EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of May 1, 2002
or such earlier date as the parties agree (the "Effective Date"), by and between
XXXXXXX X. XXXX (the "Employee") and Waste Connections, Inc., a Delaware
corporation (the "Company"), with reference to the following facts.
Thc Company desires to engage the services and employment of the
Employee, and the Employee is willing to accept employment by the Company, 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, on the terms and
conditions stated herein.
2. POSITION AND RESPONSIBILITIES. During the Term the Employee shall
serve as the Senior Vice President - Administration of the Company, reporting
directly to the Company's Executive Vice President - Operations. The Employee
shall be based in the Company's corporate headquarters in California and shall
be responsible for the Company's Risk Management and Loss Control Programs, as
well as the Company's Human Resource Administration and Employee Benefit program
administration. The employee shall perform such other duties and
responsibilities as the President or the Board of Directors (the "Board") of the
Company may reasonably assign to the Employee from time to time. 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 Effective Date and continue until
the third anniversary of the Effective Date, unless terminated earlier as
provided herein or extended by the Board. At the end of the initial Term, this
Agreement shall be renewed automatically for successive Terms of one year,
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. The Employee shall be paid a base salary
("Base Salary") of not less than $135,000.00 dollars ($135,000.00) per year in
installments consistent with the Company's usual practices. The Board shall
review the Employee's Base Salary on each anniversary of the Effective Date 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 up to fifty(50%) of the applicable year's beginning 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. 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 fiscal year be paid more than seventy-five (75) days after the end of such
fiscal year. For the Employee's bonus to be paid in 2003, for the fiscal 2002
year, any bonus earned shall be prorated from the first day of employment to the
end of the year.
(3) GRANT OF OPTIONS OR RESTRICTED STOCK. On the Effective
Date, the Company sha11 grant to the Employee, for no additional consideration,
the following awards:
(a.) Nonqualified stock options (the "Options") to purchase an
amount of the Company's Common Stock under the Company's 2002 Senior Management
Equity Incentive Plan, a grant of forty thousand (40,000) non-qualified stock
options of the Company's Common Stock. These stock options will be issued to the
Employee in his name effective on April 26, 2002. The price of each stock option
will be equal to the close of market price for one share of the Company's common
stock on the April 26, 2002. The ownership of these shares shall vest 33 1/3% on
the first, second and third anniversaries of the grant date to the Employee,
pursuant to the Company's 2002 Senior Management Equity Incentive Plan.
The terms of the Options shall be described in more detail in a
Stock Option Agreement to be entered into between the Employee and the Company.
If at any time while any of the Options are still outstanding the Company amends
its Stock Option Plan to provide for a less favorable vesting schedule for stock
options than that provided herein, any Options then outstanding shall thereupon
be converted to warrants entitling the Employee to purchase the number of shares
of Common Stock for which the Employee's then outstanding Options may be
exercised, on the same terms as provided under such Options.
(b) 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 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 after applicable waiting period. The Employee
shall be entitled to three (3) weeks of paid vacation during each of the first
three twelve-month periods of his employment, and four (4) weeks per
twelve-month period beginning with the fourth twelve-month period of employment
under this agreement.
(c) REIMBURSEMENT OF OTHER EXPENSES. The Company agrees to pay
or reimburse the Employee for a11 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, 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 sha11 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.
(a) TERMINATION BY THE COMPANY FOR CAUSE OR BY THE EMPLOYEE. The
employment of the Employee may be terminated for cause at any time by the
"Board" on written Notice of Termination (as defined in Section 8(a)) delivered
to the Employee describing with specificity the grounds for termination. The
employment of the Employee may also be terminated at any time by the Employee on
written Notice of Termination delivered to the Company. 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 8(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, and (ii)all
outstanding but unvested Options and other options and rights relating to
capital stock of the Company. For purposes of this Agreement, Cause shall mean:
(1) a material breach of any of the terms of this Agreement
that is not immed1ately corrected following written notice of default specifying
such breach;
(2) a breach of any of the provisions of Section 10;
(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 respons1b1l1tles 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 8(a)). On the
Date of Termination (as defined in Section 8(b)) pursuant to this Section 7(b),
the Company shall pay to the Employee in a lump sum an amount equal to (i) the
Base Salary payable under Section 4(a)(1) at the rate in effect on the Date of
Termination a period of 18 months or, if termination occurs within the first 18
months of the initial term of the contract, employee will be entitled to the
balance of the initial term of the contract as severance, provided the Employee
agrees to a full time transition period to assist the Company of up to one
hundred and twenty (120) days as directed by the Company. At the end of this
transition period, the Company shall pay the Employee the eighteen months lump
sum payment or the balance of the initial term, whichever is applies. In
addition, on termination of the Employee under this Section 7(b),all of the
Employee's outstanding but unvested Options and other options and rights
relating to capital stock of the Company shal1 immediately vest and become
exercisable. The term of any such options and rights shall be extended to the
second anniversary of the Employee's termination. The Employee acknowledges that
extending the term of any option pursuant to this Section 7(b), or Section 7(c)
or 7(d), 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 8(8)) 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 8(b)) pursuant to this Section 7(c). On the Date of
Termination pursuant to this Section 7(c), 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. The term of any such
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 8(b))pursuant to this Section 7(d), 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. The term of any such options and rights shall be extended to the
third anniversary of the Employee's termination. The provisions of the Section
7(d) shall 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. PROVISIONS APPLICABLE TO TERMINATION OF EMPLOYMENT.
(a) NOTICE OF TERMINATION. Any purported termination of
Employee's employment by thc Company or by the employee pursuant to Section 7
shall be communicated by Notice of Termination to the Employee or the Company,
as the case may be, as provided herein ("Notice of Termination").
(b) DATE OF TERMINATION. For all purposes, "Date of Termination"
shall mean the date on which a Notice of Termination is given.
(c) BENEFITS ON TERMINATION. On termination of this Agreement
pursuant to Section 7, 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. Except as otherwise provided in Sections
7(b), 7(c), 7(d), and 9, if the Employee's employment by the Company is
terminated before all of the Employee's options, warrants and rights with
respect to the Company's capital stock have vested, the Employee shall forfeit
any such options, warrants and rights that are unvested as of the termination
date.
9. 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
shal1 be entitled to receive and the Company agrees to pay to the Employee in a
lump sum under Section 7(b) that is payable to the Employee on termination
without Cause except, if such a change in control happens during the initial
three (3) year term of the agreement, the salary paid shall equal 36 months
instead of 18 months. 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 term of any such 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 "Termination 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:
(i) 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
(ii) 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 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.
10. NON-COMPETITION AND NON-SOLICITATION.
(a) In consideration of the provisions hereof, for the period
commencing on the date hereof and ending on the later of the first anniversary
of the termination of this Agreement, or one year after receipt by the Employee
of all compensation owed under this Agreement, the Employee will not, except as
specifically provided below, anywhere in any county in any state in which the
Company is engaged in business as of such termination date, directly or
indirectly, acting individually or as the owner, shareholder, partner or
management employee in 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 tender 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.
(b) After termination of this Agreement, 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 any county in any state in which the Company is engaged in business as of
such termination date, (ii) solicit any residential or commercial customer of
the Company to enter into a solid waste ool1ection account relationship with a
competitor of the Company in any such county,(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 that the Employee called on
or was involved in soliciting on behalf of the Company during the Term) in each
case until the second anniversary of the date of such termination, unless
otherwise permitted to do so by Section l0(a); provided that if the Employee is
terminated by the Company without Cause by the Company pursuant to Section 7(b),
the restrictions in this Section 10(b)shall apply only for as many months after
such termination as are used to calculate the amount actually paid under Section
7(b){iii) to the Employee on such termination. For example, if the Employee
waives his right to be paid any amount under Section 7(b)(iii) {relating to the
Total Compensation paid to him during the previous twelve months, the
restrictions in this Section l0(b) shall not apply at a1l; if the Employee
elects to receive under Section 7(b)(iii)an amount equal to only eight months'
Total Compensation. the restrictions shall apply for only eight months.
(c) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 10 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.
11. INDEMNIFICATION. As an employee and agent of the Company: the
Emp1oyee shall be fully indemnified by the Company to the fullest extent
permitted by applicable law in connection with his employment hereunder.
12. SURVIVAL OF PROVISIONS. The obligations of the Company under
Section 11 of this Agreement, and of the Employee under Sections 5,6 and 10 of
this Agreement, shall survive both the termination of the Employee's employment
and this Agreement.
13. 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 thc
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.
14. 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 sha11 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 sha11 assign this Agreement to any entity that acquires
its assets or business.
15. 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.
16. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement of the parties relating to the Employee's employment and supercedes
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.
17. 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.
18. 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.
19. SEVERABILITY. In case anyone 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.
20. 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 10 of this Agreement, and, in
any action or proceeding to enforce the provisions of Sections 5, 6, or 10
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 re1ief 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 broaches any provision of Section 10, 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.
21. 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.
22. DUE AUTHORIZATION. The execution of this Agreement has been duly
authorized by the Company by all necessary corporate action.
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:
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Printed Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President and Chief Executive Officer
EMPLOYEE:
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Xxxxxxx X. Xxxx
