STANDSTILL AGREEMENT
Exhibit 10.1
STANDSTILL AGREEMENT (the “Agreement”), dated November 3, 2010, by and among Republic
Services, Inc., a Delaware corporation (the “Company”), Cascade Investment, L.L.C. (“Cascade”) and
the Xxxx & Xxxxxxx Xxxxx Foundation Trust (the “Trust”).
WHEREAS, Cascade holds 55,404,169 shares of Common Stock which may be deemed to be
beneficially owned by Xxxxxxx X. Xxxxx III as the sole member of Cascade, and the Trust
beneficially owns 1,350,000 shares of Common Stock, which may be deemed to be beneficially owned by
Xxxxxxx X. Xxxxx III and Xxxxxxx Xxxxxx Xxxxx (collectively, “Gates”) as Co-Trustees of the Trust;
WHEREAS, the parties hereto wish to provide for a constructive, orderly and mutually
beneficial relationship between themselves;
WHEREAS, one or both of Cascade and the Trust propose to acquire Beneficial Ownership of
additional shares of Common Stock in one or more transactions from time to time, in open market
purchases, block transactions, privately negotiated transactions or otherwise, pursuant to which
each of Gates, Cascade, and the Trust may become an “interested stockholder” as defined in Section
203 of the General Corporation Law of the State of Delaware (the “DGCL”, and such future
transactions that collectively result in Gates, Cascade, and the Trust becoming interested
stockholders, the “Stock Purchases”);
WHEREAS, Gates, Cascade, and the Trust generally would be subject to certain restrictions
under Section 203 of the DGCL if they should proceed with the Stock Purchases in the absence of the
prior approval thereof by the Board of Directors of the Company and Cascade and the Trust have
requested that the Company’s Board of Directors consider approving the Stock Purchases in
accordance with Section 203 of the DGCL and, in connection with obtaining such approval, Cascade
and the Trust have agreed to enter into this Agreement; and
WHEREAS, the Board of Directors has approved the Stock Purchases to be made on or before
February 9, 2011, (the “203 Expiration Date”) in accordance with Section 203 of the DGCL.
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions.
(a) “Acquisition Transaction” shall mean the acquisition or purchase of all or substantially
all of the consolidated assets or securities of, or any merger, consolidation or other form of
business combination with, the Company.
(b) “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations of the Securities and Exchange Commission (the “Commission”) thereunder (the
“Exchange Act Rules”) as in effect on the date hereof (the term “registrant” in Rule 12b-2 meaning
in this case the Company, the Trust or Cascade, as the case may be); except that, for the purposes
of this Agreement, the Company and its subsidiaries shall not be deemed to be Affiliates of the
Trust or Cascade and the Trust and Cascade shall not be deemed to be an Affiliate of the Company
and its subsidiaries.
(c) A Person shall be deemed the “Beneficial Owner” and have “Beneficial Ownership” of and
shall be deemed to “Beneficially Own” any securities:
(i) which such Person or any of such Person’s Affiliates beneficially owns, directly or
indirectly, within the meaning of Rule 13d-3 under the Exchange Act Rules;
(ii) which such Person or any of such Person’s Affiliates has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates has any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting
or disposing of any such securities.
(d) “Common Stock” shall mean the shares of common stock, $0.01 par value per share, of the
Company.
(e) “Independent Investment Banker” shall mean a nationally recognized investment banking firm
selected by the affirmative vote of the Board of Directors of the Company.
(f) “Permitted Acquisition Transaction” shall mean any Acquisition Transaction by any Person
available to all holders of shares of Common Stock (A) that is a tender offer (with a mandatory
clean-up or back-end merger at the same per share price and form of consideration) or (B) that
requires a stockholder vote and, in the case of each of clauses (A) and (B) above, satisfies the
following conditions:
(1) it is recommended by the Board of Directors of the Company; and
(2) the Board of Directors of the Company shall have received a written opinion of an
Independent Investment Banker that the consideration which the holders of shares of Common Stock
shall be entitled to receive in such Acquisition Transaction is fair to such stockholders from a
financial point of view.
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(g) “Person” shall mean any individual, firm, corporation or other entity and shall include
any group comprised of any Person and any other Person with whom such Person or an Affiliate of
such Person has any agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of any securities.
(h) “Standstill Period” shall mean a period of time beginning on the date of this Agreement
and ending on the date of termination of this Agreement.
2. Restrictions on Purchases.
(a) During the Standstill Period, each of the Trust and Cascade agrees that it shall not, and
agrees that it shall cause its current and future subsidiaries and Affiliates (which shall include
Persons that it controls, is controlled by or is under common control with) not to (the Trust,
Cascade and such subsidiaries and Affiliates being referred to as the “Prohibited Persons”),
directly or indirectly, without the prior written approval of the Board of Directors of the
Company:
(1) acquire, propose or agree to acquire, by purchase or otherwise, shares of Common Stock if
such acquisition would result in the Prohibited Persons collectively having Beneficial Ownership of
25% or more of the then outstanding shares of Common Stock (such percentage of the then outstanding
Common Stock, the “Percentage Limitation”) except (i) by way of stock dividends or other
distributions by the Company made available to holders of shares of Common Stock generally or (ii)
pursuant to a Permitted Acquisition Transaction;
(2) form or join any “group” within the meaning of Section 13(d)(3) of the Exchange Act with
respect to shares of Common Stock other than a group, if any, consisting solely of Gates, the
Trust, Cascade and/or any of their subsidiaries;
(3) deposit any shares of Common Stock in a voting trust or subject any shares of Common Stock
to any voting agreement or similar arrangement with respect to the voting of such shares of Common
Stock;
(4) become a “participant” in any “solicitation” of “proxies” (as such terms are defined in
Regulation 14A under the Exchange Act) to vote or solicitation of written consents to action, or to
seek to influence any Person with respect to the voting of, any shares of Common Stock, except in
accordance with matters recommended by the Board of Directors of the Company; or
(5) take any action, alone or in concert with any other Person or “group” within the meaning
of Section 13(d)(3) of the Exchange Act, to seek control of the Company or otherwise seek to
circumvent the limitations of the provisions of this Agreement. Without limiting the generality of
the foregoing and other than in compliance with this Agreement, each of the Trust and Cascade shall
not, and shall cause the Prohibited Persons not to, (i) present to the Company or to any third
party any proposal that can reasonably be expected to result in a change of control of the Company
or in any increase of the Prohibited Persons’ Beneficial Ownership beyond the Percentage
Limitation, (ii) publicly suggest or announce its willingness or
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desire to engage in a transaction or group of transactions or have another Person engage in a
transaction or group of transactions that would result in a change of control of the Company or in
any increase of the Prohibited Persons’ Beneficial Ownership beyond the Percentage Limitation, or
(iii) initiate, request, induce or attempt to induce or give encouragement to any other Person to
initiate any proposal that can reasonably be expected to result in a change of control of the
Company or in any increase of the Prohibited Persons’ Beneficial Ownership beyond the Percentage
Limitation.
(b) Anything to the contrary contained in Section 2(a) notwithstanding:
(1) for the avoidance of doubt, nothing in Section 2(a) shall apply to any portfolio company
of Gates, the Trust or Cascade with respect to which none of Gates, the Trust, or Cascade nor any
of their subsidiaries is the party exercising control over the decision to acquire or purchase or
otherwise obtain Beneficial Ownership of, or the voting of, shares of Common Stock, provided that
such portfolio company is not acting at the request or direction of Gates, the Trust, Cascade or
any of their subsidiaries;
(2) there will not be a deemed violation of Section 2(a) if the Beneficial Ownership of then
outstanding shares of Common Stock by the Prohibited Persons exceeds the Percentage Limitation
solely as a result of an acquisition of shares of Common Stock by the Company or its subsidiaries
(including without limitation as a result of a redemption or repurchase by the Company of any
shares of Common Stock) that, by reducing the number of shares of Common Stock outstanding,
increases the proportionate number of shares of Common Stock Beneficially Owned by the Prohibited
Persons, provided that no Prohibited Person acquires Beneficial Ownership of additional Common
Stock in violation of Section 2(a) after Cascade and the Trust have been notified by the Company of
such acquisition of shares of Common Stock by the Company or its subsidiaries; and
(3) nothing contained in Section 2(a) shall prevent any Prohibited Person from voting any
shares of Common Stock then Beneficially Owned by such Prohibited Person in any manner.
(c) For purposes of determining compliance with this Section 2 and determining the number of
shares of Common Stock outstanding at any given time, the Trust and Cascade shall be entitled to
rely without independent investigation upon the most recent publicly available Form 10-K, Form 10-Q
or Form 8-K (or any successor form) of the Company filed with the Commission reporting the number
of shares of Common Stock then issued and outstanding.
3. Representations.
(a) The Company represents and warrants to each of the Trust and Cascade that:
(1) The Company has the requisite corporate power to enter into, deliver and perform its
obligations under this Agreement. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly authorized by all requisite
corporate action on its part. This Agreement has been duly and
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validly executed and delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms; and
(2) The execution and delivery of this Agreement by the Trust and Cascade and the Stock
Purchases in accordance with this Agreement will not violate, result in the breach or modification
of, conflict with, constitute a default or result in an acceleration of any obligation under,
result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness
of, (A) the Certificate of Incorporation of the Company, as amended, or Bylaws of the Company, as
amended, (B) Section 203 of the DGCL or (C) any contract, permit, order or other law applicable to
the Company, except (as to clause (C) only) for any violation, breach, modification, conflict,
default, acceleration, encumbrance or effect which would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(b) Each of the Trust and Cascade severally and not jointly represent and warrant to the
Company that:
(1) It has the power to enter into, deliver and perform its respective obligations under this
Agreement. This Agreement has been duly and validly executed and delivered by it and constitutes
a valid and binding obligation of each of it enforceable against it in accordance with its terms;
and
(2) The execution and delivery of this Agreement by it and the Stock Purchases in accordance
with this Agreement will not violate, result in the breach or modification of, conflict with,
constitute a default or result in an acceleration of any obligation under, result in the imposition
of any encumbrance pursuant to, or affect the validity or effectiveness of, any organizational
documents of, or any contract, permit, federal law or order applicable to, it except for any
violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would
not have a material adverse effect on it.
4. Specific Enforcement. Each of the Company, the Trust and Cascade, acknowledge and
agree that each would be irreparably harmed and would have no adequate remedy at law if any of the
provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that, in addition to any other remedies which may be
available, the parties shall be entitled to obtain temporary and permanent injunctive relief with
respect to any breach or threatened breach of, or otherwise obtain specific performance of, the
covenants and other agreements contained in this Agreement.
5. Governing Jurisdiction. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Delaware Chancery Court and any state appellate court therefrom, or if such
court shall not have jurisdiction, any federal or other state court of the State of Delaware, for
the purpose of any action or proceeding arising out of or relating to this Agreement and each of
the parties hereto hereby irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any such court. Each party hereto agrees
that a final judgment in any action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by applicable law. Each
party hereto irrevocably consents to the service of the summons and complaint and any other
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process in any other action or proceeding relating to the transactions contemplated by this
Agreement, on behalf of itself or its property, by personal delivery of copies of such process to
such party. Nothing in this Section 5 shall affect the right of any party to serve legal process in
any other manner permitted by applicable law.
6. Miscellaneous.
(a) Expenses. Each party shall bear the expenses of its attorneys, investment
advisors or other costs it has incurred.
(b) Entire Agreement; Amendments. This Agreement, together with the Resolutions of
the Board of Directors of the Company approving this Standstill Agreement and the related purchase
of Common Stock by one or both of Cascade and the Trust, embody the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect thereto. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change, amendment, modification
or discharge may be sought and in the case of the Company only upon the approval of a majority of
the Board of Directors.
(c) Termination. This Agreement will remain in full force and effect until the
earliest to occur of the following (as a result of which this Agreement shall immediately terminate
and cease to be in full force and effect): (i) termination by the written agreement of each of the
Company, the Trust and Cascade; (ii) upon written notice by the Trust and Cascade to the Company,
any time after a third party other than the Trust or Cascade or any of their respective
subsidiaries or Affiliates (A) commences (for the purposes of Rule 14d-2 under the Exchange Act
Rules) a tender offer or exchange offer for at least 50% of the outstanding shares of Common Stock;
or (B) enters into a definitive agreement with the Company contemplating the acquisition (by way of
merger, tender offer, consolidation, business combination or otherwise) of at least 50% of the
outstanding shares of Common Stock or all or any material portion of the consolidated assets of the
Company; (iii) upon written notice by the Trust and Cascade to the Company, any time after the
Trust and Cascade in the aggregate have acquired Beneficial Ownership of 15% or more of the
outstanding shares of Common Stock but thereafter have disposed of shares of Common Stock such that
their aggregate Beneficial Ownership at such time is less than 15% of the then outstanding shares
of Common Stock; (iv) the third anniversary of the date hereof; or (v) on the 203 Expiration Date,
if Cascade and the Trust are not as of the 203 Expiration Date the Beneficial Owners in the
aggregate of 15% or more of the outstanding shares of Common Stock.
(d) Headings. The section headings are for convenience only and shall not affect the
construction of any provision of this Agreement. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement, unless otherwise indicated.
(e) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, and each such executed counterpart shall be an original instrument and all of such
counterparts together shall be deemed to be one and the same instrument.
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(f) Notices. All notices, requests, service of process and other communications
hereunder shall be validly given, made or served, upon delivery, if in writing and delivered
personally, by telex (except for service of process) or sent by registered mail (except for
service of process), postage prepaid, to the parties at the following addresses (or at such other
address as shall be specified by like notice):
if to the Company:
Republic Services, Inc.
00000 X. Xxxxxx Xxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
00000 X. Xxxxxx Xxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
if to Cascade:
Cascade Investment, L.L.C.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
if to the Trust:
Xxxx & Xxxxxxx Xxxxx Foundation Trust
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(g) Governing Law. This Agreement shall be governed by the laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof.
(h) Successors. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
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(i) Waiver. No failure or delay on the part of any party in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise of any
other power, right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
(j) Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms
and provisions or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction, and the parties agree to negotiate in good faith an
amendment to this Agreement to cure any such invalidity or unenforceability in a manner designed to
most closely effect the purpose of such term or provision.
(k) Further Assurances. At the request of either party hereto, the other party hereto
shall execute and deliver to such party such documents and instruments as may be reasonably
necessary to implement or evidence the foregoing.
(l) Business Days. Any action which is required to be taken hereunder shall be taken
on a business day and where the date required for any action hereunder does not fall on a business
day, such action shall be taken on the next calendar day which is a business day.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first above written.
By:
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/s/ Xxxxxxx Xxxxxxx | |||
Name:
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Xxxxxxx Xxxxxxx | |||
Title:
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Executive Vice President |
CASCADE INVESTMENT, L.L.C.
By:
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/s/ Xxxxxxx Xxxxxx | |||
Name:
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Xxxxxxx Xxxxxx | |||
Title:
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Business Manager |
XXXX & XXXXXXX XXXXX FOUNDATION TRUST
By:
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/s/ Xxxxxxx Xxxxxx | |||
Name:
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Xxxxxxx Xxxxxx | |||
Title:
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Authorized Representative |
