PERSONAL AND CONFIDENTIAL
July 29, 1996
Xxx Xxxxx
Rust Scaffold Builders Inc.
0000 Xxxxxxx
Xxxxxxxx, XX 00000
Re: Employment Security Agreement
Dear Xxx:
As you know, WMX Technologies, Inc. ("WMX") has announced certain
activities relative to realignment of our businesses. The Company recognizes
the uncertainty that accompanies this announcement and wishes to offer you this
Employment Security Agreement in appreciation of your past dedicated service
and to provide you with peace of mind.
In consideration for the payments and other security listed below, you
agree to continue your employment with the Company and provide your full
cooperation and assistance to the Company.
1. Term. The Term of the Agreement shall be until July 31, 1998.
2. Base Salary. Your current base salary will not be reduced during the
Term and will be subject to normal increases which are in the discretion of
management.
3. Guaranteed Minimum Bonus. Regardless of the amount of your earned bonus
under the Management Incentive Bonus Plan ("Plan") (i) if you remain employed
with the Company through December 31, 1996, the Company agrees to pay you a
minimum bonus equal to 50% of your target bonus under the 1996 Plan; (ii) if
you remain employed with the Company through December 31, 1997, the Company
agrees to pay you a minimum bonus equal to 50% of your target bonus under the
1997 Plan; and (iii) if you remain employed with the Company through the end of
the Term, the Company agrees to pay you a minimum bonus equal to 50% of your
target bonus under the 1998 Plan, pro-rated to the end of the Term. The 1997
and 1998 Plans will be on terms at least as favorable as the 1996 Plan.
4. Completion Bonus. If you remain employed with the Company through
the end of the Term, you will receive, in a single lump sum as soon as
practicable after the end of the Term, 35% of your 1996 Plan earned bonus and
35% of your 1997 Plan earned bonus.
5. Transaction Bonus. In the event of a sale of the Company during the
Term to an entity unrelated to any WMX affiliated company, if you remain
employed with the Company through the closing of the sale, the Company will pay
you a transaction bonus equal to two times your monthly base salary as soon as
reasonably practicable following the date of the closing. Payment of such bonus
will be subject to normal withholding.
6. Stock Options. Any otherwise exercisable stock options will remain
in effect, in accordance with the terms of the stock option plan under which
they were issued, during any period of employment with the Company and any
subsequent period during which you may be receiving severance pay. However, in
the event of a transaction involving the Company which under the terms of the
stock option plan would cause the options to terminate, the Company will use
its reasonable best efforts to cause the exercisability of the options to be
accelerated.
7. (a) Termination Without Cause. If you are terminated by the Company
without Cause prior to the end of the Term, the Company will pay you (i) an
amount equal to the greater of (a) the amount of the base salary remaining to
be paid during the Term, or (b) one year of continued base salary (payable in
the same manner as regular salary), measured by your base salary in effect on
the date of your termination, (ii) the bonus payment(s) (determined under
paragraph (3) for the balance of the Term, and (iii) the Completion Bonus to be
paid under paragraph 4, but determined on the basis of target bonus, as opposed
to earned bonus. The Company will also provide you with one year's continued
coverage under the Company's medical and dental plans at the rate applicable to
active employees. (The one year of continued salary and benefits is hereinafter
referred to as the "Severance Period".) Notwithstanding the foregoing, your
payments under this paragraph (a) can, at your election, be paid in a single
lump sum. If you are terminated by the Company without Cause prior to the
closing of the sale of the Company, the Company will pay you the Transaction
Bonus determined under paragraph 5.
(b) Severance. If you are terminated by the Company without
Cause after the expiration of the Term of this Agreement and for a period of
two years thereafter, you shall be entitled to receive severance equal to two
weeks of base salary for each year of service you have with the Company through
the date of your termination of employment.
(c) Cause. For purposes of this Agreement, Cause shall mean
any act of dishonesty or theft, willful misconduct, acts of gross negligence or
the willful and continued failure or your refusal to perform assigned duties
(other than caused by a disability, which for purposes of this Agreement shall
mean your total and permanent incapacity to perform the duties you were
performing immediately prior to the onset of such disability).
8. Survivor's Benefit. In the event of your death before the end of
the Term, or during the course of any applicable Severance Period, your spouse,
if any, shall receive the full (or, if your death occurs during any applicable
Severance Period, the remainder of the) one year of continued base salary and
medical and dental coverage set forth in paragraph 7 above. Further, your
spouse, if any, shall receive the Guaranteed Minimum Bonus due with respect to
the year of your death under paragraph 3 and the Completion Bonus set forth in
paragraph 4 above.
2
9. Affirmation. As further consideration for the payments and other
security set forth above, by signing this Agreement you agree to continue to
abide by the covenants and agreements so forth in Exhibit A attached hereto.
10. Assignment. You may not assign your rights or obligations
hereunder. The rights and obligations of the Company hereunder shall inure to
the benefit of and shall be binding upon its respective successors and assigns.
The Company shall use its reasonable best efforts to ensure that any purchaser
of the business of the Company offers the same or substantially equivalent
plans as the medical, dental and vehicle allowance plans currently offered by
the Company.
11. General Provisions. (a) This Agreement shall be subject to and
governed by the laws of the State of Illinois without regard to its choice of
law principles.
(b) Failure to insist upon strict compliance with any
provision(s) hereof shall not be deemed a waiver of such provision(s) or any
other provision hereof. If all or any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any paragraph or a part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such paragraph or part of a paragraph to
the fullest extent possible while remaining lawful and valid.
(c) This Agreement shall not be altered, amended, or modified
except by written instrument executed by the Company and you. A waiver of any
term, covenant, agreement or condition contained in this Agreement shall not be
deemed a waiver of any other term, covenant, agreement or condition and any
waiver of any default in any such term, covenant, agreement or condition shall
not be deemed a waiver of any later default thereof or of any other term,
covenant, agreement or condition.
(d) The Company's obligation to pay amounts hereunder are
subject to its withholding obligations under applicable federal, state and
local laws.
RUST SCAFFOLD SERVICES INC.
By:
-------------------------
Xxxxxx X. Xxxxxxx,
Vice President
ACCEPTANCE
Agreed to and accepted this day of July, 1996.
By:
---------------------------
Xxx Xxxxx
3
EXHIBIT A
COVENANT NOT-TO-COMPETE.
(a) I agree that while I am employed by the Company, I will not,
directly or indirectly, compete with the business conducted by the Company.
(b) I agree that for a period of twelve (12) months after my voluntary
termination of employment with the Company or my termination by the Company for
Cause:
(i) I will not, within the Restricted Area, accept employment
with a competitor of the Company if such competitor provides or offers to
provide competitive products or services to persons who are or were customers
of the Company within the Restricted Area; and
(ii) I will not directly or indirectly sell, attempt to sell,
provide or attempt to provide any products or services (in competition with
those products or services which I sold or provided on behalf of the Company)
to any person:
(A) residing or located within the Restricted Area;
(B) who was a customer of the Company within the Restricted
Area during the last twelve (12) months of my employment; or
(C) to whom I sold, attempted to sell, provided or
attempted to provide such products or services during the last twelve (12)
months of my employment with the Company.
I agree that I will comply with the most restrictive of the provisions
specified in subsections (i) and (ii)(A) through (C) which is allowed by
applicable state law. The parties agree that if enforcement of this agreement
is sought, the enforcing court should select the most restrictive provisions
appropriate under applicable state law.
(c) I agree that while I am employed by the Company and for a period
of twelve (12) months after termination of my employment for any reason, with
or without Cause, I will not directly or indirectly hire, or attempt to hire
any employee of the Company nor will I encourage any employee of the Company to
terminate employment with the Company.
(d) "Restricted Area" is the geographic area serviced by any division
of the Company for which I performed duties during the last twelve (12) months
of my employment with the Company.
(e) I understand that if I am terminated by the Company for other than
Cause, I may go to work for a competitor, but all other provisions of the
Covenant shall apply.
AGREEMENT NOT-TO-USE CLASSIFIED INFORMATION
I acknowledge that during the term of my employment, I will be making
use of, acquiring or adding to the Company's Classified Information. In order
to protect the Classified Information: I will not during the term of my
employment with the Company or thereafter, in any way utilize any of the
Classified Information except in connection with my employment by the Company.
I will not copy, reproduce or remove from the Company's premises the original
or any copies of the Classified Information and I will not disclose any of the
Classified Information to anyone.
4
PERSONAL & CONFIDENTIAL
May 15, 1996
Xxx Xxxxx
Rust Scaffold Builders, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
SUBJECT: 1996 MANAGEMENT INCENTIVE BONUS PLAN
PARTICIPATION
Dear Xxx:
As we begin the second quarter of 1996, I want to thank you for your
hard work and effort and ask for your continued leadership. We have set
aggressive financial and customer service goals for our division in 1996 and we
will need to clearly focus ourselves and our people if we are to meet and
exceed all our objectives.
I am pleased to inform you of your selection as a participant in the
1996 WMI-RIS Management Incentive Bonus Plan. As a result of the WMX Strategic
Review Process, there have been several significant changes made to the
incentive bonus plans for 1996. These changes include:
o focusing on both financial and non-financial measurements,
o providing a framework which can be cascaded throughout the
organization, and
o promoting teamwork at each division.
For 1996, your target bonus has been set at 30% of your 1996 base
salary. Any actual 1996 bonus payout will be based on the following three
measures:
Division Pre-Tax
Division Cash Flow
Division Safety Goals
Everyone at our division who participates in the 1996 management
incentive bonus plan will have his/her bonus based upon the same non-financial
and financial measurables. This emphasizes "TEAMWORK" and reinforces the fact
that only if we cooperate and work together can we achieve our goals.
I AM ALSO PLEASED TO INFORM YOU THAT YOU WILL BE ELIGIBLE FOR AN
ADDITIONAL BONUS PAYOUT, UP TO 3% OF YOUR BASE SALARY, IF YOUR DIVISION
ACHIEVES CERTAIN ACCOUNTS RECEIVABLE/DAYS-SALES LEVELS. ACCOUNTS RECEIVABLES
REMAIN A MAJOR CONCERN WITHIN OUR DIVISION AND WE NEED YOUR
ASSISTANCE IN HELPING REDUCE THESE LEVELS.
Thank you again for all your efforts. I need your continued strong
leadership during 1996 as we focus on customer service improvements, teamwork
and financial performance.
Sincerely,
-----------------------------------
Xxxxx XxXxx
Group Vice President
Attachments
1996 WMI-RIS MANAGEMENT INCENTIVE BONUS PLAN
PARTICIPANT SUMMARY
LEVEL-1
REPRESENTATIVE POSITION TITLES:
DIVISION PRESIDENT
AREA GENERAL MANAGER
o Target incentive award is 30% of December 31, 1996 base salary.
o Participants will be eligible for an additional bonus opportunity of
up to 3% based upon the level of Accounts Receivable collection
results.
o Maximum incentive award potential, including the Accounts Receivable
portion, is 103% of 1996 base salary.
o To qualify for a bonus, an overall prequalification will be a
year-end 1996 performance evaluation of 2 or 3, with management
reserving the right to revoke or reduce any bonus otherwise payable
under the plan for serious non-compliance in any EMS pillar.
BONUS MEASUREMENTS
CRITERIA BONUS MAX AWARD % OF
-------- TARGET % BASE SALARY
-------- --------------
SAFETY 20% 6.0%
DIVISION PRE-TAX 60% 70.5%
DIVISION CASH FLOW 20% 23.5%
ACCOUNTS RECEIVABLE 3.0%
-------- --------
TOTAL 100% 103%
-------------------------------------------------------------------------
NON-FINANCIAL MEASURES
The Safety Measurement is worth 20% of a participant's target bonus. Bonus
awards for this portion will be paid if the safety goals are achieved,
regardless if pre-tax/cash flow goals are achieved.
3
1996 WMI-RIS MANAGEMENT INCENTIVE BONUS PLAN
PARTICIPANT SUMMARY
LEVEL-1
GENERAL PLAN INFORMATION
o Financial calculation of pre-tax goal achieved must include
the accrual for all bonus payments which are anticipated to
be achieved under the respective bonus plans in the current
year.
o An additional Accounts Receivable incentive to collect
customer payments in a timely manner has been added for 1996.
o In the event that a participant's target award level changes
during the plan year, the individual's award will be
pro-rated based on the time that he or she participated in
each target award level category.
o 1996 bonus awards will be made using December 31, 1996 base
salary.
o If a participant's employment is terminated (either
voluntarily or involuntarily) during the plan year for any
reason, any incentive bonus award otherwise earned will be
forfeited.
o All awards will be paid in cash, minus applicable withholding
and taxes, prior to February 27, 1997. Individuals must be on
the active payroll at the time of payout in order to be
eligible for bonus award.
o The Company may, in its sole discretion, amend or terminate
this plan at any time.
1996 WMI-RIS MANAGEMENT BONUS PLAN
PARTICIPANT SUMMARY
LEVEL 1
NAME: XXX XXXXX TITLE: DIVISION PRESIDENT
---------------------- ---------------------
1996 BASE SALARY: $ 108,000.00 DIVISION: TEXAS - SCAFFOLD
------------- -----------------
75% - RSS WEST
25% - RSS EAST REGION
Plan Overview is based on April 1, 1996 Base Salary
1996 Payout is based on End of Year 1996 Base Salary
30% $32,400.00
------------- ---------------
Target Bonus % Target Bonus $
--------------------------------------------------------------------------
For 1996, your incentive bonus will be determined as follows:
BONUS MEASURABLES (000'S OMITTED)
CRITERIA BONUS PORTION BONUS PORTION 1996 BUDGET GOAL
-------- % $
------------- ----------------------- ----------------------------
WEST EAST WEST EAST
1. Division Pre-Tax 60% $14,580.00 $4,860.00 $4,551,000 $5,812,000
2. Division Cash Flow 20% $ 4,860.00 $1,620.00 $3,956,000 $6,345,000
3. Safety 20% $ 4,860.00 $1,620.00 $ (See Note)
4. Accounts Receivable (0-3%) $ 2,430.00 $ 810.00
NOTE: FOLLOWING OBJECTIVES MUST BE SATISFACTORILY ACHIEVED FOR THE SAFETY AND
ACCOUNTS RECEIVABLE PORTIONS OF THE BONUS TO BE AWARDED:
SAFETY TARGETS: ACCOUNTS RECEIVABLE (DSO) TARGETS AT YEAR END:
TOR 2.5 less than 50 DAYS - 1% OF BASE SALARY
LWCR 1.0 less than 45 DAYS - 2% OF BASE SALARY
less than 40 DAYS - 3% OF BASE SALARY
RUST INDUSTRIAL SERVICES INC.
0000 XXXXX XXXX
XXXXX
XXX XXXXX DIVISION PRESIDENT
9/30/96
ALL SALARY ACTUAL YTD 9/30
SCAFFOLD BASE YTD GOAL EXCESS PERCENT $
--------------------- ----------------- ---------------- --------------- --------------- ----------------- ----------------
PRETAX 108,000 4,528,441 3,397,583 0.18 14,580
EXCESS *0.035 1,130,858 0.07 79,160
------------------------------------------------------------------------------------------------------------------------------
93,740
CASH FLOW 4,159,195 2,731,816 0.06 4,860
EXCESS *0.03 1,427,379 0.03 42,821
------------------------------------------------------------------------------------------------------------------------------
47,681
SAFETY 1.05,0 2.5,1.0 0.06 4,860
------------------------------------------------------------------------------------------------------------------------------
4,860
AR/DSO 48 50 0.01 810
------------------------------------------------------------------------------------------------------------------------------
810
147,091
------------------------------------------------------------------------------------------------------------------------------
(TABLE RESTUBED FROM ABOVE)
*1.33 MAX
ALL PRO-RATE AWARD MAX ANNUAL
SCAFFOLD DEC. 96 % $ PAYMENT
--------------------- ---------------- -------------- ------------- ----------------
PRETAX 19,391
EXCESS 105,283 0.705 76,140 76,140
---------------------------------------------------------------------------------------
124,674
CASH FLOW 6,464 0.235 25,380 25,380
EXCESS 56,952
---------------------------------------------------------------------------------------
63,416
SAFETY 6,464 0.06 6,480 6,480
---------------------------------------------------------------------------------------
6,464
AR/DSO 1,077 0.03 3,240 1,077
---------------------------------------------------------------------------------------
1,077
195,632 1.03 111,240 109,077
---------------------------------------------------------------------------------------
1996 WMI-RIS MANAGEMENT INCENTIVE BONUS PLAN
PARTICIPANT SUMMARY
LEVEL 1
BONUS CALCULATION
Bonus awards due for the financial measurement portions will be determined
according to the following matrices:
WMI-RIS DIVISION MATRICES
WMI-RIS DIVISION
PRE-TAX
60% OF BONUS TARGET
% OF
% OF TARGET
PRE-TAX PORTION
ACHIEVED* EARNED*
-------- ------
90% 50%
92% 60%
94% 70%
96% 80%
98% 90%
-----------------------------------------------
100% TARGET 100%
-----------------------------------------------
greater than 100% See Below
===============================================
WMI-RIS DIVISION
CASH FLOW
20% OF BONUS TARGET
==============================================
% OF % OF
CASH TARGET
FLOW PORTION
ACHIEVED* EARNED*
-------- ------
75% 25%
80% 40%
85% 55%
90% 70%
95% 85%
-----------------------------------------------
100% TARGET 100%
-----------------------------------------------
greater than 100% See Below
===============================================
*If percentage of pre-tax profit/cash flow goal achieved is not shown
above, interpolate between amounts to determine percentage of target bonus
earned.
NOTE: Individuals with responsibility for multiple divisions will have the bonus
calculations determined by one of two methods:
1) Based on salary allocation per division (or)
2) Simple Average
ADDITIONAL BONUS OPPORTUNITY (BEYOND TARGET)
Over target bonus opportunity will be directly tied to the incremental increase
in pre-tax profit and cash flow beyond the annual goals. The over target bonus
opportunity for Level 1 participants will be a flat $.07 per dollar over
pre-tax and $.03 per dollar over cash flow.
Maximum bonus amount payable under the Pre-Tax portion is 70.5% of base salary;
while maximum bonus amount payable under the Cash Flow portion is 23.5% of base
salary.
ADDITIONAL ACCOUNTS RECEIVABLE BONUS AWARD OPPORTUNITY
The 1996 incentive plan provides the opportunity to receive an additional bonus
award when your division achieves certain days-sales levels. Accounts
Receivable levels continue to be higher than we want and a principal goal for
1996 is to significantly reduce our days of sales receivables. As a management
representative, you have the opportunity to work with your customers in
improving their payment schedules. Participants will be eligible for an
additional bonus award according to the level of days - sales we achieve in
1996 based upon the following matrix:
Days - Sales Bonus Earned as a
Level Achieved Percent of 1996 Base
Salary
------------------ ------------------------
(Level 1) 1.0%
(Level 2) 2.0%
(Level 3) 3.0%
1996 WMI-RIS MANAGEMENT BONUS PLAN
PARTICIPANT SUMMARY
LEVEL 1
Name: XXX XXXXX TITLE: DIVISION PRESIDENT
---------------------- ------------------
1996 BASE SALARY: $ 108,000.00 DIVISION: TEXAS-SCAFFOLD
------------------------- ------------------
Plan Overview is based on April 1, 1996 Base Salary
1996 Payout is based on End of Year 1996 Base Salary
30% $ 32, 400.00
-------------- ---------------
Target Bonus % Target Bonus $
------------------------------------------------------------------------------
For 1996, your incentive bonus will be determined as follows:
BONUS MEASURABLES (000'S OMITTED)
CRITERIA BONUS PORTION BONUS PORTION 1996 BUDGET GOAL
-------- % $
------------- --------------- ----------------
1. Division Pre-Tax 60% $ 19,440.00 $ 4,551,000
--------------- ----------------
2. Division Cash Flow 20% $ 6,480.00 $ 3,956,000
--------------- ----------------
3. Safety 20% $ 6,480.00 $ (See Note)
---------------
4. Accounts (0 - 3%) $ 3,240.00
Receivable ---------------
NOTE: FOLLOWING OBJECTIVES MUST BE SATISFACTORILY ACHIEVED FOR THE SAFETY
AND ACCOUNTS RECEIVABLE PORTIONS OF THE BONUS TO BE AWARDED:
SAFETY TARGETS: ACCOUNTS RECEIVABLE (DSO) TARGETS AT YEAR END:
TOR 2.5 less than 50 DAYS - 1% OF BASE SALARY
LWCR 1.0 less than 45 DAYS - 2% OF BASE SALARY
less than 40 DAYS - 3% OF BASE SALARY
RUST INDUSTRIAL SERVICES INC.
1996 BONUS PLAN
XXXXX ALL SCAFFOLD
ACTUAL GOAL
------------- ----------- OVER PREVIOUS ANNUAL
NAME LOCATION SALARY YTD YTD EXCESS % $ MAX PAYMENTS PAYMENT
==== =========== ============= =============== ========== ============== ====== ======= ======== =========== ========
WEST 75% PRETAX 108,000 4,528,441 3,397,583 18.00% 14,580 14,580
EXCESS *.07 1,130,858 7.00% 59,370 59,370
CASH FLOW 4,159,195 2,731,816 6.00% 4,860 4,860
EXCESS *.03 1,427,379 3.00% 32,116 32,116
SAFETY 15,0 2.5, 1.0 6.00% 6,480 6,480
AR/DSO 48 50 1.00% 1,080 1,080
EAST 25% PRETAX 4,917,201 4,152,170 18.00% 4,860 4,860
EXCESS *.07 765,031 7.00% 13,388 13,388
CASH FLOW 4,462,221 3,393,603 6.00% 1,620 1,620
EXCESS *.03 1,068,018 3.00% 8,015 8,015
PRETAX MAX (16,058) (16,058)
CASH FLOW MAX (21,231) (21,231)
TOTALS 108,000 146,369 (37,289) $ 109,080
