EXHIBIT 10.3
_________________________________________________________________
EXECUTIVE EMPLOYMENT AGREEMENT
by and between
AMERICAN DISPOSAL SERVICES, INC.
a Delaware corporation,
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
an individual
_________________________________________________________________
TABLE OF CONTENTS
PAGE
1. Position and Duties; Location . . . . . . . . . . . . . . 1
2. Term of Employment. . . . . . . . . . . . . . . . . . . . 2
3. Compensation, Benefits and Reimbursement. . . . . . . . . 2
3.1 Base Salary. . . . . . . . . . . . . . . . . . . . . 2
3.2 Increases in Base Salary . . . . . . . . . . . . . . 2
3.3 Bonus. . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Target Bonus . . . . . . . . . . . . . . . . . 3
(b) Determination of Bonus . . . . . . . . . . . . 3
3.4 Additional Benefits. . . . . . . . . . . . . . . . . 3
(a) Officer Benefits. . . . . . . . . . . . . . . . 3
(b) Vacation . . . . . . . . . . . . . . . . . . . 3
(c) Life Insurance. . . . . . . . . . . . . . . . . 4
(d) Automobile. . . . . . . . . . . . . . . . . . . 4
(e) Reimbursement for Expenses. . . . . . . . . . . 4
(f) Withholding . . . . . . . . . . . . . . . . . . 4
4. Termination of the Agreement. . . . . . . . . . . . . . . 4
4.1 Termination by Company Defined . . . . . . . . . . . 4
(a) Termination Without Cause . . . . . . . . . . . 4
(b) Termination For Cause . . . . . . . . . . . . . 5
(c) Termination by Reason of Death or Disability. . 5
4.2 Termination by Officer Defined . . . . . . . . . . . 6
(a) Termination Other Than For Good Reason . . . . 6
(b) Termination For Good Reason . . . . . . . . . . 6
(c) Good Reason Following a Change in Control . . . 6
4.3 Effect of Termination. . . . . . . . . . . . . . . . 8
(a) Termination by Company. . . . . . . . . . . . . 9
(i) Termination Without Cause . . . . . . . . 9
(ii) Termination For Cause . . . . . . . . . . 9
(iii) Termination Due to Death or
Permanent Disability . . . . . . . . . . 9
(b) Termination by Officer . . . . . . . . . . . . . 10
(i) Termination Other Than For Good Reason. . 10
(ii) Termination For Good Reason . . . . . . . 10
4.4 Severance Payment. . . . . . . . . . . . . . . . . . 10
(a) Definition of "Severance Payment" . . . . . . . 10
(b) Payment of Severance Payment . . . . . . . . . 11
(c) Other Severance Benefits. . . . . . . . . . . . 11
(d) Full Settlement of All Obligations. . . . . . . 12
(e) Change in Control . . . . . . . . . . . . . . . 12
4.5 Gross-Up . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Offset . . . . . . . . . . . . . . . . . . . . . . . 14
5. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . 15
5.1 Payment Obligations. . . . . . . . . . . . . . . . . 15
5.2 Confidentiality. . . . . . . . . . . . . . . . . . . 15
5.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Entire Agreement; Modifications. . . . . . . . . . . 15
5.5 Notices. . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Headings . . . . . . . . . . . . . . . . . . . . . . 16
5.7 Governing Law. . . . . . . . . . . . . . . . . . . . 16
5.8 Arbitration. . . . . . . . . . . . . . . . . . . . . 16
5.9 Severability . . . . . . . . . . . . . . . . . . . . 17
5.10 Survival of Company's Obligations. . . . . . . . . . 17
5.11 Survival of Certain Rights and Obligations . . . . . 17
5.12 Counterparts . . . . . . . . . . . . . . . . . . . . 17
EXECUTIVE EMPLOYMENT AGREEMENT
THE EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of the first day of January, 1998, (the
"Effective Date"), by and between AMERICAN DISPOSAL SERVICES,
INC., a Delaware corporation (the "Company") and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, an individual (the "Officer").
RECITAL
WHEREAS, the Officer has been employed by and currently
serves as the Company's President-Chief Executive Officer;
WHEREAS, the Company recognizes Officer's substantial
contribution to the growth and success of the Company; and
desires to provide for continued employment of Officer in order
to reinforce and encourage his continued attention and dedication
to the Company as a member of the Company's senior management;
WHEREAS, Company desires to continue to employ Officer
as President-Chief Executive Officer, and Officer is willing to
continue to accept such employment by Company, on the terms and
subject to the conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the foregoing
mutual covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Position and Duties; Location.
During the Term (as defined in Paragraph 2 below) of
the Agreement, Officer agrees to be employed by and to serve the
Company as its President-Chief Executive Officer subject to the
control of the Board of Directors (the "Board"), and the Company
agrees to employ and retain Officer in such capacities. During
the Term (as defined in Paragraph 2 below) Officer agrees to
devote substantially all of his working time, energy, efforts and
abilities to the business affairs of the Company and its
subsidiaries. Officer's principal place of business will be
located within 25 miles of ▇▇▇▇ Ridge, Illinois. The Company
shall provide Officer with working facilities and support
services as are suitable to his position and appropriate for the
performance of his duties.
2. Term of Employment.
The Term (the "Term") of the Agreement shall be for the
period commencing on the Effective Date and ending on the last
day of the thirty-sixth (36th) month following the Effective Date
(the "Termination Date"), unless terminated earlier pursuant to
the Agreement (the "Early Termination Date"); provided, however,
that commencing on the last day of the twelfth (12th) month
following the Effective Date and each subsequent anniversary
thereof, the Term shall be automatically extended for one (1)
additional year unless, no later than six (6) months before such
date, either party shall have given written notice to the other
that it does not wish to extend the Term of the Agreement.
References herein to the Term of the Agreement shall refer to
both the initial Term and any such extended Term.
3. Compensation, Benefits and Reimbursement.
3.1 Base Salary. During the Term of the Agreement and
subject to the terms and conditions set forth herein, Company
agrees to pay to Officer an annual "Base Salary" equal to Three
Hundred Thousand Dollars ($300,000), or such higher amount as may
from time-to-time be determined by the Board. Unless otherwise
agreed in writing by Officer and Company, the salary shall be
payable in substantially equal semimonthly installments in
accordance with the standard policies of Company in existence
from time-to-time.
3.2 Increases in Base Salary. Officer's Base Salary
shall be reviewed no less frequently than on each anniversary of
the Effective Date during the Term by the Board (or such
committee as may be appointed by the Board for such purpose).
The Base Salary payable to Officer may be increased on each such
anniversary date (and such other times as the Board or a
committee of the Board may deem appropriate during the Term of
the Agreement) to an amount determined by the Board (or a
committee of the Board). Any increase in Base Salary or other
compensation shall in no way limit or reduce any other
obligations of Company hereunder and, once established at an
increased specified rate, Officer's Base Salary shall not be
reduced unless Officer otherwise agrees in writing.
3.3 Bonus. During the Term of the Agreement, Officer
shall be eligible for the following bonus:
(a) Target Bonus. Officer shall be eligible to
receive as an annual bonus an amount not less than fifty percent
(50%) of his Base Salary for each fiscal year of the Company (or
portion thereof) during the Term of the Agreement as determined
below. Any such bonus shall be payable within seventy-five (75)
days after the end of Company's fiscal year to which such bonus
relates; provided, however, that the payment of such bonus may be
deferred upon mutual agreement by Officer and the Company.
(b) Determination of Bonus. With respect to each
fiscal year during the Term, the actual amount of the bonus
payable pursuant to Subparagraph (a) shall be determined on the
basis of criteria with respect to the performance of Officer
and/or Company established by the Board (or a committee of the
Board) prior to the commencement of the fiscal year and such
other factors and conditions as the Board may deem relevant;
provided, however, that the criteria for the bonus for 1998 shall
be established in the first quarter of 1998.
3.4 Additional Benefits. During the Term of the
Agreement, Officer shall be entitled to the following additional
benefits:
(a) Officer Benefits. Officer shall be entitled
to such benefits as are generally provided by the Company to its
senior executive employees including, without limitation, (i)
Company stock incentive plans, annual incentive compensation
plans, profit sharing/pension plans, deferred compensation plans,
annual physical examinations, dental, vision, sick pay, and
medical plans, personal catastrophe and accidental death
insurance plans, financial planning and automobile arrangements,
retirement plans and supplementary executive retirement plans, if
any, and (ii) personal leave, sick leave and vacation leave to
the extent such leaves are provided to all senior executive
employees. Officer is also entitled to the benefit of any life
and health insurance plans, pension, stock option plans and other
similar plans as the Company may have or may establish from time-
to-time for its senior executive employees.
(b) Vacation. Officer shall be entitled to a
minimum of four (4) weeks of vacation during each year during the
Term of the Agreement and any extensions thereof, prorated for
partial years. Any accrued vacation not taken during any year
may be carried forward to subsequent years; provided, that
Officer may not accrue more than eight (8) weeks of unused
vacation at any time.
(c) Life Insurance. During Term of the
Agreement, Company shall, at its sole cost and expense, procure
and keep in effect term life insurance (a minimum three (3) year
term certain policy) on the life of Officer, payable to such
beneficiaries as Officer may from time-to-time designate, in the
aggregate amount of Two Million Five Hundred Thousand Dollars
($2,500,000); provided, however, in no event shall the premiums
for such insurance policy exceed three times normal and customary
rates for a normal healthy male of similar age. Such policy
shall be owned by Officer or by a member of his immediate family.
The Company shall have no incidents of ownership therein.
(d) Automobile. During the Term of the
Agreement, the Company will also make available to Officer an
automobile of a make and model consistent with past practices and
shall pay all operating expenses associated with such automobile.
(e) Reimbursement for Expenses. During the Term
of the Agreement, Company shall reimburse Officer for all
reasonable out-of-pocket business and/or entertainment expenses
incurred by Officer for the purpose of and in connection with the
performance of his services pursuant to the Agreement. Officer
shall be entitled to such reimbursement upon the presentation by
Officer to the Company of vouchers or other statements itemizing
such expenses in reasonable detail consistent with Company's
policies.
(f) Withholding. Compensation and benefits paid
to Officer under the Agreement shall be subject to applicable
federal, state and local wage deductions and other deductions
required by law.
4. Termination of the Agreement.
4.1 Termination by Company Defined.
(a) Termination Without Cause. Subject to the
provisions set forth in Paragraph 4.3 below, "Termination Without
Cause" shall constitute any termination by Company other than
termination for "Cause" (as defined in Paragraph 4.1(b) below).
(b) Termination For Cause. Subject to the
provisions set forth in Paragraph 4.3 below, prior to the
Termination Date, the Company shall have the right to terminate
the Agreement for "Cause"; provided, however, that Officer shall
not be deemed to have been terminated for Cause without (i)
reasonable written notice to Officer setting forth the reasons
for the Company's intention to terminate for "Cause", (ii) an
opportunity for the Officer, together with his counsel, to be
heard before the Board, and (iii) delivery to the Officer of a
written notice of termination (which date of delivery of such
notice shall be the Early Termination Date), as defined herein,
from the Board finding that in the good faith opinion of the
Board, Officer was guilty of conduct set forth therein, and
specifying the particulars thereof in detail. For purposes of
the Agreement, "Cause" shall mean the following:
A commission of a felony, a crime involving moral
turpitude, embezzlement, misappropriation of property
of the Company or a subsidiary, any other act involving
dishonesty or fraud with respect to the Company or a
subsidiary; a material breach of a directive of the
Board which has not been cured within a specified
reasonable time after written notice of breach; or a
repeated failure after written notice to follow the
reasonable directives of the Board.
(c) Termination by Reason of Death or Disability.
Subject to the provisions set forth in Paragraph 4.3 below, prior
to the Termination Date, Company shall have the right to
terminate the Agreement by reason of Officer's death or Permanent
Disability. For purposes of the Agreement, "Permanent
Disability" shall mean the following:
The Officer is unable to perform his duties hereunder
for 180 days during any 365 consecutive days by reason
of physical or mental disability. The disability will
be deemed to have occurred on the one hundred and
eightieth (180th) day of Officer's absence or lack of
adequate performance.
4.2 Termination by Officer Defined.
(a) Termination Other Than For Good Reason.
Subject to the provisions set forth in Paragraph 4.3 below,
Officer shall have the right to terminate the Agreement for any
reason other than for Good Reason (as defined in Paragraph 4.2(b)
below), at any time prior to the Termination Date, upon written
notice delivered to Company thirty (30) days prior to the
effective date of termination specified in such notice (which
date shall be the applicable Early Termination Date).
(b) Termination For Good Reason. Subject to the
provisions of Paragraph 4.3 below, Officer shall have the right
to terminate the Agreement prior to the Termination Date in the
event of the material breach of the Agreement by Company, if such
breach is not cured by Company within thirty (30) days after
written notice thereof specifying the nature of such breach has
been delivered to Company, or, following a Change in Control (as
defined in Paragraph 4.4(e) below), under the circumstances set
forth in Paragraph 4.2(c) below. For purposes of the Agreement,
termination of the Agreement by Officer in the event of Company's
material breach of the Agreement in accordance with the
provisions of this Paragraph 4.2(b) shall be defined as
termination by Officer for "Good Reason."
(c) Good Reason Following a Change in Control.
Following a Change in Control (as defined in Paragraph 4.4(e)
below), "Good Reason" shall mean, without Officer's express
written consent, a material breach of the Agreement by Company,
including the occurrence of any of the following circumstances,
which breach is not fully corrected within thirty (30) days after
written notice thereof specifying the nature of such breach has
been delivered to Company:
(i) the assignment to Officer of any duties
inconsistent with the position in Company that Officer held
immediately prior to the Change in Control, or an adverse
alteration in the nature or status of Officer's
responsibilities from those in effect immediately prior to
such change, or Company employs an officer in a capacity
that is senior to Officer (except that Company shall be
entitled to employ a Chairman of the Board so long as such
Chairman is not the Chief Executive Officer);
(ii) a substantial change in the nature of
the business operations of Company;
(iii) a reduction by Company in Officer's
annual Base salary as in effect on the date hereof or as the
same may be increased from time to time;
(iv) the relocation of Company's principal
executive offices to a location more than 25 miles from ▇▇▇▇
Ridge, Illinois (or, if different, the town in which such
offices are located immediately prior to the Change in
Control), or Company's requiring Officer to be based
anywhere other than Company's principal executive offices
except for required travel on Company's business to an
extent substantially consistent with Officer's business
travel obligations immediately prior to the Change in
Control;
(v) the failure by Company to pay Officer
any portion of his current compensation except pursuant to
an across-the-board compensation deferral similarly
affecting all officers of Company and all officers of any
person whose actions resulted in a Change in Control or any
person affiliated with Company or such person, or to pay
Officer any portion of an installment of deferred
compensation under any deferred compensation program of
Company, within seven (7) days of the date such compensation
is due;
(vi) the failure by Company to continue in
effect any compensation plan in which Officer participates
immediately prior to the Change in Control which is material
to Officer's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan,
or the failure by Company to continue Officer's
participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of
participation relative to other participants, as existed at
the time of the Change in Control;
(vii) the failure by Company to continue to
provide Officer with benefits substantially similar to those
under any of Company's life insurance, medical, health and
accident, or disability plans in which Officer was
participating at the time of the Change in Control, the
taking of any action by Company which would directly or
indirectly materially reduce any of such benefits or deprive
Officer of any material fringe benefit enjoyed by him at the
time of the Change in Control, or the failure by Company to
provide Officer with the number of paid vacation days to
which he is entitled on the basis of years of service with
Company in accordance with Company's normal vacation policy
in effect at the time of the Change in Control or pursuant
to Officer's existing employment agreement, if any; or
(viii) the failure of Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform the Agreement.
Notwithstanding the above, during the one year period
immediately following the occurrence of a Change in Control,
"Good Reason" shall mean termination of employment by the
Executive for any reason other than death or Permanent
Disability.
Officer's right to terminate Officer's employment for
Good Reason shall not be affected by Officer's incapacity due to
physical or mental illness. Officer's continued employment shall
not constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason hereunder.
4.3 Effect of Termination. In the event that the
Agreement is terminated by Company or Officer prior to the
Termination Date in accordance with the provisions of this
Paragraph 4, the obligations and covenants of the parties under
this Paragraph 4 shall be of no further force and effect, except
for the obligations of the parties set forth below in this
Paragraph 4.3, and such other provisions of the Agreement which
shall survive termination of the Agreement as provided in
Paragraph 6.11 below. Except as otherwise specifically set
forth, all amounts due upon termination shall be payable on the
date such amounts would otherwise have been paid had the
Agreement continued through its Term; provided, however, that
Deferred Amounts (as defined in Paragraph 4.3(a)(i) below) shall
be payable within thirty (30) days following the Early
Termination Date.
In the event of any such early termination in
accordance with the provisions of this Paragraph 4.3, Officer
shall be entitled to the following:
(a) Termination by Company.
(i) Termination Without Cause. In the event
that Company terminates the Agreement without Cause pursuant
to Paragraph 4.1(a) above, Officer shall be entitled to (i)
Earned Base Salary (as defined below); (ii) earned benefits
and reimbursable expenses; (iii) any earned bonus which
Officer has been awarded pursuant to the terms of the
Agreement or any other plan or arrangement as of the Early
Termination Date, but which has not been received by Officer
as of such date; (iv) any compensation earned but deferred
("Deferred Amounts"); and (v) the Severance Payment (as
defined in Paragraph 4.4 below).
(ii) Termination For Cause. In the event
that Company terminates the Agreement for Cause pursuant to
Paragraph 4.1(b) above, Officer shall be entitled to (i)
Earned Base Salary; (ii) any earned bonus which Officer has
been awarded pursuant to the terms of the Agreement or any
other plan or arrangement as of the Early Termination Date,
but which has not been received by Officer as of such date;
(iii) earned benefits and reimbursable expenses; and (iv)
any Deferred Amounts. Following delivery to Officer of the
notice described in Paragraph 4.1(b)(i), the Company may
suspend Officer from further duties with full pay and
benefits as provided hereunder as if Officer continued to be
employed until the delivery of the notice of termination
described in Paragraph 4.1(b)(iii). Officer shall not be
entitled to any future annual bonus or Severance Payment.
(iii) Termination Due to Death or Permanent
Disability. In the event that the Company terminates the
Agreement by reason of Officer's death or Permanent
Disability pursuant to Paragraph 4.1(c) above, Officer shall
be entitled to (i) Earned Base Salary (as defined below);
(ii) earned benefits and reimbursable expenses; (iii) any
earned bonus which Officer has been awarded pursuant to the
terms of the Agreement or any other plan or arrangement as
of the Early Termination Date, but which has not been
received by Officer as of such date; (iv) any Deferred
Amounts; and (v) all outstanding options (whether or not
exercisable at the Early Termination Date) shall become
fully and immediately vested and may be exercised for one
year following such termination.
(b) Termination by Officer.
(i) Termination Other Than For Good Reason.
In the event that Officer terminates the Agreement other
than for Good Reason, Officer shall be entitled to (i)
Earned Base Salary; (ii) any earned bonus which Officer has
been awarded pursuant to the terms of the Agreement or any
other plan or arrangement as of the Early Termination Date,
but which has not been received by Officer as of such date;
(iii) earned benefits and reimbursable expenses; and (iv)
any Deferred Amounts. Officer shall not be entitled to any
future annual bonus or Severance Payment.
(ii) Termination For Good Reason. In the
event that Officer terminates the Agreement for Good Reason,
Officer shall be entitled to (i) Earned Base Salary; (ii)
earned benefits and reimbursable expenses; (iii) any earned
bonus which Officer has been awarded pursuant to the terms
of the Agreement or any other plan or arrangement as of the
Early Termination Date, but which has not been received by
Officer as of such date; (iv) any Deferred Amounts; and (v)
the Severance Payment (as defined in Paragraph 4.4 below).
The term "Earned Base Salary" shall mean all
semimonthly installments of the Base Salary which have become due
and payable to Officer, together with any partial monthly
installment prorated on a daily basis up to and including the
applicable Termination Date.
4.4 Severance Payment.
(a) Definition of "Severance Payment." For
purposes of the Agreement, the term "Severance Payment" shall
mean an amount equal to the sum of (i) the Base Salary otherwise
payable to Officer during the remainder of the Term had such
early termination of the Agreement not occurred ("Severance
Period") and (ii) for each full or partial year remaining in the
Severance Period, the average of the annual bonuses earned by
Officer in the two (2) years immediately preceding the date of
termination (or if there are less than two (2) years immediately
preceding such date, an amount equal to the immediately preceding
bonus earned) ("Average Bonus"); provided, however, that in the
event that, following a Change in Control (as defined in
Paragraph 4.4(e) below), the Company terminates the Agreement
without Cause pursuant to Paragraph 4.1(a) above or Officer
terminates the Agreement for Good Reason pursuant to Paragraph
4.2(c) above, the term "Severance Payment" shall mean an amount
equal to no less than three (3) times the sum of the Base Salary
then in effect and the Average Bonus (which Average Bonus shall
not be less than 50% of Base Salary).
(b) Payment of Severance Payment. In the event
that Officer is entitled to any Severance Payment pursuant to
Paragraph 4.3 above, that portion of such Severance Payment that
represents Base Salary shall be payable in monthly installments,
and that portion of such Severance Payment that represents the
Average Bonus shall be payable on the dates such amounts would
have been paid had Officer continued in Company's employment for
the Severance Period; provided, however, that in the event of a
Termination Following a Change in Control (as defined in
Paragraph 4.4(e) below), the Severance Payment shall be payable
in a lump sum within ten (10) days following such termination.
(c) Other Severance Benefits. In the event that
Officer is entitled to any Severance Payment pursuant to
Paragraph 4.3 above, he shall also be entitled to:
(i) the full and immediate vesting of any awards
granted to Officer under the Company's stock option and incentive
compensation plans; and
(ii) to the extent elected by Officer within five days
of the Early Termination Date, in lieu of shares of Company
common stock issuable upon exercise of outstanding options (which
options shall be cancelled upon the making of the payment
referred to below), a lump sum payment, in cash, equal to the
product of (a) the excess of (x) in the case of ISOs granted
after the date hereof, the closing price of shares of Company
common stock as reported on the NASDAQ National Market on or
nearest the Early Termination Date (or, if not listed on such
exchange, on the nationally recognized exchange or quotation
system on which trading volume in shares of Company common stock
is highest), or in the case of all other options, the higher of
such closing price or the highest per share price for shares of
common stock of the Company actually paid in connection with any
Change in Control, over (y) the per share exercise price of such
option held by Officer (whether or not then fully exercisable),
and (b) the number of shares of common stock of the Company
covered by each such option as elected by Officer; provided,
however, that if the Company is prevented by the terms of its
debt instruments from making the payment described herein,
Officer shall immediately execute a cashless exercise of all
options for which such Officer elected to receive cash (whether
or not fully exercisable at the Early Termination Date) and shall
dispose of the common stock underlying such options as soon as
practicable and the Company will pay Officer the aggregate
difference between the price of the common stock at the time such
shares are sold and the price determined under (x) above;
provided further, that in the event and to the extent that such
shares cannot be sold for any reason, the Company will repurchase
such shares at the price determined under (x) above; provided,
however, that notwithstanding the foregoing, the following shall
apply with respect to a Termination without Cause pursuant to
Paragraph 4.3(a)(i) or a Termination For Good Reason prior to a
Change in Control pursuant to Paragraph 4.3(b)(ii); to the extent
Officer within five days of the Early Termination Date elects to
receive cash in lieu of shares of Company common stock issuable
upon exercise of outstanding options (which options shall be
cancelled upon the making of the exercises referred to below),
Officer shall immediately complete a cashless exercise of all
options for which Officer elects to receive cash (whether or not
fully exercisable at the Early Termination Date) and shall
attempt to dispose of the common stock underlying such options
within three weeks of such exercise and the Company will pay
Officer the aggregate difference between the price of the common
stock at the time such shares are sold and the price determined
under (x) above; provided further, that in the event and to the
extent such shares cannot be sold within the three week period
for any reason, the Company will repurchase such shares at the
price determined under (x) above; and
(iii) continued participation throughout the Severance
Period in all employee welfare and pension benefit plans,
programs or arrangements. In the event Officer's participation
in any such plan, program or arrangement is barred, Company shall
arrange to provide Officer with substantially similar benefits.
(d) Full Settlement of All Obligations. Officer
hereby acknowledges and agrees that any Severance Payment paid to
Officer hereunder shall be deemed to be in full and complete
settlement of all obligations of Company under the Agreement.
(e) Change in Control. For purposes of the Agreement,
"Termination Following a Change in Control" shall mean a
termination of Officer's employment with Company following a
"Change in Control" by Officer for Good Reason or by Company
other than for Cause. A "Change in Control" shall be deemed to
have occurred if:
(i) Any Person, as such term is used in
section 3(a)(9) of the Securities Exchange Act of 1934 as amended
from time to time (the "Exchange Act"), as modified and used in
sections 13(d) and 14(d) thereof, (other than (A) the Company or
any of its subsidiaries, (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its affiliates, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, (D) a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, or (E) a person or group as
used in Rule 13d-1(b) under the Exchange Act, that is or becomes
the Beneficial Owner, as such term is defined in Rule 13d-3 under
the Exchange Act, directly or indirectly, of securities of the
Company and is entitled to file on Schedule 13G or any successor
form with respect to such securities) becomes the Beneficial
Owner of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates other than
in connection with the acquisition by the Company or its
affiliates of a business) representing twenty-five percent (25%)
or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The following individuals cease for any
reason to constitute a majority of the number of directors then
serving: individuals who, on the date hereof, constitute the
Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on
the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or
(iii) There is consummated a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least seventy-five percent
(75%) of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates other than
in connection with the acquisition by the Company or its
affiliates of a business) representing twenty-five percent (25%)
or more of the combined voting power of the Company's then
outstanding securities; or
(iv) The stockholders of the Company approve
a plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least
seventy-five (75%) of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
4.5 Gross-Up. In the event Officer is required
pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (the "Code")
to pay (through withholding or otherwise) an excise tax on
"excess parachute payments" (as defined in Section 280G(b) of the
Code) made by the Company pursuant to the Agreement or otherwise,
Company shall pay Officer, no later than the tenth (10th) day
following the Early Termination Date, an additional amount (a
"Gross-Up Payment") as is necessary to place Officer in the same
after-tax financial position that he would have been in if he had
not incurred any tax liability under Section 4999 of the Code.
The Gross-Up Payment shall be determined pursuant to the
procedures set forth in Annex A hereto.
4.6 Offset. Officer shall not be required to mitigate
the amount of any payment provided for under the Agreement by
seeking other employment or otherwise, nor will any payments
provided to him under the Agreement be subject to offset in
respect of any claims which the Company may have against Officer
other than with respect to loans by Officer from the Company
which are the subject of an executed note between Officer and the
Company, nor shall any payment provided hereunder be reduced by
any compensation earned by Officer as the result of employment by
another employer or by retirement benefits.
5. Miscellaneous.
5. Payment Obligations. Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right
or action which Company may have against Officer or others. In
no event shall the Officer be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to Officer under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not Officer
obtains other employment. Company agrees to pay promptly upon
receipt of proper invoices, to the fullest extent permitted by
law, all legal fees and expenses which Officer may reasonably
incur as a result of any contest by Company, Officer or others of
the validity, interpretation or enforceability of, or liability
under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest
initiated by Officer about the amount of any payment due pursuant
to this Agreement); provided, however, that in the event that it
is finally determined by arbitration pursuant to Paragraph 5.8
that Officer was terminated for Cause or that, in the case of
termination of this Agreement by Officer, Good Reason did not
exist, then Officer shall be obligated to repay to Company the
full amount of all such legal fees and expenses paid for Officer
by Company in connection with that contest.
5.2 Confidentiality. Officer agrees that all
confidential and proprietary information relating to the business
of Company shall be kept and treated as confidential both during
and after the Term of the Agreement, except as may be permitted
in writing by the Board or as such information is within the
public domain or comes within the public domain without any
breach of the Agreement.
5.3 Waiver. The waiver of the breach of any provision
of the Agreement shall not operate or be construed as a waiver of
any subsequent breach of the same or other provision hereof.
5.4 Entire Agreement; Modifications. Except as
otherwise provided herein and the letter attached hereto as
Exhibit 1, the Agreement (together with the agreements and plans
referred to herein) represents the entire understanding among the
parties with respect to the subject matter hereof, and the
Agreement supersedes any and all prior understandings,
agreements, plans and negotiations, whether written or oral, with
respect to the subject matter hereof, including without
limitation any understandings, agreements or obligations
respecting any past or future compensation, bonuses,
reimbursements or other payments to Officer from Company. All
modifications to the Agreement must be in writing and signed by
the party against whom enforcement of such modification is
sought.
5.5 Notices. All notices and other communications
under the Agreement shall be in writing and shall be given by
facsimile or first class mail, certified or registered with
return receipt requested, and shall be deemed to have been duly
given three (3) days after mailing or twenty-four (24) hours
after transmission of a facsimile to the respective persons named
below:
If to Company: American Disposal Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Officer: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any party may change such party's address for notices
by notice duly given pursuant hereto.
5.6 Headings. The paragraph headings herein are
intended for reference only and shall not by themselves determine
the construction or interpretation of the Agreement.
5.7 Governing Law. The Agreement shall be governed by
and construed in accordance with the laws of the State of
Illinois without regard to its principles of conflict of laws.
5.8 Arbitration. Any controversy or claim arising out
of or relating to the Agreement or the breach of the Agreement
that cannot be resolved by Officer on the one hand or the Company
on the other, including any dispute as to the calculation of
Officer's benefits or any payment hereunder, shall be submitted
to arbitration in the City of Chicago, in accordance with
Illinois state law and the procedures of the American Arbitration
Association. The determination of the arbitrator shall be
conclusive and binding on the Company and Officer, and judgment
may be entered on the arbitrator's award in any court having
jurisdiction.
5.9 Severability. Should a court or other body of
competent jurisdiction determine that any provision of the
Agreement is excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than
voided, if possible, all other provisions of the Agreement shall
be deemed valid and enforceable to the extent possible.
5.10 Survival of Company's Obligations. Company's
obligations hereunder shall not be terminated by reason of any
liquidation, dissolution, bankruptcy, cessation of business, or
similar event relating to Company. The Agreement shall not be
terminated by any merger or consolidation or other reorganization
of Company. In the event any such merger, consolidation or
reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of the Agreement
shall be binding upon and inure to the benefit of the surviving
or resulting corporation or person. The Agreement shall be
binding upon and inure to the benefit of the executors,
administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, the
Agreement shall not be assignable either by Company (except to an
affiliate of the Company, in which event Company shall remain
liable if the affiliate fails to meet any obligations to make
payments or provide benefits or otherwise) or by Officer.
5.11 Survival of Certain Rights and Obligations. The
rights and obligations of the parties hereto pursuant to
Paragraphs 4.3, 4.4, 4.5, 4.6, 5.1, 5.2, 5.8, 5.10, 5.11 and 5.13
hereof shall survive the termination of the Agreement.
5.12 Counterparts. The Agreement may be executed in
one or more counterparts, all of which taken together shall
constitute one and the same Agreement.
5.13 Indemnification. In addition to any rights to
indemnification to which Officer is entitled under the Company's
Articles of Incorporation and By-Laws or under the agreement
between Company and Officer attached hereto as Exhibit 2, Company
shall indemnify Officer at all times during and after the Term of
the Agreement to the maximum extent permitted under applicable
law of the State of Illinois or any successor provision thereof
and any other applicable state law, and shall pay Officer's
expenses in defending any civil or criminal action, suit, or
proceeding in advance of the final disposition of such action,
suit, or proceeding, to the maximum extent permitted under such
applicable state laws.
IN WITNESS WHEREOF, the parties hereto have executed
the Agreement.
COMPANY:
AMERICAN DISPOSAL SERVICES, INC.,
a Delaware corporation
By: _______________________________
Name
Title
Date: _____________________________
OFFICER:
By: _______________________________
Name
Title
Date: _____________________________
ANNEX A
The Gross-Up Payment shall be equal to the excess of the Total
Payments over the payment provided for by this paragraph. For
purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i)
all payments or benefits received or to be received by Officer in
connection with a Change in Control or the termination of
Officer's employment (whether payable pursuant to the terms of
the Agreement or of any other plan, arrangement or agreement with
Corporation, its successors, any person whose actions result in a
Change in Control or any person affiliated (or which, as a result
of the completion of the transactions causing a Change in
Control, will become affiliated) with Corporation or such person
within the meaning of Section 1504 of the Code (the "Total
Payments")) shall be treated as "parachute payments" (within the
meaning of Section 280G(b)(2) of the Code) unless, in the opinion
of tax counsel selected by Corporation's independent auditors and
reasonably acceptable to Officer, such payments or benefits (in
whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code, and all "excess
parachute payments" (within the meaning of Section 280G(b)(1) of
the Code) shall be treated as subject to the Excise Tax, unless
in the opinion of such tax counsel such excess parachute payments
represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4)(B) of the Code, or are
not otherwise subject to the Excise Tax, and (ii) the value of
any noncash benefits or any deferred payment or benefit shall be
determined by the Corporation's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of
the Code. For purposes of determining the amount of the Gross-Up
Payment, Officer shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of
taxation in the state and locality of the residence of Officer on
the Early Termination Date, net of the maximum reduction in
federal income taxes that could be obtained from deduction of
such state and local taxes.