Exhibit 10.50
November 25, 1997
Xx. Xxxxxxx X. Xxxx
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxx 00000
Re: Loan and Indemnification Agreement
Dear Herb:
You currently hold options to acquire 240,000 shares of the common stock of
Wheelabrator Technologies Inc. ("WTI") at an option exercise price of $8.9031
per share, under the 1986 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its Subsidiaries (the "WTI 1986 Plan"). These grants of
stock options expire on November 30, 1997. Ordinarily, you could exercise these
options and sell the shares of common stock of WTI that you would receive (the
"WTI Option Shares") and benefit from the increase in the price of WTI's common
stock that has resulted from, among other things, the pending offer by Waste
Management, Inc. (the "Company") to acquire all of the publicly held shares of
common stock of WTI (the "WTI Offer"). However, under the Company's securities
trading policy, you have been denied the ability to sell the WTI Option Shares
while the negotiation of the WTI Offer is pending. As a result of this
unforeseeable conjunction of the impending expiration of the WTI options, the
Company's pending negotiations with WTI, and the Company's securities trading
policy, the Board of Directors of the Company has determined that it would be
appropriate to preserve for you the ability to benefit from the value of your
WTI options and to hold you harmless from the adverse consequences of the
Company's requirement that you comply with the Company's securities trading
policy. Accordingly, the Board of Directors has authorized me, on behalf of the
Company, to enter into an agreement with you upon the following terms and
conditions.
Upon the terms of the Promissory Note and Security Agreement attached
hereto as Exhibit 1 (the "Note"), the Company will loan you $2,136,744, the
aggregate exercise price of your WTI options, to be used solely for payment of
the aggregate exercise price of your WTI options. This loan will be fully
collaterized by a security interest in such number of WTI Option Shares that,
valued at $15.375, yesterday's closing price, shall be equal to the principal
amount of the loan. You will also surrender a sufficient number of shares of WTI
common stock to WTI to satisfy applicable federal and state income tax
withholding requirements, pursuant to the terms of the WTI 1986 Plan. To hold
you harmless from the risk that the Company's securities trading policy would
deny you the ability to sell the WTI Option Shares for at least the amount of
the Company's lowest publicly-disclosed offer price in the WTI Offer (the
"Lowest Offer Price"), the Company hereby agrees to indemnify you to the extent
that the market price for WTI common stock on the date that you receive
clearance to sell the WTI Option Shares is below the Lowest Offer Price (the
"Sale Price Indemnification"). The Company will also indemnify you for the
interest due on the Note, and any consequence resulting from the federal and
state income and
payroll taxation on the imputation of interest income and income from the Sale
Price Indemnification, if any. These income items will be grossed-up for federal
and state income and payroll tax purposes and added to your Form W-2.
If you agree with the terms of this agreement, please indicate your
acceptance of the agreement by signing below, and by executing and delivering
the attached Promissory Note and Security Agreement, UCC-1 forms, and option
exercise forms on or before November 28, 1997.
Very truly yours,
WASTE MANAGEMENT, INC.
By: /s/ Peer Xxxxxxxx
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Peer Xxxxxxxx
Chairman, Compensation and Stock Option Committee
AGREED AND ACCEPTED:
/s/ Xxxxxxx X. Xxxx
-------------------------
Xxxxxxx X. Xxxx
