EXHIBIT 99.5
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "AGREEMENT"), dated as of April 14,
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.
WHEREAS, simultaneously with the execution of this Agreement,
Shareholders are entering into an agreement (the "TPG GROUP AGREEMENT") to
purchase an aggregate of 11,776,765 shares (the "SHARES") 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 Shares by
Shareholders pursuant to the TPG Group Agreement, TPG Group intends to assign to
Shareholders its registration rights with respect to the Shares under Article IV
of the Securities Purchase Agreement dated as of October 27, 1994, as amended,
by and between TPG Group and the Company (the "REGISTRATION RIGHTS");
WHEREAS, in recognition of Shareholders' significant share ownership
in the Company, the Company has determined to grant to Shareholders, effective
upon the closing of the acquisition of the Shares pursuant to the TPG Group
Agreement, the right as a group to appoint certain designees for election to the
Board of Directors of the Company; and
WHEREAS, in view of the foregoing, Shareholders have agreed to certain
restrictions on the acquisition and disposition of Common Stock and the conduct
of Shareholders with respect to the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and in the Assignment Agreement and
intending to be legally bound hereby, the parties agree as follows:
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 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.
"CLOSING DATE" shall mean the date of the closing of the purchase of
the Shares by Shareholders pursuant to the TPG Group Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"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.
"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.
"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 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 the Preferred Shares in accordance with the terms of the
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 3.1(a)
Xxxxxxx Agreement 3.1(a)
Registration Rights recitals
Related Transferee 4.1(e)
Rule 144 Sale 4.1(b)
Shareholders recitals
Shareholder Designee Period 3.1(b)
Shares recitals
Standstill Period 2.1
TPG Group 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 under the Company's Articles of Incorporation or By-laws,
(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 TPG Group 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 TPG Group
Agreement or (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 TPG Group
Agreement.
(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 TPG Agreement,
or any of the transactions contemplated hereby and thereby.
(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 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 between the
Company and NatWest Bank, N.A., as agent (the "CREDIT AGREEMENT"), and the
consummation of the transactions contemplated by the TPG Group 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 Shares to the Shareholders pursuant to the TPG Group Agreement, subject
to the execution and delivery by the Shareholders of this Agreement.
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, to the extent such shares may be
deemed to be beneficially owned, the shares of Common Stock which are subject to
the TPG Group Agreement.
(d) A condition to the consummation of the purchase of the Shares by
the Shareholders pursuant to the TPG Group Agreement is that the four persons
designated to the Board of Directors by TPG Group shall have resigned, and the
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 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 TPG
Group Agreement, (C) in the event that the Company shall have issued or
sold securities entitled to vote for the general election of directors, the
acquisition of shares of Common Stock to the extent necessary to maintain
such Shareholder's percentage of the Actual Voting Power as held
immediately prior to such issuance or sale, (D) 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, (E) stock options or
similar rights granted by the Company to an Affiliate of such Shareholder
as compensation for performance as a director or officer of the Company or
its subsidiaries (and any shares issuable upon exercise thereof),
(F) transfers between such Shareholder and Related Transferees as permitted
under SECTION 4.1(E) or (G) 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 or any of their Affiliates no longer beneficially own 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 has control or power to control with respect to
voting or investment decisions or (y) acquisitions of securities by limited
partners in any Shareholder or its Affiliates as to limited partners which
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 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 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;
(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
paragraphs (i) through (xi) above (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 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.
(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 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).
ARTICLE 3
Board Representation and Voting
SECTION 3.1. BOARD REPRESENTATION. (a) As of the Closing Date and
during the Standstill Period the Board of Directors shall consist of no more
than twelve (12) directors as follows: (A) two directors shall be executive
officers of the Company; (B) up to two directors, as determined pursuant to
SECTIONS 3.1(B) and 3.1(C), shall be Shareholder Designees; (C) for so long as
required under the Stock Purchase Agreement dated as of September 17, 1996, as
the same may be amended (the "XXXXXXX AGREEMENT"), by and among the Company,
Allied Holding (United States), Inc., a Delaware corporation, Xxxxxxx, Inc., a
Canadian corporation ("XXXXXXX"), and certain of Xxxxxxx'x subsidiaries, two
directors as shall be designated in accordance with the Xxxxxxx Agreement; and
(D) each other director shall be an individual who is not a partner, employee,
director, officer or affiliate of any Shareholder or any employee or officer of
the Company; 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 Standstill Period.
For so long as Shareholders are entitled to 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.
(b) On the Closing Date, the Company will cause Xxxxxxx X. Xxxxxxx
and Xxxxxx X. Xxxxxx or, subject to SECTION 3.1(D), such other substitute
persons as may be designated by Shareholders and be reasonably acceptable to the
Company, to be elected to the Board of Directors. Until the earlier to occur of
the sixth anniversary of the Closing Date and the date on which Shareholders
own, collectively, less than 20% of the Shares (the "SHAREHOLDER DESIGNEE
PERIOD"), the Company agrees, subject to SECTION 3.1(D), to support the
nomination of, and the Company's nominating committee (or any other committee
exercising a similar function) shall recommend to the Board of Directors that,
(A) two Shareholder Designees, so long as Shareholders beneficially own 50% or
more of the Shares and (B) one Shareholder Designee, so long as Shareholders
beneficially own 20% or more and less than 50% of the Shares (each a "BENEFICIAL
OWNERSHIP THRESHOLD"), be included 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 commencing with the next annual
meeting of shareholders. Notwithstanding the foregoing, 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. In the
event that any of the Shareholder Designees shall cease to serve as a director
for any reason, the Board of Directors shall fill the vacancy resulting thereby,
subject to the terms of this Agreement, with a person designated by
Shareholders, subject to SECTION 3.1(D) (and such person shall be a "Shareholder
Designee" for purposes of this Agreement). The foregoing provision shall be
effected pursuant to an amendment to the Company's By-laws 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.
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) 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 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 (A) the election of directors of the
Company and (B) 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.
(ii) 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.
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) Dispositions of Voting Securities may be made at any time in
compliance with the Registration Rights.
(b) Dispositions of Voting Securities may be made pursuant to sales
effected in accordance 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).
(c) Prior to the second anniversary of the Closing Date, Dispositions
may be made to any Person which is a financial institution acting on its own
behalf or ultimately on the behalf of another financial institution or
institutions that would, following such sale, beneficially own no more than 9%
of the Total Voting Power. After the second anniversary of the 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).
(d) 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.
(e) 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.
(f) With respect to Voting Securities which are, by their terms,
convertible into or exercisable or exchangeable for other Voting Securities such
conversion, exercise or exchange shall not be deemed a Disposition.
(g) 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.
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
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:
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:
"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 a Affiliate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF A SHAREHOLDERS AGREEMENT, DATED AS OF
APRIL 14, 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.
SECTION 5.4. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby. 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.
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 Registration Rights in accordance their terms).
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 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.
SECTION 5.14. REGISTRATION RIGHTS. Upon closing of the acquisition
of the Shares pursuant to the TPG Group Agreement, any previous demand by TPG
Group for a shelf registration with respect to certain of the Shares shall be
deemed withdrawn and the parties shall disregard such demand and treat such
demand as if it were never made; PROVIDED that the Shareholders may reinstate
such demand at any time after the Closing Date.
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 Xxxxxxx
---------------------------
Xxxxxx Xxx Xxxxxxx
Title: President and Chief Operating Officer
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
---------------------------
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
----------------------------
Xxxxxx X. Xxxxxx
Title: Senior Managing Director
