This EMPLOYMENT
AGREEMENT is effective as of the effective time of the merger of
Allied Waste Industries, Inc., a Delaware corporation into RS
Merger Wedge, Inc., a Delaware corporation and wholly-owned
subsidiary of Republic Services, Inc., a Delaware corporation (the
“Merger”) pursuant to the Agreement & Plan of
Merger dated as of June 22, 2008 (the “Effective
Time”), by and between Republic Services, Inc. (the
“Company”) and DONALD W. SLAGER
(“Employee”).
Employee and
Allied Waste Industries, Inc. are parties to that Employment
Agreement dated as of March 2, 2007 (the “2007
Employment Agreement”).
As of the date
hereof, Employee is an employee of the Company and is considered a
valued employee such that the Company desires to retain
him.
For making changes
to the 2007 Employment Agreement, including in connection with the
Merger, Employee and the Company desire to enter into this
Agreement.
In consideration
of the premises set forth above, the mutual representations,
warranties, covenants and agreements contained in this Agreement
and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties agree as
follows:
(a)
Retention . The Company agrees to employ the Employee as its
President and Chief Operating Officer, and Employee agrees to
accept such employment, subject to the terms and conditions of this
Agreement.
(b)
Employment Period . This Agreement shall commence on the
Effective Time and, unless terminated in accordance with the terms
of this Agreement shall continue in effect on a rolling two-year
basis, such that at any time during the term of this Agreement
there will be two years remaining (the “Employment
Period”). Notwithstanding the evergreen nature of the
Employment Period, the Company may terminate Employee at any time
in accordance with the provisions of Section 3 of this
Agreement.
(c)
Duties and Responsibilities . During the Employment Period,
Employee shall serve as President and Chief Operating Officer and
shall have such authority and responsibility and perform such
duties as may be assigned to him from time to time at the direction
of the Board of Directors of the Company, and in the absence of
such assignment, such duties as are customary to Employee’s
office and as are necessary or appropriate to the business and
operations of the Company. During the Employment Period,
Employee’s employment shall be full time and Employee shall
perform his duties honestly, diligently, in good faith and in the
best interests of the
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Company and
shall use his best efforts to promote the interests of the Company.
All executive officers of the Company (except for the Chairman and
the Vice Chairman) shall report to the Chief Executive
Officer.
(d)
Other Activities . Except upon the prior written consent of
the Company, Employee, during the Employment Period, will not
accept any other employment. Employee shall be permitted to engage
in any non-competitive businesses, not-for-profit organizations and
other ventures, such as passive real estate investments, serving on
charitable and civic boards and organizations, and similar
activities, so long as such activities do not materially interfere
with or detract from the performance of Employee’s duties or
constitute a breach of any of the provisions contained in
Section 7 of this Agreement, provided that the Employee may
only serve as a director of a for-profit corporation with the
advance written approval of the Company’s Board of
Directors.
(a)
Base Salary and Adjusted Salary . In consideration for
Employee’s services hereunder and the restrictive covenants
contained herein, Employee shall be paid an annual base salary (the
“Base Salary”) of $875,000, payable in accordance with
the Company’s customary payroll practices. With respect to
the 2008 Fiscal Year, Base Salary shall be prorated by multiplying
the Base Salary by a fraction, the numerator of which is the number
of days from the Effective Time to December 31, and the
denominator of which is 365. With respect to any Fiscal Year during
which Employee is employed by the Company for less than the entire
Fiscal Year, the Base Salary shall be prorated for the period
during which the Employee is so employed. Notwithstanding the
foregoing, Employee’s annual Base Salary may be increased,
but not decreased (taking into account prior increases) without
Employee’s consent at anytime and from time to time to levels
greater than the levels set forth in the preceding sentence at the
discretion of the Board of Directors of the Company to reflect
merit or other increases. The term “Fiscal Year” as
used herein shall mean each period of twelve (12) calendar
months commencing on January 1st of each calendar year during the
Employment Period and expiring on December 31st of such
year.
(b)
Annual Awards . In addition to the Base Salary, Employee
shall be eligible to receive Annual Awards in an amount equal to a
target of 120% of the Employee’s Base Salary in effect for
the Performance Period with respect to which such Annual Award is
granted, as established pursuant to the terms of the
Company’s Executive Incentive Plan, as amended (the “
Executive Incentive Plan”). The Annual Award shall be based
on the achievement of such Performance Goals as are established by
the Compensation Committee of the Board of Directors pursuant to
the Executive Incentive Plan. The achievement of said Performance
Goals shall be determined by the Compensation Committee of the
Board of Directors. Except as otherwise provided in Sections 3
and 24, with respect to any Fiscal Year during which Employee is
employed by the Company for less than the entire Fiscal Year, the
Annual Award shall be prorated for the period during which Employee
was so employed. The Annual Award shall be payable within sixty
(60) days after the end of the Company’s Fiscal Year. To
the extent of any conflict between the provisions of this Agreement
and the Executive Incentive Plan, the terms of this Agreement shall
control.
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(c)
Merit and Other Bonuses . Employee shall be entitled to such
other bonuses as may be determined by the Board of Directors of the
Company or by a committee of the Board of Directors as determined
by the Board of Directors, in its sole discretion.
(d)
Existing Stock Options and Shares of Restricted Stock . The
Company has issued to Employee options to purchase shares of the
Company’s Common Stock pursuant to the terms of various
Option Agreements and the terms of the 2007 Stock Incentive Plan
(the “Outstanding Option Grants”). The Company has also
granted to Employee restricted shares of the Company’s Common
Stock pursuant to the terms of the Company’s 2007 Stock
Incentive Plan (the “Outstanding Restricted Stock
Grants”). The options issued or to be issued under the
Outstanding Option Grants shall continue to be subject to the terms
of the Option Agreements, except to the extent otherwise provided
for in this Agreement. The shares of restricted stock granted or to
be granted under the Outstanding Restricted Stock Grants shall
continue to be subject to the terms of the Executive Restricted
Stock Agreements, except to the extent otherwise provided for in
this Agreement. Upon execution of this Agreement, the Employee will
receive shares of restricted stock with a value of $1,000,000, such
number of restricted shares to be determined based on the Fair
Market Value of one share of Company common stock (as determined
under the 2007 Stock Incentive Plan) on the execution of this
Agreement, which will vest 100% on the third anniversary thereof
provided the Employee is employed on such date or as otherwise
provided herein (“Special Restricted Stock
Award”).
(e)
Other Stock Options . Employee shall be entitled to
participate and receive option grants under the 2007 Stock
Incentive Plan and such other incentive or stock option plans as
may be in effect from time-to-time, as determined by the Board of
Directors of the Company.
(f)
Other Compensation Programs . Employee shall be entitled to
participate in the Company’s incentive and deferred
compensation programs and such other programs as are established
and maintained for the benefit of the Company’s employees or
executive officers, subject to the provisions of such plans or
programs.
(g)
Other Benefits . During the term of this Agreement, Employee
shall also be entitled to participate in any other health insurance
programs, life insurance programs, disability programs, stock
option plans, bonus plans, pension plans and other fringe benefit
plans and programs as are from time to time established and
maintained for the benefit of the Company’s employees or
executive officers, subject to the provisions of such plans and
programs.
(h)
Expenses . Employee shall be reimbursed for all
out-of-pocket expenses reasonably incurred by him on behalf of or
in connection with the business of the Company, pursuant to the
normal standards and guidelines followed from time to time by the
Company. Notwithstanding anything herein to the contrary or
otherwise, except to the extent any expense or reimbursement
described in this Section 2(h) does not constitute a
“deferral of compensation” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), any expense or reimbursement described in
this Section 2(h) shall meet the following requirements:
(i) the amount of expenses eligible for reimbursement provided
to Employee during any calendar year will not affect the amount of
expenses eligible for reimbursement or in-kind benefits provided
to
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Employee in any
other calendar year, (ii) the reimbursements for expenses for
which Employee is entitled to be reimbursed shall be made on or
before the last day of the calendar year following the calendar
year in which the applicable expense is incurred, (iii) the
right to payment or reimbursement on in-kind benefits hereunder may
not be liquidated or exchanged for any other benefit and
(iv) the reimbursements shall be made pursuant to objectively
determinable and nondiscretionary Company policies and procedures
regarding such reimbursement of expenses.
(i)
Long Term Awards . Employee shall be entitled to participate
in the Executive Incentive Plan (or any successor plan maintained
by the Company) for purposes of receiving Long Term Awards pursuant
to the terms of this Agreement and the Executive Incentive Plan (or
such successor plan).
(j)
Synergy Incentive Plan . A schedule of the maximum awards
that the Employee is eligible to receive under the Synergy
Incentive Plan is attached as Schedule 2(j), subject to
shareholder approval of amendments to the Executive Incentive Plan.
Awards under the Synergy Incentive Plan shall not be considered
Annual Awards, Long Term Awards, or equity awards or otherwise
taken into account for purposes of Sections 3, 4 or 24 of this
Agreement, but instead, such awards shall be governed by the terms
of the Synergy Incentive Plan, provided, however, that if benefits
upon termination by the Employee for Good Reason or by the Company
without Cause are to be provided under Section 3(d) in lieu of
Section 3(c), then the Employee shall not be entitled to
receive any payment under the Synergy Incentive Plan.
(k)
Vacation . Commencing on January 1, 2009 and continuing
until the Date of Termination, for each full calendar year that
this Agreement is in effect, the Employee shall be entitled to four
(4) weeks paid vacation (“Vacation Time”). For any
partial calendar year during which this Agreement is in effect, the
amount of Vacation Time to which the Employee is entitled shall be
prorated. Vacation Time of up to two (2) weeks not taken
during the calendar year in which it is accrued may be carried over
to subsequent years with no more than six (6) weeks Vacation
Time available in any Fiscal Year.
(l)
Insurance. At all times during the term of this Agreement,
and for ten (10) years thereafter, the Employee shall be
covered under the Company’s directors’ and
officers’ liability insurance, but only to the same extent as
other senior officers.
(a)
For Cause . The Company shall have the right to terminate
this Agreement and to discharge Employee for Cause (as defined
below), at any time during the term of this Agreement. Termination
for Cause shall mean, during the term of this Agreement,
(i) Employee’s willful and continued failure to
substantially perform his duties after he has received written
notice from the Company identifying the actions or omissions
constituting willful and continued failure to perform,
(ii) Employee’s conviction or plea to a felony,
misdemeanor or any other crime, (iii) Employee’s actions
or omissions that constitute fraud, dishonesty or gross misconduct,
(iv) Employee’s breach of any fiduciary duty that causes
material injury to the Company, (v) Employee’s breach of
any duty causing material injury to the Company,
(vi) Employee’s inability to perform his
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material duties
to the reasonable satisfaction of the Company due to alcohol or
other substance abuse, or (vii) any violation of the
Company’s policies or procedures involving discrimination,
harassment, substance abuse or work place violence. Any termination
for Cause pursuant to this Section shall occur only after notice is
given to Employee in writing which shall set forth in detail all
acts or omissions upon which the Company is relying to terminate
Employee for Cause and, in the case of (i) or (vii), after which
the Employee has failed to cure any actions or omissions which
provide the Company with a basis to terminate the Employee for
Cause.
Upon
any determination by the Company that Cause exists to terminate
Employee, the Company shall cause a special meeting of the Board of
Directors to be called and held at a time mutually convenient to
the Board of Directors and Employee, but in no event later than ten
(10) business days after Employee’s receipt of the
notice that the Company intends to terminate Employee for Cause.
Employee shall have the right to appear before such special meeting
of the Board of Directors with legal counsel of his choosing to
refute such allegations and shall have a reasonable period of time
to cure any actions or omissions in the case of (i) or
(vii) which provide the Company with a basis to terminate
Employee for Cause (provided that such cure period shall not exceed
30 days), provided that Company shall not terminate the
Employee until the end of the 30 day period. A majority of the
members of the Board of Directors must affirm that Cause exists to
terminate Employee. In the event the Company terminates Employee
for Cause, the Company shall only be obligated to continue to pay
in the ordinary and normal course of its business to Employee his
Base Salary plus accrued but unused Vacation Time through the
termination date and the Company shall have no further obligations
to Employee under this Agreement from and after the date of
termination.
(b)
Resignation by Employee Without Good Reason . If Employee
shall resign or otherwise terminate his employment with the Company
at anytime during the term of this Agreement, other than for Good
Reason (as defined below), Employee shall only be entitled to
receive his accrued and unpaid Base Salary and unused Vacation Time
through the termination date, and the Company shall have no further
obligations under this Agreement from and after the date of
resignation.
(c)
Termination by Company Without Cause and by Employee For Good
Reason . At any time during the term of this Agreement,
(i) the Company shall have the right to terminate this
Agreement and to discharge Employee without Cause effective upon
delivery of written notice to Employee, and (ii) Employee
shall have the right to terminate this Agreement for Good Reason
effective upon delivery of written notice to the Company. For
purposes of this Agreement, “Good Reason” shall mean:
(i) the Company has materially reduced the duties and
responsibilities of Employee from the duties and responsibilities
of the Employee as President and Chief Operating Officer at the
Effective Time, (ii) the Company has breached any material
provision of this Agreement and has not cured such breach within
30 days of receipt of written notice of such breach from
Employee, (iii) the Company does not provide health, life,
disability, incentive or equity benefits which are substantially
comparable in the aggregate to the level of such benefits and
incentive compensation provided on the Effective Time, other than
due to a reduction in such level of benefits to the extent such
reduction applies to other senior executives of the Company and
provided that any particular plan containing such benefits may be
amended or terminated, (iv)
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Employee’s office is relocated by the
Company to a location which is not located within the Arizona
County of Maricopa, (v) Employee does not become the Chief
Executive Officer upon resignation or termination of James
O’Connor, or (vi) the Company’s termination
without Cause of the continuation of the Employment Period provided
in this Agreement. Notwithstanding the foregoing, the
Employee’s termination of employment pursuant to this
Agreement shall not be effective unless (x) the Employee
delivers a written notice setting forth the details of the
occurrence giving rise to the claim of termination for Good Reason
within a period not to exceed 90 days of its initial existence
and (y) the Company fails to cure the same within a thirty
(30) day period.
Upon any such
termination by the Company without Cause, or by Employee for Good
Reason, (i) the Company shall pay to Employee: all of
Employee’s accrued but unpaid Base Salary and accrued but
unused Vacation Time through the date of termination in a lump sum
within sixty (60) days of termination; (ii) the Company
shall pay to Employee Base Salary for three (3) years from the
date of termination when and as Base Salary would have been due and
payable hereunder but for such termination; (iii) the Company
shall continue providing medical, dental, and/or vision coverage to
the Employee and/or the Employee’s family, at least equal to
that which would have been provided to the Employee if the
Employee’s employment had not terminated, until the earlier
of (1) the date the Employee becomes eligible for any
comparable medical, dental, or vision coverage provided by any
other employer, or (2) the date the Employee becomes eligible
for Medicare or any similar government-sponsored or provided health
care program (whether or not such coverage is equivalent to that
provided by the Company); (iv) all stock option grants or
restricted stock grants, whether or not part of the Outstanding
Option Grant or any options issued during the term of this
Agreement and which will become vested during the Fiscal Year of
termination and the Special Restricted Stock Award, will
immediately fully vest and become unrestricted; if not vested
previously, and any such options will remain exercisable for the
lesser of the unexpired term of the option without regard to the
termination of Employee’s employment or three (3) years
from the date of termination of employment; (v) all Annual
Awards shall vest and be paid on a prorated basis in an amount
equal to the Annual Awards payment that the Compensation Committee
of the Board of Directors determines would have been paid to
Employee pursuant to the Executive Incentive Plan had
Employee’s employment continued to the end of the Performance
Period multiplied by a fraction, the numerator of which is the
number of completed months of employment during such Performance
Period and the denominator of which is the total number of months
in the Performance Period, within sixty (60) days after the
end of the Company’s Fiscal Year; (vi) all Long Term
Awards shall vest and be paid on a prorated basis in an amount
equal to the Long Term Awards payment that the Compensation
Committee of the Board of Directors determines would have been paid
to Employee pursuant to the Executive Incentive Plan had
Employee’s employment continued to the end of the Performance
Period multiplied by a fraction, the numerator of which is the
number of completed months of employment during such Performance
Period and the denominator of which is the total number of months
in the Performance Period, within sixty (60) days after the
end of the Company’s Fiscal Year in which the Performance
Period ends; (vii) as of the termination date Employee shall
be paid, in accordance with the terms of any deferred compensation
plan in which Employee was a participant and any elections
thereunder, the balance of all amounts credited or eligible to be
credited to Employee’s deferred compensation account
(including all Company contributions, whether or not vested);
(viii) the Company shall continue director and officer
liability
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insurance for
ten (10) years; and (ix) the Company shall provide
outplacement services which may include administrative support for
up to one (1) year, provided that such amount may not exceed
$50,000 (collectively, the foregoing consideration payable to
Employee shall be referred to herein as the “Severance
Payment”). Other than the Severance Payment, the Company
shall have no further obligation to Employee except for the
obligations set forth in Sections 10, 17, and 25 of this
Agreement after the date of such termination; provided, however,
that Employee shall only be entitled to continuation of the
Severance Payment as long as he is in compliance with the
provisions of Sections 7, 8, 10 and 11 of this
Agreement.
(d)
Termination by Company Without Cause and by Employee For Good
Reason During 18 Months After the Merger . Upon any termination
by the Company Without Cause or by the Employee for Good Reason
within 18 months after the Effective Time of the Merger, in
lieu of the Severance Payment set forth in Section 3(c) above, to
the extent that such payments exceed the Severance Payment set
forth in Section 3(c) above (and any payments pursuant to the
Synergy Incentive Plan): (i) the Company shall pay to Employee
in a lump sum cash payment within sixty (60) days of the
termination, any accrued but unpaid Base Salary, any unpaid portion
of Annual Award previously awarded to the Employee, and any accrued
but unpaid Vacation Time as of the date of termination;
(ii) the Company shall pay to the Employee a sum equal to
three times (x) his Base Salary in effect immediately prior to
his termination plus (y) target Annual Award for the year in
which the termination occurs in a lump sum within sixty
(60) days of the date of termination; (iii) the Company
shall continue providing medical, dental, and/or vision coverage to
the Employee and/or the Employee’s family, at least equal to
that which would have been provided to the Employee if the
Employee’s employment had not terminated, until the earlier
of (1) the date the Employee becomes eligible for any
comparable medical, dental, or vision coverage provided by any
other employer, or (2) the date the Employee becomes eligible
for Medicare or any similar government-sponsored or provided health
care program (whether or not such coverage is equivalent to that
provided by the Company); (iv) the Special Restricted Stock
Award will immediately fully vest and become unrestricted; and
(v) the Company shall (through an agency of Company’s
choosing) provide outplacement services to the Employee for a
period of one (1) year following termination, provided that
the cost of such services shall not exceed $50,000 (or such higher
amount as may be approved by the Board of Directors (or a committee
thereof)). To the extent that the payments under this Section 3(d)
are subject to the excise tax imposed by Section 4999 of the
Code in connection with the Merger, the provisions of
Section 6.6 of the 2007 Employment Agreement shall be
available to the Employee. To the extent that amounts are payable
by the Company to Employee pursuant to this Section 3(d), they
shall be in lieu of payments pursuant to Section 3(c), and in
no event shall the Company be required to make payments or provide
benefits to Employee under both Sections 3(c) and 3(d). In
addition, in such event, the Employee shall not receive any payment
under the Synergy Incentive Plan. Other than the payments described
in this Section 3(d), the Company shall have no further
obligation to Employee under this Agreement except for the
obligations set forth in Sections 10, 17, and 25 of this
Agreement after the date of such termination; provided, however,
that Employee shall only be entitled to continuation of benefits
provided under this Section 3(d) as long as he is in compliance
with the provisions of Sections 7, 8, 10 and 11 of this
Agreement.
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(e)
Disability of Employee . This Agreement may be terminated by
the Company upon the Disability of Employee.
“Disability” shall mean any mental or physical illness,
condition, disability or incapacity which prevents Employee from
reasonably discharging his duties and responsibilities under this
Agreement for a period of 180 consecutive days. In the event that
any disagreement or dispute shall arise between the Company and
Employee as to whether Employee suffers from any Disability, then,
in such event, Employee shall submit to the physical or mental
examination of a physician licensed under the laws of the State of
Arizona, who is mutually agreeable to the Company and Employee, and
such physician shall determine whether Employee suffers from any
Disability. In the absence of fraud or bad faith, the determination
of such physician shall be final and binding upon the Company and
Employee. The entire cost of such examination shall be paid for
solely by the Company. In the event the Company has purchased
Disability insurance for Employee, Employee shall be deemed
disabled if he is completely (fully) disabled as defined by
the terms of the Disability policy. Disability shall not be deemed
to occur unless it constitutes a “disability,” as such
term is defined in Code Section 409A. In the event that at any
time during the term of this Agreement Employee shall suffer a
Disability and the Company terminates Employee’s employment
for such Disability, such Disability shall be considered to be a
termination by the Company without Cause or a termination by
Employee for Good Reason and the Severance Payment shall be paid to
Employee to the same extent and in the same manner as provided for
in Section 3(c) above, except that (i) payments of Annual
Salary shall be mitigated by payments under Company-sponsored
disability payments and (ii) the Employee will not be entitled
to outplacement services.
(f)
Death of Employee . If during the term of this Agreement
Employee shall die, then the employment of Employee by the Company
shall automatically terminate on the date of Employee’s
death. In such event, Employee’s death shall be considered to
be a termination by the Company without Cause or a termination by
Employee for Good Reason and the Severance Payment shall be paid to
Employee’s personal representative or estate to the same
extent and in the same manner as provided for in Section 3(c) above
(except that Employee will not be entitled to outplacement
services) and without mitigation for any insurance policies held by
Employee. Once such payments have been made to Employee’s
personal representative, beneficiary or estate, as the case may be,
the Company shall have no further obligations under this Agreement
to said personal representative, beneficiary or estate, or to any
heirs of Employee.
4.
Termination of Employment by Employee for Change of Control
.
(a)
Termination Rights . Notwithstanding the provisions of
Section 2 and Section 3 of this Agreement, in the event
that there shall occur a Change of Control (as defined below) of
the Company and either within six months before as set forth in
Section 4(c) or within two years after such Change of Control
Employ
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