EXHIBIT 10.5
STOCK APPRECIATION RIGHTS AGREEMENT
AGREEMENT dated as of July 13, 1997, between Waste Management, Inc., a
Delaware Corporation (the "Company"), and Xxxxxx X. XxXxx (the "Executive").
As an inducement to, and in consideration of, the Executive's agreement to
serve as the Chairman, President and Chief Executive Officer of the Company and
in order to keep the Executive whole in respect of certain option rights he is
forfeiting at Sprint Corporation ("Sprint"), the Company is providing the
Executive with the Stock Appreciation Right ("SAR") on the terms hereinafter set
forth and the Performance Stock Appreciation Right on the terms set forth in
Exhibit E-2 to the employment agreement dated as of July 13, 1997 between the
Company and the Executive (the "Employment Agreement") to compensate the
Executive for such forfeiture. This Agreement is entered into contemporaneously
with the execution and delivery of the Employment Agreement.
1. Grant of Units. The Company hereby grants to the Executive 500,000 SAR
Units ("Units") representing 500,000 shares of Sprint Common Stock.
2. Base Value of a Unit. Each Unit shall have a base value of $47.9375
subject to adjustment as hereinafter provided (the "Base Value").
3. Economic Entitlement of a Unit ("Spread"). During the period in which
the SAR is exercisable as hereinafter provided, a Unit shall entitle the
Executive to an amount equal to the "Spread" in the Unit on the date he chooses
to exercise the SAR
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in respect of that Unit. (He may, at any point during its period of
exercisability, exercise the SAR in respect of some or all of his Units but at
any given date he may exercise the SAR as to no fewer than 50,000 Units or, if
less, the balance of the Units.) For this purpose "Spread" shall mean an amount
equal to the Current Market Price per share of Sprint Common Stock on the date
the Executive exercises the SAR less the Base Value of a Unit (as adjusted
pursuant to Section 7 below). The "Current Market Price" per share of Sprint
Common Stock shall be deemed to be the Closing Price on the date on which the
Executive exercises the SAR or, if the markets are closed on such date, the next
preceding day on which the markets are open and Sprint Common Stock is traded.
"Closing Price" for any date shall be, if the Sprint Common Stock is then listed
or admitted to trading on the New York Stock Exchange, Inc. or other national
securities exchange, the last reported sale price for the Sprint Common Stock as
reported in the consolidated transaction or other reporting system for
securities listed or traded on the New York Stock Exchange, Inc., or if the
Sprint Common Stock is not so listed or admitted on such exchange, then on the
exchange which is the principal exchange on which the Sprint Common Stock is so
listed or admitted, or, if the Sprint Common Stock is not so admitted for
trading on any national securities exchange, the last sale price reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or if no such last sale prices are reported, the average of the last reported
closing bid and asked prices reported by NASDAQ.
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4. Exercisability; Exercise.
(a) The SAR shall become exercisable on June 9, 2002, and may be
exercised as hereinafter provided at any time thereafter to and including June
8, 2007, subject to Sections 4(b), (c) and (d).
(b) The Executive shall forfeit the SAR if his employment with the
Company is terminated prior to June 9, 2002 as follows: (i) due to death, (ii)
due to Disability (as defined in Section 13(b) of the Employment Agreement),
(iii) by the Company for Cause (as defined in Section 13(c) of the Employment
Agreement), or (iv) due to a Voluntary Termination by the Executive (as defined
in Section 13(e) of the Employment Agreement). In the event that, prior to the
SAR's becoming exercisable, the Executive's employment shall terminate due to a
Termination Without Cause or a Constructive Termination without Cause, pursuant
to Section 13(d) of the Employment Agreement, the SAR shall immediately become
exercisable and shall remain exercisable for the period for which Base Salary is
continued pursuant to Section 13(d)(ii) plus 3 months. In the event that, prior
to the SAR's becoming exercisable, there is a Change in Control of Sprint (based
on the definition of Change in Control as set forth in Section 1(e) of the
Employment Agreement, but substituting "Sprint" for "the Company"), the SAR
shall immediately become exercisable and shall remain exercisable for the
remainder of its term, subject to termination of employment, in which case the
remaining exercisability shall be as provided in Section 4(c) depending on the
type of termination.
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(c) For the period after the SAR becomes exercisable, the SAR shall
continue to be exercisable following a termination of the Executive's employment
with the Company as follows, provided that in no event shall the SAR be
exercisable after June 8, 2007: (i) due to death: for 12 months following death;
(ii) due to Disability (as defined in Section 13(b) of the Employment
Agreement): for 60 months following termination; or (iii) due to Termination
Without Cause or Constructive Termination Without Cause (as defined in Section
13(d) of the Employment Agreement): for the period for which Base Salary is
continued pursuant to Section 13(d)(ii) plus 3 months (or if the event
triggering exercisability is a Change in Control of Sprint (based on the
definition of Change in Control as set forth in Section l(e) of the Employment
Agreement, but substituting "Sprint" for "the Company"), for the period for
which Base Salary is continued pursuant to Section 13 (f)(i)(A) plus 3 months).
In the event that, after the SAR becomes exercisable, the Executive's employment
shall terminate due to a Termination by the Company for Cause or a Voluntary
Termination, pursuant to Section 13(c) or 13(e) of the Employment Agreement,
respectively, the SAR shall be forfeited.
(d) The rights represented by this SAR may be exercised by the
Executive, in whole or in part, by the surrender of this Agreement to the
Secretary of the Company located at 0000 Xxxxxxxxxxx Xxxx, Xxx Xxxxx, XX 00000,
or such other office or agency of the Company as it may designate by notice in
writing to the Executive at the address of the Executive appearing on the
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books of the Company at the time such notice was given. If the SAR is exercised
in part, the Company shall note on this Agreement the number of Units as to
which this Agreement has been exercised and shall return this Agreement to the
Executive.
5. Deferral of Gains. Anything in this Agreement to the contrary
notwithstanding, any gains on the exercise of the SAR as realized by the
Executive when he is a Named Executive Officer of the Company (as defined in the
regulations promulgated under Internal Revenue Code Section 162(m)) shall be
deferred as provided in the following sentence; provided, however, that this
deferral requirement shall not apply, if the Executive so elects in writing at
least six months prior to the exercise of the SAR, as to a number of units not
to exceed 100,000 (as the Executive may designate in such notice), which
election shall be irrevocable. The gains being deferred, as described in the
preceding sentence, shall be deferred into the Company's Non-Qualified Profit
Sharing and Savings Plus Plan, or a successor plan, (the "Deferral Plan") to the
extent the Deferral Plan accepts such deferrals. If the Deferral Plan is not
available to accept such deferrals, the Participant may make an irrevocable
election to defer into (i) Share units (a unit representing a Share of Common
Stock of the Company, including any dividends that may be declared thereon
during the period of the deferral) or (ii) deferred cash as to which interest
shall be credited and compounded annually based on the prime rate as announced
from time to time by Citibank N.A. Amounts deferred under clause (i) or (ii) of
the preceding sentence shall be paid out promptly
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following the date on which the Participant ceases to be a Named Executive
Officer of the Company.
6. Adjustment of Base Value and Number of Units. If the number of
outstanding shares of Sprint Common Stock shall, at any time, be increased or
decreased as a result of (a) any subdivision or consolidation of shares, stock
dividend, stock split, recapitalization, reclassification or similar capital
adjustment or (b) any combination, exchange of shares or similar event arising
from Sprint's participation in any corporate merger, consolidation or similar
transaction in which Sprint is the surviving entity and is not substantially or
completely liquidated, the number of Units and the kind of shares represented by
the Units with respect to which the SAR may thereafter be exercised and the Base
Value shall be appropriately adjusted.
7. Notices. Upon any adjustment pursuant to this SAR of the number of
Units or the Base Value, the Company within twenty calendar days after it learns
of the event requiring such adjustment shall give written notice to the
Executive setting forth the adjusted number of Units and Base Value and setting
forth in reasonable detail the method of calculation and the facts upon which
such adjustment was made, which certificate shall be presumptive evidence of the
correctness of the matter set forth therein. Such notice shall be given to the
Executive at the Executive's address on the books of the Company by first-class
mail, postage prepaid or overnight courier service.
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8. Non-transferability. The SAR shall not be transferable by the
Executive other than by will or the laws of descent and distribution. During his
lifetime, the SAR shall be exercisable only by the Executive or his legal
representative. Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of the SAR, other than as permitted herein, shall be null and
void and of no effect.
9. Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the Company and its successors and assigns and
the Executive and his estate or other legal representatives.
10. References. In the event of the Executive's death or a judicial
determination of his physical or mental incompetence, references in this
Agreement to the Executive shall be deemed, where appropriate, to refer to his
estate or other legal representative.
11. Entire Agreement. This Agreement, together with the Employment
Agreement, contains the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
parties with respect thereto.
12. Amendment or Waiver. This Agreement cannot be changed, modified or
amended without the consent in writing of both the Executive and the Company. No
waiver by either party at any time of any breach by the other party of any
condition or provision of this Agreement shall be deemed a waiver of a similar
or
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dissimilar condition or provision at the same or at any prior or subsequent
time. Any waiver must be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.
13. Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
attributable to the SAR.
14. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Illinois without reference to
principles of conflict of laws.
15. Headings. The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the
date first above written.
WASTE MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Senior Vice President
and Secretary
/s/ Xxxxxx X. XxXxx
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Xxxxxx X. XxXxx
