EXHIBIT 10.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into effective
November 1, 2001, by and between ALLIED WASTE INDUSTRIES, INC., a Delaware
corporation ("Company"), and XXXXX X. XXXX ("Henk").
R E C I T A L S:
A. The Company and Henk are parties to a written Executive Employment
Agreement, as amended ("Employment Agreement"); and
B. The Company and Henk desire to modify their relationship by
terminating the Employment Agreement and simultaneously entering into this
Agreement, whereby Henk will provide consulting services to the Company, on
the terms and conditions set forth in this Agreement and to confirm certain
other matters. The terms of this Consulting Agreement are, in most material
respects, substantially similar to, and consistent with, the terms and
conditions stated in the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
obligations contained herein, and other good and valuable consideration
described herein, the receipt and sufficiency of which is hereby
acknowledged, the Company and Henk hereby agree as follows:
A G R E E M E N T S:
1. Status of Employment and Consulting Agreements.
(a) The parties agree that the Employment Agreement is hereby
terminated and of no further force and effect as of the date of this
Agreement. Notwithstanding such termination, Henk acknowledges that certain
covenants and fiduciary obligations set forth in Sections 2.2, 2.3, 7, 8,
9, 10, 12, and 13 of Henk's Employment Agreement, shall remain in full
force and effect and shall be deemed incorporated by reference herein as
though fully set forth in this Agreement; provided however that the term of
the non-competition obligation shall be two (2) years from the effective
date of this Agreement.
(b) The parties hereby enter into this Agreement, pursuant to which
Henk, in his capacity as an independent contractor and not as an employee,
shall perform such duties and shall have such responsibilities as may from
time to time be assigned to Henk by the Company's Chief Executive Officer
and agreed to by Henk.
2. Term. The term of this Agreement shall be four (4) years from the
date of this Agreement.
3. Compensation. The compensation to which Henk is entitled as
consideration for this Agreement, for the Release referred to in Section 7,
and for his execution of certain other documents, is as follows:
(a) Upon his execution and delivery of this Agreement to the Company,
together with a Release referred to in Section 7, Henk shall receive a lump
sum payment in the amount of One Million Eight Hundred Sixty-Seven Thousand
Nine Hundred Twenty Dollars ($1,867,920). Henk hereby waives any right to
receive any additional bonus or equivalent payment that might otherwise
have accrued or be payable to Henk under the terms of the Employment
Agreement.
(b) During the first two (2) years of the term of this Agreement, the
Company shall pay Henk compensation in the amount of Seven Hundred
Seventeen Thousand Five Hundred Dollars ($717,500) per year, payable in
bi-weekly installments. Henk hereby waives any right to receive any salary
or any equivalent payments that might otherwise have accrued or be payable
to Henk under the terms of the Employment Agreement.
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(c) During the last two (2) years of the term of this Agreement, the
Company shall pay Henk compensation in the amount of One Thousand Dollars
($1,000) per year, payable in a lump sum as of the last day of each such
year.
(d) In the event of Henk's death prior to the payment of the sums
provided for in this Section 3, the unpaid balance shall be paid to Henk's
estate or to such other beneficiary as may be appropriately designated in
writing by Henk (and by Henk's spouse, if required by law).
(e) All stock options previously granted to Henk by the Company shall
continue to vest and be exercisable according to their terms,
notwithstanding the termination of the Employment Agreement, as a result of
Henk's new status as a consultant. However, all awards previously granted
to Henk under the Allied Performance-Accelerated Restricted Stock Award
Plan ("PARSAP") are forfeited as of the date of the termination of Henk's
employment with Allied.
(f) Notwithstanding the foregoing, all of the amounts payable under
this Section 3, and the stock options which are referenced in Subsection
3(e), shall be subject to forfeiture as provided below in Section 6.
(g) The parties acknowledge and agree that Henk, in his capacity as an
independent contractor, is responsible for any and all taxes that may be
due with respect to the compensation paid under Subsections (a)-(d) of this
Section 3, including without limitation, income, FICA, Medicare, FUTA and
all other federal, state, and other applicable taxes. In the event the
Company is required for any reason, in its reasonable judgment, to pay tax
with respect to any amounts paid to Henk, Henk shall indemnify the Company
with respect to any such payment and shall reimburse the Company within 30
days of its payment of such tax.
(h) Henk shall continue to be eligible for medical, dental, and vision
insurance coverage for a period of up to five (5) years from the effective
date of this Consulting Agreement. Henk's right to insurance coverage under
this paragraph will terminate before the expiration of that five (5) year
period if and when he becomes eligible for employer-provided health
insurance benefits from any person or business entity, whether or not those
heath insurance benefits are comparable to the health insurance benefits
provided by the Company.
4. Henk's Fiduciary And Other Obligations to the Company.
(a) Henk agrees and acknowledges that he owes an ongoing fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Company, and to do no act and to make no statement, oral
or written, which would injure the Company's business, its interests or its
reputation.
(b) Henk agrees to comply at all times during the term of this
Agreement with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's Code of Ethics and
the Company's policy regarding trading in the Company's common stock, as
each is in effect from time to time during the term of this Agreement.
(c) Henk shall not knowingly become involved in a conflict of interest
with the Company. If Henk discovers that he has become involved in a
conflict with the Company, he will not allow it to continue. Henk further
agrees to disclose to the Company, promptly after discovery, any facts or
circumstances that might involve a current, or lead to a future, conflict
of interest with the Company.
(d) During the term of this Agreement and thereafter, Henk shall not
disclose Confidential Information (as such term is defined in the
Employment Agreement) to any person or entity, either inside or outside of
the Company, other than as necessary in carrying out his duties and
responsibilities, without first obtaining the prior written consent of the
Company's Vice President, Legal.
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(e) During the term of this Agreement, Henk shall promptly disclose in
writing to the Company's Vice President, Legal, all information, ideas,
concepts, improvements, discoveries and inventions, which are conceived,
developed, made or acquired by the Henk, either individually or jointly
with others, and which relate to the business, products or services of the
Company or its Affiliates, irrespective of whether Henk used the Company's
time or facilities and irrespective of whether such information, idea,
concept, improvement, discovery or invention was conceived, developed,
discovered or acquired by Henk in connection with the services provided in
this Agreement, at home, or elsewhere.
(f) All information, ideas, concepts, improvements, and discoveries
which are conceived, made, developed or acquired by Henk or which are
disclosed or made known to Henk, individually or in conjunction with
others, during the term of the Consulting Agreement, and which relate to
the business, products or services of the Company or its Affiliates (as
such term is defined in the Employment Agreement) are and shall be the sole
and exclusive property of the Company.
(g) Henk shall not, during the first two (2) years of the term of this
Agreement, whether acting alone or in conjunction with others, directly or
indirectly, engage, participate, invest, accept employment or render
services as a principal, director, officer, agent, employee, employer,
consultant or in any other individual or representative capacity in or with
any business which competes, directly or indirectly, with the Company's
business in any of the business territories in which the Company or any of
its Affiliates are presently or from time to time conducting business, or
take any action inconsistent with the fiduciary relationship of an employee
to his employer. If, for any reason, a court should find that this
paragraph is overbroad in geographic or temporal scope, the parties intend
that the court enforce the restrictions in this paragraph to the maximum
extent permitted by law. Accordingly, the parties authorize the court to
determine the maximum extent that the restrictions in this paragraph can be
enforced under the law and to enforce them to that extent. Notwithstanding
the foregoing, the Company, in its discretion, acting in good faith, may,
but is not obligated to, limit or waive the application of this Subsection
4(g) under such circumstances as the Company deems appropriate, provided
that Henk furnishes the Company with a written proposal in terms
sufficiently detailed as to enable the Company to make an informed
decision.
(h) Henk shall not, directly or indirectly, (i) induce, entice or
solicit any employee of the Company to leave his employment, (ii) contact,
communicate or solicit any customer or acquisition prospect of the Company
derived from any customer list, customer lead, mail, printed matter or
other information secured from the Company or its present or past employees
(other than in connection with the performance of his services for the
Company in accordance with this Agreement), or (iii) in any other manner
use any customer lists or customer leads, mail, telephone numbers, printed
material or other information of the Company relating thereto (other than
in connection with the performance of his services for the Company).
(i) The confidentiality and non-disclosure provisions in this Section
4 shall not preclude any disclosure by Henk to the extent reasonably
required either by law or court order, provided however, that before any
such disclosure is made, Henk shall first furnish written notice to the
Company of the need for such disclosure and, in reasonable detail, the
nature of the information to be disclosed, with such notification to be
made not less than ten (10) business days prior to the date such disclosure
is proposed to be made and not less than ten (10) business days prior to
the date such disclosure is, in fact, made. If the Company deems such
disclosure to be in violation of the terms of this Agreement, it shall have
the right to seek, and Henk shall not object to or oppose the Company's
request for, injunctive relief to prevent such disclosure or any threatened
future disclosure.
(j) Henk agrees to cooperate with the Company in providing any
information he may have regarding any business or legal matter as
reasonably requested by an officer of the Company. Henk further agrees to
cooperate with the Company in any investigation of any issue or claim,
whether or not the claim has been asserted, and prosecuting or defending
against any such claim, at any times and to such extent as reasonably
requested by an officer of the Company.
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5. Henk's Loan.
(a) Henk acknowledges and reaffirms the terms of an outstanding loan
to him from the Company in the principal amount of One Million Five Hundred
Thousand Dollars ($1,500,000) ("Loan Amount"), which is payable without
interest pursuant to an Amended and Restated Loan Agreement and a certain
Amended and Restated Non-Negotiable Promissory Note, dated August 31, 2001
(collectively, "Loan Documents"), on or before August 31, 2007 ("Scheduled
Loan Date").
(b) Notwithstanding the terms of the Loan Documents, Henk hereby
agrees that if the Company's common stock ("Stock") trades at a price of at
least Thirty Dollars ($30) per share for any thirty (30) day consecutive
period ("Stock Price Level), on or before October 31, 2005, then the Loan
Amount shall become due and payable within thirty (30) days following the
completion of the earliest thirty (30) day period in which the Stock
attains and maintains the Stock Price Level. If the stock has not attained
and maintained the Stock Price Level by October 31, 2005, then the maturity
date for the Loan Amount shall be shall be extended to August 31, 2012.
Notwithstanding the foregoing, the Loan Amount shall be subject to
acceleration as provided in Section 6.
6. Breach and Forfeiture; Acceleration of Loan Amount. Notwithstanding
any contrary provision in the Loan Documents, the Employment Agreement, the
Release referred to in Section 7 below, or this Agreement, in the event
that Henk breaches any obligations owed to the Company, either pursuant to
the terms of this Agreement, the Loan Documents, the Employment Agreement
or the Release referred to in Section 7, below, and such breach is not
cured within three (3) days of the Company's written notice to Henk
(provided that the Company is not required to give notice or an opportunity
to cure in the event of a breach involving Henk's non-competition
obligations arising under any employment agreement with the Company or
under his Consulting Agreement), then in such event:
(a) Any and all of Henk's outstanding stock options, whether or not
vested, shall be forfeited notwithstanding the provisions of Section 3
above.
(b) Any payments otherwise due to Henk under Section 3 of this
Agreement shall be forfeited.
(c) The entire unpaid principal balance owed by Henk under the Loan
Documents shall be immediately due and payable.
The foregoing rights of the Company are in addition to any other
rights or remedies to which the Company may otherwise be entitled to
pursue as a consequence of such breach or default or pursuant to the
terms of the Release described in Section 7, below.
7. Release of all Claims. In consideration of the payments made to
Henk under this Agreement, and other good and valuable consideration paid
to Henk, the receipt and sufficiency of which is acknowledged by Henk, Henk
shall execute and deliver to the Company a Release ("Release") in a form
acceptable to the Company.
8. Henk's Right of Indemnification.
Henk shall be entitled to indemnification for any fees, costs or
expenses he reasonably incurs in defending against, or satisfying any
judgment arising from, any claim asserted against him for conduct that
allegedly occurred during the course and in the scope of his employment
with the Company, or fulfilling his responsibilities under this Consulting
Agreement. Henk's entitlement to indemnification is subject to the
following conditions:
(a) Henk must, within three (3) days after he learns of any claim
allegedly giving rise to his right to indemnification, provide notice to
the Company of the claim.
(b) The conduct upon which the claim against Henk is based must have
been conduct that Henk, at the time the conduct allegedly occurred,
reasonably believed to have been consistent with the law, the Company's
policies, and Henk's authority.
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(b) The Company, acting in good faith but in its sole discretion,
shall determine whether Henk's alleged conduct complied with the
requirements of Subsection 8(b) above.
(d) Upon the request of any officer of the Company, Henk will
cooperate with the Company and provide to that officer whatever information
the Company believes it needs or requires to assess either Henk's request
for indemnification and/or the Company's potential defenses and obligations
with respect to any such claim. With respect to any claim for which Henk
requests indemnification, the Company has the right to select the attorney
or attorneys who will represent Henk.
9. Miscellaneous.
(a) Notices. All notices, permissions, and other communications
required or permitted hereunder or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when
delivered by hand or mailed by registered or certified mail, return receipt
requested, as follows (provided that notice of a change of address shall be
deemed given only when received):
If to the Company:
Xxxxxx X. Xxxx, Vice President, Legal
Allied Waste Industries, Inc.
00000 Xxxxx Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
If to Henk:
Xxxxx X. Xxxx
00000 X. 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
or to such other names or addresses as the Company or Henk, as the
case may be, shall designate by notice to the other party hereto in the
manner specified in this Section 8.1.
(b) Waiver of Breach. The waiver by any party hereto of a breach of
any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party.
(c) Assignment. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors, legal representatives and
assigns, and upon Henk, his heirs, executors, administrators,
representatives and assigns; provided, however, Henk agrees that his
rights and obligations hereunder are personal to him and may not be
assigned without the express written consent of the Company.
(d) Entire Agreement, No Oral Amendments. This Agreement,
together with any schedule or exhibit attached hereto and any document
(i.e., the Employment Agreement, the loan documents and the Release),
policy, rule or regulation referred to herein, replaces and merges all
previous agreements and discussions relating to the same or similar
subject matter between Henk and the Company and constitutes the entire
agreement between Henk and the Company with respect to the subject
matter of this Agreement. This Agreement may not be modified in any
respect by any verbal statement, representation or agreement made by
any employee, officer, or representative of the Company or by any
written agreement unless signed by an officer of the Company who is
expressly authorized by the Company to execute such document.
(e) Enforceability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be
determined to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions or applications
of this Agreement which can be given effect without the invalid or
unenforceable provision or application.
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(f) Jurisdiction, Venue. The laws of the State of Arizona shall
govern the interpretation, validity and effect of this Agreement
without regard to the place of execution or the place for performance
thereof, and the Company and Henk agree that the courts situated in
Maricopa County, Arizona shall have personal jurisdiction over the
Company and Henk to hear all disputes arising under this Agreement.
This Agreement is to be at least partially performed in Maricopa
County, Arizona, and as such, the Company and Henk agree that venue
shall be proper with the courts in Maricopa County, Arizona to hear
such disputes. In the event either the Company or Henk is not able to
effect service of process upon the other party hereto with respect to
such disputes, the Company and Henk expressly agree that the Secretary
of State for the State of Arizona shall be an agent of the Company
and/or Henk to receive service of process on behalf of the Company
and/or Henk with respect to such disputes.
(g) Injunctive Relief. The Company and Henk agree that a breach
of any term of this Agreement by Henk would cause irreparable damage
to the Company and that, in the event of such breach, the Company
shall have, in addition to any and all remedies of law, the right to
any injunction, specific performance and other equitable relief to
prevent or to redress the violation of Henk's duties or
responsibilities hereunder.
(h) Attorneys' Fees. In the event that any legal action is filed
by either party to enforce or interpret any of the provisions of this
Agreement, the losing party shall pay to the prevailing party, in
addition to any other amount awarded in the action, reasonable
attorneys' fees, the amount of which shall be fixed by the court and
shall be made a part of any judgment rendered.
IN WITNESS WHEREOF, the undersigned, intending to be early bound,
have executed the Agreement as of the date first written above.
ALLIED WASTE INDUSTRIES, INC., a Delaware corporation
By
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Xxxxxx X. Xxxx, Vice President, Legal
"Company"
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Xxxxx X. Xxxx
"Henk"
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