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EXHIBIT 10.3
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;
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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
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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.
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(g) 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.
(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.
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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.
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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 X. Xxx Xxxxxxx
-------------------------------------------
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 Xxxxxx
-------------------------------------------
Title: V.P.
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: Senior Managing Director
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