EXHIBIT 99.6
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This Amended and Restated Shareholders Agreement (this "AGREEMENT"), dated
as of April 21, 1997, by and between Allied Waste Industries, Inc., a Delaware
corporation (the "COMPANY"), on the one hand, and Apollo Investment Fund III,
L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a
Delaware limited partnership, Apollo (U.K.) Partners III, L.P., an English
limited partnership, Blackstone Capital Partners II Merchant Banking Fund L.P.,
a Delaware limited partnership ("BCP"), Blackstone Offshore Capital Partners II
L.P., a Cayman Islands limited partnership, and Blackstone Family Investment
Partnership II L.P., a Delaware limited partnership (collectively,
"SHAREHOLDERS"), on the other hand, amending and restating in its entirety the
Shareholders Agreement dated as of April 14, 1997 (the "ORIGINAL AGREEMENT"), by
and between the Company, on the one hand, and the Shareholders, on the other
hand.
WHEREAS, simultaneously with the execution of the Original Shareholders
Agreement, Shareholders entered into an agreement (the "TPG GROUP PURCHASE
AGREEMENT") to purchase an aggregate of 11,776,765 shares (the "TPG GROUP
BLOCK") of the Company's common stock, par value $.01 per share (the "COMMON
STOCK"), from TPG Partners, L.P., a Delaware limited partnership, and TPG
Parallel I, L.P., a Delaware limited partnership (collectively, "TPG GROUP");
WHEREAS, concurrently with the acquisition of the TPG Group Block by
Shareholders pursuant to the TPG Group Purchase Agreement, TPG Group intends to
assign to Shareholders its registration rights with respect to the TPG Group
Block under Article IV of the Securities Purchase Agreement dated as of
October 27, 1994, as amended, by and between TPG Group and the Company;
WHEREAS, under the Original Stockholders Agreement, the Company granted to
Shareholders, effective upon the closing of the acquisition of the TPG Group
Block pursuant to the TPG Group Purchase Agreement, the right as a group to
appoint certain designees for election to the Board of Directors of the Company
and agreed to certain restrictions on the acquisition and disposition of Common
Stock and the conduct of Shareholders with respect to the Company;
WHEREAS, simultaneously with the execution of this Agreement, Shareholders
are entering into (i) a Securities Purchase Agreement (the "XXXXXXX PURCHASE
AGREEMENT") with Xxxxxxx, Inc., a Canadian corporation ("XXXXXXX"), Xxxxxxx
Transportation, Inc., a Delaware corporation, and the Company, pursuant to
which, among other things, the Shareholders have agreed to purchase an aggregate
of 14,600,000 shares of Common Stock (the "XXXXXXX BLOCK" and together with the
TPG Group Block, the "SHARES") from Xxxxxxx and (ii) a Registration Rights
Agreement (the "REGISTRATION RIGHTS AGREEMENT") with respect to the Shares
granting certain registration rights and superseding all other registration
rights with respect to the Shares;
WHEREAS, in recognition of Shareholders' significant change in ownership in
the Company, upon the closing of the purchase of the Xxxxxxx Block pursuant to
the Xxxxxxx Purchase Agreement, the parties desire to amend and restate the
Original Shareholders Agreement in its entirety (except as may be otherwise set
forth herein) as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement and in the Registration Rights Agreement and
intending to be legally bound hereby, the parties agree as follows, effective
upon the
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closing of the purchase of the Xxxxxxx Block pursuant to the Xxxxxxx Purchase
Agreement:
ARTICLE 1
Definitions; Representations and Warranties
SECTION 1.1 DEFINITIONS. Unless otherwise specified all references to
"days" shall be deemed to be references to calendar days. For purposes of this
Agreement, the following terms shall have the following meanings:
"ACTUAL VOTING POWER" shall mean the total voting power of all the then
outstanding securities of the Company at the time then entitled to vote for the
general election of directors, without giving effect to securities issuable upon
exercise or conversion of such outstanding securities.
"AFFILIATE" of a Person shall have the meaning set forth in Rule 12b-2 of
the Exchange Act as in effect on the date of this Agreement, but shall not
include (i) any investment fund in which a Person has invested if the Person
does not otherwise control the investment fund or have, directly or indirectly,
voting or dispositive power over any securities owned by such fund or (ii) any
investor or limited partner of any Person who does not otherwise have voting or
dispositive power over securities owned by that Person and is not controlled by
that Person. It is expressly intended that any Person who now or hereafter
controls, directly or indirectly, any Shareholder shall be subject to the
restrictions of Section 2.1 as if it were a Shareholder.
"BENEFICIAL OWNERSHIP" by a Person of any Voting Securities shall be
determined in accordance with the term "beneficial ownership" as defined in Rule
13d-3
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under the Exchange Act as in effect on the date of this Agreement and, in
addition, "beneficial ownership" shall include securities which such Person has
the right to acquire (irrespective of whether such right is exercisable
immediately or only after the passage of time, including the passage of time in
excess of sixty (60) days) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise. For purposes of this Agreement, a
Shareholder shall be deemed to beneficially own any Voting Securities
beneficially owned by its Affiliates or any Group of which such Shareholder or
any such Affiliate is a member.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company.
"COMMISSION" shall mean the Securities and Exchange Commission.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FIRST CLOSING DATE" shall mean the date of the closing of the purchase of
the TPG Group Block by Shareholders pursuant to the TPG Group Purchase
Agreement.
"GROUP" shall mean a "group" as such term is used in Section 13(d)(3) of
the Exchange Act as in effect on the date of this Agreement.
"LAWS" shall mean all applicable foreign, federal, state and local laws,
statutes, rules, regulations, codes and ordinances.
"PERSON" shall mean any individual, Group, corporation, general or limited
partnership, limited liability company, governmental entity, joint venture,
estate, trust, association, organization or other entity of any kind or nature.
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"REORGANIZATION TRANSACTION" means: (i) any merger, consolidation,
recapitalization, liquidation or other business combination transaction
involving the Company; (ii) any tender offer or exchange offer for any
securities of the Company; or (iii) any sale or other disposition of assets of
the Company or any of its Subsidiaries in a single transaction or in a series of
related transactions in each of the foregoing cases constituting individually or
in the aggregate 10% or more of the assets or Voting Securities (as applicable)
of the Company.
"SECOND CLOSING DATE" shall mean the date of the closing of the purchase of
the Xxxxxxx Block by Shareholders pursuant to the Xxxxxxx Purchase Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHAREHOLDER DESIGNEE" shall mean a person designated for election to the
Board of Directors by Shareholders as provided in SECTION 3.1.
"TOTAL VOTING POWER" shall mean the total combined Voting Power, on a fully
diluted basis, of all the Voting Securities then outstanding.
"VOTING POWER" shall mean the voting power in the general election of
directors of the Company, and shall be calculated for each Voting Security by
reference to the maximum number of votes such Voting Security is or would be
entitled to cast in the general election of directors, and, in the case of
convertible (or exercisable or exchangeable) securities, by reference to the
maximum number of votes such Voting Security would be entitled to cast in
unconverted or converted (or exercised, unexercised, exchanged or unexchanged)
status. For purposes of determining Voting Power under this Agreement, a Voting
Security which is convertible into or exchangeable for a Voting Security shall
be counted as having the greater of (i) the number of votes to which such
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Voting Security is entitled prior to conversion or exchange and (ii) the number
of votes to which the Voting Security into which such Voting Security is
convertible or exchangeable is entitled. Notwithstanding anything else to the
contrary contained in this Agreement, there shall not be included in calculating
Voting Power any votes which a Person shall have upon the non-payment of
dividends on preferred shares in accordance with the terms of such preferred
shares.
"VOTING SECURITIES" shall mean (x) any securities entitled, or which may be
entitled, to vote generally in the election of directors of the Company, (y) any
securities convertible or exercisable into or exchangeable for such securities
(whether or not the right to convert, exercise or exchange is subject to the
passage of time or contingencies or both), or (z) any direct or indirect rights
or options to acquire any such securities; PROVIDED that unexercised options
granted pursuant to any employment benefit or similar plan and rights issued
pursuant to any shareholder rights plan (including that described in SECTION
3.5) shall be deemed not to be "Voting Securities" (or to have Voting Power).
In addition, the following terms have the definitions specified in the
Sections noted:
TERM SECTION
Actual Voting Power Threshold 3.1(b)
Agreement recitals
Beneficial Ownership Threshold 3.1(b)
Common Stock recitals
Company recitals
Disposition 4.1
Xxxxxxx recitals
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Xxxxxxx Purchase Agreement recitals
Xxxxxxx Block recitals
Registration Rights Agreement recitals
Related Transferee 4.1(f)
Rule 144 Sale 4.1(c)
Shareholders recitals
Shareholder Designee Period 3.1(b)
Shares recitals
Standstill Period 2.1
TPG Group Block recitals
TPG Group Purchase Agreement recitals
SECTION 1.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Shareholders as follows:
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within its corporate powers and have been duly authorized by all
necessary corporate action on its part. This Agreement constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy, and
insolvency, fraudulent transfer reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor's rights and to general
equity principles.
(b) The execution, delivery and performance of this Agreement by the
Company does not and will not (i) contravene or conflict with or constitute a
default
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under the Company's Certificate of Incorporation or Bylaws, (ii) contravene or
conflict with or constitute a default under any agreement to which the Company
is a party or is bound, or result in a breach of or default under any instrument
or agreement to which the Company is a party or is bound, which violation,
breach or default would have a material adverse effect on the Company's business
taken as a whole or would adversely affect the consummation of the transactions
contemplated by this Agreement or the Xxxxxxx Purchase Agreement, (iii) violate
any judgment, order, injunction, decree or award against or binding upon the
Company as of the date of this Agreement, the violation of which, individually
or in the aggregate, would have a material adverse effect on the Company's
business taken as a whole or would adversely affect the consummation of the
transactions contemplated by this Agreement or the Xxxxxxx Purchase Agreement,
(iv) violate any Law relating to the Company, the violation of which,
individually or in the aggregate, would have a material adverse effect on the
Company's business taken as a whole or would adversely affect the consummation
of the transactions contemplated by this Agreement or the Xxxxxxx Purchase
Agreement or (v) constitute a "change of control," or result in the acceleration
of rights, under any material debt instrument to which the Company is a party.
(c) Except for applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT") and the Exchange Act, the
Company is not required to make any filing or registration with, or obtain any
permit, authorization, consent or approval of, any governmental entity or any
other Person in connection with this Agreement, the Xxxxxxx Purchase Agreement,
or any of the transactions contemplated hereby and thereby.
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(d) As of the date of this Agreement, there is no action, suit or
proceeding pending or, to the knowledge of the Company, threatened against the
Company that relates to this Agreement, the TPG Group Purchase Agreement, the
Xxxxxxx Purchase Agreement, or any of the transactions contemplated hereby or
thereby.
(e) As of the date hereof, the Company would be entitled to make at least
$1.00 in additional borrowings under the Credit Agreement (the "CREDIT
AGREEMENT") among the Company, Allied Waste North America, Inc. and the various
lenders represented by Xxxxxxx Xxxxx Credit Partners, L.P., Credit Suisse and
Citibank, N.A., and the consummation of the transactions contemplated by the
Xxxxxxx Purchase Agreement and this Agreement will not, by themselves, limit the
Company's ability to borrow under the Credit Agreement.
(f) All documents which have been filed by the Company with the Commission
under the Exchange Act, at the time they were filed with the Commission,
conformed in all material respects with the requirements of Exchange Act, and
the rules and regulations of the Commission thereunder, and, as of the date
thereof and taken as a whole as of the date hereof do not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) The Board of Directors of the Company has approved the transfer of the
Xxxxxxx Block to the Shareholders pursuant to the Xxxxxxx Purchase Agreement,
subject to the execution and delivery by the Shareholders of this Agreement.
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SECTION 1.3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Each
Shareholder severally, but not jointly, represents and warrants to the Company
as follows:
(a) The execution, delivery and performance by such Shareholder of this
Agreement and the consummation by such Shareholder of the transactions
contemplated by this Agreement are within its powers and have been duly
authorized by all necessary action on its part. This Agreement constitutes a
legal, valid and binding agreement of such Shareholder enforceable against such
Shareholder in accordance with its terms, subject, as to enforcement, to
bankruptcy, and insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor's rights
and to general equity principles.
(b) The execution, delivery and performance of this Agreement by such
Shareholder does not and will not contravene or conflict with or constitute a
default under such Shareholder's partnership agreement or similar governing
documents.
(c) As of the date of this Agreement, such Shareholder does not
beneficially own any Voting Securities except (i) any Voting Securities
beneficially owned on the date hereof in compliance with the Original
Shareholders Agreement and (ii) to the extent such shares may be deemed to be
beneficially owned, the shares of Common Stock which are subject to the Xxxxxxx
Purchase Agreement or the TPG Group Purchase Agreement.
(d) A condition to the consummation of the purchase of the Xxxxxxx Block
by the Shareholders pursuant to the Xxxxxxx Purchase Agreement is that the
persons designated to the Board of Directors by Xxxxxxx shall have resigned, and
the
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Shareholders agree not to waive this condition without the prior written consent
of the Company.
ARTICLE 2
Standstill
SECTION 2.1. STANDSTILL. Until the earliest to occur of (A) the sixth
anniversary of the Second Closing Date, (B) the date on which Shareholders own,
collectively, Voting Securities which would represent (i) less than 10% of the
Total Voting Power and (ii) less than 10% of the Actual Voting Power and (C)
termination under SECTION 2.2 (such period, the "STANDSTILL PERIOD"), each
Shareholder will not, and will cause each of its Affiliates not to, directly or
indirectly:
(i) acquire, offer to acquire, or agree to acquire, by purchase or
otherwise, any Voting Securities or voting rights or direct or indirect
rights or options to acquire any Voting Securities of the Company or any of
its Affiliates other than (A) the exercise of convertible securities
acquired in compliance with the terms of this Agreement, or an acquisition
as a result of a stock split, stock dividend or similar recapitalization,
(B) the acquisition of shares of Common Stock which are subject to the
Xxxxxxx Purchase Agreement, (C) with the prior written consent of the two
most senior executive officers of the Company, acquisitions by all
Shareholders of up to a collective aggregate amount of 3,000,000 shares (as
such number may be appropriately adjusted to reflect stock splits, reverse
stock splits, stock dividends or any other recapitalization of the Company)
of Common Stock, (D) stock options or similar rights granted by the Company
to an Affiliate of such Shareholder as compensation for performance as
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a director or officer of the Company or its subsidiaries (and any shares
issuable upon exercise thereof), (E) transfers between such Shareholder and
Related Transferees as permitted under SECTION 4.1(F) or (F) any rights
which are granted to all shareholders of the Company (and any shares
issuable upon exercise thereof); PROVIDED, HOWEVER, that if the
Shareholders or any of their Affiliates in good faith inadvertently acquire
not more than 500,000 shares of Common Stock in violation of these
provisions and within 15 days after the first date on which the
Shareholders have actual knowledge (including by way of written notice
given by the Company) that a violation has occurred Shareholders or any of
their Affiliates shall have transferred any shares of Common Stock held in
violation of these provisions to unrelated third parties so that the
Shareholders and their Affiliates no longer beneficially own any such
shares or have any agreement or understanding relating to such shares, this
SECTION 2.1 shall be deemed to not have been violated; and PROVIDED,
FURTHER, that no violation of this provision shall be deemed to have
occurred by reason of the indirect acquisition of beneficial ownership of
securities resulting from (x) investments in investment funds as to which
no Shareholder or Affiliate thereof has control or power to control with
respect to voting or investment decisions or (y) acquisitions of securities
by a limited partner in any Shareholder or Affiliates thereof as to which
limited partner no Shareholder or its Affiliates has control or power to
control;
(ii) make or cause to be made any proposal for a Reorganization
Transaction;
(iii) form, join or in any way participate in a Group with respect
to any securities of the Company or its Affiliates, other than with other
Shareholders
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or Affiliates of any Shareholder; PROVIDED, HOWEVER, that in the case of
securities other than voting securities, Shareholders may participate in a
Group with respect thereto with the prior approval of a majority of the
entire Board of Directors (which approval is requested in a manner which
does not require disclosure publicly or to any third party);
(iv) make, or in any way cause or participate in, any
"solicitation" of "proxies" to vote (as those terms are defined in
Regulation 14A under the Exchange Act) with respect to the Company or its
Affiliates, or communicate with, seek to advise, encourage or influence any
Person, in any manner, with respect to the voting of, securities of the
Company or its Affiliates, or become a "participant" in any "election
contest" (as those terms are defined or used in Rule 14a-11 under the
Exchange Act) with respect to the Company or its Affiliates (other than
non-public communications with other Shareholders or Affiliates of any
Shareholder which would not require public disclosure by any Person);
(v) initiate, propose or, except with the prior approval of a
majority of the entire Board of Directors (which approval is requested in a
manner which does not require disclosure publicly or to any third parties)
otherwise solicit stockholders for the approval of one or more stockholder
proposals with respect to the Company or its Affiliates or induce or
attempt to induce any other Person to initiate any stockholder proposal or
seek election to or seek to place a representative on the Board of
Directors of the Company (except pursuant to SECTION 3.1 of this Agreement)
or its Affiliates or seek the removal of any member of the Board of
Directors of the Company or its Affiliates (for this purpose, the actions
of the Shareholder Designees in communicating (without public disclosure
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or disclosure to third parties) with the Board of Directors in their
capacity as directors of the Company, and non-public communication by a
Shareholder with other Shareholders or Affiliates of any Shareholder which
would not require public disclosure by any Person, shall not be deemed to
be in contravention of the paragraph (v));
(vi) in any manner, agree, attempt, seek or propose (other than
making any request for permission with respect thereto which would not
require disclosure publicly or to any third party) to deposit any
securities of the Company or its Affiliates in any voting trust or similar
arrangement or to subject any securities of the Company or its Affiliates
to any other voting or proxy agreement, arrangement or understanding (other
than any such agreements or understandings with other Shareholders or
Affiliates of any Shareholder);
(vii) offer, sell or transfer any Common Stock or rights to receive
Common Stock except for Dispositions in accordance with ARTICLE 4;
(viii) disclose any intention, plan or arrangement, or make any
public announcement (or request permission to make any such announcement
other than making any request for permission which would not require
disclosure publicly or to any third party), or induce any other Person to
take any action, inconsistent with the foregoing;
(ix) enter into any negotiations, arrangements or understandings
with any third party with respect to any of the foregoing;
(x) advise, assist or encourage or finance (or assist or arrange
financing to or for) any other Person in connection with any of the
foregoing;
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(xi) otherwise act in concert with others, to seek to control or
influence the management, Board of Directors or policies of the Company or
its Affiliates (for this purpose, the actions of the Shareholder Designees
in their capacity as directors of the Company shall not be deemed to be in
contravention of this paragraph (xi)); or
(xii) request a waiver of any of the provisions of any of
paragraphs (i) through (xii) of this SECTION 2.1 (except any request which
would not require disclosure publicly or to any third party);
PROVIDED, that this SECTION 2.1 shall not restrict or inhibit the rights of a
Shareholder to exercise its voting rights as a stockholder of the Company
(subject to SECTION 3.2).
SECTION 2.2. EARLY TERMINATION OF STANDSTILL. The obligations of
Shareholders under SECTION 2.1 shall terminate early upon the occurrence of any
of the following events:
(a) At least $10,000,000 in indebtedness for monies borrowed by the
Company or its subsidiaries shall have been accelerated and payment therefor
shall not have been made within 20 days after such acceleration, and the Company
shall not in good faith be contesting whether such amount is owed.
(b) A final judgment or judgments (not subject to appeal) for the payment
of money shall have been entered against the Company or its subsidiaries in an
aggregate amount in excess of $10,000,000 (exclusive of any amounts fully
covered by insurance (less any applicable deductible) or indemnification) by a
court or courts of competent jurisdiction, which judgments remain unsatisfied,
undischarged, unstayed or unbonded for a period of 45 days after the entry of
such judgment or judgments.
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(c) The Company shall file a petition in bankruptcy or for reorganization
or for an arrangement or any composition, readjustment, liquidation, dissolution
or similar relief pursuant to Title 11 of the United States Code or under any
similar present or future federal law or the law of any other jurisdiction or
shall be adjudicated a bankrupt or insolvent, or consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or for all or any
substantial part of its property, or shall make a general assignment for the
benefit of its creditors.
(d) A petition or answer shall be filed proposing the adjudication of the
Company as bankrupt or its reorganization or arrangement, or any composition,
readjustment, liquidation, dissolution or similar relief with respect to it
pursuant to Title 11 of the United States Code or under any similar present or
future federal law or the law of any other jurisdiction, and the Company shall
consent to or acquiesce in the filing thereof, or such petition or answer shall
not be discharged or denied within 60 days after the filing thereof.
(e) The Company shall be in material breach of its obligations to
Shareholders under the Registration Rights Agreement and such breach shall not
have been cured within 20 days after receipt by the Company from Shareholders of
a written notice specifying such breach and requiring it to be remedied, and the
Company shall not in good faith be contesting whether such breach has occurred.
(f) If the Company shall, in breach of its obligations under this
Agreement, fail to nominate for election to the Board of Directors any
Shareholder Designee who satisfies the requirements for designation to the Board
of Directors set forth in SECTIONS 3.1(D).
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ARTICLE 3
Board Representation and Voting
SECTION 3.1. BOARD REPRESENTATION. (a) As of the Second Closing Date and
until the earlier to occur of the sixth anniversary of the Second Closing Date
and the date on which Shareholders own, collectively, less than 20% of the
Shares (the "SHAREHOLDER DESIGNEE PERIOD"), the Board of Directors shall consist
of no more than twelve (12) directors; PROVIDED, HOWEVER, that if Xx. X'Xxxxx
ceases to serve as a director, the Board of Directors shall thereafter consist
of no more than eleven (11) directors during the Shareholder Designee Period.
For so long as Shareholders are entitled to at least two Shareholder
Designees under this Agreement, Shareholders shall be entitled to have one
Shareholder Designee serve on each committee of the Board of Directors other
than any committee formed for the purpose of considering matters relating to the
Shareholders and as set forth below with respect to the Nominating Committee.
(b) On the Second Closing Date, the Company will cause Xxxxx Xxxxxx and
one additional person as designated by Shareholders or, subject to
SECTION 3.1(D), such other substitute persons as may be designated by
Shareholders, to be elected to the Board of Directors. At all times during the
Shareholder Designee Period, the Company agrees, subject to SECTION 3.1(D), to
support the nomination of, and the Company's Nominating Committee (as defined
herein) shall recommend to the Board of Directors the inclusion in the slate of
nominees recommended by the Board of Directors to shareholders for election as
directors at each annual meeting of shareholders of the Company: (i) no more
than two persons who are executive officers of the Company
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("Management Directors"), (ii) (A) four Shareholder Designees, so long as
Shareholders beneficially own 75% or more of the Shares, (B) three Shareholder
Designees, so long as Shareholders beneficially own 50% or more but less than
75% of the Shares, (C) two Shareholder Designees, so long as Shareholders
beneficially own 25% or more but less than 50% of the Shares and (D) one
Shareholder Designee, so long as Shareholders beneficially own 20% or more but
less than 25% of the Shares (each a "BENEFICIAL OWNERSHIP THRESHOLD"), provided
that if at any time as a result of the Company's issuance of Voting Securities
Shareholders beneficially own 9% or less of the Actual Voting Power (the "ACTUAL
VOTING POWER THRESHOLD"), Shareholders shall be entitled to no more than one
Shareholder Designee, and (iii) such other persons, each of whom is (A)
recommended by the Nominating Committee and (B) not an employee or officer of or
outside counsel to the Company or a partner, employee, director, officer,
affiliate or associate (as defined in Rule 12b-2 under the Exchange Act) of any
Shareholder or any affiliate of a Shareholder or as to which the Shareholders or
their affiliates own at lest ten percent of the voting equity securities
("Unaffiliated Directors"). If any vacancy (whether by death, retirement,
disqualification, removal from office or other cause, or by increase in number
of directors) occurs prior to a meeting of the Company's stockholders, the Board
(i) may appoint a member of management to fill a vacancy caused by a Management
Director ceasing to serve as a director, (ii) shall appoint, subject to Section
3.1(d), a person designated by the Shareholders to fill a vacancy created by a
Shareholder Designee ceasing to serve as a director (except as a result of the
reduction of the number of Shareholder Designees entitled to be included on the
Board of Directors by reason of a decrease in Shareholders' beneficial ownership
of Common Stock below any Beneficial Ownership Threshold or Voting Securities
below the Actual Voting Power Threshold), and (iii) may appoint a person who
qualifies as an Unaffiliated Director and is
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recommended by the Nominating Committee pursuant to the procedures set forth in
the following paragraph to fill a vacancy created by an Unaffiliated Director
ceasing to serve as a director (provided that in the case of a vacancy relating
to an Unaffiliated Director, if a majority of the Nominating Committee is unable
to recommend a replacement, then the Board seat with respect to this vacancy
shall remain vacant), and each such person shall be a Management Designee,
Shareholder Designee or Unaffiliated Director, as the case may be, for purposes
of this Agreement.
At all times during the Shareholder Designee Period, Unaffiliated Directors
shall be designated exclusively by a majority of a nominating committee (the
"Nominating Committee"), which shall at all times during the Shareholder
Designee Period consist of not more than four persons, two of whom shall be
Shareholder Designees (or such lesser number of Shareholder Designees as then
serves on the Board of Directors) and two of whom shall be either Management
Directors or Unaffiliated Directors. If the Nominating Committee is unable to
recommend one or more persons to serve as Unaffiliated Directors (except with
respect to any vacancy created by an Unaffiliated Director ceasing to serve as
such), then the Board of Directors shall nominate and recommend for election by
stockholders an Unaffiliated Director then serving on the Board of Directors.
Notwithstanding the foregoing, if the Shareholders beneficially own less than
50% of the Shares, the Nominating Committee shall be comprised of individuals
only one of whom is a Shareholder Designee.
The foregoing provisions shall be effected pursuant to an amendment to the
Company's Bylaws in a form reasonably acceptable to the parties to this
Agreement, which shall not be further amended by the Board of Directors during
the Shareholder Designee Period.
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Notwithstanding the foregoing, the Company shall have no obligation to
support the nomination, recommendation or election of any Shareholder Designee
pursuant to this SECTION 3.1(B) or any other obligation under this Section 3.1
if Shareholders are in breach of any material provision of this Agreement.
(c) Upon any decrease in Shareholders' beneficial ownership of Common
Stock below any Beneficial Ownership Threshold or Voting Securities below the
Actual Voting Power Threshold, Shareholders shall cause a number of Shareholder
Designees to offer to immediately resign from the Company's Board of Directors
such that the number of Shareholder Designees serving on the Board of Directors
immediately thereafter will be equal to the number of Shareholder Designees
which Shareholders would then be entitled to designate under SECTION 3.1(B).
Upon termination of the Shareholder Designee Period, Shareholders shall promptly
offer to cause all of the Shareholder Designees to resign from the Board of
Directors and any committees thereof and the Company's obligations under this
SECTION 3.1 shall terminate.
(d) Notwithstanding the provisions of this SECTION 3.1, Shareholder shall
not be entitled to designate any person to the Company's Board of Directors (or
any committee thereof) in the event that the Company receives a written opinion
of its outside counsel that a Shareholder Designee would not be qualified under
any applicable law, rule or regulation to serve as a director of the Company or
if the Company objects to a Shareholder Designee because such Shareholder
Designee has been involved in any of the events enumerated in Item 2(d) or (e)
of Schedule 13D or such person is currently the target of an investigation by
any governmental authority or agency relating to felonious criminal activity or
is subject to any order, decree, or judgment of any court or agency prohibiting
service as a director of any public company or providing investment or
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financial advisory services and, in any such event, the Shareholder shall
withdraw the designation of such proposed Shareholder Designee and designate a
replacement therefor (which replacement Shareholder Designee shall also be
subject to the requirements of this Section). The Company shall use its
reasonable best efforts to notify the Shareholder of any objection to a
Shareholder Designee sufficiently in advance of the date on which proxy
materials are mailed by the Company in connection with such election of
directors to enable the Shareholder to propose a replacement Shareholder
Designee in accordance with the terms of this Agreement.
(e) Each Shareholder Designee serving on the Board of Directors shall be
entitled to all compensation and stock incentives granted to directors who are
not employees of the Company on the same terms provided to such directors.
SECTION 3.2. VOTING. (a) Each Shareholder agrees that during the
Standstill Period such Shareholder shall, and shall cause its Affiliates and any
Person which is a member of any Group of which such Shareholder or any of its
Affiliates is a member to, be present, in person or represented by proxy, at all
meetings of shareholders of the Company so that all Voting Securities
beneficially owned by such Shareholder shall be counted for the purpose of
determining the presence of a quorum at such meetings. Each Shareholder agrees
that during the Standstill Period:
(i) In connection with the election of directors of the Company,
such Shareholder shall vote or cause to be voted all Voting Securities
beneficially owned by such Shareholder to elect those individuals nominated
in accordance with the provisions of Section 3.1.
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(ii) In connection with any proposal for a Reorganization
Transaction, such Shareholder shall vote or cause to be voted, or consent
with respect to, all Voting Securities beneficially owned by such
Shareholder in the manner recommended by a majority of the entire Board of
Directors.
(iii) In connection with other proposals submitted to shareholders
of the Company, such Shareholder shall be free to vote or cause to be
voted, or consent with respect to, all Voting Securities beneficially owned
by such Shareholder in its discretion.
SECTION 3.3. NOTICES OF DISPOSITIONS OF VOTING SECURITIES. Not later
than the tenth day following the end of any calendar month during the Standstill
Period in which one or more Dispositions of Voting Securities by a Shareholder
or any of its Affiliates shall have occurred, such Shareholder shall use its
reasonable best efforts to give written notice to the Company of all such
Dispositions (in the case of Dispositions by Affiliates, to the extent it has
knowledge) unless any such Disposition has been reflected in a public filing
that was delivered to the Company on or in advance of the date upon which notice
thereof under this SECTION 3.3 would have been due. Such notice shall state the
date upon which each such Disposition was effected, the number and type of
Voting Securities involved in each such Disposition, the means by which each
such Disposition was effected and, to the extent known, the identity of the
Person acquiring Voting Securities.
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ARTICLE 4
Transfer Restrictions
SECTION 4.1. RESTRICTIONS ON DISPOSITIONS. During the Standstill Period,
each Shareholder shall not, and shall cause its Affiliates not to, directly or
indirectly (including, without limitation, through the disposition or transfer
of control of another Person), sell, assign, donate, transfer, pledge,
hypothecate, grant any option with respect to or otherwise dispose of any
interest in (or enter into an agreement or understanding with respect to the
foregoing) any Voting Securities (a "DISPOSITION"), except as set forth below in
this SECTION 4.1. Without limiting the generality of the foregoing, any sale of
securities held by any Shareholder or any of its Affiliates which is currently
(or following the passage of time, the occurrence of any event or the giving of
notice), directly or indirectly, exchangeable or exercisable for, or convertible
into, any Voting Securities shall constitute a Disposition of such Voting
Securities.
Dispositions may be effected by a Shareholder during the Standstill Period
as follows:
(a) No Dispositions of any nature may be made prior to the second
anniversary of the Second Closing Date except pursuant to SECTION 4.1(E) or
4.1(F).
(b) After the second anniversary of the Second Closing Date, Dispositions
of Voting Securities may be made at any time in compliance with the Registration
Rights Agreement.
(c) After the second anniversary of the Second Closing Date, Dispositions
of Voting Securities may be made pursuant to sales effected in accordance
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with Rule 144 under the Securities Act (a "RULE 144 SALE"); PROVIDED that such
Dispositions shall not be made to any Person who or which would immediately
thereafter, to the knowledge of such Shareholder, any of its Affiliates, or such
Shareholder's broker, beneficially own Voting Securities representing 9% or more
of the Total Voting Power (and such Person shall have provided a certificate to
such effect).
(d) After the second anniversary of the Second Closing Date, Dispositions
may be made to any Person (other than pursuant to a Reorganization Transaction)
that would, following such sale, beneficially own no more than 9% of the Total
Voting Power (and such Person shall have provided a certificate to such effect).
(e) Dispositions may be made pursuant to a merger transaction or a tender
offer for all of the outstanding shares of Common Stock which is recommended to
the shareholders of the Company generally by at least a majority of the entire
Board of Directors, on the terms and conditions of such transaction available to
all other holders of shares of Common Stock.
(f) Dispositions may be made by a Shareholder to (i) any other Shareholder
or (ii) any Affiliate of any Shareholder that executes an instrument in form and
substance satisfactory to the Company in which it makes the representations and
warranties set forth in SECTION 1.3(B) as of the date of the execution of such
instrument and agrees to be bound by the terms of this Agreement as if an
original signatory to this Agreement (such transferee, a "RELATED TRANSFEREE"),
in which case such Related Transferee shall thereafter be a "Shareholder" for
all purposes of this Agreement.
(g) With respect to Voting Securities which are, by their terms,
convertible into or exercisable or exchangeable for other Voting Securities such
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conversion, exercise or exchange shall not be deemed a Disposition.
(h) Each Shareholder agrees that during the Standstill Period, without the
consent of the managing underwriter(s) in an underwritten offering in respect of
the Company's Voting Securities, it will not effect any sale or distribution of
Voting Securities (other than in connection with such Shareholder's own
registration pursuant to paragraph (b) of this SECTION 4.1), including a Rule
144 Sale, during the ten (10) day period prior to, and during the ninety (90)
day period beginning on, the effective date of the registration statement filed
by the Company in respect of such underwritten offering, or any shorter period
as may apply to the Company and its affiliates.
ARTICLE 5
Miscellaneous
SECTION 5.1. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be made in writing by hand-
delivery, registered first-class mail, telex, fax or air courier guaranteeing
delivery:
(a) If to the Company, to:
Allied Waste Industries, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
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with copies to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx, Xx.
Fax: (000) 000-0000
or to such other person or address as the Company shall furnish to Shareholders
in writing;
(b) If to Shareholders, to:
Apollo Management, L.P.
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
and:
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The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
or to such other person or address as Shareholders shall furnish to the Company
in writing.
All such notices, requests, demands and other communications shall be
deemed to have been duly given: at the time of delivery by hand, if personally
delivered; five (5) Business Days after being deposited in the mail, postage
prepaid, if mailed domestically in the United States (and seven (7) Business
Days if mailed internationally); when answered back, if telexed; when receipt
acknowledged, if telecopied; and on the Business Day for which delivery is
guaranteed, if timely delivered to an air courier guaranteeing such delivery.
SECTION 5.2. LEGENDS. (a) If requested in writing by the Company, a
Shareholder shall present or cause to be presented promptly all certificates
representing Voting Securities beneficially owned by such Shareholder or any of
its Affiliates, for the placement thereon of a legend substantially to the
following effect, which legend will remain thereon so long as such legend is
required under applicable securities laws:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH A REGISTRATION THEREUNDER OTHER
THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND
DELIVERY TO ALLIED WASTE INDUSTRIES, INC. OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THOSE LAWS."
(b) Each Shareholder shall present or cause to be presented promptly all
certificates representing Voting Securities beneficially owned by such
Shareholder or any of its Affiliates, for the placement thereon of a legend
substantially to the following effect, which legend will remain thereon during
the Standstill Period as long as such Voting Securities are beneficially owned
by any Shareholder or an Affiliate of any Shareholder:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT,
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DATED AS OF APRIL 21, 1997, BETWEEN ALLIED WASTE INDUSTRIES, INC.
("ALLIED") AND CERTAIN SHAREHOLDERS OF ALLIED NAMED THEREIN AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SAID AGREEMENT
IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF ALLIED"
(c) The Company may enter a stop transfer order with the transfer agent or
agents of Voting Securities against any Disposition not in compliance with the
provisions of this Agreement.
SECTION 5.3. ENFORCEMENT. Shareholders, on the one hand, and the Company,
on the other hand, acknowledge and agree that irreparable injury to the other
party would occur in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached and
that such injury would not be adequately compensable in damages. It is
accordingly agreed that, in addition to any other remedies which may be
available at law or in equity, each party hereto (the "MOVING PARTY") shall be
entitled to specific enforcement of, and injunctive relief to prevent any
violation of, the terms of this Agreement, and the other parties hereto will not
take action, directly or indirectly, in opposition to the Moving Party seeking
such relief on the grounds that any other remedy or relief is available at law
or in equity. The parties further agree that no bond shall be required as a
condition to the granting of any such relief.
-29-
SECTION 5.4. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby; PROVIDED that the Original Shareholders Agreement shall
remain in full force and effect until the closing of the purchase of the Xxxxxxx
Block pursuant to the Xxxxxxx Purchase Agreement and the representations and
warranties of the parties set forth in SECTIONS 1.2 and 1.3 of the Original
Agreement shall survive and shall be deemed to be not amended or otherwise
affected by this Agreement. This Agreement may be amended only by a written
instrument duly executed by the parties or their respective successors or
assigns; PROVIDED, HOWEVER, that any amendment or waiver by the Company shall be
made only with the prior approval of a majority of the directors of the Company
other than Shareholder Designees.
SECTION 5.5. SEVERABILITY. Whenever possible, each provision or portion
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision or portion of any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law, rule or regulation in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision shall have been
replaced with a provision which shall, to the maximum extent permissible under
such applicable law, rule or regulation, give effect to the intention of the
parties as expressed in such invalid, illegal or unenforceable provision.
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SECTION 5.6. HEADINGS. Descriptive headings contained in the Agreement
are for convenience only and will not control or affect the meaning or
construction of any provision of this Agreement.
SECTION 5.7. COUNTERPARTS. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by the parties, and each such
executed counterpart will be an original instrument.
SECTION 5.8. NO WAIVER. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
SECTION 5.9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Company and Shareholders, and to their
respective successors and assigns other than, in the case of Shareholders,
transferees that are not Related Transferees, including any successors to the
Company or Shareholders or their businesses or assets as the result of any
merger, consolidation, reorganization, transfer of assets or otherwise, and any
subsequent successor thereto, without the execution or filing of any instrument
or the performance of any act; PROVIDED that no party may assign this Agreement
without the other party's prior written consent, except by the Shareholders to a
Shareholder or a Related Transferee as expressly provided in this Agreement (and
that nothing herein restricts the transfer of any of the rights of Shareholders
under the Registration Rights Agreement in accordance the terms of the
Registration Rights Agreement).
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SECTION 5.10. GOVERNING LAW. This Agreement will be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without giving effect to the conflict of laws principles thereof.
SECTION 5.11. FURTHER ASSURANCES. From time to time on and after the date
of this Agreement, the Company and Shareholders, as the case may be, shall
deliver or cause to be delivered to the other party hereto such further
documents and instruments and shall do and cause to be done such further acts as
the other parties hereto shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure that it is protected in acting hereunder.
SECTION 5.12. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any legal
action or proceeding with respect to this Agreement or any matters arising out
of or in connection with this Agreement, and any action for enforcement of any
judgment in respect thereof shall be brought exclusively in the state or federal
courts located in the State of Delaware, and, by execution and delivery of this
Agreement, the Company and Shareholders each irrevocably consent to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
the Company or Shareholders at their respective addresses referred to in this
Agreement. The Company and Shareholders each hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to above and hereby further irrevocably
waives and agrees, to the extent permitted by applicable law, not to plead or
claim in any such court that any
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such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing in this Agreement shall affect the right of any
party hereto to serve process in any other manner permitted by law.
SECTION 5.13. SHAREHOLDER ACTION. The Company shall be entitled to rely
upon any written notice, designation, or instruction signed by Apollo Capital
Management II, Inc. and BCP (the "REPRESENTATIVES") as a notice, designation or
instruction of all Shareholders and the Company shall not be liable to any
Shareholder if the Company acts in accordance with and relies upon such writing.
In that regard, each of the Shareholders acknowledges that the Representatives
have full power and authority to act on their behalf.
-33-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
ALLIED WASTE INDUSTRIES, INC.
By: /s/ Xxxxxx Xxx Xxxxxx
_________________________
Title: President
________________________
APOLLO INVESTMENT FUND III, L.P.
APOLLO OVERSEAS PARTNERS III, L.P.
APOLLO (U.K.) PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
By: Apollo Capital Management II, Inc.
By: /s/ Xxxxx X. Xxxxxx
_________________________
Title: Vice President
________________________
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND X.X.
XXXXXXXXXX OFFSHORE CAPITAL
PARTNERS II X.X.
XXXXXXXXXX FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
_________________________
Title: Sr. Managing Director
________________________
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