EXHIBIT 10.2
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of May 10,
2002, by and between Robert D. Evans (the "Employee") and Waste Connections,
Inc., a Delaware corporation (the "Company"), with reference to the following
facts.
The Company desires to engage the services and employment of the
Employee for the period provided in this Agreement, and the Employee is willing
to accept employment by the Company for such period, on the terms and conditions
set forth below.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein, the Company and the Employee agree as follows:
1. Employment. The Company agrees to employ the Employee, and the
Employee agrees to accept employment with the Company, for the Term stated in
Section 3 hereof and on the other terms and conditions herein.
2. Position and Responsibilities. During the Term, the Employee
shall serve as Executive Vice President, General Counsel and Secretary of the
Company, reporting directly to the Company's Chairman and Chief Executive
Officer, and shall perform such other duties and responsibilities as the
Chairman and Chief Executive Officer or the Board of Directors (the "Board") of
the Company may reasonably assign to the Employee from time to time. The
Employee shall be based at the Company's corporate headquarters in Folsom,
California. The Employee shall devote such time and attention to his duties as
are necessary to the proper discharge of his responsibilities hereunder. The
Employee agrees to perform all duties consistent with (a) policies established
from time to time by the Company and (b) all applicable legal requirements.
3. Term. The period of the Employee's employment under this
Agreement (the "Term") shall commence on the date of this Agreement, and shall
continue through May 31, 2005, unless terminated earlier as provided herein or
extended by the Board. On June 1 of each year, commencing June 1, 2003, this
Agreement shall be extended automatically for an additional year, thus extending
the Term to three years from such date, unless either party shall have given the
other notice of termination hereof as provided herein.
4. Compensation, Benefits and Reimbursement of Expenses.
(a) Compensation. The Company shall compensate the Employee
during the Term of this Agreement as follows:
(1) Base Salary. Commencing June 1, 2002, the Employee shall
be paid a base salary ("Base Salary") of not less than Two Hundred Thousand
Dollars ($200,000) per year in installments consistent with the Company's usual
practices. The Board shall review the Employee's Base Salary on October 1 of
each year or more frequently, at the times prescribed in salary administration
practices applied generally to management employees of the Company.
(2) Performance Bonus. The Employee shall be entitled to an
annual cash bonus (the "Bonus") based on the Company's attainment of reasonable
financial objectives to be determined annually by the Board. The maximum annual
Bonus will equal fifty percent (50%) of the applicable year's ending Base Salary
and will be payable if the Board determines, in its sole and exclusive
discretion, that that year's financial objectives have been fully met. For
fiscal year 2002, the Bonus will not be pro rated. The Bonus shall be paid in
accordance with the Company's bonus plan, as approved by the Board; provided
that in no case shall any portion of the Bonus with respect to any such fiscal
year be paid more than seventy-five (75) days after the end of such fiscal year.
(3) Contract Signing Bonus. As an additional inducement for
the Employee to enter into this Agreement, the Company will pay the Employee an
initial cash bonus of Four Hundred Thousand Dollars ($400,000), which amount
shall be paid in one or more installments of at least One Hundred Thousand
Dollars ($100,000) at any time prior to May 31, 2002, within fifteen days after
request by the Employee.
(4) Loan Facility. The Company will make available to the
Employee a loan facility (the "Loan Facility") in the principal amount of Four
Hundred Thousand Dollars, ($400,000) on the following terms: (i) One Hundred
Thousand Dollars ($100,000) of the Loan Facility will be made available during
each one-year period commencing June 1, 2002, 2003, 2004 and 2005; (ii) any
portion of the Loan Facility not drawn in any such one-year period may be
carried forward and borrowed during any subsequent one-year period; (iii)
borrowings under the Loan Facility shall bear interest at the annual rate of six
percent (6%), which need not be paid currently, but shall accrue and be added to
principal; (iv), the Loan Facility shall be unsecured provided that the Employee
may request that the Loan Facility be secured by a deed of trust on the
Employee's residence; (v) if the Loan Facility should be secured by a deed of
trust on the Employee's residence, the Company agrees that, at the Employee's
request at any time, the Company's deed to trust shall be subordinated to one or
more deeds of trust securing other indebtedness without regard to the amount
secured, and the Company further agrees that such deed of trust shall be
released promptly after any request by Employee whether or not the Loan Facility
has been repaid in whole or in part and whether or not it is in default; (vi)
the Loan Facility shall be due and payable on May 31, 2006, provided, however,
that if the Market Value of the Initial Option Grant (as defined below) does not
exceed One Million Five Hundred Thousand Dollars ($1,500,000) during any period
of ten consecutive trading days on which the Company's Common Stock could have
been traded on the principal exchange on which it is then listed when the
Employee could have sold shares of the Company's Common Stock without regard to
Company "black out" periods (whether a regular quarterly black out period or due
to the pendency of a material announcement or transaction by the Company) or
"lock-ups" imposed by underwriters of the Company's securities (each such ten
consecutive trading day period "Trading Window") between June 1, 2005 and May
31, 2006, the principal and all accrued but unpaid interest on the Loan Facility
shall be forgiven on June 1, 2006, (vii) if the Market Value of the Initial
Option Grant does not exceed One Million Five Hundred Thousand Dollars
($1,500,000) during any Trading Window between June 1, 2005, and May 31, 2006,
the Employee may by notice to the Company elect to extend the date on which
principal and accrued interest on the Loan Facility are due to June 1, 2007,
provided that if the Market Value of the Initial Option Grant exceeds One
Million Five Hundred Thousand Dollars ($1,500,000) during any Trading Window
between June 1, 2006, and May 31, 2007, the principal and accrued
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interest under the Loan Facility shall not be forgiven but shall be due and
payable in full on June 1, 2007, provided, further, that if Employee makes the
election provided for in this clause (vii), no interest shall accrue on any
principal or interest payable under the Loan Facility after June 1, 2006; and
(viii) notwithstanding clause (vi), if at any time prior to June 1, 2006, the
Employee has exercised any or all of the Options granted in the Initial Option
Grant and sold the shares of the Company's Common Stock received on such
exercise and if the net proceeds received by the Employee on such sale, before
payment of any taxes but after payment of the exercise price of the Options
exercised, exceeds One Million Five Hundred Thousand Dollars ($1,500,000), the
principal and all accrued but unpaid interest on the Loan Facility shall be due
and payable on June 1, 2006. Borrowings under the Loan Facility shall be
evidenced by one or more promissory notes in form and substance reasonably
satisfactory to the Company and the Employee. As used in this Section, "Market
Value of the Initial Option Grant" means the amount by which the fair market
value of the number of shares of the Company's Common Stock that may be
purchased by the Employee on exercise of the Options subject to the Initial
Option Grant exceeds the exercise price of the Options subject to the Initial
Option Grant, in each case as adjusted pursuant to Section 6(b) of the Company's
2002 Senior Management Equity Incentive Plan. "Fair market value" of the
Company's Common Stock shall have the same meaning as "Fair Market Value" in the
Company's 2002 Senior Management Equity Incentive Plan. "Initial Option Grant"
means the grant of options provided in Section 4(a)(5).
(5) Initial Option Grant. In connection with the Employee
entering into this Agreement, the Company shall grant the Employee Options to
purchase seventy thousand (70,000) shares of the Company's Common Stock at an
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant. Such options shall vest one third each on the first, second
and third anniversaries of the date of grant. Such Options shall be nonqualified
Stock Options issued pursuant to the Company's 2002 Senior Management Equity
Incentive Plan. The terms of such Options shall be described in more detail in a
Stock Option Agreement to be entered into between the Employee and the Company.
(6) Below Market Grant. In connection with the Employee
entering into this Agreement, the Company shall grant to the Employee Options to
purchase sixty thousand (60,000) shares of the Company's Common Stock at a price
per share equal to ten dollars ($10.00) per share less than the fair market
value of the Company's Common Stock on the date of grant. Such Options shall be
fully vested on the date of grant, but the Employee shall not sell a cumulative
total of more than the following number of shares purchased on exercise of such
Options prior to the dates indicated: June 1, 2003, twenty thousand (20,000)
shares; June 1, 2004, forty thousand (40,000) shares; and, June 1, 2005, sixty
thousand (60,000). Such Options shall be nonqualified Stock Options issued
pursuant to the Company's 2002 Senior Management Equity Incentive Plan. The
terms of such Options shall be describe in more detail in a Stock Option
Agreement to be entered into between the Employee and the Company.
(7) Grant of Options. The Employee shall be eligible for
annual grants of Options commensurate with his position and with option grants
to other management employees of the Company, based on the recommendation of the
Company's Chairman and Chief Executive Officer and as approved by the Board.
Such Options shall be nonqualified Stock Options issued pursuant to the
Company's 2002 Senior Management Equity Incentive Plan, or any other plan
hereafter adopted by the Company. The terms of the Options shall be
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described in more detail in Stock Option Agreements to be entered into between
the Employee and the Company.
(b) Benefits.
(1) Annual Executive Physical. The Employee shall be
entitled to participate annually in the Mayo Clinic at Scottsdale Executive
Medical Review Program at the expense of the Company. The Company may
discontinue this benefit for all management employees at any time.
(2) Relocation. The Company recognizes that the Employee
does not intend to relocate his principal residence at this time. The Company
will make local housing available to the Employee as reasonably necessary on
terms reasonably acceptable to both parties. Should Employee decide to locate
his principal residence from Lafayette, California, to a location near Folsom,
California, on or before June 1, 2006, the Company will provide the Employee
relocation benefits in accordance with the Relocation Agreement attached hereto
as Exhibit A. The Company may credit against the amount to be reimbursed to the
Employee in the event the Employee relocates his principal residence that amount
paid or reimbursed by the Company for local housing pursuant to the second
sentence of this section through the date the Employee relocates his residence.
(3) Automobile Allowance. Beginning June 1, 2006, unless he
has relocated his principal residence to the Folsom area, the Employee shall be
entitled to a vehicle allowance of Ten Thousand Dollars ($10,000) per year net
after payment of all taxes. The Employee shall pay all fuel and maintenance on
the Employee's vehicle. The provisions of this Section 4(b)(3) shall terminate
if the Employee relocates his principal residence to the Folsom area.
(4) Home Office. To facilitate the Employee's ability to
work at home for the convenience of the Company, the Company will pay or
reimburse the Employee the cost of a fax line and data line to the Employee's
house, and shall provide the Employee with a fax machine and a computer.
(5) Bar Dues and Continuing Education. The Company shall
reimburse Employee for dues payable to the State Bar of California and the
American Bar Association, or other professional organizations reasonably related
to the Employee's duties and shall pay or reimburse the Employee for costs
reasonably incurred in attending seminars and conferences to satisfy minimum
continuing education requirements of the State Bar of California or to further
his expertise in areas relevant to his employment by the Company. The Company
recognizes that some conference may require travel by the Employee and the
Company agrees to reimburse Employee for the reasonable costs of travel.
(6) Other Benefits. During the Term, the Company shall
provide the Employee with a cellular telephone and will pay or reimburse the
Employee's monthly service fee and costs of calls attributable to Company
business. During the Term, the Employee shall be entitled to receive all other
benefits of employment generally available to other management employees of the
Company and those benefits for which management employees are or shall
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become eligible, including, without limitation and to the extent made available
by the Company, medical, dental, disability and prescription coverage, life
insurance and tax-qualified retirement benefits. The Employee shall be entitled
to four (4) weeks of paid vacation each year of his employment, including the
year commencing on the date of this Agreement.
(c) Reimbursement of Other Expenses. The Company agrees to pay
or reimburse the Employee for all reasonable travel and other expenses incurred
by the Employee in connection with the performance of his duties under this
Agreement on presentation of proper expense statements or vouchers. All such
supporting information shall comply with all applicable Company policies
relating to reimbursement for travel and other expenses.
(d) Withholding. All compensation payable to the Employee
hereunder is subject to all withholding requirements under applicable law.
5. Confidentiality. During the Term of his employment, and at all
times thereafter, the Employee shall not, without the prior written consent of
the Company, divulge to any third party or use for his own benefit or the
benefit of any third party or for any purpose other than the exclusive benefit
of the Company, any confidential or proprietary business or technical
information revealed, obtained or developed in the course of his employment with
the Company and which is otherwise the property of the Company or any of its
affiliated corporations, including, but not limited to, trade secrets, customer
lists, formulae and processes of manufacture; provided, however, that nothing
herein contained shall restrict the Employee's ability to make such disclosures
during the course of his employment as may be necessary or appropriate to the
effective and efficient discharge of his duties to the Company.
6. Property. Both during the Term of his employment and thereafter,
the Employee shall not remove from the Company's offices or premises any Company
documents, records, notebooks, files, correspondence, reports, memoranda and
similar materials or property of any kind unless necessary in accordance with
the duties and responsibilities of his employment. In the event that any such
material or property is removed, it shall be returned to its proper file or
place of safekeeping as promptly as possible. The Employee shall not make,
retain, remove or distribute any copies, or divulge to any third person the
nature or contents of any of the foregoing or of any other oral or written
information to which he may have access, except as disclosure shall be necessary
in the performance of his assigned duties. On the termination of his employment
with the Company, the Employee shall leave with or return to the Company all
originals and copies of the foregoing then in his possession or subject to his
control, whether prepared by the Employee or by others.
7. Termination By Company.
(a) Termination for Cause. The employment of the Employee may be
terminated for Cause at any time by the Board; provided, however, that before
the Company may terminate the Employee's employment for Cause for any reason
that is susceptible to cure, the Company shall first send the Employee written
notice of its intention to terminate this Agreement for Cause, specifying in
such notice the reasons for such Cause and those conditions that, if satisfied
by the Employee, would cure the reasons for such Cause, and the Employee shall
have 60 days from receipt of such written notice to satisfy such conditions. If
such conditions are satisfied within such 60-day period, the Company shall so
advise the Employee in writing. If such conditions
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are not satisfied within such 60-day period, the Company may thereafter
terminate this Agreement for Cause on written Notice of Termination (as defined
in Section 9(a)) delivered to the Employee describing with specificity the
grounds for termination. Immediately on termination pursuant to this Section
7(a), the Company shall pay to the Employee in a lump sum his then current Base
Salary under Section 4(a)(1) on a prorated basis to the Date of Termination (as
defined in Section 9(b)). On termination pursuant to this Section 7(a), the
Employee shall forfeit (i) his Bonus under Section 4(a)(2) for the year in which
such termination occurs, (ii) all outstanding but unvested Options and other
options and rights relating to capital stock of the Company, and (iii) the
Employee may exercise all vested Options within five (5) business days after the
Date of Termination (as defined in Section 9(b)). For purposes of this
Agreement, "Cause" shall mean:
(1) a material breach of any of the terms of this Agreement
that is not immediately corrected following written notice of default specifying
such breach;
(2) a breach of any of the provisions of Section 12;
(3) repeated intoxication with alcohol or drugs while on
Company premises during its regular business hours to such a degree that, in the
reasonable judgment of the other managers of the Company, the Employee is
abusive or incapable of performing his duties and responsibilities under this
Agreement;
(4) conviction of a felony; or
(5) misappropriation of property belonging to the Company
and/or any of its affiliates.
(b) Termination Without Cause. The employment of the Employee
may be terminated without Cause at any time by the Board on delivery to the
Employee of a written Notice of Termination (as defined in Section 9(a)). On the
Date of Termination (as defined in Section 9(b)) pursuant to this Section 7(b),
the Company shall, in lieu of any payments under Section 4(a)(1) and 4(a)(2) for
the remainder of the Term, pay to the Employee an amount equal to the sum of (i)
all Base Salary payable under Section 4(a)(1) through the termination date, (ii)
the full (not pro-rated) maximum Bonus available to the Employee under Section
4(a)(2) for the year in which the termination occurs, and (iii) an amount equal
to three times the Employee's then current annual Base Salary under Section
4(a)(1) plus three times his maximum bonus under Section 4(a)(2) (whether or not
the entire amount was actually earned or paid) for the year in which the
termination occurs. Such amount shall be paid as follows: one third on the Date
of Termination and, provided that Employee has complied with the provisions of
Section 12 hereof, one third on each of the first and second anniversaries of
the Date of Termination of the Employee's employment. In addition, on
termination of the Employee under this Section 7(b), if not previously paid, the
contract signing bonus payable pursuant to Section 4(c) shall become immediately
due and payable, the principal and all accrued but unpaid interest on the Loan
Facility shall be immediately forgiven, the Company shall pay a lump sum payment
to the Employee in the amount of Four Hundred Thousand Dollars ($400,000) minus
the sum of the principal amount of the Loan Facility that is forgiven, and all
of the Employee's outstanding but
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unvested Options and other options and rights relating to capital stock of the
Company shall immediately vest and become exercisable, and the restrictions on
resale of the Common Stock received or exercise of the Options described in
Section 4(a)(6) shall terminate. The term of any such Options and other options
and rights shall be extended to the third anniversary of the Employee's
termination. The Employee acknowledges that extending the term of any incentive
stock options pursuant to this Section 7(b), or Section 7(c), 7(d) or 8(a),
could cause such option to lose its tax-qualified status if it is an incentive
stock option under the Code and agrees that the Company shall have no obligation
to compensate the Employee for any additional taxes he incurs as a result.
(c) Termination on Disability. If during the Term the Employee
should fail to perform his duties hereunder on account of physical or mental
illness or other incapacity which the Board shall in good faith determine
renders the Employee incapable of performing his duties hereunder, and such
illness or other incapacity shall continue for a period of more than six (6)
consecutive months ("Disability"), the Company shall have the right, on written
Notice of Termination (as defined in Section 9(a)) delivered to the Employee to
terminate the Employee's employment under this Agreement. During the period that
the Employee shall have been incapacitated due to physical or mental illness,
the Employee shall continue to receive the full Base Salary provided for in
Section 4(a)(1) hereof at the rate then in effect until the Date of Termination
(as defined in Section 9(b)) pursuant to this Section 7(c). On the Date of
Termination pursuant to this Section 7(c), the Company shall pay to the Employee
in a lump sum an amount equal to (i) the Base Salary remaining payable to the
Employee under Section 4(a)(1) for the full remaining Term, plus (ii) a
pro-rated portion of the maximum Bonus available to the Employee under Section
4(a)(2) for the year in which the termination occurs. In addition, on such
termination, if not previously paid, the contract signing bonus payable pursuant
to Section 4(c) shall become immediately due and payable, the principal and all
accrued but unpaid interest on the Loan Facility shall be immediately forgiven,
the Company shall pay a lump sum payment to the Employee in the amount of Four
Hundred Thousand Dollars ($400,000) minus the sum of the principal amount of the
Loan Facility that is forgiven. All of the Employee's outstanding but unvested
Options and other options and rights relating to capital stock of the Company
shall immediately vest and become exercisable, and the restrictions on resale of
the Common Stock received or exercise of the Options described in Section
4(a)(6) shall terminate. The term of any such Options and other options and
rights shall be extended to the third anniversary of the Employee's termination.
(d) Termination on Death. If the Employee shall die during the
Term, the employment of the Employee shall thereupon terminate. On the Date of
Termination (as defined in Section 9(b)) pursuant to this Section 7(d), the
Company shall pay to the Employee's estate the payments and other benefits
applicable to termination without Cause set forth in Section 7(b) hereof. In
addition, on such termination, if not previously paid, the contract signing
bonus payable pursuant to Section 4(c) shall become immediately due and payable,
the principal and all accrued but unpaid interest on the Loan Facility shall be
immediately forgiven, all of the Employee's outstanding but unvested Options and
other options and rights relating to capital stock of the Company shall
immediately vest and become exercisable, and the restrictions on resale of the
Common Stock received on exercise of the Options described in Section 4(a)(6)
shall terminate. The term of any such Options and other options and rights shall
be extended to the third anniversary of the Employee's termination. The
provisions of this Section 7(d) shall
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not affect the entitlements of the Employee's heirs, executors, administrators,
legatees, beneficiaries or assigns under any employee benefit plan, fund or
program of the Company.
8. Termination By Employee.
(a) Termination for Good Reason. The Employee may terminate his
employment hereunder for Good Reason (as defined below). On the Date of
Termination pursuant to this Section 8(a), the Employee shall be entitled to
receive, and the Company agrees to pay and deliver, the payments and other
benefits applicable to termination without Cause set forth in Section 7(b)
hereof at the times and subject to the conditions set forth therein. In
addition, on termination of the Employee under this Section 8(a), all of the
Employee's outstanding but unvested Options and other options and rights
relating to capital stock of the Company shall immediately vest and become
exercisable, and the restrictions on resale of the Common Stock received in
exercise of the Options described in Section 4(a)(6) shall terminate. The term
of any such Options and other options and rights shall be extended to the third
anniversary of the Employee's termination.
For purposes of this Agreement, "Good Reason" shall mean:
(1) assignment to the Employee of duties inconsistent with
his responsibilities as they existed on the date of this Agreement; a
substantial alteration in the title(s) of the Employee (so long as the existing
corporate structure of the Company is maintained); or a substantial alteration
in the status of the Employee in the Company organization as it existed on the
date of this Agreement;
(2) the relocation of the Company's principal executive
office to a location more than fifty (50) miles from its present location;
(3) a reduction by the Company in the Employee's Base Salary
without the Employee's prior approval;
(4) a failure by the Company to continue in effect, without
substantial change, any benefit plan or arrangement in which the Employee was
participating or the taking of any action by the Company which would adversely
affect the Employee's participation in or materially reduce his benefits under
any benefit plan (unless such changes apply equally to all other management
employees of Company);
(5) any material breach by the Company of any provision of
this Agreement without the Employee having committed any material breach of his
obligations hereunder, which breach is not cured within twenty (20) days
following written notice thereof to the Company of such breach;
(6) the failure of the Company to obtain the assumption of
this Agreement by any successor entity;
(7) The Employee shall render legal advice to the Board or
the Chairman and Chief Executive Officer of the Company on a matter of material
importance to the Company that in the Employee's reasonable judgement a
particular action or course of conduct is
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required by law or would be prohibited by law, and the Board or the Chairman and
Chief Executive Officer fails to cause the Company to take the action or course
of conduct required by law or authorizes or permits the Company to engage in an
action or course of conduct that is prohibited by law; or
(8) Prior to May 31, 2005, Ron Mittelstaedt shall
voluntarily terminate his employment with the Company or his employment is
terminated without cause by the Company.
(b) Termination Without Good Reason. The Employee may terminate
his employment hereunder without Good Reason on written Notice of Termination
delivered to the Company setting forth the effective date of termination. If the
Employee terminates his employment hereunder without Good Reason, he shall be
entitled to receive, and the Company agrees to pay on the effective date of
termination specified in the Notice of Termination, his current Base Salary
under Section 4(a)(1) hereof on a prorated basis to such date of termination. On
termination pursuant to this Section 8(b), the Employee shall forfeit (i) his
Bonus under Section 4(a)(2) for the year in which such termination occurs and
(ii) all outstanding but unvested Options and other options and rights relating
to capital stock of the Company. If the Employee terminates his employment
hereunder without Good Reason, prior to May 31, 2004, he shall repay to the
Company a pro rata portion of his contract signing bonus paid pursuant to
Section 4(a)(3), such pro rata portion to be determined by multiplying the
amount of such bonus paid by a fraction, the numerator of which is the number of
full calendar months remaining from the date of termination through May 31,
2004, and the denominator of which is 24.
9. Provisions Applicable to Termination of Employment.
(a) Notice of Termination. Any purported termination of
Employee's employment by the Company pursuant to Section 7 shall be communicated
by Notice of Termination to the Employee as provided herein, and shall state the
specific termination provisions in this Agreement relied on and set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment ("Notice of Termination"). If the
Employee terminates under Section 8, he shall give the Company a Notice of
Termination.
(b) Date of Termination. For all purposes, "Date of Termination"
shall mean, for Disability, thirty (30) days after Notice of Termination is
given to the Employee (provided the Employee has not returned to duty on a
full-time basis during such 30-day period), or, if the Employee's employment is
terminated by the Company for any other reason or by the Employee, the date on
which a Notice of Termination is given.
(c) Benefits on Termination. On termination of this Agreement by
the Company pursuant to Section 7 or by the Employee pursuant to Section 8, all
profit-sharing, deferred compensation and other retirement benefits payable to
the Employee under benefit plans in which the Employee then participated shall
be paid to the Employee in accordance with the provisions of the respective
plans.
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10. Change In Control.
(a) Payments on Change in Control. Notwithstanding any provision
in this Agreement to the contrary, unless the Employee elects in writing to
waive this provision, a Change in Control (as defined below) of the Company
shall be deemed a termination of the Employee without Cause, and the Employee
shall be entitled to receive and the Company agrees to pay to the Employee the
same amount determined under Section 7(b) that is payable to the Employee on
termination without Cause provided, however, that such amount shall be payable
in a lump sum on the Date of Termination and not in installments as provided in
Section 7(b). In addition, on a Change of Control, all of the Employee's
outstanding but unvested Options and other options and rights relating to
capital stock of the Company shall immediately vest and become exercisable, and
the restrictions on resale of the Common Stock received on exercise of the
Options described in Section 4(a)(6) shall terminate. The term of any such
Options and other options and rights shall be extended to the third anniversary
of the Employee's termination.
After a Change in Control, if any previously outstanding Option or
other option or right (the "Terminated Option") relating to the Company's
capital stock does not remain outstanding, the successor to the Company or its
then Parent (as defined below) shall either:
(1) Issue an option, warrant or right, as appropriate (the
"Successor Option"), to purchase common stock of such successor or Parent in an
amount such that on exercise of the Successor Option the Employee would receive
the same number of shares of the successor's/Parent's common stock as the
Employee would have received had the Employee exercised the Terminated Option
immediately prior to the transaction resulting in the Change in Control and
received shares of such successor/Parent in such transaction. The aggregate
exercise price for all of the shares covered by such Successor Option shall
equal the aggregate exercise price of the Terminated Option; or
(2) Pay the Employee a bonus within ten (10) days after the
consummation of the Change in Control in an amount agreed to by the Employee and
the Company. Such amount shall be at least equivalent on an after-tax basis to
the net after-tax gain that the Employee would have realized if he had been
issued a Successor Option under clause (i) above and had immediately exercised
such Successor Option and sold the underlying stock, taking into account the
different tax rates that apply to such bonus and to such gain, and such amount
shall also reflect other differences to the Employee between receiving a bonus
under this clause (ii) and receiving a Successor Option under clause (i) above.
(b) Definitions. For the purposes of this Agreement, a Change in
Control shall be deemed to have occurred if (i) there shall be consummated (aa)
any reorganization, liquidation or consolidation of the Company, or any merger
or other business combination of the Company with any other corporation, other
than any such merger or other combination that would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such transaction, (bb) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
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Company, or if (ii) any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the Company's
outstanding voting securities (except that for purposes of this Section 10(b),
"person" shall not include any person (or any person that controls, is
controlled by or is under common control with such person) who as of the date of
this Agreement owns ten percent (10%) or more of the total voting power
represented by the outstanding voting securities of the Company, or a trustee or
other fiduciary holding securities under any employee benefit plan of the
Company, or a corporation that is owned directly or indirectly by the
stockholders of the Company in substantially the same percentage as their
ownership of the Company) or if (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the entire
Board shall cease for any reason to constitute at least one-half of the
membership thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of at least
one-half of the directors then still in office who were directors at the
beginning of the period.
The term "Parent" means a corporation, partnership, trust, limited
liability company or other entity that is the ultimate "beneficial owner" (as
defined above) of fifty percent (50%) or more of the Company's outstanding
voting securities.
11. Gross Up Payments. If all or any portion of any payment or
benefit that the Employee is entitled to receive from the Company pursuant to
this Agreement (a "Payment") constitutes an "excess parachute payment" within
the meaning of Section 280G of the Code, and as such is subject to the excise
tax imposed by Section 4999 of the Code or to any similar Federal, state or
local tax or assessment (the "Excise Tax"), the Company or its successors or
assigns shall pay to the Employee an additional amount (the "Gross-Up Payment")
with respect to such Payment. The amount of the Gross-Up Payment shall be
sufficient that, after paying (a) any Excise Tax on the Payment, (b) any
Federal, state or local income or employment taxes and Excise Tax on the
Gross-Up Payment, and (c) any interest and penalties imposed in respect of the
Excise Tax, the Employee shall retain an amount equal to the full amount of the
Payment. For the purpose of determining the amount of any Gross-Up Payment, the
Employee shall be deemed to pay Federal income taxes at the highest marginal
rate applicable in the calendar year in which the Gross-Up Payment is made, and
state and local income taxes at the highest marginal rate applicable in the
state and locality where the Employee resides on the date the Gross-Up Payment
is made, net of the maximum reduction in Federal income taxes that could be
obtained from deducting such state and local taxes.
The Gross-Up Payment with respect to any Payment shall be paid to
the Employee within ten (10) days after the Internal Revenue Service or any
other taxing authority issues a notice stating that an Excise Tax is due with
respect to the Payment, unless the Company undertakes to challenge the taxing
authority on the applicability of such Excise Tax and indemnifies the Employee
for (a) any amounts ultimately determined to be payable, including the Excise
Tax and any related interest and penalties, (b) all expenses (including
attorneys' and experts' fees) reasonably incurred by the Employee in connection
with such challenge, as such expenses are incurred, and (c) all amounts that the
Employee is required to pay to the taxing authorities during the pendency of
such challenge (such amounts to be repaid by the Employee to the Company if they
are ultimately refunded to the Employee by the taxing authority).
11
12. Non-Competition and Non-Solicitation.
(a) In consideration of the provisions hereof, for the
Restricted Period (as defined below), the Employee will not, except as
specifically provided below, anywhere in any county in the State of California
or anywhere in any other state in which the Company is engaged in business as of
such termination date (the "Restricted Territory"), directly or indirectly,
acting individually or as the owner, shareholder, partner or management employee
of any entity, (i) engage in the operation of a solid waste collection,
transporting or disposal business, transfer facility, recycling facility,
materials recovery facility or solid waste landfill; (ii) enter the employ as a
manager of, or render any personal services to or for the benefit of, or assist
in or facilitate the solicitation of customers for, or receive remuneration in
the form of management salary, commissions or otherwise from, any business
engaged in such activities in such counties; or (iii) receive or purchase a
financial interest in, make a loan to, or make a gift in support of, any such
business in any capacity, including without limitation, as a sole proprietor,
partner, shareholder, officer, director, principal agent or trustee; provided,
however, that the Employee may own, directly or indirectly, solely as an
investment, securities of any business traded on any national securities
exchange or quoted on any NASDAQ market, provided the Employee is not a
controlling person of, or a member of a group which controls, such business and
further provided that the Employee does not, in the aggregate, directly or
indirectly, own two percent (2%) or more of any class of securities of such
business and provided that Employee may participate as a partner, shareholder,
owner or employee of a law firm and in that capacity may advise clients engaged
in the foregoing activities. The term "Restricted Period" shall mean the earlier
of (i) the maximum period allowed under applicable law and (ii)(x) in the case
of a Change of Control, until the third anniversary of the effective date of the
Change of Control, (y) in the case of a termination by the Company without Cause
pursuant to Section 7(b) or by the Employee for Good Reason pursuant to Section
8(a) and provided the Company has made the payments required under Section 7(b)
or 8(a), as the case may be, until the third anniversary of the Date of
Termination, or (z) in the case of Termination for Cause by the Company pursuant
to Section 7(a) or by the Employee without Good Reason pursuant to Section 8(b),
until the first anniversary of the Date of Termination.
(b) After termination of this Agreement by the Company or the
Employee pursuant to Section 7 or 8 or termination of this Agreement upon a
Change in Control pursuant to Section 10, the Employee shall not (i) solicit any
residential or commercial customer of the Company to whom the Company provides
service pursuant to a franchise agreement with a public entity in the Restricted
Territory (ii) solicit any residential or commercial customer of the Company to
enter into a solid waste collection account relationship with a competitor of
the Company in the Restricted Territory, (iii) solicit any such public entity to
enter into a franchise agreement with any such competitor, (iv) solicit any
officer, employee or contractor of the Company to enter into an employment or
contractor agreement with a competitor of the Company or otherwise interfere in
any such relationship, or (v) solicit on behalf of a competitor of the Company
any prospective customer of the Company in the Restricted Territory that the
Employee called on or was involved in soliciting on behalf of the Company during
the Term, in each case until the third anniversary of the date of such
termination or the effective date of such change of control (whichever is
later), unless otherwise permitted to do so by Section 12(a).
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(c) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 12 is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specified words or phrases
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
13. Indemnification. As an employee and agent of the Company, the
Employee shall be fully indemnified by the Company to the fullest extent
permitted by applicable law in connection with his employment hereunder.
14. Survival of Provisions. The obligations of the Company under
Section 13 of this Agreement, and of the Employee under Section 12 of this
Agreement, shall survive both the termination of the Employee's employment and
this Agreement.
15. No Duty to Mitigate; No Offset. The Employee shall not be
required to mitigate damages or the amount of any payment contemplated by this
Agreement, nor shall any such payment be reduced by any earnings that the
Employee may receive from any other sources or offset against any other payments
made to him or required to be made to him pursuant to this Agreement.
16. Assignment; Binding Agreement. The Company may assign this
Agreement to any parent, subsidiary, affiliate or successor of the Company. This
Agreement is not assignable by the Employee and is binding on him and his
executors and other legal representatives. This Agreement shall bind the Company
and its successors and assigns and inure to the benefit of the Employee and his
heirs, executors, administrators, personal representatives, legatees or
devisees. The Company shall assign this Agreement to any entity that acquires
its assets or business.
17. Notice. Any written notice under this Agreement shall be
personally delivered to the other party or sent by certified or registered mail,
return receipt requested and postage prepaid, to such party at the address set
forth in the records of the Company or to such other address as either party may
from time to time specify by written notice.
18. Entire Agreement; Amendments. This Agreement contains the entire
agreement of the parties relating to the Employee's employment and supersedes
all oral or written prior discussions, agreements and understandings of every
nature between them. This Agreement may not be changed except by an agreement in
writing signed by the Company and the Employee.
19. Waiver. The waiver of a breach of any provision of this
Agreement shall not operate or as be construed to be a waiver of any other
provision or subsequent breach of this Agreement.
20. Governing Law and Jurisdictional Agreement. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of California. The parties irrevocably and unconditionally submit to the
jurisdiction and venue of any court, federal
13
or state, situated within Sacramento County, California, for the purpose of any
suit, action or other proceeding arising out of, or relating to or in connection
with, this Agreement.
21. Severability. In case any one or more of the provisions
contained in this Agreement is, for any reason, held invalid in any respect,
such invalidity shall not affect the validity of any other provision of this
Agreement, and such provision shall be deemed modified to the extent necessary
to make it enforceable.
22. Enforcement. It is agreed that it is impossible to measure
fully, in money, the damage which will accrue to the Company in the event of a
breach or threatened breach of Sections 5, 6, or 12 of this Agreement, and, in
any action or proceeding to enforce the provisions of Sections 5, 6 or 12
hereof, the Employee waives the claim or defense that the Company has an
adequate remedy at law and will not assert the claim or defense that such a
remedy at law exists. The Company is entitled to injunctive relief to enforce
the provisions of such sections as well as any and all other remedies available
to it at law or in equity without the posting of any bond. The Employee agrees
that if the Employee breaches any provision of Section 12, the Company may
recover as partial damages all profits realized by the Employee at any time
prior to such recovery on the exercise of any warrant, option or right to
purchase the Company's Common Stock and the subsequent sale of such stock, and
may also cancel all outstanding such warrants, options and rights.
23. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
24. Due Authorization. The execution of this Agreement has been duly
authorized by the Company by all necessary corporate action.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Employment Agreement as of the day and year set forth above.
WASTE CONNECTIONS, INC., a Delaware
corporation
By:
----------------------------------------
Ronald J. Mittelstaedt
Chairman and Chief Executive Officer
and President
EMPLOYEE:
----------------------------------------
Robert D. Evans
15
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT is made and entered into as of July
22, 2002, by and between Robert D. Evans ("Employee") and Waste Connections,
Inc., a Delaware corporation (the "Company"), with reference to the following
facts:
The Company and the Employee entered into an Employment Agreement as of May 10,
2002 (the "Employment Agreement"). The Company and The Employee now wish to
amend the Employment Agreement in certain respects.
NOW THEREFORE in consideration of the premises and the mutual covenants and
conditions herein, the Company and the Employee agree as follows:
1. Amendment of Employment Agreement. Section 8(b) of the Employment Agreement
is hereby amended by deleting the last sentence of that Section ("If the
Employee terminates...of which is 24.").
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment No. 1
to Employment Agreement as of the day and year set forth above.
WASTE CONNECTIONS, INC.
By: _______________________
Ronald J. Mittelstaedt
Chairman and Chief Executive Officer and President
EMPLOYEE:
- ----------------------------
Robert D. Evans
16