EXHIBIT 10.1
WASTE SERVICES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is dated as of October 26, 2005 by
and between WASTE SERVICES, INC., a Delaware corporation (the “Company”) and
DAVID SUTHERLAND-YOEST (the “Executive”):
WHEREAS, the Company desires to employ Executive in an executive capacity and
Executive desires to enter into the Company’s employ upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements set forth
herein, the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:

1.   EMPLOYMENT.

The Company shall employ Executive, and Executive shall be employed by the
Company, upon the terms and subject to the conditions set forth in this
Agreement, effective as of October 26, 2005 (the “Effective Date”); provided,
however that as a condition to effectiveness of this Agreement, the Company and
Executive shall have entered into an Indemnification Agreement substantially in
the form of Exhibit A attached hereto.

2.   TERM OF EMPLOYMENT.

The period of Executive’s employment under this Agreement (the “Employment
Term”) shall begin on the Effective Date and shall continue until Executive’s
employment is terminated in accordance with Section 5 below.

3.   DUTIES AND RESPONSIBILITIES.   (a)   Executive shall serve as Chairman and
Chief Executive Officer of the Company and shall report to the Board of
Directors of the Company. In such capacity, Executive shall have the
responsibilities, duties and authorities provided for in the Company’s Bylaws,
as amended from time to time, and as may be assigned to Executive from time to
time by the Board of Directors of the Company or a duly authorized committee
thereof.   (b)   During the Employment Term, Executive shall devote his full
time and attention during normal business hours to the affairs of the Company
and use his best efforts to perform faithfully and efficiently his duties and
responsibilities; provided, however, that subject to the limitations of
Section 8 hereof and to the prior approval of the Chief Executive Officer of the
Company, Executive may serve on corporate, industry, civic or charitable Boards
or committees as long as such activities do not interfere with the performance
of Executive’s responsibilities to the Company. Executive agrees to act at all
times in the best interests of the Company and to take no action or make any
statement, oral or

 

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    written, which could reasonably be expected by Executive to injure the
Company’s business, financial condition, results of operations, prospects,
interests or reputation.   (c)   Executive agrees to comply at all times during
the Employment Term with all applicable policies, rules, codes and regulations
of the Company in effect from time to time, including, without limitation, all
applicable codes of ethics or conduct and all policies regarding trading in the
Company’s common stock.   4.   COMPENSATION AND BENEFITS.   (a)   BASE SALARY.
During the Employment Term, the Company shall pay Executive a base salary at the
annual rate of $500,000 USD, or such higher rate as may be determined from time
to time by the Board of Directors or a duly authorized committee thereof (such
amount, as increased from time to time, the “Base Salary”). Such Base Salary
shall be paid on the Company’s regular pay days in accordance with the Company’s
standard payroll practice for executive officers, subject only to such payroll
and withholding deductions as may be required by law and other deductions
applied generally to employees of the Company for insurance and other employee
benefit plans. For all purposes under this Agreement, Executive’s Base Salary
shall include any amount which is deferred under any nonqualified plan or
arrangement of the Company.   (b)   INCENTIVE COMPENSATION.

  (i)   ANNUAL CASH BONUS. In addition to the Base Salary, Executive shall be
eligible for an annual cash bonus (either pursuant to a bonus or incentive plan
or program of the Company or otherwise) for each fiscal year during the
Employment Term. Executive’s target annual cash bonus will be equal to 100% (the
“Target Bonus Rate”) of his Base Salary in effect at the beginning of the
relevant fiscal year. The amount of the annual cash bonus, which may be higher
or lower than the Target Bonus Rate, shall be determined by the Board of
Directors or a duly authorized committee thereof based upon applicable corporate
and individual performance targets established by the Board of Directors or such
committee in its sole discretion (the “Annual Bonus”). For all purposes under
this Agreement, Executive’s Annual Bonus shall include any amount which is
deferred under any nonqualified plan or arrangement of the Company.     (ii)  
LONG-TERM OR SUPPLEMENTAL INCENTIVE COMPENSATION. Executive shall be eligible to
participate in any supplemental and/or long-term incentive compensation plans or
programs (which may consist of stock options, restricted stock, long-term cash
awards or other forms of long-term or supplemental incentive compensation)
generally made available to full-time senior executive officers of the Company.

(c)   BENEFIT PLANS. Executive shall be eligible to participate in and receive
benefits under all retirement, health and welfare benefit plans, programs and
arrangements which are

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    from time to time available to full-time senior executive officers of the
Company in accordance with the terms and conditions of such plans, programs and
arrangements in effect from time to time. Such benefit plans, programs and
arrangements will include family medical, family dental and family vision
benefit plans and short-term and long-term disability plans, and may include,
without limitation, life insurance plans, accidental death insurance plans,
travel accident insurance plans, savings and retirement plans and pension plans
(all such benefit plans, the “Benefit Plans”). At his option, Executive may pay
directly the premiums for coverage under the above-mentioned disability plans
and have the Company pay to him, as additional income, an amount equal to the
amount of those premiums. Executive agrees to submit to a physical examination
from time to time as requested by the Company to facilitate Executive’s
participation in one or more Benefit Plans. The Company may terminate or reduce
benefits under any such plans, programs or arrangements to the extent such
reductions apply uniformly to all full-time senior executive officers of the
Company, and Executive’s benefits shall be reduced or terminated accordingly.
The Company’s obligations under this Section 4(c) are expressly conditioned on
Executive and his family dependents taking all reasonable actions (including but
not limited to enrolling in all health and welfare benefit programs, plans and
arrangements which are from time to time available to the Company’s full-time
senior executive officers as and when Executive and his family dependents become
eligible to participate in such programs, plans and arrangements) and providing
all information as the Company shall reasonably request and as is necessary for
the Company to fulfill such obligations.   (d)   VACATION. In addition to normal
statutory holidays recognized by the Company, Executive shall be entitled to the
greater of (a) four weeks of paid vacation for each fiscal year during the
Employment Term and (b) such other amount of paid vacation as may be afforded
executive officers under the Company’s policies in effect from time to time
(“Vacation Time”).   (e)   EXPENSE REIMBURSEMENT. The Company shall promptly
reimburse Executive for travel and other out-of-pocket expenses incident to his
position in accordance with the Company’s customary practices applicable to
full-time senior executive officers. To the extent that these expense
reimbursements are reportable as taxable income, they will be grossed up to
include the tax due on them.   (f)   REIMBURSEMENT OF CERTAIN TAX EXPENSES. The
Company shall, upon written demand by Executive accompanied by supporting
invoices, promptly reimburse Executive for all costs and expenses (including
reasonable legal, accounting and other advisory fees) incurred by Executive to
(i) determine, in any tax year of Executive, the tax consequences to Executive
of any amount payable (or reimbursable) under Section 7 hereof, or (ii) prepare
responses to an Internal Revenue Service or Canada Revenue Agency audit of, and
to otherwise defend, his personal income tax return for any year during the
Employment Term or to defend himself in any administrative proceeding or civil
litigation relating to any such tax return, in each case that is occasioned by
or related to any audit by the Internal Revenue Service or the Canada Revenue
Agency of the

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    Company’s income tax returns; provided, however, in no event shall the
Company be required to reimburse Executive for costs and expenses in excess of
seventy-five thousand United States dollars ($75,000 USD) in any given fiscal
year pursuant to this Section 4(e).   (g)   FRINGE BENEFITS AND PERQUISITES.
Executive shall be eligible to participate in and receive benefits under all
fringe benefit plans, practices, policies and programs of the Company to the
same extent, and subject to the same terms and conditions, as those arrangements
are made available to full-time senior executive officers of the Company.   5.  
TERMINATION OF EMPLOYMENT.

Executive’s employment under this Agreement may be terminated under any of the
circumstances set forth in this Section 5. Upon termination, Executive (or his
beneficiaries or estate as the case may be) shall be entitled to receive the
compensation and benefits described in Section 6 and, if applicable, Section 7
below.

(a)   DEATH. Executive’s employment hereunder shall terminate automatically upon
Executive’s death.   (b)   TOTAL DISABILITY. The Company may terminate
Executive’s employment hereunder, by written notice to Executive delivered in
accordance with Sections 5(g) and 15 hereof, upon a determination pursuant to
this Section 5(b) that Executive is “Totally Disabled.” For purposes of this
Agreement, For the purposes of this provision, “Totally Disabled” shall have the
same meaning as it has under the long-term disability policy covering Executive
pursuant to paragraph 4(c) herein. Executive’s receipt of disability benefits
under the Company’s long-term disability plan shall be deemed conclusive
evidence of Total Disability for purposes of this Agreement.   (c)   TERMINATION
BY THE COMPANY FOR CAUSE. The Company may terminate Executive’s employment
hereunder for “Cause” at any time, by written notice to Executive delivered in
accordance with Sections 5(g) and 15 hereof.

  (i)   For purposes of this Agreement, the term “Cause” shall mean any of the
following: (A) conviction of a crime (including conviction on a nolo contendre
plea) involving the commission by Executive of a felony or of a misdemeanor
involving, in the good faith judgment of the Board of Directors, fraud,
dishonesty or moral turpitude; (B) Executive’s deliberate and continual refusal
to perform the duties and responsibilities assigned to Executive under this
Agreement (other than as a result of vacation permitted under this Agreement,
sickness, illness or injury); (C) fraud or embezzlement by Executive, determined
in accordance with the Company’s normal, internal investigative procedures
consistently applied; (D) gross misconduct or gross negligence by Executive in
connection with the business of the Company or an Affiliate (as defined herein)
unless Executive reasonably believed, in good faith, that his acts or omissions
were in or not

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      Opposed to the best interests of the Company (without intent of Executive
to gain therefrom, directly or indirectly, a profit to which he was not legally
entitled); or (E) any material breach by Executive of any of the provisions of
Section 8 of this Agreement or of any provisions of the Confidentiality and
Proprietary Information Agreement (as defined herein); provided, however, that
the occurrence of an act or omission covered by clauses (B), (D) or (E) of this
paragraph 5(c)(i) shall not constitute “Cause” if Executive remedies such act or
omission within ten (10) business days after delivery by the Company of written
notice to Executive in accordance with Section 15 hereof specifying in
reasonable detail the facts and circumstances believed by the Company to
constitute such “Cause.”     (ii)   Any determination of Cause under this
Agreement shall be made by resolution duly adopted by the affirmative vote of at
least two-thirds of the members of the Board of Directors (not including
Executive if Executive is a member of the Board of Directors) at a meeting of
the Board of Directors called and held for that purpose; provided that Executive
shall have been given written notice of such meeting by certified mail at least
ten (10) business days prior to the meeting and shall have been given the
opportunity to be heard by the Board of Directors before such resolution is
passed. The failure by the Company to follow the procedures set forth in this
Section 5(c)(ii) shall result in the termination of the Executive’s employment
being deemed to be a termination by the Company without Cause.

(d)   TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate his
employment hereunder for Good Reason after delivery by Executive of written
notice to the Company in accordance with Sections 5(g) and 15 hereof within
sixty (60) days after the occurrence of a Good Reason Event (as hereinafter
defined). For purposes of this Agreement, “Good Reason” means the occurrence of
any of the following events (each a “Good Reason Event”) without Executive’s
written consent during the Employment Term:

  (i)   A change in Executive’s responsibilities or titles or any other action
by the Company which represents a material diminution of Executive’s position,
status or authority, except in connection with or as a result of the termination
of Executive’s employment pursuant to any provision of this Section 5 (a
“Dimunition”); provided, however that such Dimunition shall not constitute “Good
Reason” or a “Good Reason Event” if the Company remedies such Dimunition within
ten (10) business days after delivery by Executive of written notice to the
Company in accordance with Section 15 hereof specifying in reasonable detail the
facts and circumstances believed by Executive to constitute such Dimunition.    
(ii)   A reduction by the Company in Executive’s Base Salary.

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  (iii)   A material breach by the Company of Section 4(c) hereof; provided,
however that such a breach shall not constitute “Good Reason” or a “Good Reason
Event” if the Company remedies such breach within ten (10) business days after
delivery by Executive of written notice to the Company in accordance with
Section 15 hereof specifying in reasonable detail the facts and circumstances
believed by Executive to constitute a material breach of Section 4(c).     (iv)
  The failure by the Company to pay Executive any material amount of his Base
Salary, or any material amount of other compensation, that is due and payable
under this Agreement within ten (10) business days after Executive makes written
demand for such amount.     (v)   The failure by the Company to enter into a
written agreement with any entity that purchases all or substantially all of the
assets of the Company or any entity into which the Company is merged (each a
“Successor”) pursuant to which such Successor agrees to assume all of the
obligations of the Company under this Agreement at and effective as of the
closing of such sale of assets or merger.

(e)   VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate his employment
hereunder without Good Reason at any time during the Employment Term after
providing thirty (30) days’ written notice to the Company delivered in
accordance with Sections 5(g) and 15 hereof.   (f)   TERMINATION BY THE COMPANY
WITHOUT CAUSE. At any time during the Employment Term, the Company may terminate
Executive’s employment hereunder without Cause by written notice to Executive
delivered in accordance with Sections 5(g) and 15 hereof. For purposes of this
Agreement, Executive’s employment will be deemed to have been terminated
“Without Cause” if Executive is terminated by the Company for any reason other
than Death pursuant to Section 5(a), Total Disability pursuant to Section 5(b),
or Cause pursuant to Section 5(c).   (g)   NOTICE OF TERMINATION. Any
termination of Executive’s employment by the Company for Cause pursuant to
Section 5(c), without Cause pursuant to Section 5(f), or as a result of
Executive’s Total Disability pursuant to Section 5(b), or by Executive for Good
Reason pursuant to Section 5(d), shall be communicated by Notice of Termination
to the other party hereto given in accordance with this Agreement. For purposes
of this Agreement, a “Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive’s employment under the provision so
indicated, and (iii) specifies the effective date of termination, if such date
is other than the date of receipt of such notice (which effective date shall not
be (A) less than ten (10) business days after the giving of such notice in the
case of termination by Executive for Good Reason or (B) more than 15 days after
the giving of such notice in all other cases). Any voluntary termination of
Executive’s employment by Executive pursuant to Section 5(e) shall be
communicated by

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    written notice to the Company specifying (i) that Executive wishes to
terminate his employment with the Company pursuant to Section 5(e) hereof and
(ii) indicating the effective date of termination (which effective date shall
not be less than 30 days after the giving of such notice).   6.   COMPENSATION
AND BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT.

In the event that Executive’s employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:

(a)   COMPENSATION AND BENEFITS PAYABLE FOLLOWING TERMINATION FOR ANY REASON.
The following compensation and benefits shall be payable upon termination of
Executive’s employment under this Agreement for any reason:

  (i)   Executive or his beneficiaries or estate shall be entitled to receive,
within fourteen (14) days after the effective date of termination, any accrued
but unpaid Base Salary for services rendered by Executive to the Company prior
to the date of termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, and cash compensation (at a rate per day equal
to the Base Salary divided by the number of business days in the relevant year)
for any accrued Vacation Time that remained unused by the Executive at the time
of termination; and     (ii)   Any earned benefits to which Executive (or his
beneficiaries or estate) may be entitled pursuant to the plans, policies and
arrangements referred to in Sections 4(b), 4(c) and 4(g) hereof shall be
determined and paid in accordance with the terms of such plans, policies and
arrangements. In the case of compensation previously deferred by Executive, all
amounts previously deferred and not yet paid by the Company shall be paid to
Executive (or his beneficiaries or estate) within fourteen (14) days after the
effective date of termination unless such payment is inconsistent with the terms
of any payment election made by Executive with respect to such deferred
compensation.

(b)   TERMINATION BY REASON OF DEATH. In the event that Executive’s employment
is terminated by reason of Executive’s death, the Company shall pay Executive’s
estate the following compensation and benefits in addition to the compensation
and benefits provided for in Section 6(a) above:

  (i)   Executive’s estate shall be entitled to be paid:

  (A)   Executive’s Base Salary at the rate in effect immediately prior to
Executive’s date of death on the Company’s regular pay days for a period of
three (3) years from the effective date of termination as if his employment had
continued until the end of such three (3)-year period; and

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  (B)   an aggregate amount equal to three (3) times the average of the Annual
Bonuses paid to Executive in the three (3) most recently completed fiscal years
preceding the effective date of termination, without regard to whether the
payment of all or any portion of such Annual Bonus has been deferred (such
average being hereinafter referred to as the “Bonus Average”), which shall be
paid in equal installments on the Company’s regular pay days over the course of
thirty-six (36) months from the effective date of termination; provided,
however, that if at the time of termination Executive has not been employed by
the Company for three fiscal years, the Bonus Average shall be deemed for all
purposes of this Agreement to equal Executive’s Target Bonus Rate multiplied by
his Base Salary at the rate in effect immediately prior to the effective date of
termination. The Company may purchase insurance to cover all or any part of the
obligations set forth in this Section 6(b)(i) and Executive agrees to submit to
a physical examination from time to time to facilitate the procurement or
renewal of such insurance. Any proceeds of such insurance paid to Executive or
his beneficiaries or estate shall be considered a portion of the payments
required to be made to Executive pursuant to this Section 6(b)(i) and shall not
be in addition thereto.

  (ii)   Executive’s dependents shall be entitled to continue to receive
medical, dental and vision insurance coverage at least equal in type and amount
to that made available to dependents of full-time senior executives of the
Company immediately prior to Executive’s death for a period of three (3) years
from the effective date of termination, or until Executive’s dependents become
eligible for substantially equivalent employer-provided health insurance
benefits from any other person or business entity, whichever occurs first. In
the event that participation in any such plan, program or arrangement of the
Company is prohibited, the Company will arrange to provide benefits
substantially similar to those benefits which Executive’s dependents would have
been entitled to receive under such plan, program or arrangement for such
period.     (iii)   All of Executive’s then outstanding options to purchase
shares of the Company’s common stock shall be vested and exercisable in
accordance with the terms of the stock option plan of the Company pursuant to
which such options were granted (the “Governing Stock Option Plan”) as then in
effect.

(c)   TERMINATION BY REASON OF TOTAL DISABILITY. In the event that Executive’s
employment is terminated by reason of Executive’s Total Disability pursuant to
Section 5(b) hereof, the Company shall pay Executive the following compensation
and benefits in addition to the compensation and benefits provided for in
Section 6(a) above:

  (i)   Subject to Section 6(c)(ii) below, Executive shall be entitled to be
paid:

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  (A)   his Base Salary at the rate in effect immediately prior to the effective
date of termination on the Company’s regular pay days for a period of three
(3) years from the effective date of termination as if his employment had
continued until the end of such three (3) year period; and     (B)   an
aggregate amount equal to three (3) times the Bonus Average, which shall be paid
in equal installments on the Company’s regular pay days over the course of
thirty-six (36) months from the effective date of termination.

  (ii)   Whenever compensation is payable to Executive under Section 6(c)(i)
during a period in which he is partially or totally disabled, and such
disability would (except for the provisions hereof) entitle Executive to
disability income or salary continuation payments from the Company according to
the terms of any plan or program presently maintained or hereafter established
by the Company, the disability income or salary continuation paid to Executive
pursuant to any such plan or program shall be considered a portion of the
payments required to be made to Executive pursuant to this Section 6(c) and
shall not be in addition thereto. If disability income is payable directly to
Executive by an insurance company under the terms of an insurance policy paid
for by the Company, the amounts paid to Executive by such insurance company
shall be considered a portion of the payment to be made to Executive pursuant to
this Section 6(c) and shall not be in addition thereto.     (iii)   Executive
and his dependents shall be entitled to continue to receive medical, dental and
vision insurance coverage at least equal in type and amount to that made
available to full-time senior executives of the Company immediately prior to the
effective date of termination for a period of three (3) years from the effective
date of termination, or until Executive becomes eligible for substantially
equivalent employer-provided health insurance benefits from any other person or
business entity, whichever occurs first. In the event that participation in any
such plan, program, or arrangement of the Company is prohibited, the Company
will arrange to provide benefits substantially similar to those benefits which
Executive would have been entitled to receive under such plan, program, or
arrangement, for such period.     (iv)   All of Executive’s then outstanding
options to purchase shares of the Company’s common stock shall be vested and
exercisable in accordance with the terms of the Governing Stock Option Plan, as
then in effect.

(d)   TERMINATION FOR CAUSE. In the event that Executive’s employment is
terminated by the Company for Cause pursuant to Section 5(c) hereof, the Company
shall not be obligated to make any payments to Executive under this Agreement on
or following the effective date of termination, other than the compensation and
benefits provided for in Section 6(a) above.

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(e)   VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive terminates
his employment without Good Reason pursuant to Section 5(e) hereof, the Company
shall not be obligated to make any payments to Executive under this Agreement on
or following the date of termination, other than the compensation and benefits
provided for in Section 6(a) above.   (f)   TERMINATION BY THE COMPANY WITHOUT
CAUSE OR BY EXECUTIVE FOR GOOD REASON. In the event that Executive’s employment
is terminated by the Company without Cause pursuant to Section 5(f) hereof or by
Executive for Good Reason pursuant to Section 5(d) hereof, the Company shall pay
to Executive the following compensation and benefits in addition to the
compensation and benefits provided for in Section 6(a) above:

  (i)   Executive shall be entitled to be paid:

  (A)   his Base Salary at the rate in effect immediately prior to the effective
date of termination on the Company’s regular pay days for a period of three
(3) years from the effective date of termination as if his employment had
continued until the end of such three (3) year period; and     (B)   an
aggregate amount equal to three (3) times the Bonus Average, which shall be paid
in equal installments on the Company’s regular pay days over the course of
thirty-six (36) months from the effective date of termination.

  (ii)   Executive and his dependents shall be entitled to continue to receive
medical, dental and vision insurance coverage at least equal in type and amount
to that made available to full-time senior executives of the Company immediately
prior to the effective date of termination for a period of three (3) years from
the effective date of termination, or until Executive becomes eligible for
substantially equivalent employer-provided health insurance benefits from any
other person or business entity, whichever occurs first. In the event that
participation in any such plan, program or arrangement of the Company is
prohibited, the Company will arrange to provide benefits substantially similar
to those benefits which Executive would have been entitled to receive under such
plan, program or arrangement for such period.     (iii)   All of Executive’s
then outstanding options to purchase shares of the Company’s common stock shall
be vested and exercisable in accordance with the terms of the Governing Stock
Option Plan, as then in effect;

    provided, however, that if the Company terminates Executive’s employment
without Cause or Executive terminates his employment with the Company for Good
Reason within the one-year period preceding, or within the two-year period
following, a “Change of Control” or in the event that Executive terminates his
employment without Good Reason within the six-month period following a “Change
of Control”, Executive shall be

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    paid the compensation and benefits provided for in Section 7 hereof rather
than the compensation and benefits provided for in this Section 6(f).   (g)   NO
OTHER BENEFITS OR COMPENSATION. Except as may be provided under this Agreement
or under the terms of any Compensation Plans or Benefit Plans in effect and
applicable to Executive on the effective date of termination, Executive shall
have no right to receive any other compensation, or to participate in any other
plan, arrangement or benefit after such termination and all other obligations of
the Company and rights of Executive under this Agreement shall terminate
effective as of the effective date of termination.   7.   CHANGE OF CONTROL.  
(a)   RESIGNATION FOLLOWING CHANGE OF CONTROL. If (i) the Company terminates
Executive’s employment without Cause or Executive terminates his employment with
the Company for Good Reason and (ii) a “Change of Control” has occurred within
the two-year period preceding, or within the one-year period following, the
effective date of termination, or if (i) Executive terminates his employment
with the Company without Good Reason and (ii) a “Change of Control” has occurred
within the six-month period preceding the effective date of termination,
Executive shall be entitled to the compensation described in this Section 7 in
addition to the compensation and benefits provided for in Section 6(a) above and
in lieu of the compensation and benefits provided for in Section 6(e) or Section
6(f) above:

  (i)   a lump sum amount equal to three(3) times the sum of (A) and (B) below:

  (A)   his Base Salary at the rate in effect immediately prior to the effective
date of termination; and     (B)   the Bonus Average.

  (ii)   Executive and his dependents shall be entitled to continue to receive
medical, dental and vision insurance coverage at least equal in type and amount
to that made available to full-time senior executives of the Company immediately
prior to the effective date of termination for a period of three (3) years from
the effective date of termination, or until Executive becomes eligible for
employer-provided health insurance benefits from any other person or business
entity (whether or not those health insurance benefits are comparable to the
health insurance benefits provided by the Company), whichever occurs first. In
the event that participation in any such plan, program, or arrangement of the
Company is prohibited, the Company will arrange to provide benefits
substantially similar to those benefits which Executive would have been entitled
to receive under such plan, program, or arrangement, for such period.

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  (iii)   All of Executive’s then outstanding options to pursuant shares of the
Company’s common stock shall be vested and exercisable in accordance with the
terms of the Governing Stock Option Plan as then in effect.

(b)   DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, a “Change
of Control” shall be deemed to have occurred upon the happening of any of the
following:

  (i)   the sale or lease of all or substantially all of the assets of the
Company to any other person or entity other than a direct or indirect
wholly-owned subsidiary or parent of the Company;     (ii)   a merger,
amalgamation, consolidation or other reorganization of the Company with any
other entity (other than a direct or indirect wholly-owned subsidiary or parent
of the Company) in which the Company is not the surviving entity or becomes
owned entirely by another entity, unless at least 50% of the outstanding voting
securities of the surviving or parent corporation, as the case may be,
immediately following such transaction are beneficially held by the same persons
and/or entities that beneficially held the outstanding voting securities of the
Company immediately prior to such transaction, and such outstanding voting
securities are beneficially held by such persons and/or entities in the same
proportion as such persons and/or entities beneficially held the outstanding
voting securities of the Company immediately prior to such transaction;    
(iii)   the acquisition of beneficial ownership, as such term is defined in the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) in a single
transaction or series of related transactions (by tender offer or otherwise), of
more than 50% of the voting securities of the Company by a single person or
entity (other than the Company or any affiliate (as such term is defined in
Rule 12b-2 under the Exchange Act) of the Company (each an “Affiliate”), a
trustee or any other fiduciary or committee of any employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of the
stock of the Company) or “group” within the meaning of Section 13(d)(3) of the
Exchange Act, whether through the acquisition of previously issued and
outstanding voting securities or of voting securities that have not been
previously issued, or any combination thereof;     (iv)   the voluntary or
involuntary dissolution, liquidation or winding up of the Company, or the
adoption of any resolution with respect thereto; or     (v)   the individuals
who constituted the Board of Directors as of the Effective Date (the “Incumbent
Board”) ceasing for any reason to constitute at least a majority of the Board of
Directors; provided, that any person becoming a director whose election or
nomination for election was approved by a majority of the members of

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      the Incumbent Board shall be considered, for purposes of this Agreement, a
member of the Incumbent Board; and provided further that, notwithstanding
anything herein to the contrary, a Change of Control shall not be deemed to have
occurred in connection with (i) any public offering of the common stock of the
Company for cash; (ii) any transaction with an entity or group that includes, is
affiliated with or is wholly or partially controlled by, one or more executive
officers of the Company in office immediately prior to the transaction that
would otherwise constitute a Change of Control; (iii) any capital raising
transaction (including any investment by one or more private equity funds) for
the purpose of financing acquisitions specifically identified by the Board of
Directors of the Company; or (iv) the U.S. Reorganization Transaction.

(c)   CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any portion
of the payments or benefits provided to Executive under this Agreement or
pursuant to any other plan, arrangement or agreement between Executive and the
Company or any Affiliate thereof (collectively, “Total Payments”) would be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code or any
similar tax that may hereafter be imposed, then Executive shall be entitled to
receive an additional payment (the “Gross-up Payment”) in an amount which, when
combined with the net amount of the Total Payments retained by Executive after
giving effect to the application of the Excise Tax and all other applicable
taxes on the Total Payments (including any interest or penalties imposed with
respect to such taxes), will result in receipt by Executive of a Gross-up
Payment equal to the Excise Tax imposed upon the Total Payments.

  (i)   Determination by Accounting Firm. Subject to the provisions of Section
7(c)(ii) below, all determinations required to be made under this Section 7(c),
including whether a Gross-up Payment is required, the amount of the Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by the Company’s independent auditors or such other certified
public accounting firm reasonably acceptable to Executive as may be designated
by the Company (the “Accounting Firm”). The Accounting Firm shall provide
detailed calculations supporting the Gross-up Payment to the Company and
Executive. All fees and expenses of the Accounting Firm shall be paid solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 7(c),
shall be paid by the Company to Executive not later than the due date for the
payment of any Excise Tax. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 7(c)(ii) and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such

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      Underpayment shall be promptly paid by the Company to or for Executive’s
benefit.     (ii)   The Company’s Right to Contest Excise Tax. Executive agrees
to notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than ten (10) business days after Executive is informed in writing of such claim
and shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which Executive gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive agrees to:

  (A)   give the Company any information reasonably requested by the Company
relating to such claim,     (B)   take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company;     (C)  
cooperate with the Company in good faith in order to effectively contest such
claim, and     (D)   permit the Company to participate in any proceedings
relating to such claim;

      provided, however, that the Company agrees to bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 7(c)(ii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company

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      shall advance the amount of such payment to Executive, on an interest-free
basis, and shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for Executive’s taxable
year with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.     (iii)   Repayment to the Company. If, after the
receipt by Executive of an amount advanced by the Company pursuant to
Section 7(c)(ii), Executive becomes entitled to receive any refund with respect
to such claim, Executive shall promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). Executive shall be entitled to deduct from any payment made
to the Company pursuant to the previous sentence the amount of any taxes that
Executive previously paid on the amount of such payment. If, after the receipt
by Executive of an amount advanced by the Company pursuant to Section 7(c)(ii),
a determination is made that Executive is not entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

(d)   Notwithstanding anything herein to the contrary, to the extent that
Executive has received payments of Base Salary pursuant to Section 6(f)(i)
hereof at a time when a “Change of Control” occurs, such payments shall be
deducted from the lump sum payment required to be made to Executive pursuant to
Section 7(a)(i) hereof.   8.   RESTRICTIVE COVENANTS   (a)   COMPETITIVE
ACTIVITY. Executive covenants and agrees that at all times during Executive’s
employment with the Company, and during the Non-Compete Period (as defined
below), Executive will not, acting alone or in conjunction with others, without
the prior written consent of the Company, directly or indirectly, engage or
participate in, assist, render services to or for, or have any active interest
or involvement in, whether as an employee, principal, agent, consultant,
creditor, lender, advisor, employer, officer, director, stockholder (excluding
holdings by Executive of up to 3% of the voting stock of any corporation subject
to the periodic reporting requirements of the Exchange Act), partner, proprietor
or in any other individual or representative capacity in or with, any

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    person, entity or business which competes, directly or indirectly, with the
Company or any Affiliate in any of the business areas or territories in which
the Company or any Affiliate then conducts business or with any development
opportunity being pursued by the Company during the Non-Compete Period.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times during
Executive’s employment with the Company, and during the Non-Compete Period,
Executive will not, without the prior written consent of the Company, directly
or indirectly (i) induce, solicit or entice any customer of the Company or any
customer of any Affiliate to patronize any person, business or entity which
competes, directly or indirectly, with the Company or such Affiliate in any of
the business areas or territories in which the Company or such Affiliate then
conducts business; (ii) canvass, solicit or accept any business from any
customer of the Company or any customer of any Affiliate (other than in
connection with the performance by Executive of his duties and responsibilities
for the Company in accordance with this Agreement) in any of the business areas
or territories in which the Company or any Affiliate of the Company then
conducts business; (iii) request or advise any customer of the Company or any
customer of any Affiliate to withdraw, curtail or cancel such customer’s
business with the Company or such Affiliate in any of the business areas or
territories in which the Company or any Affiliate of the Company then conducts
business; (iv) contact, communicate with or solicit any prospect that the
Company is actively pursuing or any prospect that any Affiliate is actively
pursuing (other than in connection with the performance by Executive of his
duties for the Company in accordance with this Agreement); (v) disclose to any
other person, entity or business the names or addresses of any customer or
acquisition prospect of the Company or any customer or acquisition prospect of
any Affiliate (other than as required in connection with the performance by
Executive of his duties for the Company in accordance with this Agreement);
(vi) cause, solicit, entice or induce any employee of the Company or any
employee of any Affiliate to leave the employ of the Company or such Affiliate,
or to accept employment with, or compensation from, Executive or any person,
entity or business (other than the Company or any Affiliate) with which
Executive is affiliated or by whom Executive is employed; or (vii) use any
customer lists or customer leads, mail, telephone numbers, printed material or
other information obtained from the Company or any Affiliate or any employee of
any of the foregoing (other than in connection with the performance by Executive
of his duties for the Company in accordance with this Agreement).   (c)  
NON-DISPARAGEMENT.

  (i)   Executive covenants and agrees that Executive shall not engage in any
pattern of conduct that involves the making or publishing of written or oral
statements or remarks (including, without limitation, the repetition or
distribution of derogatory rumors, allegations, negative reports or comments)
which are disparaging, deleterious or damaging to the integrity, reputation or
good will of the Company or any Affiliate or any member of management of the
Company or any Affiliate.

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  (ii)   The Company covenants and agrees that it shall not engage in any
pattern of conduct that involves the making or publishing of written or oral
statements or remarks (including, without limitation, the repetition or
distribution of derogatory rumors, allegations, negative reports or comments)
which are disparaging, deleterious or damaging to the integrity or reputation of
Executive.

(d)   PROTECTED INFORMATION. Executive recognizes and acknowledges that
Executive has had and will continue to have access to various confidential and
proprietary information concerning the Company and its Affiliates which is of a
special and unique value. As a condition to commencement of Executive’s
employment hereunder, Executive shall execute a Confidentiality and Proprietary
Rights Agreement in substantially the form of Exhibit C attached hereto (the
“Confidentiality and Proprietary Rights Agreement”). Any breach by Executive of
the Confidentiality and Proprietary Rights Agreement shall be considered a
breach of this Agreement.

(e)   NON-COMPETE PERIOD. For purposes of this Agreement, the term “Non-Compete
Period” shall have the following meanings:

  (i)   in the event (A) Executive’s employment hereunder is terminated by the
Company without Cause pursuant to Section 5(f), or by Executive for Good Reason
pursuant to Section 5(d), and (B) a Change of Control did not occur within the
two-year period preceding, and does not occur within the one-year period
following, the effective date of termination, the Non-Compete Period shall mean
the period beginning on the effective date of termination and ending on the
second anniversary of the effective date of termination;     (ii)   in the event
that (A) Executive’s employment hereunder is terminated by the Company without
Cause pursuant to Section 5(f), or by Executive for Good Reason pursuant to
Section 5(d), and (B) a Change of Control occurred within the two-year period
preceding the effective date of termination, there shall be no Non-Compete
Period;     (iii)   in the event (A) Executive’s employment hereunder is
terminated by the Company without Cause pursuant to Section 5(f), or by
Executive for Good Reason pursuant to Section 5(d), and (B) a “Change of
Control” occurs within the one-year period following the effective date of
termination, the Non-Compete Period shall mean the period beginning on the
effective date of termination and ending on the effective date of the “Change of
Control”;     (iv)   in the event Executive’s employment hereunder is terminated
by Executive voluntarily pursuant to Section 5(e), or by the Company with Cause
pursuant to Section 5(c), the Non-Compete Period shall mean the period beginning
on the effective date of termination and ending on the first anniversary of the
effective date of termination; and

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  (v)   in the event Executive’s employment hereunder is terminated by the
Company upon Death of Executive pursuant to Section 5(a), or upon the Total
Disability of Executive pursuant to Section 5(b), there shall be no Non-Compete
Period.

9.   ENFORCEMENT OF COVENANTS.   (a)   TERMINATION OF EMPLOYMENT AND FORFEITURE
OF COMPENSATION. Notwithstanding anything in this Agreement to the contrary, in
the event that the Board of Directors or a duly authorized committee thereof
determines in its good faith judgment that Executive has violated Sections 8(a)
or 8(b) hereof, the Company shall have the right to suspend or terminate any or
all remaining payments or benefits payable pursuant to Section 6 and/or 7 of
this Agreement. Such suspension or termination of benefits shall be in addition
to and shall not limit any and all other rights and remedies that the Company
may have against Executive.   (b)   RIGHT TO INJUNCTION. Executive acknowledges
that a breach of the covenants set forth in Section 8 hereof will cause
irreparable damage to the Company with respect to which the Company’s remedy at
law for damages will be inadequate. Therefore, in the event of a breach of the
covenants set forth in Section 8 by Executive or if the Company has reasonable
grounds to believe that a breach by Executive of the covenants set forth in
Section 8 is imminent, Executive and the Company agree that the Company shall be
entitled to the following particular forms of relief, in addition to remedies
otherwise available to it at law or in equity; (i) injunctions, both preliminary
and permanent, enjoining or restraining such breach or anticipatory breach and
Executive hereby consents to the issuance thereof forthwith and without bond by
any court of competent jurisdiction; and, in the event the Company prevails on
the merits after all available appeals have been exhausted (ii) recovery of all
reasonable sums expended and costs, including reasonable attorney’s fees,
incurred by the Company to enforce the covenants set forth in Section 8.   (c)  
SEPARABILITY OF COVENANTS. The covenants contained in Section 8 hereof
constitute a series of separate covenants, one for each applicable State in the
United States and the District of Columbia, and one for each province and
Territory in Canada. If in any judicial proceeding, a court shall hold that any
of the covenants set forth in Section 8 exceed the time, geographic, or
occupational limitations permitted by applicable laws, Executive and the Company
agree that such provisions shall and are hereby reformed to the maximum time,
geographic, or occupational limitations permitted by such laws. Further, in the
event a court shall hold unenforceable any of the separate covenants deemed
included herein, then such unenforceable covenant or covenants shall be deemed
eliminated from the provisions of this Agreement for the purpose of such
proceeding to the extent necessary to permit the remaining separate covenants to
be enforced in such proceeding. Executive and the Company further agree that the
covenants in Section 8 shall each be construed as a separate agreement
independent of any other provisions of this Agreement, and the existence of any
claim or cause of action by Executive against the Company, whether predicated on
this Agreement or otherwise,

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    shall not constitute a defense to the enforcement by the Company of any of
the covenants of Section 8.   10.   MITIGATION OF DAMAGES; ATTORNEY’S FEES   (a)
  Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment.   (b)   If any legal action
is filed by either party to enforce or interpret any of the provisions of this
Agreement, the non-prevailing party shall pay to the prevailing party, in
addition to any other amounts awarded in the action, all reasonable attorney’s
fees and other fees and costs incurred by the prevailing party in connection
with such legal action, the amount of which shall be fixed by the court hearing
such action and made a part of any judgment rendered.   11.   WITHHOLDING OF
TAXES.

The Company may withhold all legally required taxes from any compensation and
benefits payable under this Agreement.

12.   ASSIGNMENT.

Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of, and be binding upon, the parties hereto and their respective
heirs, representatives, successors and permitted assigns. The rights, benefits
and obligations of Executive under this Agreement are personal to Executive and
no such right, benefit or obligation shall be subject to voluntary or
involuntary alienation, assignment or transfer; provided, however, that nothing
in this Section 12 shall preclude Executive from designating a beneficiary or
beneficiaries to receive any benefit payable on his death. The Company shall
require any Successor (whether by purchase of all or substantially all of the
assets of the Company, merger of the Company into another entity, or otherwise)
to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform if no such
succession had taken place. Upon any such assignment, all references herein to
the Company shall be deemed to refer to such assignee.

13.   ENTIRE AGREEMENT; AMENDMENT.

This Agreement, together with all schedules, exhibits and other documents
referred to herein, shall supersede any and all existing oral or written
agreements, representations, or warranties between Executive and the Company
relating to the terms of Executive’s employment by the Company. This Agreement
may not be amended, nor any provision waived, except by a written instrument
signed by the party against whom such amendment or waiver is sought to be
enforced.

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14.   GOVERNING LAW; JURISDICTION.

This Agreement shall be governed by and construed in accordance with the
internal substantive laws of the State of Delaware, without giving effect to the
conflict of law principles thereof. The parties agree that all disputes, legal
actions, suits and proceedings arising out of or relating to this Agreement or
Executive’s employment with the Company must be brought exclusively in a federal
district court or state court of competent jurisdiction located in the State of
Delaware. Each party hereby irrevocably consents and submits to the exclusive
jurisdiction of such courts. No legal action, suit or proceeding with respect to
this Agreement or Executive’s employment with the Company may be brought in any
other forum. Each party hereby irrevocably waives all claims of immunity from
jurisdiction and any right to object on the basis that any dispute, action, suit
or proceeding brought in any such court has been brought in an improper or
inconvenient forum or venue.

15.   NOTICES.

Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by registered or certified mail (return
receipt requested), or by confirmed facsimile to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
     To the Company or Capital:

             1122 International Blvd., Suite 601
Burlington, Ontario L7L 6Z8
Attention: General Counsel

     To Executive: At the address for Executive set forth on the signature page
below.

16.   MISCELLANEOUS.   (a)   WAIVER. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
The waiver by any party hereto of a breach of any provision of this Agreement
shall neither operate nor be construed as a general waiver or as a specific
waiver of any subsequent breach by any party, unless otherwise expressly
provided in such waiver.   (b)   SEPARABILITY. Subject to Section 9 hereof, if
any term or provision of this Agreement or application thereof to anyone or
under any circumstances shall be determined to be invalid, illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to
be enforceable, such term or provision shall immediately become null and void,
leaving the remainder of this Agreement in full force and effect.

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(c)   HEADINGS. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this Agreement.   (d)
  RULES OF CONSTRUCTION. Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.   (e)  
COUNTERPARTS. This Agreement may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, and such counterparts
will together constitute but one Agreement.   (f)   Intentionally omitted.   (g)
  RELEASE. Notwithstanding anything herein to the contrary, the Company shall
not be required to make any of the payments, or provide any of the benefits, to
the Executive pursuant to Sections 6 or 7 hereof unless and until Executive
executes and delivers a release of all claims arising out of this Executive
Employment Agreement through the date of the release, but excluding claims for
indemnification from the Company under the Indemnification Agreement attached
hereto as Exhibit A, local, state or federal statutory or constitutional claims,
or other claims not arising under this Executive Employment Agreement.   (h)  
SURVIVAL. Notwithstanding anything in this Agreement to the contrary, the
provisions of Sections 8, 9, 10, 14, 15 and 16 shall survive any termination of
Executive’s employment in accordance with their respective terms.

[SIGNATURE PAGES TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
THE COMPANY:
WASTE SERVICES, INC.

                By:   /s/ Wallace A. Timmeny       Name:   Wallace A. Timmeny   
  Title:   Chairman of the Compensation Committee of the Board of Directors     

Date: October 26, 2005
EXECUTIVE:

              By:   /s/ David Sutherland-Yoest         David Sutherland-Yoest   
    29 Colonial Crescent
Oakville, Ontario L6J 4K8     

Date: October 26, 2005

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