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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)*
Allied Waste Industries, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
019589
--------------
(CUSIP Number)
John F. Hartigan
Morgan, Lewis & Bockius
801 South Grand Avenue
Los Angeles, California 90071
(213) 612-2500
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 15, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
- ------------------------------ -----------------------------------
CUSIP NO. 019589 PAGE 2 OF 13 PAGES
---------- --- ----
- ------------------------------ -----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Investment Fund III, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY -------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 26,376,765
-------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
26,376,765
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,376,765
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 019589 PAGE 3 OF 13 PAGES
---------- --- ----
- ------------------------------ -----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Overseas Partners III, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY -------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 26,376,765
-------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
26,376,765
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,376,765
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 019589 PAGE 4 OF 13 PAGES
---------- --- ----
- ------------------------------ -----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo (U.K.) Partners III, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United Kingdom
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY -------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 26,376,765
-------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
26,376,765
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,376,765
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
4
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SCHEDULE 13D
- ------------------------------ -----------------------------------
CUSIP NO. 019589 PAGE 5 OF 13 PAGES
---------- --- ----
- ------------------------------ -----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Advisors II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY -------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 26,376,765
-------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
26,376,765
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,376,765
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
5
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ITEM 1. SECURITY AND ISSUER
This Statement relates to the common stock, par value $0.01 per share
("Common Stock"), of Allied Waste Industries, Inc., a Delaware corporation (the
"Issuer"). The address of the principal executive office of the Issuer is 15880
N. Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) AND (f)
This Statement is filed jointly by Apollo Investment Fund III, L.P., a
Delaware limited partnership ("Fund III"), Apollo Overseas Partners III,
L.P., a Delaware limited partnership ("Overseas Partners"), Apollo (U.K.)
Partners III, L.P., a limited partnership organized under the laws of the
United Kingdom ("U.K. Partners" and, together with Fund III and Overseas
Partner, the "Apollo Purchasers") and Advisors (as defined below). The
foregoing entities are hereinafter referred to collectively as the "Reporting
Entities." The Reporting Entities are making this joint filing because they
may be deemed to constitute a "group" within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934 (the "Exchange Act"). In addition,
certain information concerning the Blackstone Entities (as defined below) is
included in this Schedule 13D because the Reporting Entities together with
the Blackstone Entities may be deemed to constitute a "group" within the
meaning of Section 13(d)(3). The Reporting Entities disclaim any pecuniary
interest in the Blackstone Block (as defined below).
Each of the Apollo Purchasers is principally engaged in the business of
investment in securities. The principal office of each of the Apollo
Purchasers is c/o Apollo Advisors II, L.P., Two Manhattanville Road, Purchase,
New York 10577.
Apollo Advisors II, L.P., a Delaware limited partnership ("Advisors"), is
the managing general partner of each of the Apollo Purchasers. Advisors is
principally engaged in the business of serving as managing general partner of
the Apollo Purchasers.
Apollo Capital Management II, Inc., a Delaware corporation ("Apollo
Capital"), is the general partner of Apollo Advisors. Apollo Capital is
principally engaged in the business of serving as general partner to Advisors.
Apollo Management, L.P., a Delaware limited partnership ("Apollo
Management"), serves as manager of the Apollo Purchasers and manages their
day-to-day operations.
AIF III Management, Inc., a Delaware corporation ("AIM"), is the general
partner of Apollo Management. AIM is principally engaged in the business of
serving as general partner to Apollo Management.
6
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The respective addresses of the principal office of Advisors, Apollo
Capital, Apollo Management and AIM are c/o Apollo Advisors II, L.P., Two
Manhattanville Road, Purchase, New York 10577.
Apollo Fund Administration II LDC, a Cayman Islands LDC ("Administration"),
is the administrative general partner of each of Overseas Partners and UK
Partners. Administration is principally engaged in the business of serving as
administrative general partner of Overseas Partners and UK Partners. The
principal place of business of Administration is Apollo Fund Administration II
LDC, c/o CIBC Bank and Trust Company (Cayman) Limited, Edward Street,
Georgetown, Grand Cayman, Cayman Islands, British West Indies.
Apollo Management (UK) Ltd., an English corporation ("Management UK"), is
the resident general partner of UK Partners. Management UK is principally
engaged in the business of serving as resident general partner of UK Partners.
The address of the principal business of Management UK is Hill House, 1 Little
New Street, London EC4A 3TR, England.
Attached as Schedule I to this Statement is information concerning the
Reporting Entities and other persons and entities as to which such information
is required to be disclosed in response to Item 2 and General Instruction C to
Schedule 13D.
(d) AND (e)
None of the Reporting Entities, Apollo Capital, Apollo Management, AIM,
Administration, Management UK nor any of the persons or entities referred to
in Schedule I has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree, or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a Stock Purchase Agreement, dated as of April 14, 1997 and
delivered among the parties thereto on April 15, 1997 (the "TPG Agreement"),
by and between the Apollo Purchasers, Blackstone Capital Partners II Merchant
Banking Fund L.P., a Delaware limited partnership, 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, the "Blackstone Entities" and, together with the Apollo
Purchasers, "Purchasers"), and TPG Partners, L.P., a Delaware limited
partnership and TPG Parallel I, L.P., a Delaware limited partnership
(collectively, "TPG"), and subject to the terms and conditions therein, the
Purchasers will acquire an aggregate of 11,776,765 shares of Common Stock of
the Issuer from TPG (the "TPG Shares") for an aggregate purchase price of
$111,879,267.50 (exclusive of related fees and expenses). The TPG Agreement
provides that the closing is to occur following termination or expiration of
applicable waiting
7
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periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). At the closing, TPG is obligated to deliver to the
Purchasers, among other things, the resignations of TPG's four director
representatives from the Board of Directors of the Issuer (the "Board").
Pursuant to a Securities Purchase Agreement, dated as of April 21, 1997
(the "Laidlaw Agreement" and, together with the TPG Agreement, the "Purchase
Agreements"), by and between the Issuer, the Purchasers and Laidlaw, Inc., a
Canadian corporation, and Laidlaw Transportation, Inc., a Delaware corporation
(collectively, "Laidlaw"), and subject to the terms and conditions therein, the
Purchasers will acquire an aggregate of 14,600,000 shares of Common Stock of the
Issuer from Laidlaw (the "Laidlaw Shares" and, together with the TPG Shares, the
"Shares") for an aggregate purchase price of $146,000,000 (exclusive of fees and
expenses). In addition, the Laidlaw agreement provides for the Issuer's
retirement of Laidlaw's interest in warrants of the Issuer and debt of certain
subsidiaries of the Issuer ("Laidlaw Warrants and Debt"). The Laidlaw Agreement
provides that the closing is to occur on the later of (i) the termination or
expiration of applicable waiting periods under the HSR Act and (ii) the Issuer's
consummation of the financing required for the retirement of the Laidlaw
Warrants and Debt. At the closing, Laidlaw is obligated to deliver to the
Purchasers, among other things, the resignations of Laidlaw's two director
representatives from the Board.
Pursuant to an Investment Agreement, dated as of April 14, 1997 and
delivered among the parties thereto on April 15, 1997 (the "Investment
Agreement"), by and among the Purchasers, the Apollo Purchasers agreed to
purchase 65% of the Shares, or 17,144,897 shares of Common Stock (such
percentage of the Shares is referred to herein as the "Apollo Block"), and pay
65% of the aggregate purchase price for the Shares, and the Blackstone Entities
agreed to purchase 35% of the Shares, or 9,231,868 shares of Common Stock (such
percentage of the Shares is referred to herein as the "Blackstone Block"), and
pay 35% of the aggregate purchase price for the Shares. Under the Investment
Agreement, the Apollo Purchasers may allocate their obligation to purchase the
Apollo Block, and the ownership of shares received, among themselves in their
sole discretion; the Blackstone Entities have similar allocation rights with
respect to the Blackstone Block.
The Apollo Purchasers plan to fund their purchase of the Apollo Block
through capital contributions from their investors.
All references to, and summaries of, the TPG Agreement, Laidlaw Agreement
and the Investment Agreement in this Schedule 13D are qualified in their
entirety by reference to such agreements, the full texts of which are filed as
Exhibits 1, 2 and 3 hereto, respectively, and incorporated herein by this
reference.
ITEM 4. PURPOSE OF TRANSACTION
The Apollo Purchasers have entered into the Purchase Agreements in order
to acquire a significant equity interest in the Issuer and for general
investment purposes. The Apollo Purchasers retain the
8
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right to change their investment intent, and, subject to the restrictions set
forth in the Investment Agreement and the Shareholders Agreements (as defined
below), to propose one or more possible transactions to the Issuer and/or other
stockholders with the consent of the Issuer and/or the Blackstone Entities. In
the event of a material change in the present plans of the Apollo Purchasers,
the Reporting Entities will amend this Schedule 13D to reflect such change.
The Purchasers and the Issuer have entered into a Shareholders Agreement,
dated April 14, 1997 and delivered among the parties thereto on April 15, 1997
(the "TPG Shareholders Agreement"), relating to, among other things, (i) certain
restrictions during the Standstill Period (as defined) on the Purchasers' (A)
dispositions and acquisitions of voting securities of the Issuer, except in
certain limited circumstances including the opportunity to obtain up to a
maximum of 3,000,000 additional shares with the written consent of the two most
senior executives of the Issuer, (B) making of any proposals for certain
Reorganization Transactions (as defined) and (C) solicitation of shareholders
for the approval of various shareholder proposals, (ii) the assignment of
registration rights held by TPG to the Purchasers and (iii) corporate governance
matters concerning the Issuer, including the requirement that the Issuer cause
two Purchasers representatives, consisting of one designee of each of the
Apollo Purchasers and the Blackstone Entities, to be elected to the Board.
Pursuant to an Amended and Restated Shareholders Agreement, dated April 21,
1997 (the "Amended Shareholders Agreement"), the Purchasers and the Issuer have
agreed to amend the TPG Shareholders Agreement, effective upon the Purchasers'
acquisition of the Laidlaw Shares, to provide that (1) two additional designees
of the Apollo Purchasers be elected to the Board, for a total of three
designees of the Apollo Purchasers and one designee of the Blackstone Entities,
(2) during the Standstill Period, the Purchasers will not make Dispositions (as
defined) of voting securities of the Issuer prior to the second anniversary of
the effective date of the amendment, except in certain limited circumstances,
and (3) during the Shareholder Designee Period (as defined), the Issuer support
the election of the Purchasers' four designees to serve as directors on the
Board, subject to a reduction in the number of such designees if the Purchasers
decrease their ownership of the Shares by specified percentages. The Purchasers
also have the right to include their director designees on a nominating
committee, which will make recommendations with respect to the Unaffiliated
Directors (as defined) who will be included in management's slate of nominees to
the Board.
The Purchasers and the Company have also entered into an Agreement, dated
April 21, 1997 (the "Interim Agreement"), concerning certain governance matters
and the suspension of the Purchasers' registration rights during the period
prior to the Purchasers' acquisition of the Laidlaw Shares. The Interim
Agreement also provides that the Issuer will not fill any of the vacancies
created by the TPG and Laidlaw director resignations provided for in the
Purchase Agreements other than in accordance with the TPG Shareholders Agreement
and the Amended Shareholders Agreement.
Pursuant to a Registration Rights Agreement, dated April 21, 1997 (the
"Registration Rights Agreement"), between the Purchasers and the
9
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Company, the Company granted to the Purchasers certain registration rights with
respect to Common Stock owned by the Purchasers. Upon the Purchasers'
acquisition of the Laidlaw Shares, the rights granted under the Registration
Rights Agreement will supersede all other registration rights held by the
Purchasers with respect to the Common Stock and are not exercisable until the
second anniversary of such acquisition.
All references to, and summaries of, the TPG Shareholders Agreement,
Amended Shareholders Agreement, Interim Agreement and Registration Rights
Agreement (collectively, the "Shareholders Agreements") in this Schedule 13D are
qualified in their entirety by reference to such agreements, the full texts of
which are filed as Exhibits 4, 5, 6 and 7 hereto, respectively, and incorporated
herein by this reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) AND (b)
Fund III has the right to acquire 15,632,717 shares of Common Stock
pursuant to the Purchase Agreements and the Investment Agreement, representing
approximately 20.4% of the outstanding shares of Common Stock as of March 31,
1997 (the "Outstanding Shares"), and will have, upon such acquisition and
subject to the Shareholders Agreements and the Investment Agreement, sole voting
and sole dispositive power with respect to such shares.
Overseas Partners has the right to acquire 934,397 shares of Common Stock
pursuant to the Purchase Agreements and Investment Agreement, representing
approximately 1.2% of the Outstanding Shares, and will have, upon such
acquisition and subject to the Shareholders Agreements and the Investment
Agreement, sole voting and sole dispositive power with respect to such shares.
U.K. Partners has the right to acquire 577,783 shares of Common Stock
pursuant to the Purchase Agreements and Investment Agreement, representing
approximately 0.8% of the Outstanding Shares, and will have, upon such
acquisition and subject to the Shareholders Agreements and the Investment
Agreement, sole voting and sole dispositive power with respect to such shares.
Each of Advisors and Apollo Capital may be deemed, pursuant to the
attribution rules of Rule 13d-3 of the Exchange Act, to be the beneficial owner
of 17,144,897 shares of Common Stock, representing approximately 22.4% of the
Outstanding Shares, consisting of the Apollo Block. Each of Advisors and Apollo
Capital disclaim beneficial ownership of such shares.
By virtue of the Purchase Agreements, Investment Agreement and Shareholders
Agreements, and pursuant to the attribution rules of Rules 13d-3 and 13d-5(b) of
the Exchange Act, each of the Reporting Entities and each of the Blackstone
Entities may be deemed to beneficially own 26,376,765 shares of Common Stock,
representing 34.4% of the Outstanding Shares, constituting all of the Shares
which the Purchasers collectively have a right to acquire under the Purchase
10
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Agreements. The statements in this Schedule 13D shall not be construed as an
admission that a Reporting Entity is the beneficial owner of any of the
Shares other than those which such Reporting Entity has a right to acquire
pursuant to the Purchase Agreements and the Investment Agreement. Further,
each of the Reporting Entities disclaim any pecuniary interest in the shares
of Common Stock held by the Blackstone Entities.
In addition, by virtue of the Purchase Agreements, Investment Agreement and
Shareholders Agreements, each of the Reporting Entities and each of the
Blackstone Entities may be deemed to share voting and dispositive power with
respect to the Shares. The Reporting Entities disclaim the existence of such
shared power.
(C) The responses to Items 3 and 4 of this Schedule 13D are incorporated
herein.
(D) Not applicable
(E) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The response to Items 3, 4 and 5 of this Schedule 13D are incorporated
herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(1) Stock Purchase Agreement, dated as of April 14, 1997
(2) Securities Purchase Agreement, dated as of April 21, 1997
(3) Investment Agreement, dated as of April 14, 1997
(4) Shareholders Agreement, dated as of April 14, 1997
(5) Amended and Restated Shareholders Agreement, dated as of April 21,
1997
(6) Agreement, dated as of April 21, 1997
(7) Registration Rights Agreement, dated as of April 21, 1997
11
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct. In addition, by signing below, the undersigned agrees
that this Schedule 13D may be filed jointly on behalf of each of Apollo
Investment Fund III, L.P., Apollo Overseas Partners III, L.P., Apollo (U.K.)
Partners III, L.P. and Apollo Advisors II, L.P.
Dated as of the 25th day of April, 1997.
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.,
its General Partner
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
------------------------------------------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
its General Partner
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
------------------------------------------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO (U.K.) PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
its General Partner
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
------------------------------------------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO ADVISORS II, L.P.
By: Apollo Capital Management II,
its General Partner
By: /s/ Michael D. Weiner
------------------------------------------------------------
Name: Michael D. Weiner
Title: Vice President
12
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SCHEDULE I
The following sets forth information with respect to the general
partners, executive officers, directors and principal shareholders of
Advisors, Apollo Capital, Apollo Management, AIM, Administration and
Management UK. Capitalized terms used herein without definition have the
meanings assigned thereto in the Schedule 13D to which this Schedule I
relates. Except as otherwise indicated in this Schedule I or in the Schedule
13D to which this Schedule I relates, the principal business address of each
person or entity set forth below is c/o Apollo Advisors II, L.P., Two
Manhattanville Road, Purchase, New York 10577, and each such person or
entity is a citizen of the United States of America.
The principal business of Advisors is to provide advice regarding
investments by, and serving as general partner to, the Apollo Purchasers, and
the principal business of Apollo Capital is that of serving as general partner
of Advisors. The principal business of Apollo Management is to serve as the
manager of the Apollo Purchasers. The principal business of AIM is to serve
as general partner to Apollo Management.
The principal occupation of each of Messrs. Leon D. Black and John J.
Hannan is to act as an executive officer and director of Apollo Capital and
AIM. Messrs. Black and Hannan are also limited partners of Advisors and
Apollo Management.
Messrs. Black and Hannan are also founding principals of Apollo Advisors,
L.P. ("Apollo Advisors"), Lion Advisors, L.P. ("Lion") and Apollo Real Estate
Advisors, L.P. ("AREA"). The principal business of Apollo Advisors and Lion is
to provide advice regarding investments in securities and the principal business
of AREA is to provide advice regarding investments in real estate and real
estate-related investments. The business address of each of Messrs. Black and
Hannan is c/o Apollo Management, L.P., 1301 Avenue of the Americas, New York,
New York 10019.
Peter Henry Larder, Michael Francis Benedict Gillooly, Ian Thomas Patrick
and Martin William Laidlaw, each of whom is a British citizen, serve as
directors of Administration. Each of the above four individuals is principally
employed by CIBC Bank and Trust Company (Cayman) Limited ("CIBC") in the
following positions: Mr. Larder, Managing Director; Mr. Gillooly, Deputy
Managing Director; Mr. Patrick, Manager-Accounting Services; and Mr. Laidlaw,
Senior Fund Accountant. CIBC is a Cayman Islands corporation which is
principally engaged in the provision of trust, banking and corporate
administration services, the principal address of which is Edward Street, Grand
Cayman, Cayman Islands, British West Indies. It provides accounting,
administrative and other services to Administration pursuant to a contract. Mr.
Leon D. Black is the beneficial owner of the stock of Administration.
13
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EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of April 14, 1997 (this
"AGREEMENT") is made and entered into by and between Apollo Investment Fund III,
L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a
Delaware limited partnership, and Apollo (U.K.) Partners III, L.P., an English
limited partnership (collectively, "APOLLO"), and Blackstone Capital Partners II
Merchant Banking Fund L.P., a Delaware limited partnership, 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, "BLACKSTONE" and, together with Apollo, "PURCHASERS"), and TPG
Partners, L.P., a Delaware limited partnership ("TPG PARTNERS"), and TPG
Parallel I, L.P., a Delaware limited partnership ("TPG PARALLEL" and together
with TPG Partners, "SELLERS"). Capitalized terms not otherwise defined herein
have the meanings set forth in SECTION 9.1.
WHEREAS, Sellers own collectively 11,776,765 shares of common stock,
par value $.01 per share, of Allied Waste Industries, Inc., a Delaware
corporation (the "COMPANY"), constituting approximately 15.6% of the issued and
outstanding shares of capital stock of the Company as of the date hereof (such
shares being referred to herein as the "SHARES");
WHEREAS, Sellers desire to sell, and Purchasers desire to purchase,
the Shares on the terms and subject to the conditions set forth in this
Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.1 PURCHASE AND SALE. At the Closing, on the terms and subject to
the conditions set forth in this Agreement, each Seller agrees to sell to
Purchasers all of the right, title and interest of such Seller in and to the
Shares, and the Purchasers jointly and severally agree to purchase from the
Sellers all of such Shares.
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1.2 PURCHASE PRICE. The purchase price for the Shares is $9.50 per
share, or $111,879,267.50 in the aggregate (the "PURCHASE PRICE"), payable in
immediately available United States funds at the Closing in the manner provided
in SECTION 1.3.
1.3 CLOSING. The Closing will take place at the offices of Kelly,
Hart & Hallman, 201 Main Street, Suite 2500, Fort Worth, Texas, or at such other
place as Purchasers and Sellers mutually agree, at 10:00 A.M. local time, on the
Closing Date. At the Closing, Purchasers will pay the Purchase Price by wire
transfer of immediately available funds to such account or accounts as Sellers
may reasonably direct by written notice delivered to Purchasers by Sellers at
least one (1) Business Day before the Closing Date. Simultaneously, each Seller
will assign and transfer to Purchasers all of such Seller's right, title and
interest in and to the Shares by delivering to Purchasers a certificate or
certificates representing such Shares, in genuine and unaltered form, duly
endorsed in blank or accompanied by duly executed stock powers endorsed in
blank, with requisite stock transfer tax stamps, if any, attached.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller, jointly and severally, hereby represents and warrants to
Purchasers as follows:
2.1 ORGANIZATION OF SELLER. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby, including without limitation to own, hold,
sell and transfer (pursuant to this Agreement) the Shares.
2.2 TITLE TO SHARES. TPG Partners and TPG Parallel own 10,709,637 and
1,067,128 Shares, respectively (such amounts representing all of the Shares and
any other equity equivalents owned directly or indirectly by Sellers or any of
their affiliates), and each Seller is the sole record and beneficial owner of
such Shares, free and clear of all Liens. The delivery of a certificate or
certificates at the Closing representing the Shares in the manner provided in
SECTION 1.3 will transfer to Purchasers good and valid title to the Shares, free
and clear of all Liens (except such as may be imposed on the Shares by the
Purchasers).
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2.3 AUTHORITY. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations hereunder have been duly and
validly authorized, no other action on the part of Seller, its general partner
or their respective partners and stockholders being necessary. This Agreement
has been duly and validly executed and delivered by Seller and constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms, except to the extent such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting generally the enforcement of creditors'
rights and (ii) the availability of equitable remedies (whether in a proceeding
in equity or at law).
2.4 NO CONFLICTS. The execution and delivery by Seller of this
Agreement do not, and the performance by Seller of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the partnership agreement, certificate or
articles of incorporation or by-laws (or other comparable organizational
documents) of Seller or their general partners;
(b) subject to making all filings, giving all notices and obtaining
all approvals required under the HSR Act, conflict with or result in a violation
or breach of any term or provision of any Law or Order applicable to Seller or
the Shares; or
(c) (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require Seller to obtain any consent from any Person as a result or
under the terms of, or (iv) result in the creation or imposition of any Lien
(other than such Liens as may be created by this Agreement) upon Seller or the
Shares under, any Contract to which Seller is a party.
2.5 GOVERNMENTAL APPROVALS AND FILINGS. Other than the filing of a
Schedule 13D and applicable forms under Section 16 as required under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), no consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority on the part of Seller is required in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
2.6 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending
or, to the knowledge of Seller, threatened against, relating to or affecting
Seller (or to the knowledge of
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Seller, the Company) which could reasonably be expected to result in the
issuance of an Order restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
2.7 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Seller directly with
Purchasers without the intervention of any Person on behalf of Seller in such
manner as to give rise to any valid claim by any Person against Purchasers or
the Company for a finder's fee, brokerage commission or similar payment.
2.8 AGREEMENTS RELATING TO SHARES. Other than documents listed on
SCHEDULE 2.8 (the "SELLER AGREEMENTS"), true and complete copies of which have
been filed with the Securities and Exchange Commission and made available to
Purchasers, and other than the respective partnership agreements of each Seller,
there are no (i) Contracts or other arrangements concerning the acquisition,
disposition or the voting of the Shares, (ii) options with respect to the
Shares, including without limitation any form of preemptive rights or claims of
third parties or (iii) outstanding proxies, shareholder agreements, voting
trusts, powers of attorney or comparable delegations of authority concerning the
Shares. Each Seller Agreement is valid, binding and in full force and effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser, severally but not jointly, hereby represents and
warrants to Sellers as follows:
3.1 ORGANIZATION. Purchaser is a limited partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Purchaser has full power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
3.2 AUTHORITY. The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of its obligations hereunder, have
been duly and validly authorized, no other action on the part of Purchaser, its
general partner or their respective partners and stockholders being necessary.
This Agreement has been duly and validly executed and delivered by Purchaser and
constitutes a legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its
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terms, except to the extent such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting generally the enforcement of creditors' rights and (ii)
the availability of equitable remedies (whether in a proceeding in equity or at
law).
3.3 NO CONFLICTS. The execution and delivery by Purchaser of this
Agreement do not, and the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the partnership agreement, certificate or
articles of incorporation or by-laws (or other comparable organizational
documents) of Purchaser or its general partner;
(b) subject to making all filings, giving all notices and obtaining
all approvals required under the HSR Act, conflict with or result in a violation
or breach of any term or provision of any Law or Order applicable to Purchaser;
(c) (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, or (iii) require Purchaser to obtain any consent from any Person as a
result or under the terms of, any Contract to which Purchaser is a party.
3.4 GOVERNMENTAL APPROVALS AND FILINGS. Other than filings, notices
and approvals required under the HSR Act or the Exchange Act, no consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority on the part of Purchaser is required in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
3.5 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser which could reasonably be expected to result in the issuance of an
Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
3.6 PURCHASE FOR INVESTMENT. The Shares will be acquired by Purchaser
(or, if applicable, its permitted assigns hereunder) for its own account for the
purpose of investment, it being understood that the right to dispose of such
Shares shall be entirely within the discretion of Purchaser (or such assignee,
as the case may be).
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3.7 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser directly
with Sellers without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against Sellers or
the Company for a finder's fee, brokerage commission or similar payment, except
for Goldman Sachs & Co., whose fees and expenses will be paid by Purchaser.
ARTICLE IV
COVENANTS OF SELLERS
Each Seller covenants and agrees with Purchasers that:
4.1 CERTAIN RESTRICTIONS. During the term hereof, Seller will not
vote the Shares in any manner that would have a material adverse effect on
Business or Condition of the Company or vote for any material transaction not
otherwise in the ordinary course of business of the Company.
4.2 NOTICE AND CURE. Seller will notify Purchasers in writing of, and
contemporaneously will provide Purchasers with true and complete copies of any
and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Seller, occurring
after the date of this Agreement that causes or will cause any covenant or
agreement of Seller under this Agreement to be breached or that renders or will
render untrue any representation or warranty of Seller contained in this
Agreement as if the same were made on or as of the date of such event,
transaction or circumstance.
ARTICLE V
COVENANTS OF PURCHASERS
Each Purchaser covenants and agrees with Sellers that:
5.1 HSR. Purchaser will within ten Business Days file a notification
under the HSR Act, and will promptly take all reasonable actions to obtain all
approvals required under the HSR Act in connection with the transactions
contemplated by this Agreement.
5.2 NOTICE AND CURE. Purchaser will notify Sellers in writing of, and
contemporaneously will provide Sellers with true
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and complete copies of any and all information or documents relating to, and
will use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practicable after it becomes
known to Purchaser, occurring after the date of this Agreement that causes or
will cause any covenant or agreement of Purchaser under this Agreement to be
breached or that renders or will render untrue any representation or warranty of
Purchaser contained in this Agreement as if the same were made on or as of the
date of such event, transaction or circumstance. No notice given pursuant to
this Section shall have any effect on the representations, warranties, covenants
or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASERS
The obligation of Purchasers hereunder to purchase the Shares is
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part only by
Purchasers in their sole discretion):
6.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Sellers in this Agreement (other than those made as of a
specified date earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation or
warranty made as of a specified date earlier than the Closing Date shall have
been true and correct in all material respects on and as of such earlier date.
6.2 PERFORMANCE. Sellers shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Sellers at or before the
Closing.
6.3 REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations
or expirations of waiting periods) required under the HSR Act necessary for the
consummation of the transactions contemplated by this Agreement shall have been
obtained (or terminated or expired).
6.4 DELIVERY OF SHARES. All of the Shares, and not just a portion
thereof, shall have been delivered for sale by Sellers.
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6.5 ASSIGNMENT OF REGISTRATION RIGHTS. Sellers shall have validly
assigned to Purchasers, to the fullest extent permitted under the Seller
Agreements, all of Sellers' registration rights relating to the Shares; provided
that Purchasers shall execute and deliver to the Company a written undertaking
to comply with the obligations imposed on the holder of such registration rights
under the Seller Agreements.
6.6 BOARD RESIGNATIONS. Each of James G. Coulter, Jeffrey A. Shaw,
John M. Lewis and William K. Reilly, representing all of Sellers' designees or
affiliates on the Board of Directors, (or any other person who shall replace or
succeed such person as a member of the Board of Directors of the Company) shall
have resigned from the Board of Directors of the Company.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to sell the Shares are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Sellers in their sole
discretion):
7.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Purchasers in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date.
7.2 PERFORMANCE. Purchasers shall have performed and complied with,
in all material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by Purchasers at or before
the Closing.
7.3 REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations
or expirations of waiting periods) required under the HSR Act necessary for the
consummation of the transactions contemplated by this Agreement shall have been
obtained (or terminated or expired).
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ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Sellers and Purchasers; or
(b) at any time after June 15, 1997 by Sellers or Purchasers upon
notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party.
ARTICLE IX
DEFINITIONS
9.1 DEFINITIONS. (a) DEFINED TERMS. As used in this Agreement, the
following defined terms have the meanings indicated below:
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"BUSINESS OR CONDITION OF THE COMPANY" means the business, condition
(financial or otherwise), results of operations, assets and properties and
prospects of the Company taken as a whole.
"BUSINESS DAY" means a day other than Saturday, Sunday or any other
day on which banks located in the States of New York, Texas or California are
authorized or obligated to close.
"CLOSING" means the closing of the transactions contemplated by
SECTION 1.3.
"CLOSING DATE" means (a) the first Business Day after the day on which
the last of the approval or waiting period described in SECTION 6.3 and SECTION
7.3 has been obtained or has expired, as applicable, or (b) such other date as
Purchasers and Sellers mutually agree upon in writing.
"COMPANY" means Allied Waste Industries, Inc., a Delaware corporation.
Unless the context requires otherwise, all
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references to the Company herein shall be deemed to include all of the
consolidated subsidiaries of the Company.
"CONTRACT" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"HSR ACT" means Section 7A of the Clayton Act (Title II of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and
regulations promulgated thereunder.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PERSON" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
ARTICLE X
MISCELLANEOUS
10.1 FURTHER ASSURANCES. Sellers and Purchasers will execute and
deliver at the Closing each agreement and other document that such party is
required hereby to execute and deliver as a condition to the Closing, and will
take all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each condition to the obligations of
such party contained in this Agreement and will
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not take or fail to take any action that could reasonably be expected to result
in the nonfulfillment of any such condition. At the Closing and from time to
time thereafter, Sellers and Purchasers shall execute and deliver such other
documents and instruments (including officers' certificates and opinions of
counsel), provide such materials and information and take such other actions as
may be reasonably requested to cause such party to fulfill its obligations under
this Agreement.
10.2 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
10.3 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
10.4 REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity. Notwithstanding the foregoing, the parties acknowledge that
it will be impossible to measure in money the damage caused by any failure of
either party to comply with its agreements set forth herein, that each such
agreement is material, and that in the event of any such failure, the other
party will not have an adequate remedy at law or in damages. Therefore, each
party consents to the issuance of an injunction or the enforcement of other
equitable remedies against such party at the suit of the other party, without
bond or other security, to compel performance of all of the terms hereof, and
each party hereby waives the defense of availability of relief in damages.
10.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to a Contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
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\ David B. Kaplan
---------------------------------
Name: David B. Kaplan
Title: Vice President
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: \s\ Howard A. Lipson
---------------------------------
Name: Howard A. Lipson
Title: Senior Managing Director
TPG PARTNERS, L.P.
TPG PARALLEL I, L.P.
By: TPG GenPar, L.P.
By: TPG Advisors, Inc.
By: \s\ James J. O'Brien
---------------------------------
Name: James J. O'Brien
Title: Vice President
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EXHIBIT 99.3
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT dated as of April 21, 1997 (this
"AGREEMENT") is made and entered into by and between Apollo Investment Fund III,
L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a
Delaware limited partnership, and Apollo (U.K.) Partners III, L.P., an English
limited partnership (collectively, the "APOLLO PURCHASERS"), and Blackstone
Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership,
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, the "BLACKSTONE PURCHASERS" and, together
with the Apollo Purchasers, "PURCHASERS"), Laidlaw Inc., a Canadian corporation
("LAIDLAW") and Laidlaw Transportation, Inc., a Delaware corporation and a
wholly-owned subsidiary of Laidlaw ("LTI" and, together with Laidlaw,
"SELLERS"), and Allied Waste Industries, Inc., a Delaware corporation (the
"COMPANY"). Capitalized terms not otherwise defined herein have the meanings
set forth in SECTION 6.1.
WHEREAS, LTI owns (a) 14,600,000 shares of common stock, par value
$.01 per share, of the Company, constituting approximately 19.3% of the issued
and outstanding shares of capital stock of the Company as of the date hereof
(such shares being referred to herein as the "SHARES") and (b) Warrants to
purchase 20,400,000 shares of the Company's common stock (the "WARRANTS");
WHEREAS, Laidlaw owns (a) $150,000,000 aggregate principal amount of
the 7% Junior Subordinated Debentures of Allied Waste Finance (Canada) Ltd., a
Canadian corporation and a wholly-owned subsidiary of the Company ("ALLIED
FINANCE") (the "7% DEBENTURES") and (b) $168,300,000 aggregate principal amount
of the Zero Coupon Junior Subordinated Debentures of Allied Finance (the "ZERO
COUPON DEBENTURES" and, together with the 7% Debentures, the "DEBENTURES");
WHEREAS, LTI desires to sell, and Purchasers desire to purchase, the
Shares on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, LTI desires to sell the Warrants, and the Company desires to
purchase, the Warrants on the terms and subject to the conditions set forth in
this Agreement;
<PAGE>
WHEREAS, Laidlaw desires to sell the Debentures, and the Company
desires to purchase, the Debentures on the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, in connection with the agreement to purchase certain shares
of the Company's common stock (including the assignment of certain related
registration rights (the "TPG REGISTRATION RIGHTS")) pursuant to a Stock
Purchase Agreement dated April 14, 1997 between the Purchasers, TPG Partners,
L.P. and TPG Parallel I, L.P., the Company and Purchasers have entered into a
Shareholders Agreement, dated April 14, 1997 (the "TPG SHAREHOLDERS AGREEMENT");
WHEREAS, in connection with this Agreement, the Company and the
Purchasers have entered into (i) an amended and restated Shareholders Agreement,
dated the date hereof (the "SHAREHOLDERS AGREEMENT"), and (ii) a Registration
Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT"), each effective upon the
Closing Date (which Shareholders Agreement and Registration Rights Agreement
shall supersede and replace the TPG Shareholders Agreement and the TPG
Registration Rights on the Closing Date);
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.1 PURCHASE AND SALE. At the Closing, on the terms and subject to
the conditions set forth in this Agreement, (i) LTI agrees to sell to Purchasers
all of the right, title and interest of LTI in and to the Shares, and Purchasers
jointly and severally agree to purchase from LTI all of the Shares and (ii) LTI
agrees to sell to the Company all of the right, title and interest of LTI in and
to the Warrants, and the Company agrees to purchase from LTI all of the
Warrants, and (iii) Laidlaw agrees to sell to the Company all of the right,
title and interest of Laidlaw in and to the Debentures, and the Company agrees
to purchase from Laidlaw all of the Debentures.
1.2 PURCHASE PRICE.
(a) SHARES. Subject to adjustment as provided in SECTION
5.1(B), the purchase price per share for the Shares is $10.00 per share, or
$146,000,000 in the aggregate (the
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"SHARES PURCHASE PRICE"), payable in immediately available United States
funds at the Closing in the manner provided in SECTION 1.3.
(b) OTHER SECURITIES. Subject to adjustment as provided in
SECTION 5.1(B), the purchase price for the Debentures and the Warrants,
(collectively, the "OTHER SECURITIES") shall be $230,000,000 (the "OTHER
SECURITIES PURCHASE PRICE"), payable in immediately available United States
funds at the Closing in the manner provided in SECTION 1.3.
1.3 CLOSING. The Closing will take place at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York, or at
such other place as Purchasers, Sellers and the Company mutually agree, at 10:00
A.M. local time, on the Closing Date; PROVIDED, that the parties hereto will use
commercially reasonable efforts to cause the Closing to occur by May 31, 1997.
At the Closing, Purchasers will pay the Shares Purchase Price and the Company
will pay the Other Securities Purchase Price by wire transfer of immediately
available funds to such account or accounts as Laidlaw may reasonably direct by
written notice delivered to Purchasers and the Company at least one (1) Business
Day before the Closing Date (Laidlaw shall accept delivery of the Securities
Purchase Price on behalf of itself and LTI, which hereby appoints Laidlaw as its
agent for such purpose). Simultaneously, (i) LTI will assign and transfer to
Purchasers all of LTI's right, title and interest in and to the Shares by
delivering to Purchasers one or more certificates representing such Shares, in
genuine and unaltered form, duly endorsed in blank or accompanied by duly
executed stock powers endorsed in blank, with requisite transfer tax stamps, if
any, attached, and (ii) each of Laidlaw and LTI will assign and transfer to the
Company all of Laidlaw's and LTI's respective right, title and interest in and
to the Others Securities by delivering to the Company one or more Notes,
Warrants or other certificates representing such Other Securities, in genuine
and unaltered form, duly endorsed in blank or accompanied by duly executed bond
or stock powers endorsed in blank, with requisite transfer tax stamps, if any,
attached.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. Laidlaw and LTI,
jointly and severally, hereby represent and warrant to Purchasers and the
Company as follows:
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(a) ORGANIZATION. Each of Laidlaw and LTI is a corporation duly
organized, validly existing and in good standing under the laws of Canada
and Delaware, respectively. Each of Laidlaw and LTI has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares and the Other Securities owned by
such Seller.
(b) TITLE TO SHARES. The Shares represent all of the common
stock and any other equity equivalents (other than the Warrants and options
held by Company directors who are affiliates of Sellers) of the Company
owned directly or indirectly by Sellers or any of their affiliates, and LTI
is the sole record and beneficial owner of such Shares, free and clear of
all Liens. The delivery of one or more certificates at the Closing
representing the Shares in the manner provided in SECTION 1.3 will transfer
to Purchasers good and valid title to the Shares, free and clear of all
Liens (except such as may be imposed on the Shares by the Purchasers).
(c) TITLE TO OTHER SECURITIES. The Other Securities represent
all of the securities (other than the Shares and options held by Company
directors who are affiliates of Sellers) of the Company owned directly or
indirectly by Sellers or any of their affiliates. Laidlaw is the sole
record and beneficial owner of the Debentures, and, LTI is the sole record
and beneficial owner of the Warrants, in each case, free and clear of all
Liens. The delivery of one or more Notes, Warrants or other certificates
at the Closing representing the Other Securities in the manner provided in
SECTION 1.3 will transfer to the Company good and valid title to the Other
Securities, free and clear of all Liens (except such as may be imposed on
the Other Securities by the Company).
(d) AUTHORITY. The execution and delivery by each of Laidlaw
and LTI of this Agreement and the performance by each of Laidlaw and LTI of
its obligations hereunder have been duly and validly authorized, no other
action on the part of Laidlaw, LTI or their stockholders being necessary.
This Agreement has been duly and validly executed and delivered by each of
Laidlaw and LTI and constitutes a legal, valid and binding obligation of
each of Laidlaw and LTI enforceable against each of Laidlaw and LTI in
accordance with its terms, except to the extent such enforceability may be
limited by (i) bankruptcy, insolvency,
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reorganization, moratorium or other similar laws relating to or affecting
generally the enforcement of creditors' rights and (ii) the availability of
equitable remedies (whether in a proceeding in equity or at law).
(e) NO CONFLICTS. The execution and delivery by each of Laidlaw
and LTI of this Agreement do not, and the performance by each of Laidlaw
and LTI of its obligations under this Agreement and the consummation of the
transactions contemplated hereby will not:
(i) conflict with or result in a violation or breach of any
of the terms, conditions or provisions of the certificate or articles
of incorporation or by-laws (or other comparable charter documents) of
Laidlaw or LTI;
(ii) subject to making all filings, giving all notices and
obtaining all approvals required under the HSR Act, conflict with or
result in a violation or breach of any term or provision of any Law or
Order applicable to Laidlaw or LTI, the Shares or the Other
Securities; or
(iii)(A) conflict with or result in a violation or breach
of, (B) constitute (with or without notice or lapse of time or both) a
default under, (C) require Laidlaw or LTI to obtain any consent from
any Person as a result or under the terms of, or (D) result in the
creation or imposition of any Lien (other than such Liens as may be
created by this Agreement) upon Laidlaw or LTI, the Shares or the
Other Securities under, any Contract to which Laidlaw or LTI is a
party.
(f) GOVERNMENTAL APPROVALS AND FILINGS. Other than the filing
of a Schedule 13D and applicable forms under Section 16 as required under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), no
consent, approval or action of, filing with or notice to any Governmental
or Regulatory Authority on the part of Laidlaw or LTI is required in
connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby.
(g) LEGAL PROCEEDINGS. As of the date of this Agreement, there
are no Actions or Proceedings pending or, to the knowledge of Laidlaw or
LTI, threatened against, relating to or affecting Laidlaw or LTI (or to the
knowledge of Laidlaw or LTI, the Company) which could reasonably be
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expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement.
(h) BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Laidlaw and
LTI directly with Purchasers and the Company without the intervention of
any Person on behalf of such Seller in such manner as to give rise to any
valid claim by any Person against Purchasers or the Company for a finder's
fee, brokerage commission or similar payment, except for Goldman, Sachs &
Co., whose fees (i) with respect to the purchase of the Shares shall be
payable by Purchasers and (ii) with respect to the Financing (as defined
herein) shall be payable by the Company.
(i) AGREEMENTS RELATING TO SHARES. Other than the documents
listed on SCHEDULE 2.1(I) (the "SELLERS AGREEMENTS"), true and complete
copies of which have been filed with the Securities and Exchange Commission
by the Company and made available to Purchasers, neither Laidlaw nor LTI is
a party to (i) any Contracts or other arrangements concerning the
acquisition, disposition or the voting of the Shares or the Other
Securities, (ii) any options with respect to the Shares or the Other
Securities, including without limitation any form of preemptive rights or
claims of third parties or (iii) any outstanding proxies, shareholder
agreements, voting trusts, powers of attorney or comparable delegations of
authority concerning the Shares or the Other Securities. Each Sellers
Agreement is valid, binding and in full force and effect.
2.2 REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser,
severally but not jointly, hereby represents and warrants to Sellers and the
Company as follows:
(a) ORGANIZATION. Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Purchaser has full power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby.
(b) AUTHORITY. The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized, no other action on the part of
Purchaser, its general partner or their respective partners and
stockholders being necessary. This Agreement has been
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duly and validly executed and delivered by Purchaser and constitutes a
legal, valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms, except to the extent such
enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
generally the enforcement of creditors' rights and (ii) the availability of
equitable remedies (whether in a proceeding in equity or at law).
(c) NO CONFLICTS. The execution and delivery by Purchaser of
this Agreement do not, and the performance by Purchaser of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(i) conflict with or result in a violation or breach of any
of the terms, conditions or provisions of the partnership agreement,
certificate or articles of incorporation or by-laws (or other
comparable organizational documents) of Purchaser or its general
partner;
(ii) subject to making all filings, giving all notices and
obtaining all approvals required under the HSR Act, conflict with or
result in a violation or breach of any term or provision of any Law or
Order applicable to Purchaser;
(iii)(A) conflict with or result in a violation or breach
of, (B) constitute (with or without notice or lapse of time or both) a
default under, or (C) require Purchaser to obtain any consent from any
Person as a result or under the terms of, any Contract to which
Purchaser is a party.
(d) GOVERNMENTAL APPROVALS AND FILINGS. Other than filings,
notices and approvals required under the HSR Act and the Exchange Act, no
consent, approval or action of, filing with or notice to any Governmental
or Regulatory Authority on the part of Purchaser is required in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
(e) LEGAL PROCEEDINGS. As of the date hereof, there are no
Actions or Proceedings pending or, to the knowledge of Purchaser,
threatened against, relating to or affecting Purchaser which could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or
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otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement.
(f) PURCHASE FOR INVESTMENT. The Shares will be acquired by
Purchaser (or, if applicable, its permitted assigns hereunder) for its own
account for the purpose of investment, it being understood that the right
to dispose of such Shares shall be entirely within the discretion of
Purchaser (or such assignee, as the case may be).
(g) BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Purchaser
directly with Sellers and the Company without the intervention of any
Person on behalf of such Purchaser in such manner as to give rise to any
valid claim by any Person against Sellers or the Company for a finder's
fee, brokerage commission or similar payment, except for Goldman, Sachs &
Co., whose fees (i) with respect to the purchase of the Shares shall be
payable by Purchasers and (ii) with respect to the Financing shall be
payable by the Company.
2.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Purchasers and Sellers as follows:
(a) ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Company has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including without
limitation to purchase (pursuant to this Agreement) the Other Securities.
(b) AUTHORITY. The execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations
hereunder have been duly and validly authorized, no other action on the
part of the Company or its stockholders being necessary. This Agreement
has been duly and validly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
generally the enforcement of creditors' rights and (ii) the availability of
equitable remedies (whether in a proceeding in equity or at law).
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(c) NO CONFLICTS. The execution and delivery by the Company of
this Agreement do not, and the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(i) conflict with or result in a violation or breach of any
of the terms, conditions or provisions of the certificate or by-laws
of the Company;
(ii) subject to making all filings, giving all notices and
obtaining all approvals required under the HSR Act and the Exchange
Act, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to the Company, the Shares or
the Other Securities, except as would not, and in the aggregate have a
material adverse effect on the Business or Condition of the Company or
the consummation of the transactions contemplated hereby;
(iii)(A) conflict with or result in a violation or breach
of, (B) constitute (with or without notice or lapse of time or both) a
default under, or (C) require the Company to obtain any consent from
any Person as a result or under the terms of, any Contract to which
the Company is a party, except as would not, in the aggregate have a
material adverse effect on the Business or Condition of the Company or
the consummation of the transactions contemplated hereby.
(d) GOVERNMENTAL APPROVALS AND FILINGS. Other than filings,
notices and approvals required under the HSR Act and the Exchange Act, no
consent, approval or action of, filing with or notice to any Governmental
or Regulatory Authority on the part of the Company is required in
connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby.
(e) LEGAL PROCEEDINGS. As of the date of this Agreement, there
are no Actions or Proceedings pending or, to the knowledge of the Company,
threatened against, relating to or affecting the Company which could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of
any of the transactions contemplated by this Agreement.
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(f) BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Company
directly with Purchasers and Sellers without the intervention of any Person
on behalf of the Company in such manner as to give rise to any valid claim
by any Person against Purchasers, Sellers or the Company for a finder's
fee, brokerage commission or similar payment, except for Goldman, Sachs &
Co., whose fees (i) with respect to the purchase of the Shares shall be
payable by Purchasers and (ii) with respect to the Financing shall be
payable by the Company.
(g) USRPHC STATUS. None of the Company and its subsidiaries is
a United States real property holding company within the meaning of Section
897(c)(2) of the Internal Revenue Code of 1986, as amended (the "CODE")
during the applicable period specified in Code Section 897(c)(1)(A)(ii).
ARTICLE III
COVENANTS
3.1 COVENANTS OF SELLERS. Each Seller, jointly and severally,
covenants and agrees with Purchasers and the Company that:
(a) NO SOLICITATIONS. From and after the date hereof, Seller
will not take, nor will it permit any affiliate of Seller (or authorize or
permit any investment banker, financial advisor, attorney, accountant or
other Person retained by or acting for or on behalf of Seller or any such
affiliate) to take, directly or indirectly, any action to solicit,
encourage, receive, negotiate, assist or otherwise facilitate any offer or
inquiry from any Person concerning a transfer of the Shares or the Other
Securities (other than the sale pursuant to this Agreement). If Seller or
any such affiliate (or any such Person acting for or on their behalf)
receives from any Person any offer, inquiry or informational request
referred to above, Seller will promptly advise such Person, by written
notice, of the terms of this Section and will promptly, orally and in
writing, advise Purchasers and the Company of such offer, inquiry or
request and deliver a copy of such notice to Purchasers and the Company.
(b) CERTAIN RESTRICTIONS. Seller will not vote the Shares in
any manner that would have a material adverse effect on the Business or
Condition of the Company or vote
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for any material transaction not otherwise in the ordinary course of
business of the Company.
(c) NOTICE AND CURE. Seller will notify Purchasers and the
Company in writing of, and contemporaneously will provide Purchasers and
the Company with true and complete copies of any and all information or
documents relating to, and will use all commercially reasonable efforts to
cure before the Closing, any event, transaction or circumstance, as soon as
practicable after it becomes known to Seller, occurring after the date of
this Agreement that causes or will cause any covenant or agreement of
Seller under this Agreement to be breached or that renders or will render
untrue any representation or warranty of Seller contained in this Agreement
as if the same were made on or as of the date of such event, transaction or
circumstance.
(d) BOARD RESIGNATIONS. Seller shall cause each of James R.
Bullock and Ivan R. Cairns (or any other person who shall replace or
succeed such person as a member of the Board of Directors of the Company),
representing all of Sellers' designees or affiliates on the Board of
Director of the Company, to have resigned from the Board of Directors of
the Company on or prior to the Closing Date.
(e) AMENDMENTS AND ASSIGNMENTS. From the date hereof until the
earlier to occur of the Closing or the termination of this Agreement,
without the consent of Purchasers, Sellers will not materially amend the
Sellers Agreements or assign any of their rights under this Agreement.
3.2 COVENANTS OF PURCHASER. Each Purchaser, severally but not
jointly, covenants and agrees with Sellers and the Company that:
(a) HSR. Purchaser will promptly take all reasonable actions to
obtain all approvals required under the HSR Act in connection with the
transactions contemplated by this Agreement.
(b) NOTICE AND CURE. Purchaser will notify Sellers and the
Company in writing of, and contemporaneously will provide Sellers and the
Company with true and complete copies of any and all information or
documents relating to, and will use all commercially reasonable efforts to
cure before the Closing, any event, transaction or circumstance, as soon as
practicable after it becomes known to Purchaser,
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occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Purchaser under this Agreement to be breached or
that renders or will render untrue any representation or warranty of
Purchaser contained in this Agreement as if the same were made on or as of
the date of such event, transaction or circumstance. No notice given
pursuant to this Section shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for
purposes of determining satisfaction of any condition contained herein.
(c) AMENDMENTS AND ASSIGNMENTS. From the date hereof until the
earlier to occur of the Closing or the termination of this Agreement,
without the consent of Sellers, Purchasers will not materially amend the
TPG Shareholders Agreement or assign any of their rights under this
Agreement; PROVIDED, that the Purchasers may assign this Agreement to any
Person who is a Related Transferee (as such term is defined in the TPG
Shareholders Agreement).
3.3 COVENANTS OF THE COMPANY. The Company covenants and agrees with
Sellers and Purchasers that:
(a) HSR. The Company will promptly take all reasonable actions
to obtain all approvals required under the HSR Act in connection with the
transactions contemplated by this Agreement.
(b) CONDUCT OF BUSINESS. Until the Closing, the Company will
conduct business only in the ordinary course consistent with past practice,
except with the written consent of Purchasers or as otherwise contemplated
by this Agreement (including the Financing) or the TPG Shareholders
Agreement.
(c) CERTAIN RESTRICTIONS. Until the Closing, the Company will
not without the written consent of Purchasers:
(i) amend its certificate of incorporation or by-laws,
except as contemplated by the TPG Shareholders Agreement, or take any
action with respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of the Company;
(ii) authorize, issue, sell or otherwise dispose of any
shares of capital stock of or any option with respect to the Company
(other than (x) grants of stock or stock options pursuant to the
Company's benefit plans and (y) issuances of shares of common
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stock upon the exercise of such options, the conversion of
currently outstanding securities or, in lieu of cash,
acquisitions permitted in the ordinary course of business
under SECTION 3.3(B)), or modify or amend any right of any
holder of outstanding shares of capital stock of or option
with respect to the Company;
(iii) declare, set aside or pay any dividend or other
distribution in respect of the capital stock of the Company, or
directly or indirectly redeem, purchase or otherwise acquire any
capital stock of or any option with respect to the Company (except
with respect to the payment of regular dividends on shares of
preferred stock); or
(iv) enter into any Contract to do or engage in any of the
foregoing.
(d) NOTICE AND CURE. The Company will notify Sellers and
Purchasers in writing of, and contemporaneously will provide Sellers and
Purchasers with true and complete copies of any and all information or
documents relating to, and will use all commercially reasonable efforts to
cure before the Closing, any event, transaction or circumstance, as soon as
practicable after it becomes known to the Company, occurring after the date
of this Agreement that causes or will cause any covenant or agreement of
the Company under this Agreement to be breached or that renders or will
render untrue any representation or warranty of the Company contained in
this Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. No notice given pursuant to this Section
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein.
(e) FINANCING. The Company will use commercially reasonable
efforts to obtain the financing (the "FINANCING") for the Company's
purchase of the Other Securities from Sellers on such terms as are
satisfactory to Purchasers and the Company, and to obtain on the Closing
Date the funds contemplated to be raised by such Financing.
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ARTICLE IV
CONDITIONS
4.1 SELLERS' CONDITIONS. The obligation of Sellers hereunder to sell
the Shares and the Other Securities are subject to the fulfillment, at or before
the Closing, of each of the following conditions (all or any of which may be
waived in whole or in part by Sellers in their sole discretion):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by Purchasers and the Company in this Agreement shall
be true and correct in all material respects on and as of the Closing Date
as though such representation or warranty was made on and as of the Closing
Date.
(b) PERFORMANCE. Purchasers and the Company shall have
performed and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement to be so performed or
complied with by Purchasers and the Company at or before the Closing.
(c) REGULATORY CONSENTS AND APPROVALS. All approvals (or
terminations or expirations of waiting periods) required under the HSR Act
necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained (or terminated or expired).
(d) NO ORDERS. There shall not be in effect on the Closing Date
any Order restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement.
(e) PURCHASE OF SHARES AND OTHER SECURITIES. The Purchasers
shall have paid to Sellers the Shares Purchase Price for the Shares and the
Company shall have paid to Sellers the Other Securities Purchase Price for
the Other Securities.
4.2 PURCHASERS' CONDITIONS. The obligations of Purchasers hereunder
to purchase the Shares is subject to the fulfillment, at or before the Closing,
of each of the following conditions (all or any of which may be waived in whole
or in part only by Purchasers in their sole discretion, except that Purchasers
shall not waive the conditions in SECTION 4.2(G) without the Company's consent):
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(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by Sellers and the Company in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as
though such representation or warranty was made on and as of the Closing
Date.
(b) PERFORMANCE. Sellers and the Company shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with
by Sellers and the Company at or before the Closing.
(c) REGULATORY CONSENTS AND APPROVALS. All approvals (or
terminations or expirations of waiting periods) required under the HSR Act
necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained (or terminated or expired).
(d) NO ORDERS. There shall not be in effect on the Closing Date
any Order restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement.
(e) DELIVERY OF SHARES. All of the Shares, and not just a
portion thereof, shall have been delivered for sale by Laidlaw.
(f) PURCHASE OF OTHER SECURITIES. All of the Other Securities,
and not just a portion thereof, shall have been delivered for sale by
Sellers, and the Company shall have completed the Financing and purchased
the Other Securities for the Other Securities Purchase Price.
(g) BOARD RESIGNATIONS. Each of James R. Bullock and Ivan R.
Cairns (or any other person who shall replace or succeed such person as a
member of the Board of Directors of the Company), representing all of
Sellers' designees or affiliates on the Board of Director of the Company,
shall have resigned from the Board of Directors of the Company.
(h) USRPHC AFFIDAVIT. The Company shall have delivered to
Purchasers an affidavit of an authorized officer in form and substance
reasonably satisfactory to Purchasers indicating that none of the Company
or the Company's subsidiaries is a United States real property holding
company within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii).
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4.3 THE COMPANY'S CONDITIONS. The obligation of Company hereunder to
purchase the Other Securities is subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived
in whole or in part by the Company in its sole discretion):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by Sellers and Purchasers in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as
though such representation or warranty was made on and as of the Closing
Date.
(b) PERFORMANCE. Sellers and Purchasers shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with
by Sellers and Purchasers at or before the Closing.
(c) REGULATORY CONSENTS AND APPROVALS. All approvals (or
terminations or expirations of waiting periods) required under the HSR Act
necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained (or terminated or expired).
(d) NO ORDERS. There shall not be in effect on the Closing Date
any Order restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement.
(e) FINANCING. The Company shall have consummated the
Financing.
(f) DELIVERY OF OTHER SECURITIES. All of the Other Securities,
and not just a portion thereof, shall have been delivered for sale by
Sellers.
(g) PURCHASE OF SHARES. All of the Shares, and not just a
portion thereof, shall have been delivered for sale by Laidlaw and
purchased by Purchasers.
(h) BOARD RESIGNATIONS. Each of James R. Bullock and Ivan R.
Cairns (or any other person who shall replace or succeed such person as a
member of the Board of Directors of the Company), representing all of
Sellers' designees or affiliates on the Board of Director of the Company,
shall have resigned from the Board of Directors of the Company.
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ARTICLE V
TERMINATION
5.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement
of Sellers, Purchasers and the Company; or
(b) at any time after May 31, 1997, by Sellers, Purchasers or the
Company, upon notification to the non-terminating parties by the
terminating party if the Closing shall not have occurred on or before such
date and such failure to consummate is not caused by a breach of this
Agreement by the terminating party; PROVIDED, that Purchasers shall have
the right from time to time to extend such date for up to an additional 10
days upon written notice to Sellers on or prior to such date. For each day
that Purchasers and the Company extend the termination date by written
notification pursuant to the foregoing provision, $25,000 shall be added to
the Shares Purchase Price and $75,000 shall be added to the Other
Securities Purchase Price, with the payment of such additional amounts
being subject to the same terms and conditions hereunder as the payment of
such Purchase Prices.
5.2 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to SECTION 5.1, this Agreement will forthwith become null and void, and
there will be no liability or obligation on the part of Sellers, Purchasers or
the Company (or any of their respective officers, directors, employees, agents
or other representatives or affiliates), except as provided in the next
succeeding sentence and except that the provisions with respect to
confidentiality in SECTION 7.1 will continue to apply following any such
termination. Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to SECTION 5.1(B), each
party will remain liable to the other parties for any willful breach of this
Agreement by such party existing at the time of such termination, and such other
parties may seek such remedies, including damages and fees of attorneys, against
the other with respect to any such breach as are provided in this Agreement or
as are otherwise available at Law or in equity.
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ARTICLE VI
DEFINITIONS
6.1 DEFINITIONS. (a) DEFINED TERMS. As used in this Agreement, the
following defined terms have the meanings indicated below:
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"BUSINESS OR CONDITION OF THE COMPANY" means the business, condition
(financial or otherwise), results of operations, assets and properties and
prospects of the Company taken as a whole.
"BUSINESS DAY" means a day other than Saturday, Sunday or any other
day on which banks located in the States of New York or California are
authorized or obligated to close.
"CLOSING" means the closing of the transactions contemplated by
SECTION 1.3.
"CLOSING DATE" means (a) the later of (i) the first Business Day after
the day on which the last of the approval or waiting period described in SECTION
4.1(C), SECTION 4.2(C) and SECTION 4.3(C) has been obtained or has expired, as
applicable, or (ii) the date of the consummation of the Financing or (b) such
other date as Purchasers, Sellers and the Company mutually agree upon in
writing.
"COMPANY" means Allied Waste Industries, Inc., a Delaware corporation.
Unless the context requires otherwise, all references to the Company herein
shall be deemed to include all of the consolidated subsidiaries of the Company.
"CONTRACT" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"FINANCING" shall have the meaning set forth in SECTION 3.3(E).
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
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<PAGE>
"HSR ACT" means Section 7A of the Clayton Act (Title II of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and
regulations promulgated thereunder.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PERSON" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
ARTICLE VII
MISCELLANEOUS
7.1 CONFIDENTIALITY. Until this Agreement is publicly disclosed, no
party to this Agreement will, and each party will cause its respective
representatives not to, make any release to the press or other public disclosure
with respect to the existence or contents of this Agreement or the transactions
contemplated by this Agreement, except for such public disclosure as may be
necessary for the party proposing to make the disclosure not to be in violation
of or default under any applicable law, regulation or governmental order. If
any party proposes to make any such disclosure, such party will in good faith
consult with and consider the suggestions of the other parties concerning the
nature and scope of the information it proposes to disclose.
7.2 FURTHER ASSURANCES. The parties hereto will execute and deliver
at or prior to the Closing each agreement and other document that such party is
required hereby to execute and deliver as a condition to the Closing, and will
take all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each condition to the
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obligations of such party contained in this Agreement and will not take or fail
to take any action that could reasonably be expected to result in the
nonfulfillment of any such condition. At the Closing and from time to time
thereafter, the parties hereto shall execute and deliver such other documents
and instruments (including officers' certificates and opinions of counsel),
provide such materials and information and take such other actions as may be
reasonably requested to cause such party to fulfill its obligations under this
Agreement.
7.3 ENTIRE AGREEMENT. This Agreement, the TPG Shareholders Agreement,
the Shareholders Agreement and the Registration Rights Agreement supersede all
prior discussions and agreements between the parties with respect to the subject
matter hereof and thereof, and this Agreement contains the sole and entire
agreement between the parties hereto with respect to the subject matter hereof.
7.4 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
7.5 REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity. Notwithstanding the foregoing, the parties acknowledge that
it will be impossible to measure in money the damage caused by any failure of
either party to comply with its agreements set forth herein, that each such
agreement is material, and that in the event of any such failure, the other
party will not have an adequate remedy at law or in damages. Therefore, each
party consents to the issuance of an injunction or the enforcement of other
equitable remedies against such party at the suit of the other party, without
bond or other security, to compel performance of all of the terms hereof, and
each party hereby waives the defense of availability of relief in damages.
7.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to a Contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7.7 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each Seller
hereby irrevocably appoints Ivan R. Cairns, at its office at 3221 North Service
Road, Burlington, Ontario, Canada, and each Apollo Purchaser hereby irrevocably
appoints David Kaplan, at its offices at 1999 Avenue of the Stars, Suite 1900,
Los Angeles, California, and each Blackstone Purchaser hereby irrevocably
appoints Howard Lipson, at its offices at 345 Park
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<PAGE>
Avenue, New York, New York, and the Company hereby irrevocably appoints Steve
Helm, at its offices at 15880 North Greenway-Hayden Loop, Suite 100, Scottsdale,
Arizona, its lawful agent and attorney to accept and acknowledge service of any
and all process against it in any action, suit or proceeding arising out of or
relating to this Agreement or any of the transactions contemplated hereby and
upon whom such process may be served, with the same effect as if such party were
a resident of the State of Delaware and had been lawfully served with such
process in such jurisdiction, and waives all claims of error by reason of such
service, PROVIDED that in the case of any service upon such agent and attorney,
the party effecting such service shall also deliver a copy thereof to the other
parties. Sellers, Purchasers and the Company will enter into such agreements
with such agents as may be necessary to constitute and continue the appointment
of such agents hereunder. In the event that such agent and attorney resigns or
otherwise becomes incapable of acting as such, such party will appoint a
successor agent and attorney, reasonably satisfactory to the other parties, with
like powers. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York or any court of the State of New York located in the Borough of
Manhattan in the City of New York in any action, suit or proceeding arising out
of or relating to this Agreement or any of the transactions contemplated hereby,
and agrees that any such action, suit or proceeding shall be brought only in
such court, PROVIDED, HOWEVER, that such consent to jurisdiction is solely for
the purpose referred to in this SECTION 7.7 and shall not be deemed to be a
general submission to the jurisdiction of said courts or in the State of
Delaware other than for such purpose. Each party hereby irrevocably waives, to
the fullest extent permitted by Law, any objection that it may now or hereafter
have to the laying of the venue of any such action, suit or proceeding brought
in such a court and any claim that any such action, suit or proceeding brought
in such a court has been brought in an inconvenient forum.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
7.9 MISCELLANEOUS. The Company shall have the right to assign its
right to purchase the Other Securities to any of its wholly-owned subsidiaries,
PROVIDED that no such assignment shall relieve the Company of any of its
obligations hereunder.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
LAIDLAW INC.
By: \s\ Ivan R. Cairns
-----------------------------------
Name: Ivan R. Cairns
Title: Senior Vice President and General Counsel
LAIDLAW TRANSPORTATION, INC.
By: \s\ Ivan R. Cairns
-----------------------------------
Name: Ivan R. Cairns
Title: Senior Vice President and General Counsel
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\ David B. Kaplan
-----------------------------------
Name: David B. Kaplan
Title: Vice President
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: \s\ Howard A. Lipson
-----------------------------------
Name: Howard A. Lipson
Title: Senior Managing Director
ALLIED WASTE INDUSTRIES, INC.
By: \s\ Thomas Van Weelden
-----------------------------------
Name: Thomas Van Weelden
Title: President and Chief Operating Officer
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Schedule 2.1(i)
- - Stock Purchase Agreement, dated September 17, 1996, as amended on December
30, 1996
- - $150 million 7% Junior Subordinated Debenture due 2008, dated December 30,
1996
- - Zero Coupon Junior Subordinated Debenture due 2008, dated December 30, 1996
- - Warrant (to purchase 20,400,000 shares of Allied common stock), dated
December 30, 1996
- - Subscription Agreement, dated December 30, 1996
- - Registration Rights Agreement, dated December 30, 1996
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<PAGE>
EXHIBIT 99.4
INVESTMENT AGREEMENT
This Investment Agreement (the "Agreement"), dated as of April 14,
1997, is made and entered into by and among Apollo Investment Fund III, L.P., a
Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware
limited partnership, and Apollo (UK) Partners III, L.P., an English limited
partnership, (collectively, and together with their Affiliated Transferees (as
defined herein), the "Apollo Stockholders"), and Blackstone Capital Partners II
Merchant Banking Fund L.P., a Delaware limited partnership, 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, and together with their Affiliated Transferees, the "Blackstone
Stockholders" and, together with the Apollo Stockholders, the "Stockholders").
WHEREAS, the Stockholders have entered into this Agreement for the
purpose of allocating and administering among themselves certain rights and
obligations with respect to their ownership of the common stock, par value $.01
per share (the "Common Stock"), of Allied Waste Industries, Inc., a Delaware
corporation (the "Company"), and certain other matters as set forth herein;
WHEREAS, the Stockholders have entered into a Stock Purchase Agreement
with TPG Partners, L.P. and TPG Parallel I, L.P., each a Delaware limited
partnership (collectively "TPG"), dated April 14, 1997 (the "TPG Purchase
Agreement"), providing for the purchase by the Stockholders of an aggregate of
11,776,765 shares of the Common Stock (the "TPG Shares") from TPG, subject to
the terms and conditions set forth therein, and may enter into additional
agreements (such additional agreements, together with the TPG Purchase
Agreement, the "Purchase Agreements") providing for the purchase by one or more
of the Stockholders of additional shares of Common Stock (such additional
shares, together with the TPG Shares, the "Shares"); and
WHEREAS, the Stockholders have entered into a Shareholders Agreement
with the Company, dated April 14, 1997, concerning certain governance rights,
registration rights and other matters set forth therein, subject to the terms
and conditions set forth therein (the "TPG Shareholders Agreement"), and may
enter into additional agreements or amendments with respect thereto (such
additional agreements and amendments, together with the TPG Shareholders
Agreement, the "Shareholders Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions contained herein,
<PAGE>
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
The following terms shall have the definitions set forth below:
"Affiliate" has the meaning given such term in Rule 12b-2 under the
Exchange Act.
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of New York) on which banks are open for
business in New York.
"Closing Dates" shall mean collectively, the closing date of the
purchase of the TPG Shares pursuant to the TPG Purchase Agreement, together with
the closing of the sale of Common Stock under any other Purchase Agreement as
provided under such Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Losses" shall mean any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).
"Majority Decision" shall mean approval by Stockholders holding a
majority of the Shares then held by all Stockholders; provided, however, that if
a dissenting Stockholder reasonably determines that the decision will materially
adversely affect its ownership of the Shares, then the decision must be approved
by all Stockholders.
"Permitted Transferees" shall mean:
(a) any Affiliate of, or investment fund sponsored by, a Stockholder
(an "Affiliated Transferee");
(b) with respect to any Stockholder which is a limited partnership,
any partners (or a liquidating trust for the benefit of the partners) of
such limited partnership in accordance with the provisions of the limited
partnership agreement of such Stockholder as then in effect; or
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(c) solely with respect to bona fide pledges of shares of Common
Stock to a financial institution to secure indebtedness for borrowed money
to finance the purchase of shares of Common Stock, such financial
institution;
PROVIDED that with respect to clause (a), the Affiliated Transferee agrees in a
writing provided to each of the other Stockholders to be bound by the terms of
this Agreement; PROVIDED, FURTHER, that with respect to clause (c), the pledge
agreement gives the other Stockholders the right to purchase the pledged shares
from the financial institution on substantially the same terms as those provided
in Section 5.2 in connection with any foreclosure on such pledged shares. For
purposes hereof, the Permitted Transferees of a Stockholder shall include the
Permitted Transferees of such Stockholder's Permitted Transferees.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union
or association or governmental or regulatory authority.
"Registration Percentage" shall mean the quotient of (a) the total
number of shares of Common Stock owned directly by a Stockholder immediately
prior to an offering divided by (b) the total number of shares of Common Stock
beneficially owned by the Stockholders as a group immediately prior to such
offering.
"Rule 144" means Rule 144 promulgated under the Securities Act, and
any successor provision thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Transfer" shall mean with respect to any security, any sale,
assignment, donation, pledge, hypothecation, grant or other transfer of, or the
grant of any option with respect to, such security (or the entering into of any
agreement or understanding with respect to the foregoing).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
A. Each Apollo Stockholder hereby severally (and not jointly)
represents and warrants to the Blackstone Stockholders with respect to itself
and the Shares to be acquired by such Apollo Stockholder pursuant to the
Purchase Agreements, and not with respect to any other Apollo Stockholder or any
other Shares as follows:
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<PAGE>
Section 2.A.1. ORGANIZATION; AUTHORIZATION. Such Apollo Stockholder
is a limited partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. Such Apollo Stockholder is
duly authorized to execute and deliver, to perform its obligations under and to
consummate the transactions contemplated by this Agreement, the TPG Purchase
Agreement and the Shareholders Agreement. This Agreement, the TPG Purchase
Agreement and the Shareholders Agreement are valid and legally binding
agreements of such Apollo Stockholder, enforceable against such Apollo
Stockholder in accordance with their terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally and, as to enforceability, general equitable principles.
Section 2.A.2. ACQUISITION FOR INVESTMENT. (a) Such Apollo
Stockholder is acquiring the Shares for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and such Apollo Stockholder has no present intention or
plan to effect any distribution of the Shares.
B. Each Blackstone Stockholder hereby severally (and not jointly)
represents and warrants to the Apollo Stockholders with respect to itself and
the Shares to be acquired by such Blackstone Stockholder pursuant to the
Purchase Agreements, and not with respect to any other Blackstone Stockholder or
any other Shares as follows:
Section 2.B.1. ORGANIZATION; AUTHORIZATION. Such Blackstone
Stockholder is a limited partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Such
Blackstone Stockholder is duly authorized to execute and deliver, to perform its
obligations under and to consummate the transactions contemplated by this
Agreement, the TPG Purchase Agreement and the Shareholders Agreement. This
Agreement, the TPG Purchase Agreement and the Shareholders Agreement are valid
and legally binding agreements of such Blackstone Stockholder, enforceable
against such Blackstone Stockholder in accordance with their terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally and, as to enforceability, general
equitable principles.
Section 2.B.2. ACQUISITION FOR INVESTMENT. (a) Such Blackstone
Stockholder is acquiring the Shares for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and such Blackstone Stockholder has no present intention
or plan to effect any distribution of the Shares.
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C. RELIANCE ON REPRESENTATIONS AND WARRANTIES IN PURCHASE
AGREEMENTS. In addition to the foregoing representations and warranties, each
of the Stockholders shall be entitled to rely upon the representations and
warranties of each other Stockholder contained in any Purchase Agreement.
ARTICLE III
PURCHASE OF THE SHARES
Section 3.1. ALLOCATION OF PURCHASE PRICE. (a) On the Closing Date
with respect to the purchase of any Shares from TPG or Laidlaw, Inc., a Canadian
corporation ("Laidlaw") or its Affiliates, (i) the Apollo Stockholders hereby
agree to purchase 65% of the Shares by paying 65% of the total purchase price
for the Shares in the manner provided in the applicable Purchase Agreement and
(ii) the Blackstone Stockholders hereby agree to purchase 35% of the Shares by
paying 35% of the total purchase price for the Shares in the manner provided in
the applicable Purchase Agreement. Prior to such Closing Date, in their sole
discretion, (x) the Apollo Stockholders may allocate their rights and
obligations under this Section among themselves and (y) the Blackstone
Stockholders may allocate their rights and obligations under this Section among
themselves. Except for purchases of Shares from TPG or Laidlaw which shall be
subject to and allocated in accordance with this Section, all purchases of
Shares shall be subject to and allocated in accordance with the provisions of
Section 5.3.
(b) If a Stockholder fails for any reason to make a purchase or
payment as required under clause (a) of this Section 3.1, each of the non-
failing Stockholders shall have the irrevocable and exclusive option to purchase
up to that percentage of such failing Stockholder's shares, determined by
dividing the number of Shares such non-failing Stockholder is then entitled to
purchase by the total number of Shares that all Stockholders are then entitled
to purchase (without reference to either the Shares such failing Stockholder was
entitled to purchase or the number of Shares entitled to be purchased by a
Stockholder who elects not to purchase such failing Stockholder's Shares). If a
Stockholder's failure to purchase Shares constitutes a breach of the applicable
Purchase Agreement, such failing Stockholder shall indemnify and hold harmless
the non-failing Stockholders for any Losses incurred by them due to such breach;
PROVIDED, HOWEVER, the maximum aggregate liability of a failing Stockholder
under this Section 3.1 (including liability to the seller of the Shares) shall
not exceed the amount that such failing Stockholder would have been required to
pay had it not been in breach of such Purchase Agreement.
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ARTICLE IV
BOARD OF DIRECTORS
The Stockholders agree among themselves as follows:
Section 4.1. ALLOCATION OF AFFILIATE DIRECTOR DESIGNEES. If the
number of persons the Stockholders are entitled to designate to serve on the
Board of Directors of the Company (the "Board") pursuant to the Shareholders
Agreement, without restriction as to the affiliation of such person ("Affiliate
Designees"), is:
(a) four (4), then the Apollo Stockholders shall be entitled to
designate three (3) Affiliate Designees and the Blackstone Stockholders
shall be entitled to designate one (1) Affiliate Designee;
(b) three (3), then the Apollo Stockholders shall be entitled to
designate two (2) Affiliate Designees and the Blackstone Stockholders shall
be entitled to designate one (1) Affiliate Designee;
(c) two (2), then the Apollo Stockholders shall be entitled to
designate one (1) Affiliate Designee and the Blackstone Stockholders shall
be entitled to designate one (1) Affiliate Designee; and
(d) one (1), then the Apollo Stockholders shall be entitled to
designate that Affiliate Designee; PROVIDED, HOWEVER, that if the
Blackstone Stockholders own more shares of Common Stock than the Apollo
Stockholders at the time of such designation, then the Blackstone
Stockholders shall be entitled to designate that Affiliate Designee.
Section 4.2. ALLOCATION OF NON-AFFILIATE DESIGNEES. If the
Stockholders are entitled pursuant to the Shareholders Agreement to designate
persons to serve on the Board in addition to the Affiliate Designees, such
designations shall be allocated between the Apollo Stockholders and Blackstone
Stockholders in the same proportions as the allocation of Affiliate Designees;
provided, however, that any designation must be reasonably acceptable to the
non-designating Stockholders.
Section 4.3. EXERCISE OF VETO RIGHTS FOR THIRD PARTY DESIGNEES. If
the Stockholders are entitled pursuant to the Shareholders Agreement to approve
or reject a person designated by a third party to serve on the Board or any
committee thereof, such approval or rejection may be exercised by either the
Blackstone Stockholders or the Apollo Stockholders.
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<PAGE>
Section 4.4. AGREEMENT TO VOTE FOR DIRECTORS. The Stockholders agree
to vote all shares of Common Stock held by them in favor of the persons
designated pursuant to Sections 4.1 and 4.2 hereof. The failure of any
Stockholder entitled to designate nominees pursuant to Sections 4.1 or 4.2
hereof to fully exercise its respective designation rights shall not constitute
a waiver or diminution of such rights, nor shall it prevent such Stockholder
from fully exercising such rights prospectively. Should a person designated
pursuant to Section 4.1 or 4.2 hereof be unwilling or unable to serve, or
otherwise cease to serve (including by means of removal in accordance with the
following sentence), the Stockholders who originally nominated such director
pursuant to Sections 4.1 or 4.2 shall be entitled to designate any replacement
director. If the Apollo Stockholders propose to remove any director designated
by them, or if the Blackstone Stockholders propose to remove any director
designated by them, the Stockholders agree to cooperate in, and vote all shares
of Common Stock held by them in support of, such removal and any resulting
vacancy shall be filled in accordance with the preceding sentence. The
Stockholders agree not to take any action to remove, with or without cause, any
director other than in accordance with the foregoing.
Section 4.5. COMMITTEES OF THE BOARD OF DIRECTORS. If the
Stockholders are entitled pursuant to the Shareholders Agreement to designate
directors to serve on the executive committee or any other committee established
by the Board, such designation shall be allocated among the Stockholders based
on the same proportions as the allocation provisions set forth in this Article
IV for designating persons to serve as a director on the Board.
Section 4.6. FURTHER ASSURANCES. Each Stockholder shall vote, in
person or by proxy, all of the shares of Common Stock owned by such Stockholder,
at any annual or special meeting of stockholders of the Company called for the
purpose of voting on the election of directors or by consensual action of
stockholders without a meeting with respect to the election of directors, in
favor of the election of the directors designated in accordance with this
Article IV. Each Stockholder shall vote the shares of Common Stock owned by
such Stockholder and shall take all other actions necessary to ensure that the
Certificate of Incorporation and By-laws of the Company do not at any time
conflict with the provisions of this Agreement.
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ARTICLE V
TRANSFERS OF COMMON STOCK
Section 5.1. RESTRICTIONS ON TRANSFERS; PERMITTED TRANSFEREES. (a)
Except as otherwise provided in Section 5.1(b) and 5.1(c) of this Agreement,
each Stockholder agrees and acknowledges that such Stockholder will not:
(i) directly or indirectly, Transfer or offer to Transfer any shares
of Common Stock or solicit any offers to purchase or otherwise acquire or
make a pledge of any shares of Common Stock;
(ii) grant any proxy or enter into or agree to be bound by any voting
trust with respect to any shares of Common Stock;
(iii) enter into any stockholder agreements or arrangements of any
kind (other than agreements entered into by all of the Stockholders) with
any Person with respect to any shares of Common Stock (whether or not such
agreements and arrangements are with other Stockholders hereto or holders
of shares of Common Stock who are not parties to this Agreement), including
but not limited to, agreements or arrangements with respect to the
acquisition, disposition or voting of shares of Common Stock; or
(iv) act, for any reason, as a member of a group or in concert with
any other Persons (other than Permitted Transferees) in connection with the
Transfer or voting of shares of Common Stock.
(b) Except as provided in Section 5.1(c), none of the restrictions
contained in Section 5.1(a) shall apply to any Transfers:
(i) to a Permitted Transferee of the transferor (whereupon the
transferor hereby agrees to provide written notice thereof, together with
such transferee's written undertaking to assume the transferor's
obligations hereunder) to the other Stockholders within 30 days after such
Transfer); or
(ii) to any Person, provided the transferor has first complied with
the provisions of Sections 5.2 and 5.3.
(c) Notwithstanding anything in this Agreement to the contrary,
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(i) no Transfer of shares of Common Stock may be made by a
Stockholder if such Transfer would violate any of the provisions of the
Shareholders Agreement (unless such provision is waived by the Company);
and
(ii) until such time as any Apollo Stockholder Transfers any of its
Shares to a Person who is not a Permitted Transferee, no Transfer of shares
of Common Stock may be made by any of the Blackstone Stockholders that
would result in the Stockholders losing any rights to designate persons to
serve on the Board or any committee thereof.
Section 5.2. RIGHT OF FIRST NEGOTIATION WITH RESPECT TO CERTAIN SHARE
TRANSFERS. (a) Except for Transfers permitted pursuant to Sections 5.1(b)(i),
if any Apollo Stockholder or Blackstone Stockholder desires to Transfer any
shares of Common Stock (a "Selling Stockholder"), such Selling Stockholder shall
first give written notice (the "Sellers Notice") to the Apollo Stockholders (if
a Blackstone Stockholder is the Selling Stockholder") and to the Blackstone
Stockholders (if an Apollo Stockholder is the Selling Stockholder) (the "Offeree
Stockholders") stating the Selling Stockholders' desire to make such Transfer
and the number of shares of Common Stock proposed to be transferred (the
"Offered Shares").
(b) Upon receipt of the Sellers Notice, each of the Offeree
Stockholders shall have a 15-day exclusive right to negotiate to purchase the
Offered Shares. The Selling Stockholders and the Offeree Stockholders agree to
negotiate in good faith.
(c) If the Sellers Notice shall be duly given, and if the Offeree
Stockholders shall not purchase the Offered Shares within such 15-day period or
shall have otherwise declined to purchase the Offered Shares, then the Selling
Stockholders shall be free to sell the Offered Shares to any third party
transferee; PROVIDED, that such sale complies with the provisions of Section 5.1
of this Agreement.
Section 5.3. PRO RATA RIGHT TO PARTICIPATE IN CERTAIN SHARE
PURCHASES. (a) Until an aggregate of 3,000,000 shares shall have been
purchased by the Stockholders and their Affiliates from Persons other than the
Stockholders, TPG and Laidlaw and their respective Affiliates (such other
Persons, "Exempt Sellers"):
(i) until the Apollo Stockholders and their Affiliates (the "Apollo
Purchasers") purchase in aggregate 1,000,000 or more shares of Common Stock
from Persons other than the Exempt Sellers: If any Blackstone Stockholder
or any of their Affiliates (the "Blackstone Purchasers"), pursuant to
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a single transaction or series of related transactions, proposes to
purchase shares of Common Stock from a Person who is not an Exempt Seller,
the Apollo Stockholders shall have the exclusive option to purchase up to
65% of the total number of shares proposed to be purchased by the
Blackstone Purchasers, upon the same terms and conditions applicable to the
Blackstone Purchasers.
(ii) If any Apollo Purchaser, pursuant to a single transaction or
series of related transactions, proposes to purchase shares of Common Stock
from a Person who is not an Exempt Seller, the Blackstone Stockholders
shall have the exclusive option to purchase up to 35% of the total number
of shares proposed to be purchased by the Apollo Purchaser, upon the same
terms and conditions applicable to the Apollo Purchaser; PROVIDED, HOWEVER,
if the Apollo Purchasers have purchased in the aggregate 1,000,000 or more
shares of Common Stock from persons other than the Exempt Sellers, the
foregoing percentage shall be 100%.
(b) After an aggregate of 3,000,000 shares shall have been purchased
by the Stockholders and their Affiliates from Persons other than Exempt Sellers
in accordance with Section 5.3(a) above:
(i) If any Apollo Purchaser, pursuant to a single transaction or
series of related transactions, proposes to purchase shares of Common Stock
from a Person who is not an Exempt Seller, the Blackstone Stockholders
shall have the exclusive option to purchase up to 50% of the total number
of shares proposed to be purchased by the Apollo Purchaser, upon the same
terms and conditions applicable to such Apollo Purchaser.
(ii) If any Blackstone Purchaser, pursuant to a single transaction or
series of related transactions, proposes to purchase shares of Common Stock
from a Person who is not an Exempt Seller, the Apollo Stockholders shall
have the exclusive option to purchase up to 50% of the total number of
shares proposed to be purchased by the Blackstone Purchaser, upon the same
terms and conditions applicable to such Blackstone Purchaser.
(c) Any Apollo Purchaser or Blackstone Purchaser proposing to
purchase of any shares of Common Stock subject to this SECTION 5.3 shall use its
best efforts to keep the other Stockholders informed and shall cooperate with
the other Stockholders with respect to such proposed purchase so as to allow the
other Stockholders a reasonable opportunity to exercise their purchase option
hereunder. Without limiting the foregoing, the Apollo Purchaser or Blackstone
Purchaser shall provide a
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<PAGE>
written notice (an "OPTION NOTICE") to the other Stockholders describing the
proposed purchase, including the price and the proposed closing date, promptly
after the proposed purchase price has been determined; PROVIDED that the Apollo
Purchaser or Blackstone Purchaser shall endeavor to provide such notice
sufficiently in advance of the proposed closing date so as to allow the other
Stockholders a reasonable opportunity to make a "capital call" or otherwise
arrange funding for their purchase option. A Stockholder may exercise its
purchase option by giving written notice (an "EXERCISE NOTICE") to the Apollo
Purchaser or Blackstone Purchaser, as the case may be, specifying the number of
shares such Stockholder desires to purchase, within one (1) Business Day after
receiving the Option Notice. If such Option Notice shall be duly given by an
Apollo Purchaser or Blackstone Purchaser, and if the Exercise Notice shall not
have been received by such Apollo Purchaser or Blackstone Purchaser within one
(1) Business Day thereafter or the other Stockholders shall have otherwise
declined to exercise such option, then such Apollo Purchaser or Blackstone
Purchaser shall be free to purchase and own all of the subject shares.
ARTICLE VI
ALLOCATION OF REGISTRATION RIGHTS
Section 6.1. SHELF REGISTRATION RIGHTS. (a) If the Stockholders are
entitled pursuant to any registration rights agreement with the Company (a
"Registration Rights Agreement") to require that the Company cause to be filed
pursuant to Rule 415 of the Securities Act a shelf registration statement with
respect to resales of shares beneficially owned by the Stockholders, the number
of demands to require the filing of a shelf registration statement shall be
divided between the Apollo Stockholders and Blackstone Stockholders in the same
proportions as the allocation of the number of Affiliate Designees in Section
4.1.
Section 6.2. UNDERWRITTEN OFFERINGS. If the Stockholders are
entitled pursuant to any Registration Rights Agreement to require that the
Company cause to be filed a registration statement under the Securities Act with
respect to a firm commitment underwritten offering of shares beneficially owned
by the Stockholders, the number of demands to require the filing of a
registration statement shall be divided between the Apollo Stockholders and
Blackstone Stockholders in the same proportions as the allocation of the number
of Affiliate Designees in Section 4.1; provided that the allocation of demand
rights pursuant to this Section shall be determined on the date such demand
rights are granted, and shall not be affected by subsequent changes in the
allocation of the number of Affiliate Designees resulting from changes in the
relative Share ownership of the Stockholders.
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<PAGE>
Section 6.3. SHARES INCLUDED. In connection with any offering made
pursuant to a registration statement in which the Stockholders are entitled to
include shares of Common Stock beneficially owned by them, whether pursuant to
shelf, demand or "piggyback" registration rights, each Stockholder shall have
the right to include a number of shares owned by it in the offering in an amount
up to the product of (A) the aggregate number of shares the Stockholders as a
group are entitled to include in such offering multiplied by (B) such
Stockholder's Registration Percentage; PROVIDED, that the Stockholders shall be
entitled to increase on a pro rata basis the number of Shares they can include
in such offer to the extent any Stockholder includes less than the full number
of shares it has a right to include in such offering. For the purposes of this
clause, the Apollo Stockholders and the Blackstone Stockholders may allocate
their rights to include shares in an offering among their respective Affiliates
in their sole discretion. The Stockholders shall give each other reasonable
notice in advance of the exercise of any shelf, demand or piggy-back rights
pursuant to any Registration Rights Agreement.
Section 6.4. CUTBACKS. If in connection with any underwritten
offering the total number of shares that the Stockholders seek to have included
in such offering is limited by the underwriters (a "Cutback"), and following
such Cutback, the Apollo Stockholders include more shares in such registration
statement filed upon the demand of the Blackstone Stockholders, or the
Blackstone Stockholders include more shares in such registration statement filed
upon the demand of the Apollo Stockholders, such demand shall be deemed
exercised by the Stockholder that included more shares in such registration
statement (regardless of which Stockholder initially exercised such demand
right).
Section 6.5. UNDERWRITERS. If the Stockholders have the right to
designate a managing underwriter in connection with any firm commitment
underwriting, whichever of the Apollo Stockholders or the Blackstone
Stockholders made the demand for such registration shall be entitled to choose
such managing underwriter, otherwise the decision shall be made by Majority
Decision.
ARTICLE VII
OTHER AGREEMENTS
Section 7.1. DISPUTE RESOLUTION. Any allocation of rights or
obligations not specifically provided for herein shall be allocated first by
Majority Decision. The parties hereby
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<PAGE>
waive any rights to a jury trial in connection with any disputes to be decided
pursuant to the provisions of this Section.
Section 7.2. EXPENSES. Unless specifically provided for otherwise
herein, each party shall bear its own expenses in connection with the matters
covered by this Agreement, except that in connection with any registered
offering of shares of Common Stock, any counsel and fees and offering expenses
(other than underwriting discounts) charged to the Stockholders shall be
allocated based on each Stockholder's proportionate number of shares included in
such offering. Notwithstanding the foregoing, Apollo Stockholders agree to bear
65%, and the Blackstone Stockholders agree to bear 35%, of all fees and expenses
(including without limitation the fees and expenses of Milbank, Tweed, Hadley &
McCloy, Simpson Thacher & Bartlett and any other legal counsel, Deloitte &
Touche and any other accounting or financial advisor, and Goldman, Sachs & Co.
or any other broker) incurred by such Stockholders in connection with their due
diligence investigation or negotiation and purchase of Shares from TPG and
Laidlaw.
Section 7.3. REQUIRED FILINGS; PUBLICITY. (a) Each of the
Stockholders shall (and shall cause each of its Affiliates to) (i) take all
actions necessary to comply promptly with all legal requirements which may be
imposed on such Stockholder (or its Affiliates) as a result of this Agreement or
any of the transactions contemplated hereby and (ii) without limiting the
foregoing, make all required filings pursuant to the Securities Act and the
Exchange Act.
(b) To the extent reasonably practicable, the Stockholders shall
consult with each other prior to all public statement or filings to be issued or
made by any of them or their Affiliates with respect to this Agreement and the
transactions contemplated hereby.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. TERMINATION. This Agreement shall terminate on the
earlier of (a) solely with respect to Article IV, upon termination of the
Shareholders Agreement, (b) solely with respect to Article VI, upon termination
of all Registration Rights Agreements and (c) with respect to all other
provisions of this Agreement, on the date when either the Apollo Stockholders or
the Blackstone Stockholders cease to own any shares of Common Stock.
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<PAGE>
Section 8.2. NOTICES. All notices to be given by any Stockholder
hereunder shall be in writing and shall be deemed to have been duly given if
mailed, by first class or registered mail, three (3) Business Days after deposit
in the United States Mail, or if telexed or telecopied, sent by telegram, or
delivered by hand or reputable overnight courier, when confirmation is received,
at the addresses set forth below, or in the case of any transferee of a
Stockholder, at the address set forth in the stock ledger of the Company:
in the case of the Apollo Stockholders (or any of them), to:
Apollo Investment Fund III, L.P.
Apollo Overseas Partner III, L.P.
Apollo (UK) Partners, III, L.P.
C/O Apollo Management, L.P.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
Attention: David B. Kaplan
Telecopy: (310) 201-4198
with a copy to:
Milbank, Tweed, Hadley & McCloy
30th Floor
601 South Figueroa Street
Los Angeles, CA 90017
Attention: Kenneth J. Baronsky, Esq.
Telecopy: (213) 629-5063
In the case of the Blackstone Stockholders (or any of them), to:
Blackstone Capital Partners II
Merchant Banking Fund L.P.
Blackstone Offshore Capital Partners II L.P.
Blackstone Family Investment Partnership II L.P.
C/O The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson
Telecopy: (212) 754-8703
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<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Attention: Wilson S. Neely, Esq.
Telecopy: (212) 455-2000
The parties may change their respective addresses for purposes of notice
hereunder by giving notice of such change to all other parties in the manner
provided in this Section 8.2.
Section 8.3. BINDING EFFECT. This Agreement supersedes all prior
negotiations, statements and agreements of the parties hereto with respect to
the subject matter of this Agreement, and shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto. If any
transferee of any Stockholder shall acquire any shares of Common Stock in any
manner, whether by operation of law or otherwise, such shares of Common Stock
shall be held subject to all of the terms of this Agreement, and by taking and
holding such shares of Common Stock such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, PROVIDED, HOWEVER, that shares of Common Stock which have been
transferred in accordance with this Agreement to any person other than a
Stockholder or an Affiliated Transferee shall no longer be subject to this
Agreement.
Section 8.4. COMPLETE AGREEMENT. This Agreement represents the
entire agreement among the Stockholders with respect to the matters set forth
herein, and the parties hereto acknowledge that there have been no
representations, warranties, covenants or agreements made by any party hereto
other than those contained in this Agreement.
Section 8.5. COUNTERPARTS. This Agreement may be executed in
counterparts and all of which are deemed to be one and the same agreement
binding upon each of the Stockholders.
Section 8.6. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
Section 8.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflicts of law doctrine, except for matters of corporate law, which
shall be governed by and construed in accordance with the General Corporation
Law of the State of Delaware. By execution and delivery of this Agreement, each
of the Stockholders accepts,
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<PAGE>
generally and unconditionally, the nonexclusive jurisdiction of the state or
federal courts in New York.
Section 8.8. INJUNCTIVE RELIEF. It is hereby agreed and acknowledged
that it will be impossible to measure in money the damages that would be
suffered if the parties to this Agreement fail to comply with any of the
obligations imposed on them by this Agreement and that in the event of any such
failure, an aggrieved person will be irreparably damaged and will not have an
adequate remedy at law. Any such person shall, therefore, be entitled to
injunctive relief, including specific performance, to enforce such obligations,
and if any action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
Section 8.9. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of any provision of
this Agreement in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
Section 8.10. RECAPITALIZATION, ETC. In the event that any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any shares of Common Stock by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Common Stock or any other change in
the Company's capital structure, appropriate adjustments shall be made to the
provisions of this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties hereto under
this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned, thereunto duly authorized, have
hereunto set their respective hands as of the day and year first above written.
APOLLO INVESTMENT FUND III, L.P.
APOLLO OVERSEAS PARTNERS III, L.P.
APOLLO (UK) PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
By: Apollo Capital Management II, Inc.
By: \s\ David B. Kaplan
---------------------------
Name: David B. Kaplan
Title: Vice President
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: \s\ Howard A. Lipson
---------------------------
Name: Howard A. Lipson
Title: Senior Managing Director
<PAGE>
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:
<PAGE>
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.
<PAGE>
"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
<PAGE>
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
Laidlaw 3.1(a)
Laidlaw 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
<PAGE>
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 Hart-Scott-Rodino
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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);
<PAGE>
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
<PAGE>
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
<PAGE>
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 "LAIDLAW AGREEMENT"), by and among the Company,
Allied Holding (United States), Inc., a Delaware corporation, Laidlaw, Inc., a
Canadian corporation ("LAIDLAW"), and certain of Laidlaw's subsidiaries, two
directors as shall be designated in accordance with the Laidlaw 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 Mr. O'Leary 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 Anthony P. Ressler
and Howard A. Lipson 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
<PAGE>
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
<PAGE>
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
<PAGE>
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).
<PAGE>
(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.
7701 East Camelback Road, Suite 375
Scottsdale, Arizona 85251
Attn: Roger A. Ramsey
Fax: (602) 481-9347
<PAGE>
with copies to:
Porter & Hedges, L.L.P.
700 Louisiana Street, Suite 3500
Houston, Texas 77002
Attn: Robert G. Reedy
Fax: (713) 228-1331
and to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attn: Arthur Fleischer, Jr.
Fax: (212) 859-4000
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.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
Attn: David Kaplan
Fax: (310) 201-4198
with a copy to:
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Attn: Kenneth J. Baronsky, Esq.
Fax: (213) 629-5063
and:
<PAGE>
The Blackstone Group
345 Park Avenue
New York, NY 10154
Attn: Howard A. Lipson
Fax: (212) 754-8716
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Wilson S. Neely, Esq.
Fax: (212) 455-2502
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
<PAGE>
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.
<PAGE>
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,
<PAGE>
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
<PAGE>
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.
<PAGE>
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/ Thomas Van Weelden
---------------------------
Thomas Van Weelden
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/ David B. Kaplan
---------------------------
David B. Kaplan
Title: Vice President
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II
L.L.C.
By: /s/ Howard A. Lipson
----------------------------
Howard A. Lipson
Title: Senior Managing Director
<PAGE>
EXHIBIT 99.6
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This Amended and Restated Shareholders Agreement (this "AGREEMENT"), dated
as of April 21, 1997, by and between Allied Waste Industries, Inc., a Delaware
corporation (the "COMPANY"), on the one hand, and Apollo Investment Fund III,
L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a
Delaware limited partnership, Apollo (U.K.) Partners III, L.P., an English
limited partnership, Blackstone Capital Partners II Merchant Banking Fund L.P.,
a Delaware limited partnership ("BCP"), Blackstone Offshore Capital Partners II
L.P., a Cayman Islands limited partnership, and Blackstone Family Investment
Partnership II L.P., a Delaware limited partnership (collectively,
"SHAREHOLDERS"), on the other hand, amending and restating in its entirety the
Shareholders Agreement dated as of April 14, 1997 (the "ORIGINAL AGREEMENT"), by
and between the Company, on the one hand, and the Shareholders, on the other
hand.
WHEREAS, simultaneously with the execution of the Original Shareholders
Agreement, Shareholders entered into an agreement (the "TPG GROUP PURCHASE
AGREEMENT") to purchase an aggregate of 11,776,765 shares (the "TPG GROUP
BLOCK") of the Company's common stock, par value $.01 per share (the "COMMON
STOCK"), from TPG Partners, L.P., a Delaware limited partnership, and TPG
Parallel I, L.P., a Delaware limited partnership (collectively, "TPG GROUP");
WHEREAS, concurrently with the acquisition of the TPG Group Block by
Shareholders pursuant to the TPG Group Purchase Agreement, TPG Group intends to
assign to Shareholders its registration rights with respect to the TPG Group
Block under Article IV of the Securities Purchase Agreement dated as of
October 27, 1994, as amended, by and between TPG Group and the Company;
<PAGE>
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 "LAIDLAW PURCHASE
AGREEMENT") with Laidlaw, Inc., a Canadian corporation ("LAIDLAW"), Laidlaw
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 "LAIDLAW BLOCK" and together with the
TPG Group Block, the "SHARES") from Laidlaw 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 Laidlaw Block pursuant to
the Laidlaw 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 Laidlaw Block pursuant to the Laidlaw 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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<PAGE>
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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<PAGE>
"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 Laidlaw Block by Shareholders pursuant to the Laidlaw 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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<PAGE>
Voting Security is entitled prior to conversion or exchange and (ii) the number
of votes to which the Voting Security into which such Voting Security is
convertible or exchangeable is entitled. Notwithstanding anything else to the
contrary contained in this Agreement, there shall not be included in calculating
Voting Power any votes which a Person shall have upon the non-payment of
dividends on preferred shares in accordance with the terms of such preferred
shares.
"VOTING SECURITIES" shall mean (x) any securities entitled, or which may be
entitled, to vote generally in the election of directors of the Company, (y) any
securities convertible or exercisable into or exchangeable for such securities
(whether or not the right to convert, exercise or exchange is subject to the
passage of time or contingencies or both), or (z) any direct or indirect rights
or options to acquire any such securities; PROVIDED that unexercised options
granted pursuant to any employment benefit or similar plan and rights issued
pursuant to any shareholder rights plan (including that described in SECTION
3.5) shall be deemed not to be "Voting Securities" (or to have Voting Power).
In addition, the following terms have the definitions specified in the
Sections noted:
TERM SECTION
Actual Voting Power Threshold 3.1(b)
Agreement recitals
Beneficial Ownership Threshold 3.1(b)
Common Stock recitals
Company recitals
Disposition 4.1
Laidlaw recitals
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Laidlaw Purchase Agreement recitals
Laidlaw 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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<PAGE>
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 Laidlaw 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 Laidlaw 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 Laidlaw 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 Hart-Scott-Rodino 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 Laidlaw Purchase Agreement,
or any of the transactions contemplated hereby and thereby.
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<PAGE>
(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
Laidlaw 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 Goldman Sachs Credit Partners, L.P., Credit Suisse and
Citibank, N.A., and the consummation of the transactions contemplated by the
Laidlaw 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
Laidlaw Block to the Shareholders pursuant to the Laidlaw Purchase Agreement,
subject to the execution and delivery by the Shareholders of this Agreement.
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<PAGE>
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 Laidlaw
Purchase Agreement or the TPG Group Purchase Agreement.
(d) A condition to the consummation of the purchase of the Laidlaw Block
by the Shareholders pursuant to the Laidlaw Purchase Agreement is that the
persons designated to the Board of Directors by Laidlaw shall have resigned, and
the
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<PAGE>
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
Laidlaw 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
(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 Mr. O'Leary
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 David Kaplan and
one additional person as designated by Shareholders or, subject to
SECTION 3.1(D), such other substitute persons as may be designated by
Shareholders, to be elected to the Board of Directors. At all times during the
Shareholder Designee Period, the Company agrees, subject to SECTION 3.1(D), to
support the nomination of, and the Company's Nominating Committee (as defined
herein) shall recommend to the Board of Directors the inclusion in the slate of
nominees recommended by the Board of Directors to shareholders for election as
directors at each annual meeting of shareholders of the Company: (i) no more
than two persons who are executive officers of the Company
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("Management Directors"), (ii) (A) four Shareholder Designees, so long as
Shareholders beneficially own 75% or more of the Shares, (B) three Shareholder
Designees, so long as Shareholders beneficially own 50% or more but less than
75% of the Shares, (C) two Shareholder Designees, so long as Shareholders
beneficially own 25% or more but less than 50% of the Shares and (D) one
Shareholder Designee, so long as Shareholders beneficially own 20% or more but
less than 25% of the Shares (each a "BENEFICIAL OWNERSHIP THRESHOLD"), provided
that if at any time as a result of the Company's issuance of Voting Securities
Shareholders beneficially own 9% or less of the Actual Voting Power (the "ACTUAL
VOTING POWER THRESHOLD"), Shareholders shall be entitled to no more than one
Shareholder Designee, and (iii) such other persons, each of whom is (A)
recommended by the Nominating Committee and (B) not an employee or officer of or
outside counsel to the Company or a partner, employee, director, officer,
affiliate or associate (as defined in Rule 12b-2 under the Exchange Act) of any
Shareholder or any affiliate of a Shareholder or as to which the Shareholders or
their affiliates own at lest ten percent of the voting equity securities
("Unaffiliated Directors"). If any vacancy (whether by death, retirement,
disqualification, removal from office or other cause, or by increase in number
of directors) occurs prior to a meeting of the Company's stockholders, the Board
(i) may appoint a member of management to fill a vacancy caused by a Management
Director ceasing to serve as a director, (ii) shall appoint, subject to Section
3.1(d), a person designated by the Shareholders to fill a vacancy created by a
Shareholder Designee ceasing to serve as a director (except as a result of the
reduction of the number of Shareholder Designees entitled to be included on the
Board of Directors by reason of a decrease in Shareholders' beneficial ownership
of Common Stock below any Beneficial Ownership Threshold or Voting Securities
below the Actual Voting Power Threshold), and (iii) may appoint a person who
qualifies as an Unaffiliated Director and is
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recommended by the Nominating Committee pursuant to the procedures set forth in
the following paragraph to fill a vacancy created by an Unaffiliated Director
ceasing to serve as a director (provided that in the case of a vacancy relating
to an Unaffiliated Director, if a majority of the Nominating Committee is unable
to recommend a replacement, then the Board seat with respect to this vacancy
shall remain vacant), and each such person shall be a Management Designee,
Shareholder Designee or Unaffiliated Director, as the case may be, for purposes
of this Agreement.
At all times during the Shareholder Designee Period, Unaffiliated Directors
shall be designated exclusively by a majority of a nominating committee (the
"Nominating Committee"), which shall at all times during the Shareholder
Designee Period consist of not more than four persons, two of whom shall be
Shareholder Designees (or such lesser number of Shareholder Designees as then
serves on the Board of Directors) and two of whom shall be either Management
Directors or Unaffiliated Directors. If the Nominating Committee is unable to
recommend one or more persons to serve as Unaffiliated Directors (except with
respect to any vacancy created by an Unaffiliated Director ceasing to serve as
such), then the Board of Directors shall nominate and recommend for election by
stockholders an Unaffiliated Director then serving on the Board of Directors.
Notwithstanding the foregoing, if the Shareholders beneficially own less than
50% of the Shares, the Nominating Committee shall be comprised of individuals
only one of whom is a Shareholder Designee.
The foregoing provisions shall be effected pursuant to an amendment to the
Company's Bylaws in a form reasonably acceptable to the parties to this
Agreement, which shall not be further amended by the Board of Directors during
the Shareholder Designee Period.
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Notwithstanding the foregoing, the Company shall have no obligation to
support the nomination, recommendation or election of any Shareholder Designee
pursuant to this SECTION 3.1(B) or any other obligation under this Section 3.1
if Shareholders are in breach of any material provision of this Agreement.
(c) Upon any decrease in Shareholders' beneficial ownership of Common
Stock below any Beneficial Ownership Threshold or Voting Securities below the
Actual Voting Power Threshold, Shareholders shall cause a number of Shareholder
Designees to offer to immediately resign from the Company's Board of Directors
such that the number of Shareholder Designees serving on the Board of Directors
immediately thereafter will be equal to the number of Shareholder Designees
which Shareholders would then be entitled to designate under SECTION 3.1(B).
Upon termination of the Shareholder Designee Period, Shareholders shall promptly
offer to cause all of the Shareholder Designees to resign from the Board of
Directors and any committees thereof and the Company's obligations under this
SECTION 3.1 shall terminate.
(d) Notwithstanding the provisions of this SECTION 3.1, Shareholder shall
not be entitled to designate any person to the Company's Board of Directors (or
any committee thereof) in the event that the Company receives a written opinion
of its outside counsel that a Shareholder Designee would not be qualified under
any applicable law, rule or regulation to serve as a director of the Company or
if the Company objects to a Shareholder Designee because such Shareholder
Designee has been involved in any of the events enumerated in Item 2(d) or (e)
of Schedule 13D or such person is currently the target of an investigation by
any governmental authority or agency relating to felonious criminal activity or
is subject to any order, decree, or judgment of any court or agency prohibiting
service as a director of any public company or providing investment or
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financial advisory services and, in any such event, the Shareholder shall
withdraw the designation of such proposed Shareholder Designee and designate a
replacement therefor (which replacement Shareholder Designee shall also be
subject to the requirements of this Section). The Company shall use its
reasonable best efforts to notify the Shareholder of any objection to a
Shareholder Designee sufficiently in advance of the date on which proxy
materials are mailed by the Company in connection with such election of
directors to enable the Shareholder to propose a replacement Shareholder
Designee in accordance with the terms of this Agreement.
(e) Each Shareholder Designee serving on the Board of Directors shall be
entitled to all compensation and stock incentives granted to directors who are
not employees of the Company on the same terms provided to such directors.
SECTION 3.2. VOTING. (a) Each Shareholder agrees that during the
Standstill Period such Shareholder shall, and shall cause its Affiliates and any
Person which is a member of any Group of which such Shareholder or any of its
Affiliates is a member to, be present, in person or represented by proxy, at all
meetings of shareholders of the Company so that all Voting Securities
beneficially owned by such Shareholder shall be counted for the purpose of
determining the presence of a quorum at such meetings. Each Shareholder agrees
that during the Standstill Period:
(i) In connection with the election of directors of the Company,
such Shareholder shall vote or cause to be voted all Voting Securities
beneficially owned by such Shareholder to elect those individuals nominated
in accordance with the provisions of Section 3.1.
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(ii) In connection with any proposal for a Reorganization
Transaction, such Shareholder shall vote or cause to be voted, or consent
with respect to, all Voting Securities beneficially owned by such
Shareholder in the manner recommended by a majority of the entire Board of
Directors.
(iii) In connection with other proposals submitted to shareholders
of the Company, such Shareholder shall be free to vote or cause to be
voted, or consent with respect to, all Voting Securities beneficially owned
by such Shareholder in its discretion.
SECTION 3.3. NOTICES OF DISPOSITIONS OF VOTING SECURITIES. Not later
than the tenth day following the end of any calendar month during the Standstill
Period in which one or more Dispositions of Voting Securities by a Shareholder
or any of its Affiliates shall have occurred, such Shareholder shall use its
reasonable best efforts to give written notice to the Company of all such
Dispositions (in the case of Dispositions by Affiliates, to the extent it has
knowledge) unless any such Disposition has been reflected in a public filing
that was delivered to the Company on or in advance of the date upon which notice
thereof under this SECTION 3.3 would have been due. Such notice shall state the
date upon which each such Disposition was effected, the number and type of
Voting Securities involved in each such Disposition, the means by which each
such Disposition was effected and, to the extent known, the identity of the
Person acquiring Voting Securities.
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ARTICLE 4
Transfer Restrictions
SECTION 4.1. RESTRICTIONS ON DISPOSITIONS. During the Standstill Period,
each Shareholder shall not, and shall cause its Affiliates not to, directly or
indirectly (including, without limitation, through the disposition or transfer
of control of another Person), sell, assign, donate, transfer, pledge,
hypothecate, grant any option with respect to or otherwise dispose of any
interest in (or enter into an agreement or understanding with respect to the
foregoing) any Voting Securities (a "DISPOSITION"), except as set forth below in
this SECTION 4.1. Without limiting the generality of the foregoing, any sale of
securities held by any Shareholder or any of its Affiliates which is currently
(or following the passage of time, the occurrence of any event or the giving of
notice), directly or indirectly, exchangeable or exercisable for, or convertible
into, any Voting Securities shall constitute a Disposition of such Voting
Securities.
Dispositions may be effected by a Shareholder during the Standstill Period
as follows:
(a) No Dispositions of any nature may be made prior to the second
anniversary of the Second Closing Date except pursuant to SECTION 4.1(E) or
4.1(F).
(b) After the second anniversary of the Second Closing Date, Dispositions
of Voting Securities may be made at any time in compliance with the Registration
Rights Agreement.
(c) After the second anniversary of the Second Closing Date, Dispositions
of Voting Securities may be made pursuant to sales effected in accordance
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with Rule 144 under the Securities Act (a "RULE 144 SALE"); PROVIDED that such
Dispositions shall not be made to any Person who or which would immediately
thereafter, to the knowledge of such Shareholder, any of its Affiliates, or such
Shareholder's broker, beneficially own Voting Securities representing 9% or more
of the Total Voting Power (and such Person shall have provided a certificate to
such effect).
(d) After the second anniversary of the Second Closing Date, Dispositions
may be made to any Person (other than pursuant to a Reorganization Transaction)
that would, following such sale, beneficially own no more than 9% of the Total
Voting Power (and such Person shall have provided a certificate to such effect).
(e) Dispositions may be made pursuant to a merger transaction or a tender
offer for all of the outstanding shares of Common Stock which is recommended to
the shareholders of the Company generally by at least a majority of the entire
Board of Directors, on the terms and conditions of such transaction available to
all other holders of shares of Common Stock.
(f) Dispositions may be made by a Shareholder to (i) any other Shareholder
or (ii) any Affiliate of any Shareholder that executes an instrument in form and
substance satisfactory to the Company in which it makes the representations and
warranties set forth in SECTION 1.3(B) as of the date of the execution of such
instrument and agrees to be bound by the terms of this Agreement as if an
original signatory to this Agreement (such transferee, a "RELATED TRANSFEREE"),
in which case such Related Transferee shall thereafter be a "Shareholder" for
all purposes of this Agreement.
(g) With respect to Voting Securities which are, by their terms,
convertible into or exercisable or exchangeable for other Voting Securities such
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conversion, exercise or exchange shall not be deemed a Disposition.
(h) Each Shareholder agrees that during the Standstill Period, without the
consent of the managing underwriter(s) in an underwritten offering in respect of
the Company's Voting Securities, it will not effect any sale or distribution of
Voting Securities (other than in connection with such Shareholder's own
registration pursuant to paragraph (b) of this SECTION 4.1), including a Rule
144 Sale, during the ten (10) day period prior to, and during the ninety (90)
day period beginning on, the effective date of the registration statement filed
by the Company in respect of such underwritten offering, or any shorter period
as may apply to the Company and its affiliates.
ARTICLE 5
Miscellaneous
SECTION 5.1. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be made in writing by hand-
delivery, registered first-class mail, telex, fax or air courier guaranteeing
delivery:
(a) If to the Company, to:
Allied Waste Industries, Inc.
7701 East Camelback Road, Suite 375
Scottsdale, Arizona 85251
Attn: Roger A. Ramsey
Fax: (602) 481-9347
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with copies to:
Porter & Hedges, L.L.P.
700 Louisiana Street, Suite 3500
Houston, Texas 77002
Attn: Robert G. Reedy
Fax: (713) 228-1331
and to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attn: Arthur Fleischer, Jr.
Fax: (212) 859-4000
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.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
Attn: David Kaplan
Fax: (310) 201-4198
with a copy to:
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Attn: Kenneth J. Baronsky, Esq.
Fax: (213) 629-5063
and:
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The Blackstone Group
345 Park Avenue
New York, NY 10154
Attn: Howard A. Lipson
Fax: (212) 754-8716
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Wilson S. Neely, Esq.
Fax: (212) 455-2502
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 Laidlaw
Block pursuant to the Laidlaw 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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<PAGE>
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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<PAGE>
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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<PAGE>
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/ Thomas Van Welden
_________________________
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/ David B. Kaplan
_________________________
Title: Vice President
________________________
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: /s/ Howard S. Lipson
_________________________
Title: Sr. Managing Director
________________________
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EXHIBIT 99.7
AGREEMENT
In connection the Shareholders Agreement (as defined herein) and
Registration Rights Agreement (as defined herein) among the parties signatory
hereto (the "Parties") and in consideration of the mutual covenants and
agreements contained in this agreement (this "Agreement"), the Shareholders
Agreement and the Registration Rights Agreement, the Parties agree, as of April
21, 1997, as follows:
1. Capitalized terms not defined herein shall have respective meanings
given to such terms in the shareholders agreement (the "Shareholders Agreement")
and the registration rights agreement (the "Registration Rights Agreement"), in
each case, dated the date hereof and among the parties hereto.
2. Prior to the Annual Meeting of Shareholders of the Company to be held
in 1997 (the "1997 Meeting"), the Company shall not fill any vacancies in the
Board resulting from the resignation of the designees of the TPG Group or of
Laidlaw except as contemplated by the Original Stockholders Agreement or the
Shareholders Agreement. The Company will use its best efforts to hold the 1997
Meeting as soon as reasonably practicable after the Second Closing Date. The
Company agrees that it shall not finally determine the Company's slate of
directors proposed for election at the 1997 Meeting prior to the earlier of
(a) the termination of the Laidlaw Purchase Agreement and (b) the Second Closing
Date.
3. Each Shareholder agrees that it will not exercise any registration
rights with respect to all or any part of the TPG Group Block prior to the
earlier of (a) the termination of the Laidlaw Purchase Agreement and (b) the
Second Closing Date.
4. In order to expedite the nomination of Unaffiliated Directors promptly
after the Second Closing Date, the Company agrees to cause the Nominating
Committee contemplated by section 3.1 of the Shareholders Agreement to be formed
on the First Closing Date.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ALLIED WASTE INDUSTRIES, INC.
By: /s/ Thomas Van Welden
_________________________
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/ David B. Kaplan
_________________________
Title: Vice President
________________________
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: /s/ Howard S. Lipson
_________________________
Title: Sr. Managing Director
________________________
2
<PAGE>
EXHIBIT 99.8
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of April 21, 1997 (this
"AGREEMENT"), 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.
W I T N E S S E T H:
WHEREAS, (i) prior to the date hereof, Shareholders have entered into an
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 and (ii) concurrently herewith,
Shareholders are entering into an agreement to purchase an aggregate of
14,600,000 shares (the "LAIDLAW BLOCK" and, together with the TPG Group Block,
the "SHARES") of Common Stock from Laidlaw, Inc., a Canadian corporation;
WHEREAS, concurrently herewith, Company and Shareholders are entering into
an Amended and Restated Shareholders Agreement (the "SHAREHOLDERS AGREEMENT")
granting Shareholders certain rights to designate directors and setting forth
certain restrictions on the acquisition and distribution of securities of the
Company by Shareholders and the conduct of Shareholders with respect to the
Company; and
<PAGE>
WHEREAS, as part of establishing the relationship between Shareholders and
the Company, Shareholders and the Company have agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
Definitions
1.1. CERTAIN DEFINITIONS. In this Agreement:
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated under such Act.
"REGISTRABLE SECURITIES" means the Shares and any additional shares of
Common Stock acquired by Shareholders in compliance with the Shareholders
Agreement, and any shares of Common Stock issued in connection with any stock
dividend on, or any stock split, reclassification or reorganization of Shares or
such additional shares of Common Stock.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated under such Act.
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ARTICLE II
REGISTRATION RIGHTS
2.1. INCIDENTAL RIGHTS. If at any time or from time to time after two
years following the date of the closing of the purchase of the Laidlaw Block,
Company proposes to file with the SEC a registration statement (whether on Form
S-1, S-2, or S-3, or any equivalent form then in effect) for the registration
under the Securities Act of any shares of Common Stock for sale, for cash
consideration, to the public by Company or on behalf of one or more shareholders
of Company (excluding any sale of securities convertible into or exercisable for
Common Stock, and any shares of Common Stock issuable by Company upon the
exercise of employee stock options, or to any employee stock ownership plan, or
in connection with any acquisition made by Company, any securities exchange
offer, dividend reinvestment plan, employee benefit plan, corporate
reorganization, or in connection with any amalgamation, merger or consolidation
of Company or any direct or indirect subsidiary of Company with one or more
other corporations if Company is the surviving corporation), Company shall give
Shareholders at least 20 days' prior written notice of the proposed filing (or
if 20 days' notice is not practicable, a reasonable shorter period to be not
less than 7 days), which notice shall outline the nature of the proposed
distribution and the jurisdictions in the United States in which Company
proposes to qualify and offer such securities (the "ELECTED JURISDICTIONS"). On
the written request of Shareholders received by Company within 15 days after the
date of Company's delivery to Shareholders of the notice of intended
registration (which request shall specify the Registrable Securities sought to
be disposed of by Shareholders and the intended method or methods by which
dispositions are intended to be made), Company shall, under the terms and
subject to the conditions of this ARTICLE II, at its own expense as provided in
SECTION 4.1, include in the coverage of such registration statement (or in a
separate registration statement concurrently filed) and
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<PAGE>
qualify for sale under the blue sky or securities laws of the various states in
the Elected Jurisdictions the number of Registrable Securities (the "SPECIFIED
SECURITIES") held by Shareholders and which Shareholders have so requested to be
registered or qualified for distribution, to the extent requisite to permit the
distribution (in accordance with the intended method or methods thereof as
aforesaid) in the Elected Jurisdictions requested by Shareholders of such
Registrable Securities.
If the distribution proposed to be effected by Company involves an
underwritten offering of the securities being so distributed by or through one
or more underwriters, and if the managing underwriter of such underwritten
offering indicates in writing its reasonable belief that including all or part
of the Specified Securities in the coverage of such registration statement or in
the distribution to be effected by such prospectus will materially and adversely
affect the sale of securities proposed to be sold (which statement of the
managing underwriter shall also state the maximum number of shares, if any,
which can be sold by Shareholders requesting registration under this SECTION 2.1
without materially adversely affecting the sale of the shares proposed to be
sold), then the number of Specified Securities which Shareholders shall have the
right to include in such registration statement shall be reduced to the maximum
number of shares specified by the managing underwriter. In all cases, priority
shall be afforded to securities covered by a registration statement filed in
response to the exercise of a demand registration right by another holder of
Common Stock and no securities proposed to be sold by such other holder shall be
so reduced until all securities proposed to be sold by all other parties have
been entirely eliminated. As to all other proposed selling shareholders of
Common Stock, including Shareholders, any such reduction in the number of shares
of Common Stock proposed to be sold by the selling shareholders shall be
effected on a pro rata basis in accordance with the relationship which the
number of shares of Common
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Stock proposed to be sold by each selling shareholder bears to the number of
shares of Common Stock proposed to be sold by all selling shareholders.
Company shall have the sole right to select any underwriters, including the
managing underwriter, of any public offering of shares of Common Stock subject
to this SECTION 2.1. Nothing in this SECTION 2.1 shall create any liability on
the part of Company to Shareholders if Company for any reason decides not to
file or to delay or withdraw a registration statement (which Company may do in
its sole discretion).
Shareholders may request to have Common Stock included in an unlimited
number of registrations under this SECTION 2.1.
2.2. DEMAND RIGHTS. Upon written request of Shareholders made at any time
after two years following the date of the closing of the purchase of the Laidlaw
Block, Company shall, under the terms and subject to the conditions set forth in
this SECTION 2.2, and SECTIONS 2.3 and 2.4, file (and use its reasonable efforts
to cause to become effective) a registration statement covering, and use its
reasonable efforts to qualify for sale under the blue sky or securities laws of
the various states of the United States as may be requested by Shareholders
(except any such state in which, in the opinion of the managing underwriter of
the offering, the failure to so qualify would not materially and adversely
affect the proposed offering), in accordance with the intended method or methods
of disposition set forth in that notice, of such number of Registrable
Securities, as may be designated by Shareholders in their request, or that
portion thereof designated in said request for registration in each of the
Designated Jurisdictions (as defined below). A request for registration under
this SECTION 2.2 shall specify the number of shares to be registered, the
jurisdictions in the United States in which such registration is to be effected
(the "DESIGNATED JURISDICTIONS") and the proposed manner of sale, including the
name and address of any proposed underwriter; PROVIDED, that all offerings
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contemplated by a request for registration under this SECTION 2.2 shall be
underwritten offerings involving a distribution of Registrable Shares to the
public in which reasonable efforts are made not to knowingly sell to any single
buyer, acting individually or with others, who after such underwriting will own
more than 9% of the Total Voting Power (as defined in the Shareholders
Agreement) (any such buyer, "SIGNIFICANT STOCKHOLDER"), under circumstances in
which it would reasonably be expected to not result in any person becoming
Significant Stockholder. The principal underwriter or underwriters for any such
offering shall be selected by Shareholders, subject to Company's approval, which
may not be unreasonably withheld. Notwithstanding any other provision in this
Section, Shareholders shall not be permitted to make a demand for registration
pursuant to this Section unless the number of Registrable Securities covered by
such demand is at least five million shares (as such number may be appropriately
adjusted to reflect stock splits, reverse stock splits, dividends and any other
recapitalization or reorganization of Company).
If the distribution proposed to be effected pursuant to this SECTION 2.2
involves an underwritten offering of Registrable Securities and securities of
the Company other than Registrable Securities ("OTHER SECURITIES"), and if the
managing underwriter of such underwritten offering indicates in writing its
reasonable belief that including all or part of such securities in the coverage
of such registration statement will materially and adversely affect the sale of
the securities proposed to be sold, then the number of securities proposed to be
sold shall be reduced to the maximum number of securities specified by the
managing underwriter. In such a case, priority shall be afforded to Registrable
Securities, and such Other Securities shall be completely eliminated before the
number of Registrable Securities is reduced.
Company may delay the filing of any registration statement requested under
this SECTION 2.2, or delay its effectiveness, for a reasonable period (but not
longer than 90
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days) if, in the sole judgment of Company's Board of Directors, (i) a delay is
necessary in light of pending financing transactions, corporate reorganizations,
or other major events involving Company, or (ii) filing at the time requested
would materially and adversely affect the business or prospects of Company in
view of disclosures that may be thereby required. Once the cause of the delay
is eliminated, Company shall promptly notify Shareholders and, promptly after
Shareholders notify Company to proceed, Company shall file a registration
statement and begin performance of its other obligations under this SECTION 2.2.
Shareholders shall be entitled to request not more than three registrations
under this SECTION 2.2 (provided that the filing of a registration statement in
more than one Designated Jurisdiction in connection with a concurrent or
substantially concurrent distribution shall be deemed for the purposes of this
Agreement to be a single registration). However, if Shareholders request a
registration under this SECTION 2.2, but no registration statement becomes
effective with respect to the Registrable Securities covered by such request,
then such request shall not count as a request for purposes of determining the
number of requests for registration Shareholders may make under this
SECTION 2.2.
If there is an effective registration statement requested by the
Shareholders pursuant to this Section 2.2, the Shareholders may require the
Company to delay the filing of any registration statement relating to shares of
Common Stock or delay its effectiveness, for a reasonable period (but not longer
than 90 days) if, in the sole judgment of the Shareholders, a delay is necessary
in order to avoid materially and adversely affecting the disposition of Shares
pursuant to the offering by the Shareholders; provided that the foregoing shall
not limit the Company's right to file and have declared effective registration
statements relating to shares of Common Stock issuable pursuant to employee
benefit plans of the Company or any of its subsidiaries or issuable pursuant to
a
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merger, acquisition or similar transaction involving the Company or any of its
subsidiaries.
2.3. REGISTRATION CONDITIONS. Notwithstanding any other provision of this
Agreement, Company shall not be required to effect a registration of any
securities under this ARTICLE II, or file any post-effective amendment to such a
registration statement relating to such a qualification:
(a) unless Shareholders agree to (x) sell and distribute a portion or
all of their Registrable Securities in accordance with the plan or plans of
distribution adopted by and through underwriters, if any, acting for
Company or any such other sellers of Common Stock, and (y) bear a pro rata
share of underwriter's discounts and commissions;
(b) if a registration requested under SECTION 2.2, or any post-
effective amendment to the registration statement filed in connection therewith,
requires, under applicable statutes and rules, a special audit (other than a
normal fiscal year-end audit) of any financial statements, unless Shareholders
agree to pay their proportionate share (determined by the number of shares to be
sold by Shareholders in the offering in proportion to the total number of shares
to be sold by Company and all other participants in such offering) of the
reasonable fees and expenses of accountants incurred in connection with the
special audit and which would otherwise not be incurred; PROVIDED that
Shareholders shall not be required to pay any share of such fees and expenses if
such audit would otherwise be required at substantially the same time to satisfy
the Company's reporting requirements under the Exchange Act absent such
registration;
(c) if, in the case of a request for registration under SECTION 2.2,
(x) any offering pursuant to a registration statement covering securities
regarding
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which Shareholders could have exercised registration rights under SECTION
2.1 of this Agreement has been completed within the prior 90 days, (y) a
registration statement requested by Shareholders pursuant to SECTION 2.2
has become effective under the Securities Act within the prior twelve
months, or (z) Company has given notice under SECTION 2.1 of its intention
to file a registration statement under the Securities Act and has not
completed or abandoned the proposed offering; and
(d) unless Company has received from Shareholders all information
Company has reasonably requested concerning Shareholders and their method
of distribution of Registrable Securities, so as to enable Company to
include in the registration statement all facts required to be disclosed in
it.
2.4. COVENANTS AND PROCEDURES. If Company becomes obligated under this
ARTICLE II to effect a registration of Registrable Securities on behalf of
Shareholders, then (as applicable to the jurisdictions for which such
registration is to be made):
(a) Company, at its expense as provided in SECTION 4.2, shall prepare
and file with the SEC a registration statement covering such securities and
such other related documents as may be necessary or appropriate relating to
the proposed distribution, and shall use reasonable efforts to cause the
registration statement to become effective. Company will also, with
respect to any registration statement, file such post-effective amendments
to the registration statement (and use reasonable efforts to cause them to
become effective) and such supplements as are necessary so that current
prospectuses are at all times available for a period of at least 90 days
after the effective date of the registration statement or for such longer
period, not to exceed 180 days, as may be required under the plan or plans
of distribution set forth in the registration statement. Shareholders
shall promptly provide Company with such information with respect to
Shareholders' Registrable
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Securities to be so registered and, if applicable, the proposed terms of
their offering, as is required for the registration. If the Registrable
Securities to be covered by the registration statement are not to be sold
to or through underwriters acting for Company, Company shall:
(i) deliver to Shareholders, as promptly as practicable, as
many copies of preliminary prospectuses as Shareholders may reasonably
request (in which case Shareholders shall keep a written record of the
distribution of the preliminary prospectuses and shall refrain from
delivery of the preliminary prospectuses in any manner or under any
circumstances which would violate the Securities Act or the securities
laws of any other jurisdiction, including the various states of the
United States);
(ii) deliver to Shareholders, as soon as practicable after the
effective date of the registration statement, and from time to time
thereafter during the applicable period described in SECTION 2.4, as
many copies of the relevant prospectuses as Shareholders may
reasonably request; and
(iii) in case of the happening, after the effective date of the
registration statement and during the applicable 90 or 180-day period
described in the second sentence of SECTION 2.4(A), of any event or
occurrence as a result of which the prospectus, as then in effect,
would include an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
any statement therein not misleading in the light of the circumstances
in which it was made, give Shareholders written notice of the event or
occurrence and prepare and furnish to Shareholders, in such quantities
as it may reasonably request, copies of an amendment of or a
supplement to such prospectus as may be
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necessary so that the prospectus, as so amended or supplemented and
thereafter delivered to purchasers of the securities, will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which it
was made, not misleading.
(b) Company will notify Shareholders of any action by the SEC or any
Commission to suspend the effectiveness of any registration statement filed
pursuant hereto or the initiation or threatened initiation of any
proceeding for such purpose or the receipt by Company of any notification
with respect to the suspension of the qualification of the securities for
sale in any jurisdiction. Immediately upon receipt of any such notice,
Shareholders shall cease to offer or sell any Registrable Securities
pursuant to the registration statement or prospectus in the jurisdiction to
which such order or suspension relates. Company will also notify
Shareholders promptly of the occurrence of any event or the existence of
any state of facts that, in the judgment of Company, should be set forth in
such registration statement or prospectus. Immediately upon receipt of
such notice, Shareholders shall cease to offer or sell any Registrable
Securities pursuant to such registration statement or prospectus, cease to
deliver or use such registration statement or prospectus and, if so
requested by Company, return to Company at Company's expense all copies of
such registration statement or prospectus. Company will as promptly as
practicable take such action as may be necessary to amend or supplement
such registration statement or prospectus in order to set forth or reflect
such event or state of facts and provide copies of such proposed amendment
or supplement to Shareholders.
(c) On or before the date on which the registration statement is
declared effective, Company shall use its reasonable efforts to:
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(i) register or qualify (and cooperate with Shareholders, the
underwriter or underwriters, if any, and their counsel, in connection
with the registration or qualification of) the securities covered by
the registration statement for offer and sale under the securities or
blue sky laws of each state and other jurisdiction as Shareholders or
any underwriter reasonably requests;
(ii) use its reasonable efforts to keep each such registration
or qualification effective, including through new filings, or
amendments or renewals, during the period the registration statement
or prospectus is required to be kept effective; and
(iii) do any and all other acts or things necessary or
advisable to enable the disposition in all such jurisdictions of the
Common Stock covered by the applicable registration statement,
provided that Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified.
(d) Company shall use its reasonable efforts to cause all Registrable
Securities of Shareholders included in the registration statement to be
listed, by the date of the first sale of such shares pursuant to such
registration statement, on each securities exchange on which the securities
is then listed or proposed to be listed, if any.
(e) Company shall make generally available to Shareholders and any
underwriter participating in the offering conducted pursuant to the
registration statement an earnings statement satisfying Section 11(a) of
the Securities Act no later than 45 days after the end of the 12-month
period beginning with the first day of Company's first fiscal quarter
commencing after the effective date of the
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registration statement. The earnings statement shall cover such 12-month
period. This requirement will be deemed to be satisfied if Company timely
files complete and accurate information on Forms 10-Q, 10-K, and 8-K under
the Exchange Act, and otherwise complies with Rule 158 under the Securities
Act as soon as feasible.
(f) Company shall cooperate with Shareholders and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold under the registration
statement, and to enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
any, or Shareholders, may request, subject to the underwriters' obligation
to return any certificates representing unsold securities.
(g) Company shall use its reasonable efforts to cause Registrable
Securities covered by the registration statement to be registered with or
approved by such other governmental agencies or authorities in the United
States (including the registration of Registrable Securities under the
Exchange Act) as may be necessary to enable Shareholders or the underwriter
or underwriters, if any, to consummate the disposition of such securities.
(h) Company shall, during normal business hours and upon reasonable
notice, make available for inspection by Shareholders, any underwriter
participating in any offering pursuant to the registration statement, and
any attorney, accountant or other agent retained by Shareholders or any
such underwriter (collectively, the "INSPECTORS"), all financial and other
records, pertinent corporate documents, and properties of Company
(including non-public information), as shall be reasonably necessary to
enable the Inspectors to exercise
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their due diligence responsibilities; PROVIDED that any Inspector receiving
non-public information shall have previously entered into an appropriate
confidentiality agreement in mutually satisfactory form and substance.
Company shall also cause its officers, directors, and employees to supply
all nonconfidential information reasonably requested by any Inspector in
connection with the registration statement.
(i) Company shall use its reasonable efforts to obtain a "cold
comfort" letter and, as applicable, a "long-form comfort letter" from
Company's independent public accountants, and an opinion of counsel for
Company, each in customary form and covering such matters of the type
customarily covered by cold comfort letters and long form comfort letters
and legal opinions in connection with public offerings of securities, as
Shareholders reasonably request.
(j) Company shall enter into such customary agreements (including an
underwriting agreement containing such representations and warranties by
Company and such other terms and provisions, as are customarily contained
in underwriting agreements for comparable offerings and are reasonably
satisfactory to the Company) and take all such other actions as
Shareholders or the underwriters participating in such offering and sale
may reasonably request in order to expedite or facilitate such offering and
sale (other than such actions which are disruptive to the Company or
require significant management availability).
ARTICLE III
INDEMNIFICATION
3.1. INDEMNIFICATION BY COMPANY. In the event of any registration under
the Securities Act by any registration statement pursuant to rights granted in
this
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Agreement of Registrable Securities held by Shareholders, Company will hold
harmless Shareholders and each underwriter of such securities and each other
person, if any, who controls any Shareholder or such underwriter within the
meaning of the Securities Act, against any losses, claims, damages, or
liabilities (including legal fees and costs of court), joint or several, to
which Shareholders or such underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
or liabilities (or any actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
(i) contained, on its effective date, in any registration statement under which
such securities were registered under the Securities Act or any amendment or
supplement to any of the foregoing, or which arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
(ii) contained in any preliminary prospectus, if used prior to the effective
date of such registration statement, or in the final prospectus (as amended or
supplemented if Company shall have filed with the SEC any amendment or
supplement to the final prospectus) if used within the period which Company is
required to keep the registration to which such registration statement or
prospectus relates current under SECTION 2.4, or which arise out of or are based
upon the omission or alleged omission (if so used) to state a material fact
required to be stated in such prospectus or necessary to make the statements in
such prospectus not misleading; and will reimburse Shareholders and each such
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, or liability; PROVIDED, HOWEVER, that Company shall
not be liable to any Shareholder or its underwriters or controlling persons in
any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or such
amendment or supplement, in reliance upon and in
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conformity with information furnished to Company through a written instrument
duly executed by Shareholders or such underwriter specifically for use in the
preparation thereof.
3.2. INDEMNIFICATION BY SHAREHOLDERS. It shall be a condition precedent to
the obligation of Company to include in any registration statement any
Registrable Securities of Shareholders that Company shall have received from
Shareholders an undertaking, reasonably satisfactory to Company and its counsel,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in SECTION 3.1) Company, each director of Company, each officer of Company
who shall sign the registration statement, and any person who controls Company
within the meaning of the Securities Act, (i) with respect to any statement or
omission from such registration statement, or any amendment or supplement to it,
if such statement or omission was made in reliance upon and in conformity with
information furnished to Company through a written instrument duly executed by
Shareholders specifically for use in the preparation of such registration
statement or amendment or supplement, and (ii) with respect to compliance by
Shareholders with applicable laws in effecting the sale or other disposition of
the securities covered by such registration statement.
3.3 INDEMNIFICATION PROCEDURES. Promptly after receipt by an indemnified
party of notice of the commencement of any action involving a claim referred to
in the preceding Sections of this ARTICLE III, the indemnified party will, if a
resulting claim is to be made or may be made against and indemnifying party,
give written notice to the indemnifying party of the commencement of the action.
If any such action is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense of the action
with counsel reasonably satisfactory to the indemnified party, and after notice
from the indemnifying party to such indemnified party of its election to assume
defense of the action, the indemnifying party
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will not be liable to such indemnified party for any legal or other expenses
incurred by the latter in connection with the action's defense. An indemnified
party shall have the right to employ separate counsel in any action or
proceeding and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such indemnified party's expense unless (a) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, which authorization shall not be unreasonably withheld, (ii)
the indemnifying party has not assumed the defense and employed counsel
reasonably satisfactory to the indemnified party within 30 days after notice of
any such action or proceeding, or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include the indemnified party and
the indemnifying party and the indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to the
indemnified party that are different from or additional to those available to
the indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action or proceeding on behalf of the
indemnified party), it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to all local
counsel which is necessary, in the good faith opinion of both counsel for the
indemnifying party and counsel for the indemnified party in order to adequately
represent the indemnified parties) for the indemnified party and that all such
fees and expenses shall be reimbursed as they are incurred upon written request
and presentation of invoices. Whether or not a defense is assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent. No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term the
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giving by the claimant or plaintiff, to the indemnified party, of a release from
all liability in respect of such claim or litigation.
3.4. CONTRIBUTION. If the indemnification required by this ARTICLE III
from the indemnifying party is unavailable to or insufficient to hold harmless
an indemnified party in respect of any indemnifiable losses, claims, damages,
liabilities, or expenses, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities, or expenses in such proportion as is appropriate
to reflect (i) the relative benefit of the indemnifying and indemnified parties
and (ii) if the allocation in clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect the relative benefit referred to in
clause (i) and also the relative fault of the indemnified and indemnifying
parties, in connection with the actions which resulted in such losses, claims,
damages, liabilities, or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact, has been made by, or relates to information supplied by,
such indemnifying party or parties, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damage,
liabilities, and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding. Company and Shareholders agree that it would
not be just and equitable if contribution pursuant to this SECTION 3.4 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the prior
provisions of this SECTION 3.4.
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Notwithstanding the provisions of this SECTION 3.4, no indemnifying party
shall be required to contribute any amount in excess of [the amount by which the
total price at which the securities were offered to the public by the
indemnifying party exceeds the amount of any damages which the indemnifying
party has otherwise been required to pay by reason of an untrue statement or
omission]. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such a fraudulent misrepresentation.
ARTICLE IV
OTHER AGREEMENTS
4.1. OTHER REGISTRATION RIGHTS. Company agrees that it will not grant to
any party registration rights which would allow such party to limit
Shareholders' priority for the sale or distribution of Registrable Securities
upon the exercise of a demand registration right pursuant to SECTION 2.2.
4.2. EXPENSES. All expenses incurred by Company in connection with any
registration statement covering Registrable Securities offered by Shareholders,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), printing expenses, fees and disbursements of counsel (except for the fees
and disbursements of counsel for Shareholders) and of the independent certified
public accountants (except, in the case of any special audits, if required in
connection with any such registration, Shareholders' proportionate share of
their expense as provided in SECTION 2.4), and the expense of qualifying such
shares under state blue sky laws, shall be borne by Company, including such
expenses of any registration delayed by the Company under the fourth paragraph
of SECTION 2.2; PROVIDED, HOWEVER, that Company shall not be required to pay
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for any expenses of any registration proceeding begun pursuant to SECTION 2.2 if
the registration request is subsequently withdrawn at the request of
Shareholders (in which case Shareholders shall bear such expenses), unless
Shareholders agrees to forfeit their right to one demand registration under
SECTION 2.2; PROVIDED FURTHER, however, that if at the time of such withdrawal,
Shareholders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known at the time of its
request, then Shareholders shall not be required to pay any of such expenses and
shall retain their rights pursuant to SECTION 2.2. Company's obligations under
this SECTION 4.2 shall apply to each registration under the Securities Act or
state blue sky legislation pursuant to SECTION 2.2. However, all underwriting
expenses incurred by Shareholders, including underwriter's discounts and
commissions and legal, accounting and similar expenses, shall be borne by
Shareholders.
4.3. DISPOSITIONS DURING REGISTRATION. Each Shareholder agrees that,
without the consent of the managing underwriter(s) in an underwritten offering
in respect of Common Stock or securities convertible into Common Stock, it will
not effect any sale or distribution of Common Stock or securities convertible
into Common Stock (other than Registrable Securities included in such offering),
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.
4.4. TRANSFER OF RIGHTS. All rights of Shareholders under this Agreement
shall be transferable by Shareholders to a Related Transferee (as defined in the
Shareholders Agreement) who acquires shares of Common Stock in compliance with
Section 4.1(f) of the Shareholders Agreement and who executes an instrument in
form and substance satisfactory to the Company in which it agrees to be bound by
the terms of this Agreement as if an original signatory hereto, in which case
such Related Transferee
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shall thereafter be a "Shareholder" for all purposes of this Agreement. The
incidental registration rights or benefits of this Agreement and the demand
registration rights, including indemnification by Company, shall be transferable
by Shareholders only in a transaction permitted under Section 4.1(c) or 4.1(d)
of the Shareholders Agreement to a transferee that is not an Affiliate of the
Company who receives at least an aggregate of 1,000,000 shares of Common Stock,
in the case of incidental registration rights, or 5,000,000 shares of Common
Stock for each right to demand registration, in the case of demand registration
rights. In the case of any assignment, the party or parties who have the rights
and benefits of Shareholders under this Agreement shall become parties to and be
subject to this Agreement, and shall not, as a group, have the right to request
any greater number of registrations than Shareholders would have had if no
assignment had occurred. Upon any transfer of the registration rights or
benefits of this Agreement, Shareholders shall give Company written notice prior
to or promptly following such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned. Such notice shall include or be accompanied by a written
undertaking by the transferee to comply with the obligations imposed hereunder.
In the event any registration rights are transferred in accordance with the
terms of this Agreement, any actions required to be taken by Shareholders will
be taken with the approval of the holders of such registration rights who hold a
majority of the Registrable Securities, whose actions shall bind all such
holders of such registration rights.
4.5. BEST REGISTRATION RIGHTS. If the Company grants to any Person with
respect to any security issued by the Company or any of its Affiliates
registration rights that provide for terms that are in any manner more favorable
to the holder of such registration rights than the terms granted to the
Shareholders other than the number of demand registrations or the minimum amount
of shares required to exercise demand
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registration rights (or if the Company amends or waives any provision of any
agreement providing registration rights of others or takes any other action
whatsoever to provide for terms that are more favorable to other holders than
the terms provided to the Shareholders other than the number of demand
registrations or the minimum amount of shares required to exercise demand
registration rights), then this Agreement shall immediately be deemed amended to
provide the Shareholders with any (or all) of such more favorable terms as
Shareholders shall elect to include herein.
ARTICLE V
MISCELLANEOUS
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.
7701 East Camelback Road, Suite 375
Scottsdale, Arizona 85251
Attn: Roger A. Ramsey
Fax: (602) 481-9347
with copies to:
Porter & Hedges, L.L.P.
700 Louisiana Street, Suite 3500
Houston, Texas 77002
Attn: Robert G. Reedy
Fax: (713) 228-1331
and to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
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New York, New York 10004
Attn: Arthur Fleischer, Jr.
Fax: (212) 859-4000
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.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
Attn: David Kaplan
Fax: (310) 201-4198
with a copy to:
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Attn: Kenneth J. Baronsky, Esq.
Fax: (213) 629-5063
and:
The Blackstone Group
345 Park Avenue
New York, NY 10154
Attn: Howard A. Lipson
Fax: (212) 754-8716
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Wilson S. Neely, Esq.
Fax: (212) 455-2502
or to such other person or address as Shareholders shall furnish to the Company
in writing.
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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.
5.2. SECTION HEADINGS. The article and section headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. References in this Agreement to a designated
"Article" or "Section" refer to an Article or Section of this Agreement unless
otherwise specifically indicated.
5.3. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the law of Delaware, without regard to its
conflicts of laws principles.
5.4. 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 (other than the Shareholders Agreement, which
shall be governed solely by the analogous provisions thereof), and any action
for enforcement of any judgment in respect thereof shall be brought exclusively
in the state of federal courts located in the State of Delaware, and, by
execution and delivery of this Agreement, the Company and Shareholder 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 Shareholder at their
respective
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addresses referred to in this Agreement. The Company and the Shareholder 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 (other than the Shareholders Agreement,
which shall be governed solely by the analogous provisions thereof) 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.
5.5. AMENDMENTS. This Agreement may be amended only by an instrument in
writing executed by all of its parties.
5.6. ENTIRE AGREEMENT. This Agreement and the Shareholders Agreement
constitute the entire agreement and understanding of the parties with respect to
the transactions contemplated hereby and thereby. The registration rights
granted under this Agreement supersede any registration, qualification or
similar rights with respect to any of the Shares granted under any other
agreement, and any of such preexisting registration rights are hereby
terminated. 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 entire Board of Directors of the Company
other than Shareholder Designees (as defined in the Shareholders Agreement).
5.7. SEVERABILITY. The invalidity or unenforceability of any specific
provision of this Agreement shall not invalidate or render unenforceable any of
its other provisions. Any provision of this Agreement held invalid or
unenforceable shall be deemed reformed, if practicable, to the extent necessary
to render it valid and enforceable
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and to the extent permitted by law and consistent with the intent of the parties
to this Agreement.
5.8. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
5.9. 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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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ALLIED WASTE INDUSTRIES, INC.
By: /s/ Thomas Van Welden
_________________________
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/ David B. Kaplan
_________________________
Title: Vice President
________________________
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.
By: /s/ Howard S. Lipson
_________________________
Title: Sr. Managing Director
________________________
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