenship (5)(7) 97,451 *
Norman Steisel (6) -- --
Richard T. Kogler (3) 43,589 *
Stephen P. Lavey (3)(5) 41,667 *
Ann L. Straw (3)(8) 22,438 *
John J. McDonnell (3)(9) 54,805 *
Lawrence R. Conrath, Sr. (3)(10) 38,880 *
Mary T. Ryan (3)(11) 17,725 *
Robert S. Hillas (5) -- --
Douglas A. Pertz (5) -- --
Stephen W. Rubin (5) -- --
All directors and executive officers
as a group (13 persons) (3) 704,726 3.0%
</TABLE>
______________________
* Less than one percent.
(1) Information regarding Pilgrim Baxter & Associates, Ltd. is based on Schedule
13G filed by such person with the Securities and Exchange Commission as of
December 31, 1997. The address of Pilgrim Baxter & Associates, Ltd. is 825
Duportail Road, Wayne, Pennsylvania 19087.
(2) Information regarding Nicholas-Applegate Capital Mgmt. is based on Schedule
13G filed by such person with the Securities and Exchange Commission as of
December 31, 1997. The address of Nicholas-Applegate Capital Mgmt. is 600 West
Broadway, 29th Floor, San Diego, California 92101.
(3) Includes options exercisable within 60 days of May 1, 1998 to purchase
214,433, 171,271, 41,667, 43,589, 53,809, 37,982, 22,238 and 725 shares granted
under the Company's 1996 Stock Option Plan to Messrs. De Young, Stoller, Lavey,
Kogler, McDonnell and Conrath and Ms. Straw and Ryan, respectively. For
purposes of computing the percentage of outstanding shares beneficially held by
each person or group of persons named above on a given date, any security which
such person or persons has the right to acquire within 60 days after such date
is deemed to be beneficially owned for the purpose of computing the percentage
ownership of such person or group of persons, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any other
person.
(4) Includes 2,467 shares held jointly by Mr. De Young and his wife.
(5) Nominee for director of the Company.
(6) Such person has determined not to stand for re-election to the Company's
Board of Directors and will cease to serve as a director of the Company
immediately following the election of the nominees for directors at the Annual
Meeting.
(7) Includes 7,995 shares held by Mr. Blankenship's wife, of which Mr.
Blankenship disclaims beneficial ownership.
(8) Includes 200 shares held by Ms. Straw's minor children.
(9) Includes 996 shares held by Mr. McDonnell's minor children.
(10) Includes 498 shares held jointly by Mr. Conrath and his wife and 400 shares
held in an IRA for the benefit of Mr. Conrath.
(11) Includes 6,000 shares held in an IRA for the benefit of Ms. Ryan and 11,000
shares held jointly by Ms. Ryan and her husband.
5
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, the entire Board of Directors is to
be elected. In the absence of instructions to the contrary, the shares of
Common Stock represented by a proxy delivered to the Board of Directors will be
voted FOR the six nominees named under "Nominees for Directors" below. Each
nominee has consented to being named as a nominee in this Proxy Statement and to
serve if elected. However, if any such nominee should become unable to serve as
a director for any reason, votes will be cast instead for a substitute nominee
designated by the Board of Directors or, if none is so designated, will be cast
according to the judgment of the person or persons voting the proxy.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES
Nominees for Directors and the Executive Officers
The following table and the paragraphs that follow it present certain
information concerning the nominees for directors and the executive officers of
the Company. Directors are elected annually to serve until the next annual
meeting of stockholders and until their successors have been elected. Five of
the Company's current directors (Messrs. Halpern, Fagan, Henshaw, Stoller and
Steisel) have decided not to stand for re-election to the Company's Board of
Directors and will cease to serve as directors immediately following the
election of the nominees for directors at the Annual Meeting. Officers are
elected to serve at the discretion of the Board of Directors. There are no
family relationships among any of the directors, nominees for directors and
executive officers of the Company.
<TABLE>
<CAPTION>
Nominees for Directors Age Positions with the Company
---------------------- --- --------------------------
<S> <C> <C>
Richard De Young 43 Chairman, President, Chief Executive
Officer and Director
Stephen P. Lavey 36 Vice President and Chief Financial
Officer
G.T. Blankenship 68 Director
Robert S. Hillas 49 --
Douglas A. Pertz 43 --
Stephen W. Rubin 47 --
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Executive Officers
who are not Directors
---------------------
<S> <C> <C>
Richard Kogler 38 Vice President and Chief Operating Officer
Ann L. Straw 44 Vice President, General Counsel
and Secretary
Lawrence R. Conrath, Sr. 41 Vice President and Controller
John J. McDonnell 42 Vice President - Engineering
Mary T. Ryan 44 Vice President - Corporate Affairs
</TABLE>
Richard De Young has been Chairman of the Company since April 8, 1998,
Chief Executive Officer since September 4, 1997 and President and a director of
the Company since January 1, 1996. He has also served as President of ADS, Inc.
("ADS") since April 1994 and as a director since September 1993 and was the
Chief Operating Officer and Vice President for ADS from January 1993 through
April 1994. Mr. De Young has been a director of County Disposal, Inc. ("CDI")
since May 1995, and its President since July 31, 1996. Both ADS and CDI were
predecessor entities of the Company. From June 1982 through January 1993 he was
employed by Waste Management of North America, a subsidiary of Waste Management,
Inc. ("WMI"), most recently as a Regional Operations Vice President, with
responsibility for landfill and collection operations in the Midwest region.
Stephen P. Lavey has been a Vice President and the Chief Financial Officer
of the Company since February 1997. He was previously employed by Bank of
America from June 1990 through January 1997, most recently as a Vice President
in its Environmental Services Lending Group, specializing in the solid waste,
environmental engineering and water purification industries. Mr. Lavey is also
a Certified Public Accountant.
G. T. Blankenship has been a director of the Company since January 1, 1996.
He previously served as a director of ADS (since January 1991). Mr. Blankenship
has been a self-employed private investor since 1990.
Robert S. Hillas has been Chairman, President and Chief Executive Officer
of Envirogen, Inc. since April 1998. From 1993 through March 1998 he was a
Managing Director of E.M. Warburg, Pincus & Co., LLC, a global private equity
investment firm.
Douglas A. Pertz has been President, Chief Executive Officer and director
of Culligan Water Technologies since January 1995. From 1994 to January 1995 he
was a Corporate Vice President of Danaher Corporation, a manufacturer of hand
and automotive specialty tools. From 1990 to January 1995 he was also an
executive officer of two of its subsidiaries.
7
<PAGE>
Stephen W. Rubin has been a partner at the law firm of Proskauer Rose LLP
since 1989. Proskauer Rose LLP has been the principal outside counsel to the
Company since 1995 and continues to serve in such capacity.
Richard Kogler has been a Vice President and the Chief Operating Officer of
the Company since January 1, 1996. He previously served in the same capacities
for ADS since May 1995 and as President of CDI between May 1995 and July 1996.
He has been Vice President of CDI since July 31, 1996. From October 1984
through May 1995 Mr. Kogler was employed by WMI, most recently as a Regional
Operations Vice President.
Ann L. Straw has been a Vice President and the General Counsel of the
Company since January 1, 1996. She previously served in the same capacities for
ADS (since June 1995) and for CDI (since June 1995). She has been the Secretary
of the Company since January 1, 1996, and of ADS and CDI since July 31, 1995.
From 1986 through May 1995 she was employed by WMI, most recently as a Group
Counsel for WMI's Midwest Group.
Lawrence R. Conrath, Sr. has been Controller of the Company since January
1, 1996 and a Vice President since May 1996. He previously served as Controller
for ADS since May 1994. Prior to joining the Company, Mr. Conrath spent two
years with United Waste Systems, Inc., as Regional Controller of its Michigan
region. From 1978 through 1990, Mr. Conrath was employed by WMI in several
financial positions, most recently as Director of Accounting for the WMI Urban
Services Group. Mr. Conrath is also a Certified Public Accountant.
John J. McDonnell has been a Vice President-Engineering of the Company
since January 1, 1996. He previously served as Environmental Engineer for ADS
(since February 1993) and CDI (since June 1995). From 1985 through February
1993, Mr. McDonnell was employed by WMI, most recently as an Engineering
Manager.
Mary T. Ryan has been a Vice President-Corporate Affairs since March 1997
after joining the Company in November 1996. From May 1996 to November 1996, she
was previously employed by Ketchum Public Relations as Senior Vice President,
Corporate Issues. From July 1984 to April 1995 she was employed by WMI, most
recently as Vice President, Management Services.
Board Committees and Membership
The Board of Directors has established a compensation committee and an
audit committee. The compensation committee (which following the Annual Meeting
will be comprised of Messrs. Blankenship, Pertz and Rubin) reviews executive
salaries, administers any bonus, incentive compensation and stock option plans
of the Company, including the Company's Stock Option Plan, and approves the
salaries and other benefits of the executive officers of the Company. In
addition, the compensation committee consults with the Company's management
8
<PAGE>
regarding pension and other benefit plans and compensation policies and
practices of the Company. The audit committee (which following the Annual
Meeting will be comprised of Messrs. Hillas and Pertz) reviews the professional
services provided by the Company's independent auditors, the independence of
such auditors from management of the Company, the annual financial statements of
the Company and the Company's system of internal accounting controls.
The Company does not have a nominating committee. The Board of Directors
held 13 meetings in 1997. In addition, the audit committee held one meeting in
1997 and the compensation committee held eight meetings in 1997. Each of the
directors attended at least 75% of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings of all committees of the
Board on which such director served.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information about the compensation paid, or
payable, by the Company for services rendered in all capacities to the Chief
Executive Officer of the Company and each of the four other most highly paid key
policy-making executive officers of the Company for each of the last three
fiscal years in which such officers were executive officers for all or part of
the year.
9
<PAGE>
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
-------------------------------------- ------------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($) Awards($) Options#(1) Compensation
- ------------------ ---- --------- -------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard De Young 1997 300,000 300,000 7,824 0 101,087 0
President and 1996 275,442 0 0 0 282,743 0
Chief Executive 1995 230,092 0 0 0 0 0
Officer (2)
Richard Kogler 1997 184,283 180,000 0 0 95,000 0
Vice President and 1996 160,500 0 0 0 52,082 0
and Chief Operating 1995 93,246 0 0 0 0 0
Officer (3)
David C. Stoller 1997 300,000 0 0 0 0 0
Chairman (4) 1996 125,000 0 0 0 218,371 0
1995 0 0 0 0 0 0
Stephen P. Lavey
Vice President 1997 150,208 175,000 12,000 0 125,000 0
and Chief 1996 0 0 0 0 0 0
Financial 1995 0 0 0 0 0 0
Officer (5)
Ann L. Straw
Vice President, 1997 155,200 155,000 0 0 35,765 0
General Counsel 1996 142,500 0 0 0 34,863 0
and Secretary (6) 1995 73,125 0 0 0 0 0
</TABLE>
___________________
(1) The Company is the sole stockholder of ADS and CDI. The Company acquired
all of the shares of common stock of ADS and CDI effective January 1, 1996 in
exchange for which the previous stockholders of ADS and CDI received all of the
then outstanding shares of the Company's Common Stock (the "Exchange"). As part
of the Exchange, all options that had previously been granted by ADS and CDI
were canceled in exchange for options granted by the Company.
(2) Options to purchase 282,743 shares were granted to Mr. De Young in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years.
(3) Options to purchase 29,857 shares were granted to Mr. Kogler in 1996 as part
of the Exchange to replace options to purchase shares of ADS and CDI granted in
prior years. Mr. Kogler's 1995 compensation figure reflects employment during
the period from May 1995 through December 1995.
(4) Options to purchase 218,371 shares were granted to Mr. Stoller in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years. Mr. Stoller's 1996 compensation figure reflects
employment during the period from August 1996 through December 1996.
(5) Mr. Lavey's 1997 compensation figure reflects employment during the period
from February 1997 through December 1997. Other Annual Compensation reflects a
$12,000 relocation payment to Mr. Lavey.
(6) Options to purchase 19,863 shares were granted to Ms. Straw in 1996 as part
of the Exchange to replace options to purchase shares of ADS and CDI granted in
prior years. Ms. Straw's 1995 compensation figure reflects employment during
the period from June 1995 through December 1995.
10
<PAGE>
Stock Options
The following table contains information concerning the grant of options to
purchase shares of the Company's Common Stock to each of the named executive
officers of the Company during the year ended December 31, 1997. No stock
appreciates rights ("SARS") were granted in 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Appreciation for Option
Individual Grants Term (1)
---------------------------------------- -----------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year ($/Share) Date (2) 5% 10%
---- ------- ----------- --------- -------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard De Young 26,087 5.5% 17.25 3/21/07 733,004 1,167,186
75,000 15.7% 27.13 8/21/07 3,314,393 5,277,617
Richard Kogler 50,000 10.5% 17.25 5/15/07 1,404,922 2,237,103
45,000 9.4% 27.13 8/21/07 1,988,636 3,166,570
David C. Stoller 0 0% N/A N/A N/A N/A
Stephen P. Lavey 125,000 26.2% 17.50 2/21/07 3,563,207 5,673,812
Ann L. Straw 12,765 2.7% 17.25 3/21/07 358,676 571,132
23,000 4.8% 27.13 8/21/07 1,016,414 1,618,469
</TABLE>
_____________________
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Common Stock over the term of the options. The potential realizable values set
forth above do not take into account applicable tax and expense payments that
may be associated with such options exercises. Actual realizable value, if any,
will be dependent on the future price of the Common Stock on the actual date of
exercise, which may be earlier than the stated expiration date. The 5% and 10%
assumed annualized rates of stock price appreciation over the exercise period of
the options used in the table above are mandated by the rules of the Securities
and Exchange Commission and do not represent the Company's estimate or
projection of the future price of the Common Stock on any date. There is no
representation either express or implied that the stock price appreciation rates
for the Common Stock assumed for purposes of this table will actually be
achieved.
(2) Each option is subject to earlier termination if the officer's employment
with the Company is terminated for certain reasons.
11
<PAGE>
The following table sets forth information for each of the named executive
officers with respect to the value of options outstanding as of December 31,
1997. There were no options exercised by such executives during 1997. No SARs
were exercised during 1997 and none were outstanding as of December 31, 1997.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised In-
Underlying Unexercised the-Money Options at
Options at December 31, 1997 December 31, 1997 (1)
-------------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard De Young 196,204 187,626 $5,720,726 $3,726,520
Richard Kogler 25,745 121,337 $ 737,707 $2,127,808
David C. Stoller 171,271 47,100 $4,982,274 $1,370,139
Stephen P. Lavey 0 125,000 $ 0 $2,375,000
Ann L. Straw 17,206 53,422 $ 492,946 $ 959,653
</TABLE>
___________________
(1) Represents the difference between $36.50 the last reported sales price per
share of the Common Stock on December 31, 1997, and the exercise price per
share of the in-the-money options, multiplied by the number of shares underlying
the in-the-money options.
Director Compensation
Only non-employee directors of the Company ("Outside Directors") are
compensated for services as a director. Commencing with the 1998 Annual
Meeting, each Outside Director will receive options to purchase 20,000 shares of
Common Stock when such person is elected a director and additional options to
purchase 20,000 shares of Common Stock on each anniversary of such date so long
as such person is continuing to serve as an Outside Director on such
anniversary. In addition, each Outside Director will receive an annual retainer
of $12,000, and payments of $2,000 for each meeting of the Board of Directors
that such director attends, $500 for each meeting of a committee of the Board of
Directors that such director attends and $1,000 for each telephonic meeting of
the Board of Directors in which he participates.
Compensation Committee Interlocks and Insider Participation
During 1997, the Company's compensation committee determined the
compensation of all the Company's executive officers. No member of the
compensation committee or executive officer of the Company has a relationship
that would constitute an interlocking relationship with the executive officers
or directors of another entity.
12
<PAGE>
Employment Agreements
On January 1, 1998, Mr. De Young entered into a new three-year employment
agreement with the Company. The employment agreement provides that on each
anniversary of the agreement, the term shall be automatically extended for an
additional one-year period unless no later than six months before such
anniversary either party gives written notice to the other that it does not wish
to extend the term of the agreement. The employment agreement provides for a
current annual base salary of $300,000 plus an annual bonus determined on the
basis of criteria established annually by the compensation committee of the
Board of Directors. In the event of a Change of Control of the Company (as
defined in the employment agreement), Mr. De Young will be entitled to receive,
in addition to certain other benefits, a payment (the "Change of Control
Payment") equal to the sum of (i) the base salary otherwise payable during the
remainder of the term had the Change of Control not occurred and (ii) an amount
equal to the product of (x) the average of the annual bonuses earned in each of
the last two years (the "Average Bonus") and (y) the number of full and partial
years remaining in the term of the agreement. In no event will the Change of
Control Payment be less than three times the sum of the annual base salary then
in effect and the Average Bonus (which Average Bonus shall not be less than 50%
of the base salary).
In May 1996, Mr. Stoller entered into an employment agreement with the
Company which provides for annual compensation of $300,000. Mr. Stoller ceased
to serve as Chairman of the Company on April 7, 1998 but will be entitled to
receive compensation through July 30, 1998. The employment agreement provides
that Mr. Stoller has the right to receive a $600,000 payment in the event of a
Change of Control during the term.
On January 1, 1998, Messrs. Kogler, Lavey, Conrath and McDonnell and Mses.
Straw and Ryan each entered into a new 18-month employment agreement with the
Company. Each employment agreement provides that on each anniversary of such
agreement, the term shall be automatically extended for an additional one-year
period unless no later than six months before such anniversary either party
gives written notice to the other that it does not wish to extend the term of
the agreement. The employment agreements for Messrs. Kogler, Lavey, Conrath and
McDonnell and for Mses. Straw and Ryan provide for an annual base salary of
$225,000, $175,000, $140,000, $142,830, $158,000, and $150,000 respectively,
plus an annual bonus determined on the basis of criteria established annually by
the compensation committee of the Board of Directors. In the event of a Change
of Control, each of Messrs. Kogler, Lavey, Conrath and McDonnell and Mses. Straw
and Ryan will be entitled to receive, in addition to certain other benefits, a
Change of Control Payment equal to the sum of (i) the base salary otherwise
payable during the remainder of the term had the Change of Control not occurred
and (ii) an amount equal to the product of (x) the Average Bonus and (y) the
number of full and partial years remaining in the term of the agreement. In no
event will the Change of Control Payment be less than three times the sum of the
annual base salary then in effect and the Average Bonus (which Average Bonus
shall not be less than 50% of the base salary).
13
<PAGE>
In January 1998, the Company entered into agreements with each of Messrs.
De Young, Kogler, Lavey, Conrath and McDonnell and Mses. Straw and Ryan
providing for a payment in the event of a Change of Control in an amount equal
to the product of (i) 157,895 in the case of Mr. De Young, 75,188 in the case of
Mr. Kogler, 46,992 in the case of Mr. Lavey, 30,075 in the case of Mr. Conrath,
30,075 in the case of Mr. McDonnell, 46,617 in the case of Ms. Straw and 30,075
in the case of Ms. Ryan and (ii) the difference between (x) the closing price of
the Company's Common Stock on the date on which the stockholders of the Company
approve an amendment (the "Amendment") to the Company's Stock Option Plan
increasing the number of shares of Common Stock for which options may be granted
under the plan (the "Amendment Approval Price") and (y) $33.25. In the event
of the occurrence of a Change of Control prior to the approval of the Amendment,
the Amendment Approval Price will be replaced with the highest per share price
actually paid to the Company's stockholders in connection with the Change of
Control. Each of the agreements will terminate if the Amendment is not approved
by the stockholders of the Company by June 30, 1999.
In the event the executive officers are required to pay an excise tax on
"excess parachute payments" received from the Company upon a Change of Control,
the Company has agreed to pay to the executive an amount necessary to place the
executive in the same after-tax financial position as the executive would have
been in had the executive not incurred such tax.
Effective as of January 1, 1996, the Company entered into agreements with
each of its executive officers (other than Mr. Lavey and Ms. Ryan) providing
that, upon such officer's exercise of stock options granted in exchange for
options previously granted by CDI, the Company will pay to such officer an
amount equal to the tax savings actually recognized by the Company as a result
of the deductions attributable to such exercise. In no event can the payment to
be received by an executive officer under such agreement exceed the difference
between the federal income tax actually paid by such officer as a result of such
option exercise and the amount of federal income tax that would have been paid
by such officer had such option exercise been taxed at the capital gains rate.
Compensation Committee Report
The Company's executive compensation program is focused on shareholder
value, the overall performance of the Company, success of the Company as
impacted by the executive's performance and the performance of the individual
executive.
The Compensation Committee's objective is to provide competitive levels of
compensation to the Company's executive officers that are integrated with the
Company's long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements and assist the
Company in attracting and retaining qualified executives. The compensation
policies and programs utilized by the Compensation Committee have been reviewed
with independent compensation consultants and endorsed by the Board of Directors
and generally consists of the following:
14
<PAGE>
(i) Provide executive officer total compensation in relation to
Company performance;
(ii) Provide a compensation program competitive with that received by
executives of comparable companies in the solid waste industry in
order to attract, motivate, and retain qualified personnel;
(iii) Provide a management tool for focusing and directing the
energies of key executives toward achieving individual and corporate
objectives; and
(iv) Provide long-term incentive compensation in the form of stock
option awards to link individual success to that of the Company.
The Company's executive compensation consists of three key components: base
salary, annual incentive compensation in the form of cash bonuses, and stock
options, each of which is intended to complement the others and, taken together,
to satisfy the Company's compensation objectives. The Compensation Committee's
policies with respect to each of the three components are discussed below.
Base Salary. Each fiscal year the Compensation Committee, along with the
Chief Executive Officer reviews and approves the annual salaries for the
Company's executive officers. Many factors are included in determining base
salaries, such as the responsibilities borne by the executive officer, the scope
of the position, length of service with the Company and corporate and individual
performance.
Cash Bonuses. The Compensation Committee provides annual incentives to the
Company's executive officers in the form of cash bonuses. These bonuses are
discretionary and are based on (i) the financial success of the Company and the
individual's contribution to such achievements, and (ii) certain subjective
factors established from time to time by the Compensation Committee.
Stock Options. The primary objective of the stock option program is to
link the interests of the Company's executive officers and other selected
employees to the stockholders through significant grants of stock options made
at the discretion of the Compensation Committee. The Company's Stock Option
Plan authorizes the issuance of both incentive and non-qualified stock options
to officers and key employees of the Company. Subject to general limits
prescribed by the plan, the Compensation Committee has the authority to
determine the individuals to whom stock options are awarded and the terms of the
options and the number of shares subject to each option. The size of any
particular stock option award is based upon position and the individual
performance during the related evaluation period.
Chief Executive Officer's Compensation. As discussed under "Executive
Compensation-- Employment Agreements," the Company entered into a new employment
agreement with Mr. De Young in January 1998. Mr. De Young's 1997 salary was
based on an employment agreement
15
<PAGE>
entered into in May 1996, which was prior to the formation of the Compensation
Committee. The bonus and stock option grants to Mr. De Young in 1997 were based
on the Compensation Committee's consultation with independent compensation
consultants, a review of the compensation paid to the chief executive officers
of comparable companies, assessment of the Company's record revenue and earnings
growth, the success of the Company's acquisition program as well as the
Compensation Committee's continued recognition of Mr. De Young's leadership of
the Company.
The Compensation Committee
Richard T. Henshaw III
G.T. Blankenship
Performance Graph
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CRSP Total Returns Index for: 7/25/96 12/31/96 12/31/97
- ----------------------------- ------- -------- --------
<S> <C> <C> <C>
American Disposal Services, Inc. 100.00 205.56 405.56
Peer group 100.00 115.86 124.63
NASDAQ Market Index 100.00 117.82 144.12
</TABLE>
The Company's 1997 Peer Group is Made Up of the Following Securities:
ALLIED WASTE INDUSTRIES SUPERIOR SERVICES, INC.
BROWNING FERRIS INDUSTRIES, INC. USA WASTE SERVICES, INC.
CASELLA WASTE SYSTEMS, INC. WASTE INDUSTRIES, INC.
EASTERN ENVIRONMENTAL SERVICES, INC. WASTE MANAGEMENT, INC.
16
<PAGE>
PROPOSAL 2
APPROVAL OF
THE AMERICAN DISPOSAL SERVICES, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The affirmative vote of the holders of at least a majority of the shares of
Common Stock present and entitled to vote at the meeting is required to approve
the Amended and Restated American Disposal Services, Inc. 1996 Stock Option Plan
(the "Plan"). The principal changes effected by the amendment and restatement
are (i) to increase the number of shares of the Company's Common Stock for which
options may be granted under the Plan to the greater of 3,500,000 shares or 15%
of the aggregate number of shares of Common Stock issued and outstanding and
(ii) to provide for the grant of options to directors of the Company who are not
employees of the Company. Under the Plan as currently in effect, options to
purchase 1,600,000 shares of Common Stock were subject to grant, all of which
have been granted. The Compensation Committee and the Board of Directors have
each approved the Amended and Restated 1996 Stock Option Plan. In the absence
of instructions to the contrary, the shares of Common Stock represented by a
proxy delivered to the Board of Directors will be voted FOR the Amended and
Restated 1996 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE PROPOSAL TO APPROVE
THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The Board of Directors has adopted the Plan and directed that it be
submitted to the stockholders for approval. The following description is
qualified in its entirety by the provisions of the Plan, a copy of which is
annexed hereto as Exhibit A.
Purpose. The purpose of the Plan is to enhance the profitability and value
of the Company for the benefit of the Company's stockholders by enabling the
Company to offer employees and consultants of the Company or its Affiliates (as
defined in the Plan), as well as directors of the Company who are not employees
of the Company ("Non-Employee Directors"), options ("Stock Options") to purchase
Common Stock. The intent of such offering is to create a means to raise the
level of stock ownership by these persons in order to attract, retain and reward
them and strengthen the mutuality of interests between them and the Company's
stockholders.
Term. The Plan has been adopted by the Board of Directors effective as of
May 14, 1998 (the "Effective Date"), subject to and conditioned upon stockholder
approval at the Annual Meeting of Stockholders.
Administration. The Plan will be administered by a committee or
subcommittee of the Board of Directors appointed from time to time by the Board
(the "Committee"), consisting of
17
<PAGE>
two or more directors qualified as "non-employee directors" under Rule 16b-3
promulgated under the Securities Exchange Act of 1934 ("Rule 16b-3"), as
amended, and "outside directors" under Section 162(m) of the Code ("Section
162(m)"). All questions of interpretation and application of the Plan will be
determined by the Committee.
Participation. All employees and consultants of the Company and its
Affiliates, and all Non-Employee Directors (collectively, the "Participants"),
are eligible to receive Stock Options, and the actual recipients who are
employees (including executive officers) and consultants will be determined by
the Committee.
Shares of Stock Available for Grant. The Plan currently provides that the
total number of shares of Common Stock subject to Stock Options is 1,600,000
shares. The Plan, as amended and restated, provides that the aggregate number
of shares of Common Stock subject to Stock Options may not exceed the greater of
(i) 3,500,000 shares or (ii) 15% of the aggregate number of shares of Common
Stock issued and outstanding. In addition, the maximum number of shares of
Common Stock with respect to which Stock Options may be granted during any
calendar year of the Company to any employee is 750,000 shares (both limitations
being subject to adjustment by the Committee, in the event of stock dividend,
stock split or any other change in capital structure or business of the
Company). If any stock option expires, terminates or is canceled for any reason
without having been exercised in full, the number of shares of Common Stock
underlying any unexercised option will again be available under the Plan. To
the extent that shares of Common Stock for which Stock Options are permitted may
be granted to a Participant during a calendar year of the Company are not
covered by a grant of a Stock Option in the Company's calendar year, such shares
of Common Stock will be available for grant or issuance to the Participant in
any subsequent calendar year during the term of the Plan.
Stock Options. The Plan provides for the grant of incentive stock options
("ISOs") and nonqualified stock options ("NQSOs"). The Committee will have the
full authority to grant to any employee of the Company or a majority-owned
subsidiary one or more ISOs, NQSOs or both types of Stock Options. The
Committee will also have the full authority to grant to any employee of another
Affiliate of the Company or a Consultant one or more NQSOs.
The exercise price per share of Common Stock subject to a Stock Option will
be determined by the Committee, at the time of grant, but may not be less than
100% of the fair market value of a share of Common Stock at the time of grant;
provided, however, that if an ISO is granted to a ten percent stockholder of the
Company or its subsidiaries ("Ten Percent Stockholder"), the exercise price per
share may be no less than 110% of the fair market value of the Common Stock.
The term of such Stock Option will be fixed by the Committee, but no Stock
Option will be exercisable more than 10 years after the date the Stock Option is
granted; provided, however, that the term of an ISO granted to a Ten Percent
Stockholder may not exceed five years.
The Plan does not currently provide for the issuance of options to Non-
Employee Directors. One of the purposes of the proposed amendment and
restatement is to allow Non-
18
<PAGE>
Employee Directors to be compensated for their services as a director of the
Company through the issuance of the Company's securities, thereby providing a
performance incentive to Non-Employee Directors. Each Non-Employee Director
would receive NQSOs to purchase 20,000 shares of Common Stock upon election to
the Board of Directors and additional NQSOs to purchase 20,000 shares of Common
Stock on each anniversary of such date so long as such person is continuing to
serve as a Non-Employee Director on such anniversary. All of such NQSOs would
vest immediately upon grant, and the exercise price of such options would be the
fair market value of the Common Stock on the date of grant.
On January 15, 1998, the Compensation Committee granted, subject to the
approval of the Amended and Restated 1996 Stock Option Plan by the stockholders
of the Company at the 1998 Annual Meeting of Stockholders, Stock Options under
the Plan to Messrs. De Young, Lavey, Kogler, Conrath and McDonnell and Mses.
Straw and Ryan to purchase 157,895, 46,992, 75,188, 30,075, 30,075, 46,617 and
30,075 shares of Common Stock, respectively, at an exercise price equal to the
closing price of the Company's Common Stock on the NASDAQ National Market System
on the date of the 1998 Annual Meeting of Stockholders.
Federal Tax Consequences. The rules concerning the federal income tax
consequences with respect to Stock Options are highly technical. In addition,
the applicable statutory provisions are subject to change and their application
may vary in individual circumstances. Therefore, the following is designed to
provide a general understanding of the federal income tax consequences; it does
not set forth any state or local income tax or estate tax consequences that may
be applicable.
Incentive Stock Options. Stock Options granted under the Plan may be
"incentive stock options" as defined in the Code, provided that such Stock
Options satisfy the requirements under the Code therefor. In general, neither
the grant nor the exercise of an ISO will result in taxable income to the
Participant or a deduction to the Company. The sale of Common Stock received
pursuant to the exercise of a Stock Option which satisfied all the requirements
of an ISO, as well as the holding period requirement described below, will
result in a long-term capital gain or loss to the optionee equal to the
difference between the amount realized on the sale and the exercise price and
will not result in a tax deduction to the Company. To receive ISO treatment,
the Participant must not dispose of the Common Stock purchased pursuant to the
exercise of a Stock Option either (i) within two years after the Stock Option is
granted or (ii) within one year after the date of exercise. If the Common Stock
is held for more than eighteen months after the date of exercise the Participant
will be taxed at a lower rate applicable to capital gains for such Participant.
Capital gains rates may be further reduced in the case of a longer holding
period.
If all requirements for ISO treatment other than the holding period rules
are satisfied, the recognition of income by the Participant is deferred until
disposition of the Common Stock, but, in general, any gain (in an amount equal
to the lesser of (i) the fair market value of the Common Stock on the date of
exercise (or, with respect to officers, the date that sale of such stock would
not create liability ("Section 16(b) liability") under Section 16(b) of the
Exchange Act) minus the exercise price or (ii) the amount realized on the
disposition minus the exercise price) is treated as
19
<PAGE>
ordinary income. Any remaining gain is treated as long-term or short-term
capital gain depending on the Participant's holding period for the stock
disposed of. The Company generally will be entitled to a deduction at that time
equal to the amount of ordinary income realized by the Participant.
The Plan provides that a Participant may pay for Common Stock received upon
the exercise of a Stock Option (including an ISO) with other shares of Common
Stock held for at least six months. In general a Participant's transfer of
stock acquired pursuant to the exercise of an ISO, to acquire other stock in
connection with the exercise of an ISO may result in ordinary income if the
transferred stock has not met the minimum statutory holding period necessary for
favorable tax treatment as an ISO. For example, if a Participant exercises an
ISO and uses the stock so acquired to exercise another ISO within the two-year
or one-year holding periods discussed above, the Participant may realize
ordinary income under the rules summarized above.
Non-Qualified Stock Options. A Participant will realize no taxable income
at the time he or she is granted a NQSO. Such conclusion is predicated on the
assumption that, under existing Treasury Department regulations, a NQSO, at the
time of its grant, has no readily ascertainable fair market value. Ordinary
income will be realized when a NQSO is exercised. The amount of such income
will be equal to the excess of the fair market value on the exercise date of the
shares of Common Stock issued to a Participant over the exercise price. The
Participant's holding period with respect to the shares acquired will begin on
the date of exercise.
The tax basis of the Common Stock acquired upon the exercise of any NQSO
will be equal to the sum of (i) the exercise price of such NQSO and (ii) the
amount included in income with respect to such NQSO. Any gain or loss on a
subsequent sale of the Common Stock will be either a long-term or short-term
capital gain or loss, depending on the Participant's holding period for the
Common Stock disposed of. Subject to the limitation under Sections 162(m) and
280G of the Code (as described below), the Company generally will be entitled to
a deduction for federal income tax purposes at the same time and in the same
amount as the Participant is considered to have realized ordinary income in
connection with the exercise of the NQSO.
Certain Other Tax Issues. In addition, (i) officers of the Company subject
to Section 16(b) liability may be subject to special rules regarding the income
tax consequences concerning their awards; (ii) any entitlement to a tax
deduction on the part of the corporation is subject to the applicable federal
tax rules (including, without limitation, Section 162(m) of the Code regarding
the $1,000,000 limitation on deductible compensation); (iii) in the event that
the exercisability or vesting of any award is accelerated because of an
Extraordinary Transaction (as defined in the Plan), payments relating to the
awards (or a portion thereof), either alone or together with certain other
payments, may constitute parachute payments under Section 280G of the Code,
which excess amounts may be subject to excise taxes and may be nondeductible by
the Company; and (iv) the exercise of an ISO may have implications in the
computation of alternative minimum taxable income.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its
20
<PAGE>
chief executive officer and the four other officers whose compensation is
disclosed in its proxy statement, subject to certain exceptions. Stock Options
will generally qualify under one of these exceptions if they are granted under a
plan that states the maximum number of shares with respect to which options may
be granted to any employee during a specified period and the plan under which
the options are granted is approved by stockholders and is administered by a
compensation committee comprised of outside directors. The Plan is intended to
satisfy these requirements with respect to Stock Options.
The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended. The Plan is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
Termination or Amendment of Plan. Notwithstanding any other provision of
the Plan, the Committee may at any time, and from time to time, amend,
prospectively or retroactively, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless otherwise required by law or
specifically provided in the Plan, the rights of a Participant with respect to
Stock Options granted prior to such amendment, suspension or termination, may
not be impaired without the consent of such Participant; and provided further,
without the approval of the stockholders of the Company in accordance with the
laws of the State of Delaware, to the extent required by the applicable
provisions of Rule 16b-3 or Section 162(m), or with respect to ISOs, Section 422
of the Code, no amendment may be made which would: (a) increase the aggregate
number of shares of Common Stock that may be issued under the Plan; (b) increase
the maximum individual Participant limitations for a fiscal year under the Plan;
(c) change the classification of employees and Consultants eligible to receive
awards under the Plan; (d) decrease the minimum exercise price of any Stock
Option; or (e) extend the maximum option term under the Plan.
Extraordinary Transaction. In the event of an Extraordinary Transaction
(as defined in the Plan), the Committee may, in its sole discretion, terminate
all outstanding Stock Options, effective as of the date of the Extraordinary
Transaction, by delivering notice of termination to each such Participant at
least 30 days prior to the date of consummation of the Extraordinary
Transaction; provided, that during the period from the date on which such notice
of termination is delivered to the consummation of the Extraordinary
Transaction, each such Participant shall have the right to exercise in full all
his or her Stock Options that are then outstanding (whether vested or not
vested) but contingent on the occurrence of the Extraordinary Transaction;
provided, further, that, if the Extraordinary Transaction does not take place
within a specified period after giving such notice for any reason whatsoever,
the notice and exercise shall be null and void.
21
<PAGE>
PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998. In the
absence of instructions to the contrary, the shares of Common Stock represented
by a proxy delivered to the Board of Directors will be voted FOR the
ratification of the appointment of Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE RATIFICATION OF THE REAPPOINTMENT OF
THE COMPANY'S INDEPENDENT AUDITORS
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting of Stockholders and will be available to respond to appropriate
questions and make such statements as he or she may desire.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors,
officers, and any persons holding more than 10 percent of the Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership, on a timely basis, to the Securities and Exchange Commission. Based
on material provided to the Company, all such required reports were filed on a
timely basis in 1997 except that the Company's executive officers did not timely
file Form 5s reporting 1997 stock option grants. All non-timely Form 5s have
now been filed.
STOCKHOLDERS PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1999
must submit the same in writing so as to be received at the executive office of
the Company on or before January 25, 1999. Such proposals must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to stockholders' proposals.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1997 is
being mailed together with this Proxy Statement to the Company's stockholders of
record at the close of business on May 21, 1998.
22
<PAGE>
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of the
Company.
By Order of the Board of Directors,
/s/ Ann L. Straw
Ann L. Straw
Secretary
May 22, 1998
STOCKHOLDERS ARE REQUIRED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL
BE APPRECIATED.
23
<PAGE>
Exhibit A
AMERICAN DISPOSAL SERVICES, INC.
AMENDED AND RESTATED
1996 STOCK OPTION PLAN
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C> <C>
ARTICLE I. PURPOSE................................................. 1
ARTICLE II. DEFINITIONS............................................. 1
ARTICLE III. ADMINISTRATION.......................................... 4
ARTICLE IV. SHARE AND OTHER LIMITATIONS............................. 5
ARTICLE V. STOCK OPTIONS........................................... 8
ARTICLE VI. NON-EMPLOYEE DIRECTOR STOCK OPTIONS..................... 10
ARTICLE VII. NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY PROVISIONS....................... 11
ARTICLE VIII. TERMINATION OR AMENDMENT OF PLAN........................ 13
ARTICLE IX. UNFUNDED PLAN........................................... 13
ARTICLE X. GENERAL PROVISIONS...................................... 14
ARTICLE XI. EFFECTIVE DATE OF PLAN.................................. 15
ARTICLE XII. TERM OF PLAN............................................ 16
ARTICLE XIII. NAME OF PLAN............................................ 16
</TABLE>
i
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
AMENDED AND RESTATED
1996 STOCK OPTION PLAN
ARTICLE I.
PURPOSE
The purpose of this AMERICAN DISPOSAL SERVICES, INC. Amended and Restated
1996 Stock Option Plan (the "Plan") is to enhance the profitability and value of
AMERICAN DISPOSAL SERVICES, INC. (the "Company") and its Affiliates for the
benefit of the Company's stockholders by enabling the Company to offer Eligible
Employees and Consultants of the Company and its Affiliates, as well as Non-
Employee Directors of the Company, Stock Options in the Company, thereby
creating a means to raise the level of stock ownership by Eligible Employees,
Consultants and Non-Employee Directors in order to attract, retain and reward
such individuals and strengthen the mutuality of interests between such
individuals and the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
"Affiliate" shall mean (i) any Subsidiary; or (ii) any corporation, trade
or business (including, without limitation, a partnership or limited
liability company) which is controlled 50% or more (whether by ownership of
stock, assets or an equivalent ownership interest or voting interest) by
the Company or one of its Affiliates.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean with respect to a Participant's Termination of
Employment, (i) in the case where there is no employment or consulting
agreement between the Company or an Affiliate and the Participant, or where
there is an employment or consulting agreement, but such agreement does not
define cause (or words of like import), commission of a felony, a crime
involving moral turpitude, embezzlement, misappropriation of property of
the Company or an Affiliate, any other act involving dishonesty or fraud
with respect to the Company or an Affiliate, a material breach of a
directive which is not cured within a specified time after written notice
of such breach, or repeated failure after written notice to follow the
directives of an appropriate officer or the Board, or (ii) in the case
where there is an employment or consulting agreement between the Company or
an Affiliate and the
<PAGE>
Participant, termination that is or would be deemed to be for cause (or
words of like import) as defined under such employment or consulting
agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, including
the rules and regulations thereunder. Any reference to any section of the
Code shall also be a reference to any successor provision.
"Committee" shall mean a committee or subcommittee of the Board appointed
from time to time by the Board, which committee or subcommittee shall
consist of two or more non-employee directors, each of whom is intended to
be, to the extent required by Rule 16b-3 and Section 162(m) of the Code, a
"non-employee director" as defined in Rule 16b-3 and an "outside director"
as defined under Section 162(m) of the Code. To the extent that no
Committee exists which has the authority to administer this Plan, the
functions of the Committee shall be exercised by the Board. If for any
reason the appointed Committee does not meet the requirements of Rule 16b-3
or Section 162(m) of the Code, such noncompliance with the requirements of
Rule 16b-3 and Section 162(m) of the Code shall not affect the validity of
awards, grants, interpretations or other actions of the Committee.
"Common Stock" shall mean the common stock, $.01 par value, of the Company.
"Company" shall mean AMERICAN DISPOSAL SERVICES, INC., a Delaware
corporation.
"Consultant" shall mean any natural person who is an adviser or consultant
to the Company or its Affiliates.
"Disability" shall mean total and permanent disability, as defined in
Section 22(e)(3) of the Code.
"Effective Date" shall mean the effective date of this Plan as defined in
Article XII.
"Eligible Employee" shall mean any employee of the Company or its
Affiliates. Notwithstanding the foregoing, with respect to the grant of
Incentive Stock Options, Eligible Employee shall mean any employee of the
Company or any Subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Extraordinary Transaction" shall have the meaning set forth in Section
4.2(d).
"Fair Market Value", unless otherwise required by any applicable provision
of the Code or any regulations issued thereunder, shall mean, as of any
date, the last sales price reported for the Common Stock on the applicable
date: (i) as reported on the principal national securities exchange on
which it is then traded or the Nasdaq Stock Market, Inc. or (ii) if not
traded on any such national securities exchange or the Nasdaq Stock Market,
Inc., as quoted on an automated quotation system sponsored by the National
Association of Securities
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Dealers. If the Common Stock is not readily tradable on a national
securities exchange, the Nasdaq Stock Market, Inc., or any automated
quotation system sponsored by the National Association of Securities
Dealers, its Fair Market Value shall be set in good faith by the Committee.
"Incentive Stock Option" shall mean any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
"Non-Employee Director" shall mean any director of the Company who is not
an employee of the Company or any Affiliate.
"Non-Qualified Stock Option" shall mean any Stock Option that is not an
Incentive Stock Option.
"Participant" shall mean any Eligible Employee, Consultant or Non-Employee
Director to whom a Stock Option has been granted.
"Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange Act
as then in effect or any successor provisions.
"Section 162(m) of the Code" shall mean the exception for performance-based
compensation under Section 162(m) of the Code.
"Stock Option" shall mean any option to purchase shares of Common Stock
granted to Eligible Employees or Consultants pursuant to Article V or
granted to Non-Employee Directors pursuant to Article VI.
"Subsidiary" shall mean any subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.
"Ten Percent Stockholder" shall mean a person owning stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any parent corporation, as defined in Section
424(e) of the Code.
"Termination of Consultancy" shall mean, with respect to a Consultant, that
the Consultant is no longer acting as a Consultant to the Company and its
Affiliates. In the event an entity shall cease to be an Affiliate, there
shall be deemed a Termination of Consultancy of any individual who is a
consultant of that entity and is not otherwise a Consultant of the Company
or another Affiliate at the time the entity ceases to be an Affiliate.
"Termination of Directorship" shall mean, with respect to a Non-Employee
Director, that the Non-Employee Director has ceased to be a director of the
Company.
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"Termination of Employment" shall mean: (i) a termination of service of a
Participant from the Company and its Affiliates; or (ii) when an entity
which is employing a Participant ceases to be an Affiliate, unless the
Participant thereupon becomes employed by the Company or another Affiliate.
"Transfer" or "Transferred" shall mean anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer.
ARTICLE III.
ADMINISTRATION
3.1. The Committee. This Plan shall be administered and interpreted by
the Committee. Subject to the other provisions of this Plan, the Committee or
the Board, as applicable, shall have the authority to adopt, alter and repeal
such administrative rules governing this Plan and perform all acts, including
the delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret this Plan and any Stock Option
granted hereunder (and any agreements relating thereto). The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to carry this Plan into effect, but only to the extent any
such action would be permitted under the applicable provisions of both Rule
16b-3 and Section 162(m) of the Code. The Committee may adopt rules for persons
who are residing in, or subject to, the taxes of, countries other than the
United States to comply with applicable tax and securities laws. To the extent
applicable, this Plan is intended to comply with the applicable requirements of
Rule 16b-3 and Section 162(m) of the Code and shall be limited, construed and
interpreted in a manner so as to comply therewith. The Board, its directors, the
Committee, its members and any person to whom authority is delegated pursuant to
this Section 3.1 shall not be liable for any action or determination made in
good faith with respect to this Plan.
3.2. Awards. The Committee shall have full authority to grant Stock
Options to Eligible Employees and Consultants and to otherwise administer this
Plan. In particular, the Committee or the Board, as applicable, shall have the
authority:
(a) to select Eligible Employees and Consultants to whom Stock Options
may from time to time be granted hereunder;
(b) to determine the number of shares of Common Stock to be covered by
each Stock Option granted to an Eligible Employee or Consultant, and the
terms and conditions of the Stock Option (including, but not limited to,
the exercise or purchase price (if any), any restriction or limitation, any
vesting schedule or acceleration thereof or any forfeiture restrictions or
waiver thereof, regarding any Stock Option, and the shares of Common Stock
relating thereto, based on such factors, if any, as the Committee shall
determine in its sole discretion);
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(c) to modify or extend a Stock Option, subject to Section 8.1 herein;
and
(d) to offer to buy out a Stock Option previously granted, based on
such terms and conditions as the Committee or the Board, as applicable,
shall establish and communicate to the Participant at the time such offer
is made.
3.3. Decisions Final. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board or the
Committee (or any of its members) arising out of or in connection with this Plan
shall be within the absolute discretion of the Company, the Board or the
Committee, as the case may be, and shall be final, binding and conclusive on the
Company and its Affiliates and all employees and Participants and their
respective heirs, executors, administrators, successors and assigns.
3.4. Reliance on Counsel. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel. The Company, the Board or the Committee may also engage
consultants or agents with regard to the plan. Expenses incurred by the
Committee or Board in the engagement of any such counsel, consultant or agent
shall be paid by the Company.
3.5. Procedures. If the Committee is appointed, the Board shall designate
one of the members of the Committee as chairman and the Committee shall hold
meetings, subject to the By-Laws of the Company, at such times and places as the
Committee shall deem advisable. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company shall be fully as effective as if it had been made by a vote at a
meeting duly called and held.
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1. Shares.
(a) The aggregate number of shares of Common Stock which may be
issued and with respect to which Stock Options may be granted under this
Plan shall not exceed the greater of (i) 3,500,000 shares or (ii) 15% of
the aggregate number of shares of Common Stock issued and outstanding
immediately after the grant of any Stock Option (subject to any increase or
decrease pursuant to Section 4.2). Notwithstanding the foregoing, in no
event may the aggregate number of shares of Common Stock which may be
issued upon the exercise of Incentive Stock Options exceed 3,500,000 shares
(subject to any increase or decrease
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pursuant to Section 4.2). Shares of Common Stock issued upon the exercise
of Stock Options may be either authorized and unissued Common Stock or
Common Stock held in or acquired for the treasury of the Company. If any
Stock Option expires, terminates or is canceled for any reason without
having been exercised in full, the number of shares of Common Stock
underlying any unexercised Stock Option shall again be available under this
Plan. In addition, in determining the number of shares of Common Stock
available under the Plan other than for the granting of Incentive Stock
Options, if Common Stock has been exchanged by a Participant as full or
partial payment to the Company in connection with the exercise of a Stock
Option, the number of shares of Common Stock exchanged as payment in
connection with the exercise shall again be available under this Plan.
(b) The maximum number of shares of Common Stock with respect to which
Stock Options may be granted under this Plan during any calendar year of
the Company to each Eligible Employee shall be 750,000 shares (subject to
any increase or decrease pursuant to this Section 4.2). To the extent that
shares of Common Stock for which Stock Options are permitted to be granted
to a Participant pursuant to Section 4.1(b) during a calendar year of the
Company are not covered by a grant of a Stock Option in the Company's
calendar year, such shares of Common Stock shall be available for grant or
issuance to the Participant in any subsequent calendar year during the term
of this Plan.
4.2. Changes.
(a) The existence of this Plan and the shares of Common Stock and
Stock Options granted hereunder shall not affect in any way the right or
power of the Board or the stockholders of the Company to make or authorize
any adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of
the Company or Affiliates, any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the
authorization or issuance of additional shares of Common Stock, the
dissolution or liquidation of the Company or Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate
act or proceeding.
(b) In the event of any change in the capital structure or business of
the Company by reason of any stock dividend, stock split or reverse stock
split, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, distribution with respect to its
outstanding Common Stock or capital stock other than Common Stock,
reclassification of its capital stock, any sale or transfer of all or part
of the Company's assets or business, or any similar change affecting the
Company's capital structure or business, and the Committee or the Board, as
applicable, determines an adjustment is appropriate under this Plan, then
the aggregate number and kind of shares which thereafter may be issued
under this Plan, the number and kind of shares or other property (including
cash) to be issued upon exercise of an outstanding Stock Option granted
under this Plan and the purchase or exercise price thereof shall be
appropriately adjusted consistent with such change in such manner as the
Committee or the Board, as applicable, may deem equitable
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to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants under this Plan or as otherwise necessary to
reflect the change, and any such adjustment determined by the Committee or
the Board, as applicable, in good faith shall be binding and conclusive on
the Company and all Participants and employees and their respective heirs,
executors, administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any adjustment in
Stock Options pursuant to Section 4.2(a) or (b) shall be aggregated until,
and eliminated at, the time of exercise by rounding-down for fractions less
than one-half and rounding-up for fractions equal to or greater than one-
half. No cash settlements shall be made with respect to fractional shares
eliminated by rounding. Notice of any adjustment shall be given by the
Committee or the Board, as applicable, to each Participant whose Stock
Option has been adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of this Plan.
(d) In the event of (i) a merger or consolidation in which the Company
is not the surviving entity or in which the Company is the surviving entity
but the holders of the Common Stock outstanding immediately prior to the
consummation of the transaction are not the holders of a majority of the
Common Stock outstanding immediately subsequent to the transaction, or (ii)
in the event of any transaction that results in the acquisition of all or
substantially all of the Company's outstanding Common Stock by a single
person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially
all of the Company's assets (all of the foregoing being referred to as
"Extraordinary Transactions"), then in the event of an Extraordinary
Transaction of the type described in clause (i) above, the Committee may,
in its sole discretion, and in the event of an Extraordinary Transaction of
the type described in clause (ii) above, the Committee shall, terminate all
outstanding Stock Options, effective as of the date of the Extraordinary
Transaction by delivering notice of termination to each such Participant at
least 30 days prior to the date of consummation of the Extraordinary
Transaction; provided, that during the period from the date on which such
notice of termination is delivered to the consummation of the Extraordinary
Transaction, each such Participant shall have the right to exercise in full
all of his or her Stock Options that are then outstanding (whether vested
or not vested) but contingent on the occurrence of the Extraordinary
Transaction; provided, further, that, if the Extraordinary Transaction does
not take place within a specified period after giving such notice for any
reason whatsoever, the notice and exercise shall be null and void. If an
Extraordinary Transaction occurs, to the extent the Committee does not
terminate the outstanding Stock Options pursuant to this Section 4.2(d),
then the provisions of Section 4.2(b) shall apply.
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ARTICLE V.
STOCK OPTIONS
5.1. Stock Options. Each Stock Option granted hereunder shall be one of
two types: (i) an Incentive Stock Option intended to satisfy the requirements
of Section 422 of the Code, or (ii) a Non-Qualified Stock Option.
5.2. Grants. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. To the extent that any Stock Option
does not qualify as an Incentive Stock Option (whether because of its provisions
or the time or manner of its exercise or otherwise), such Stock Option or the
portion thereof which does not so qualify, shall constitute a separate Non-
Qualified Stock Option. The Committee shall have the authority to grant to any
Consultant one or more Non-Qualified Stock Options. Notwithstanding any other
provision of this Plan to the contrary or any provision in an agreement
evidencing the grant of an Stock Option to the contrary, any Stock Option
granted to an Employee of an Affiliate (other than a Subsidiary), a Non-Employee
Director or a Consultant shall be a Non-Qualified Stock Option.
5.3. Terms of Stock Options. Stock Options shall be subject to the
following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:
(a) The exercise price per share of Common Stock of any Stock Option
shall be determined by the Committee or the Board, as applicable, at the
time of grant but shall not be less than 100% of the Fair Market Value of a
share of Common Stock at the time of grant; provided, however, that if an
Incentive Stock Option is granted to a Ten Percent Stockholder, the
exercise price per share shall be no less than 110% of the Fair Market
Value of the Common Stock.
(b) The term of each Stock Option shall be fixed by the Committee, but
no Stock Option shall be exercisable more than 10 years after the date the
Stock Option is granted; provided, however, the term of an Incentive Stock
Option granted to a Ten Percent Stockholder may not exceed five years.
(c) Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the
Committee at the time of grant. If the Committee provides, in its
discretion, that any Stock Option is exercisable subject to certain
limitations (including, without limitation, that it is exercisable only in
installments or within certain time periods), the Committee may waive such
limitations on the exercisability at any time at or after the time of grant
in whole or in part, based on such factors, if any, as the Committee shall
determine in its sole discretion.
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(d) Subject to whatever installment exercise and waiting period
provisions apply under Section 6.3(c), Stock Options may be exercised in
whole or in part at any time during the Stock Option term, by giving
written notice of exercise to the Company specifying the number of shares
to be purchased. Common Stock purchased pursuant to the exercise of a
Stock Option shall be paid for at the time of exercise as follows: (i) in
cash or by check, bank draft or money order payable to the order of
Company; (ii) if the Common Stock is traded on a national securities
exchange, the Nasdaq Stock Market, Inc. or quoted on a national quotation
system sponsored by the National Association of Securities Dealers, through
the delivery of irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price; or (iii) on such other
terms and conditions as may be acceptable to the Committee (which may
include payment in full or part in the form of Common Stock owned by the
Participant (and for which the Participant has good title free and clear of
any liens and encumbrances) based on the Fair Market Value of the Common
Stock on the payment date as determined by the Committee or the surrender
of vested Stock Options owned by the Participant). No shares of Common
Stock shall be issued until payment therefor, as provided herein, has been
made or provided for.
(e) To the extent that the aggregate Fair Market Value (determined as
of the time of grant) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Eligible Employee
during any calendar year under this Plan and/or any other stock option plan
of the Company, any Subsidiary or any parent corporation (within the
meaning of Section 424(e) of the Code) exceeds $100,000, such Stock Options
shall be treated as Non-Qualified Stock Options. In addition, if an
Eligible Employee's employment by the Company, a Subsidiary or a parent
corporation (within the meaning of Section 424(e) of the Code) terminates
more than three months prior to the date of exercise (or such other period
as required by applicable law), such Stock Option shall be treated as a
Non-Qualified Stock Option. Should the foregoing provision not be
necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the Committee may
amend this Plan accordingly, without the necessity of obtaining the
approval of the stockholders of the Company.
(f) Subject to the terms and conditions of this Plan, a Stock Option
shall be evidenced by such form of agreement or grant as is approved by the
Committee and the Committee may modify, extend or renew outstanding Stock
Options granted under this Plan (provided that the rights of a Participant
are not reduced without his consent), or accept the surrender of
outstanding Stock Options (up to the extent not theretofore exercised) and
authorize the granting of new Stock Options in substitution therefor (to
the extent not theretofore exercised).
(g) Stock Options may contain such other provisions, which shall not
be inconsistent with any of the foregoing terms of this Plan, as the
Committee shall deem appropriate including, without limitation, permitting
"reloads" such that the same number of Stock Options are granted as the
number of Stock Options exercised, shares used to pay for the exercise
price of Stock Options or shares used to pay withholding taxes ("Reloads").
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With respect to Reloads, the exercise price of the new Stock Option shall
be the Fair Market Value on the date of the "reload" and the term of the
Stock Option shall be the same as the remaining term of the Stock Options
that are exercised, if applicable, or such other exercise price and term as
determined by the Committee.
ARTICLE VI.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
6.1. Stock Options. The terms of this Article VI shall apply only to
Stock Options granted to Non-Employee Directors.
6.2. Grants. On the date that a Non-Employee Director is first elected a
director of the Company, and on each anniversary of such date while shares of
Common Stock remain available for the grant of Stock Options hereunder, each
Non-Employee Director shall be automatically granted Stock Options to purchase
20,000 shares of Common Stock.
6.3. Non-Qualified Stock Options. Stock Options granted under this
Article VI shall be Non-Qualified Stock Options.
6.4. Terms of Options. Stock Options granted under this Article VI shall
be subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with terms of
this Plan, as the Board shall deem desirable:
(a) The exercise price per share of Common Stock subject to a Stock
Option granted pursuant to Section 6.2 shall be equal to 100% of the Fair
Market Value of Common Stock at the time of grant.
(b) Stock Options granted under this Article VI shall be exercisable
immediately upon grant.
(c) A Non-Employee Director electing to exercise one or more Stock
Options shall give written notice of exercise to the Company specifying the
number of shares to be purchased. Common Stock purchased pursuant to the
exercise of a Stock Option shall be paid for as provided in Section 5.3(d).
No shares of Common Stock shall be issued until payment therefore, as
provided herein, has been made or provided for.
(d) Except as otherwise provided herein, if not previously exercised
each Stock Option shall expire upon the tenth anniversary of the date of
the grant thereof.
(e) Stock Options granted to a Non-Employee Director under this
Article VI shall be subject to Section 4.2.
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6.5. Termination of Directorship. The following rules apply with regard
to Stock Options granted under this Article VI upon a Termination of
Directorship:
(a) Except as otherwise provided herein, upon a Termination of
Directorship on account of death or Disability, all then outstanding Stock
Options shall remain exercisable by the Participant or, in the case of
death, by the Participant's estate or by the person given authority to
exercise such Stock Options by his or her will or by operation of law, at
any time within a period of one year from the date of such Termination of
Directorship, but in no event beyond the expiration of the stated term of
such Stock Option.
(b) Except as otherwise provided herein, upon a Termination of
Directorship, on account of retirement, resignation, failure to stand for
reelection or failure to be reelected or otherwise other than as set forth
in (c) below, all then outstanding Stock Options shall remain exercisable
by the Participant at any time within a period of one year from the date of
such Termination of Directorship, but in no event beyond the expiration of
the stated term of such Stock Option.
(c) Upon removal, failure to stand for reelection or failure to be
renominated for any reason that would constitute grounds for removal of a
director for cause under Delaware law, or if the Company obtains or
discovers information after Termination of Directorship that such
Participant had engaged in conduct that would have justified removal for
cause during his or her directorship, all outstanding Stock Options of such
Participant shall immediately terminate and shall be null and void.
ARTICLE VII.
NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY PROVISIONS
7.1. Except as otherwise provided in this Section 7.1, no Stock Option
shall be Transferred by the Participant otherwise than by will or by the laws of
descent and distribution. All Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant. Any attempt to Transfer any
Stock Option shall be void, and no such Stock Option shall in any manner be used
for the payment of, subject to, or otherwise encumbered by or hypothecated for
the debts, contracts, liabilities, engagements or torts of any person who shall
be entitled to such Stock Option, nor shall it be subject to attachment or legal
process for or against such person. Notwithstanding the foregoing, the
Committee may determine at the time of grant or thereafter that a Non-Qualified
Stock Option granted pursuant to Article V or Article VI that is otherwise not
transferable pursuant to this Article VII is transferable in whole or part and
in such circumstances, and under such conditions, as specified by the Committee.
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7.2. Termination of Employment or Termination of Consultancy. The
following rules apply with regard to Stock Options upon the Termination of
Employment or Termination of Consultancy of a Participant, unless otherwise
determined by the Committee at grant or, if no rights of the Participant (or his
estate in the event of death) are reduced, thereafter:
(a) If a Participant's Termination of Employment or Termination of
Consultancy is by reason of his death, any Stock Option held by such
Participant may be exercised, to the extent exercisable at the
Participant's Termination of Employment or Termination of Consultancy, by
the Participant's estate or by the person given authority to exercise such
Stock Options by his or her will or by operation of law, at any time within
a period of one year from the date of such death, but in no event beyond
the expiration of the stated term of such Stock Option.
(b) If a Participant's Termination of Employment or Termination of
Consultancy is by reason of his Disability or retirement, any Stock Option
held by such Participant may be exercised, to the extent exercisable at the
Participant's Termination of Employment or Termination of Consultancy, by
the Participant, at any time within a period of one year from the date of
such Termination of Employment or Termination of Consultancy, but in no
event beyond the expiration of the stated term of such Stock Option;
provided, however, that, if the Participant dies within such exercise
period, any unexercised Stock Option held by such Participant shall
thereafter be exercisable by the Participant's estate or by the person
given authority to exercise such Stock Options by his or her will or by
operation of law, to the extent to which it was exercisable at the time of
death, for a period of one year (or such other period as the Committee may
specify at grant or, if no rights of the Participant's estate are reduced,
thereafter) from the date of such death, but in no event beyond the
expiration of the stated term of such Stock Option.
(c) If a Participant's Termination of Employment or Termination of
Consultancy is by the Company without cause, any Stock Option held by such
Participant may be exercised, to the extent exercisable at termination, by
the Participant at any time within a period of 90 days from the date of
such termination, but in no event beyond the expiration of the stated term
of such Stock Option.
(d) If a Participant's Termination of Employment or Termination of
Consultancy is a voluntary termination by the Participant and occurs prior
to, or more than 90 days after, the occurrence of an event which would be
grounds for Termination of Employment or Termination of Consultancy for
cause (without regard to any notice or cure period requirements), any Stock
Option held by such Participant may be exercised, to the extent exercisable
at termination, by the Participant at any time within a period of 30 days
from the date of such termination, but in no event beyond the expiration of
the stated term of such Stock Option.
(e) If a Participant's Termination of Employment or Termination of
Consultancy is: (i) for cause, or (ii) a voluntary termination (as
provided in subsection (d) above) within
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90 days after an event which would be grounds for a Termination of
Employment or Termination of Consultancy for cause, any Stock Option held
by such Participant shall thereupon terminate and expire as of the date of
termination.
ARTICLE VIII.
TERMINATION OR AMENDMENT OF PLAN
8.1. Termination or Amendment. Notwithstanding any other provision of
this Plan, the Board or the Committee may at any time, and from time to time,
amend, in whole or in part, any or all of the provisions of this Plan (including
any amendment deemed necessary to ensure that the Company may comply with any
regulatory requirement referred to in this Article VIII), or suspend or
terminate it entirely, retroactively or otherwise; provided, however, that,
unless otherwise required by law or specifically provided herein, the rights of
a Participant with respect to Stock Options granted prior to such amendment,
suspension or termination, may not be impaired without the consent of such
Participant; and provided further, without the approval of the stockholders of
the Company in accordance with the laws of the State of Delaware, to the extent
required by the applicable provisions of Rule 16b-3 or Section 162(m) of the
Code, or with respect to Incentive Stock Options, Section 422 of the Code, no
amendment may be made which would: (a) increase the aggregate number of shares
of Common Stock that may be issued under this Plan; (b) increase the maximum
individual Participant limitations for a fiscal year under Section 4.1(b); (c)
change the classification of employees and Consultants eligible to receive
Awards under this Plan; (d) decrease the minimum exercise price of any Stock
Option; (e) extend the maximum option term under Section 5.3(b); or (f)
reprice any outstanding Stock Option.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any Participant without the Participant's consent.
ARTICLE IX.
UNFUNDED PLAN
9.1. Unfunded Status of Plan. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
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ARTICLE X.
GENERAL PROVISIONS
10.1. Legend. All certificates for shares of Common Stock delivered under
this Plan shall be subject to such stock transfer orders and other restrictions
as the Committee or the Board, as applicable, may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed or any
national securities association system upon whose system the Common Stock is
then quoted, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee or the Board, as applicable, may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
10.2. Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
10.3. No Right to Employment/Consultancy/Directorship. Neither this Plan
nor the grant of any Stock Options hereunder shall give any Participant or other
employee or Consultant any right with respect to continuance of employment or
consultancy by the Company or any Affiliate, nor shall they be a limitation in
any way on the right of the Company or any Affiliate by which an employee is
employed or consultant retained to terminate his employment or consultancy, as
applicable, at any time. Neither this Plan nor the grant of any Stock Options
or shares of Common Stock hereunder shall impose any obligations on the Company
to retain any Participant as a director nor shall it impose on the part of any
Participant any obligation to remain as a director of the Company.
10.4. Withholding of Taxes. The Company shall deduct from any payment to
be made to a Participant, or shall otherwise require, prior to the issuance or
delivery of any shares of Common Stock or the payment of any cash hereunder,
payment by the Participant of any Federal, state or local taxes required by law
to be withheld; and such withholding is hereby approved by the Committee.
10.5. Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
10.6. Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply. To the
extent applicable, this Plan shall be limited, construed and interpreted in a
manner so as to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3; provided, however,
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that noncompliance with Section 162(m) of the Code and Rule 16b-3 shall have no
impact on the effectiveness of a Stock Option under this Plan.
10.7. Other Benefits. No Stock Option under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries or affiliates nor affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation.
10.8. Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing shares of Common Stock
pursuant to this Plan or any Stock Options granted hereunder.
10.9. No Right to Same Benefits. The provisions of Stock Options need not
be the same with respect to each Participant, and such Stock Options to
individual Participants need not be the same in subsequent years.
10.10. Death/Disability. The Committee or the Board, as applicable, may
in its discretion require the transferee of a Participant's Stock Option to
supply the Company with written notice of the Participant's death or Disability
and to supply the Company with a copy of the will (in the case of the
Participant's death) or such other evidence as the Committee or the Board, as
applicable, deems necessary to establish the validity of the Transfer of a Stock
Option. The Committee or the Board, as applicable, may also require that the
transferee agree in writing to be bound by all of the terms and conditions of
this Plan.
10.11. Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.
10.12. Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.
ARTICLE XI.
EFFECTIVE DATE OF PLAN
The 1996 Stock Option Plan became effective as of January 1, 1996. The
Plan, as amended and restated, shall become effective as of May 14, 1998 (the
"Effective Date"), subject to and conditioned upon the approval of this Plan by
the stockholders of the Company in accordance with the requirements of the laws
of the State of Delaware and any applicable exchange requirements.
15
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ARTICLE XII.
TERM OF PLAN
No Stock Option shall be granted pursuant to this Plan on or after the
tenth anniversary of the Effective Date, but Stock Options granted prior to such
tenth anniversary may extend beyond that date.
ARTICLE XIII.
NAME OF PLAN
This Plan shall be known as the AMERICAN DISPOSAL SERVICES, INC. AMENDED
AND RESTATED 1996 Stock Option Plan.
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PROXY AMERICAN DISPOSAL SERVICES, INC.
745 MCCLINTOCK DRIVE
BURR RIDGE, ILLINOIS 60521
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON JUNE 23, 1998
The undersigned hereby appoints RICHARD DE YOUNG, STEPHEN P. LAVEY and ANN L.
STRAW, or any of them, with the power of substitution, as proxies and hereby
authorizes them to represent and to vote, as designated below, all shares of
Common Stock of American Disposal Services, Inc. (the "Corporation") held of
record by the undersigned at the close of business on May 21, 1998 at the
Annual Meeting of Stockholders to be held on June 23, 1998.
1. ELECTION OF DIRECTORS:
[_] FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY BELOW):
G. T. Blankenship Richard De Young Robert S. Hillas
Stephen P. Lavey Douglas A. Pertz Stephen W. Rubin
[_] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. PROPOSAL TO AMEND THE STOCK OPTION PLAN:
[_] FOR[_] AGAINST[_] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS
[_] FOR[_] AGAINST[_] ABSTAIN
(Continued and to be SIGNED on other side)
4. In their discretion, the Proxies are authorized to vote upon any other
business that may properly come before the meeting and any adjournments
thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
Dated: ______________________ , 1998
------------------------------------
Signature
------------------------------------
Signature, if held jointly
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY. IF SHARES
ARE REGISTERED IN MORE THAN ONE
NAME, THE SIGNATURES OF ALL SUCH
PERSONS ARE REQUIRED. A CORPORATION
SHOULD SIGN IN ITS FULL CORPORATE
NAME BY A DULY AUTHORIZED OFFICER,
STATING SUCH OFFICER'S TITLE.
TRUSTEES, GUARDIANS, EXECUTORS AND
ADMINISTRATORS SHOULD SIGN IN THEIR
OFFICIAL CAPACITY GIVING THEIR FULL
TITLE AS SUCH. A PARTNERSHIP SHOULD
SIGN IN THE PARTNERSHIP NAME BY AN
AUTHORIZED PERSON, STATING SUCH
PERSON'S TITLE AND RELATIONSHIP TO
THE PARTNERSHIP.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE.
