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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule
14a-11(c) or Rule 14a-12
</TABLE>
Allied Waste Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ALLIED WASTE INDUSTRIES, INC.
15880 NORTH GREENWAY-HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1999
We will hold a special meeting of the stockholders of Allied Waste
Industries, Inc. at our corporate headquarters at 15880 North Greenway-Hayden
Loop, Suite 100, Scottsdale, Arizona 85260, on Wednesday, November 17, 1999 at
9:00 a.m., Mountain Standard Time.
As part of the financing for our recently completed acquisition of
Browning-Ferris Industries, Inc., we sold shares of Series A Senior Convertible
Preferred Stock. The holders of these shares of Senior Convertible Preferred
Stock have the right to convert their shares into other securities of the
company. However, the Senior Convertible Preferred Stock is not currently
convertible into shares of our common stock.
At the special meeting you will be asked to:
1. approve the issuance of our common stock upon conversion of the
Senior Convertible Preferred Stock if the holders of the Senior Convertible
Preferred Stock choose to convert their shares, and
2. approve an amendment to the 1991 Incentive Stock Plan to increase
the maximum number of shares of common stock which may be covered by awards
under the 1991 Incentive Stock Plan from 7.5% of the issued and outstanding
shares of common stock on the final day of our preceding fiscal quarter to
8.5% of the number of fully diluted shares of common stock (as defined in
the Plan) on the date of the grant of the award.
If the first proposal is approved, the Senior Convertible Preferred Stock
will be convertible only into shares of our common stock. If this proposal is
not approved, the Senior Convertible Preferred Stock will remain convertible
into a series of junior preferred stock.
Our Board of Directors recommends that you vote in favor of this proposal.
(Certain directors with a possible conflict of interest because of their
relationship with the holders of the Senior Convertible Preferred Stock abstain
from this recommendation.) If the proposal is not approved, the Senior
Convertible Preferred Stock will be more costly to us and will have other terms
which will be less favorable to us than if the proposal is approved. See the
section entitled "Reasons for the Board's Recommendation" for a more complete
description of the reasons for our recommendation to vote for the proposal.
Our Board also recommends approval of the proposal regarding the 1991
Incentive Stock Plan in order to assure that we will continue to have the
ability to attract, motivate and retain employees by means of incentive and
stock based compensation arrangements.
No other matters will be considered at the meeting.
You are entitled to vote at the meeting only if you were an owner of record
of either our common stock or our Senior Convertible Preferred Stock as of the
close of business on September 27, 1999. If you were not a record owner as of
that date, you are not entitled to notice of the special meeting or to vote at
the meeting. A list of stockholders entitled to vote at the meeting will be
available commencing October 8, 1999, and may be inspected prior to the special
meeting, during normal business hours at our corporate headquarters.
Your participation in the special meeting is important. To ensure your
representation, if you do not expect to be present at the meeting, please sign
and date the enclosed proxy and return it promptly in the enclosed
postage-prepaid envelope which has been provided for your convenience. The
prompt return of proxies will ensure a quorum and save us the expense of further
solicitation.
By Order of the Board of Directors,
/s/ Thomas H. Van Weelden
Thomas H. Van Weelden
Chairman of the Board,
President and Chief Executive Officer
October 6, 1999
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ALLIED WASTE INDUSTRIES, INC.
15880 NORTH GREENWAY -- HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
PROXY STATEMENT
REGARDING
THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
NOVEMBER 17, 1999
------------------------
We have sent you this proxy statement because the board of directors is
asking you to give your proxy (that is, the authority to vote your shares), so
that you can participate at our special meeting of stockholders.
This special meeting will be held on November 17, 1999 at our corporate
headquarters at 15880 North Greenway -- Hayden Loop, Suite 100, Scottsdale,
Arizona 85260 at 9:00 a.m., Mountain Standard Time.
This proxy statement contains information about the proposal to be voted on
at the special meeting and other information that may be helpful to you.
We began mailing this proxy statement on or about October 8, 1999.
Your proxy will be voted in accordance with the directions you specify. Any
proxy on which no direction is specified will be voted FOR the approval of the
issuance of shares of our common stock upon the conversion of the Series A
Senior Convertible Preferred Stock and FOR the approval of the amendment to the
1991 Stock Incentive Plan increasing the maximum number of shares of common
stock which may be covered by awards under the Plan. A stockholder may revoke a
proxy by: (1) delivering to us written notice of revocation, (2) delivering to
us a proxy signed on a later date or (3) appearing at the special meeting and
voting in person. Abstentions and broker non-votes will be treated as present at
the meeting for purposes of determining a quorum, but will be disregarded in the
calculation of total votes cast on the proposal.
The cost of soliciting proxies will be borne by us. In addition to
solicitations by mail, our officers, directors and employees may solicit proxies
in person or by telephone. They will not receive any extra compensation for this
work. We will also make arrangements with brokerage firms and other custodians,
nominees and fiduciaries to forward proxy solicitation material to the
beneficial owners of common stock. We will reimburse them for reasonable
out-of-pocket expenses that they incur in connection with forwarding the
material. In addition, we have retained D.F. King & Co., Inc. to help us solicit
proxies. We will pay this firm a fee expected to be approximately $10,000 and
will reimburse its reasonable out-of-pocket expenses.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
Q. WHO MAY VOTE AT THE SPECIAL MEETING?
A. You may vote if you were a holder of record of either our common stock or
Senior Convertible Preferred Stock as of the close of business on September
27, 1999.
Q. WHAT MAY I VOTE ON?
A. Two proposals will be considered at the special meeting:
- the approval of the issuance of shares of our common stock upon
conversion of the Senior Convertible Preferred Stock if the holders of
our Senior Convertible Preferred Stock choose to convert their shares
(You are not voting on the completed acquisition of Browning-Ferris or
the completed sale of shares of Senior Convertible Preferred Stock.);
and
- the amendment of our 1991 Incentive Stock Plan to increase the maximum
number of shares of common stock which may be covered by awards under
the Plan.
Q. WHAT DOES OUR BOARD OF DIRECTORS RECOMMEND?
A. The board of directors recommends that you vote
- FOR the proposal relating to the Senior Convertible Preferred Stock.
(Certain directors who are affiliated with some of the holders of the
Senior Convertible Preferred Stock abstained from the board's
recommendation because of their possible conflict of interest.)
- FOR the approval of the amendment to the 1991 Stock Incentive Plan.
Q. WHY IS THE BOARD OF DIRECTORS RECOMMENDING APPROVAL OF THE PROPOSAL RELATING
TO THE SENIOR CONVERTIBLE PREFERRED STOCK?
A. The terms of the Senior Convertible Preferred Stock will be more favorable
to the company and the holders of our common stock if the proposal is
approved.
The Senior Convertible Preferred Stock was issued as part of the financing
for our acquisition of Browning-Ferris, which was completed on July 30,
1999. If the proposal is approved by stockholders, the board believes terms
of the Senior Convertible Preferred Stock will be improved for the benefit
of the company and our common stockholders. For example, we expect that the
dividend payable on the Senior Convertible Preferred Stock will be lower if
the proposal is approved. In addition, certain other terms of the Senior
Convertible Preferred Stock will be more advantageous to the company if the
proposal is approved. See the section entitled "Proposal for Possible Common
Stock Issuance -- Reasons for the Board's Recommendation" for a more
complete description of why certain directors abstained from the Board's
recommendation and of the reasons for the recommendation to approve the
proposal.
Q. WHY IS THE BOARD OF DIRECTORS RECOMMENDING APPROVAL OF THE PROPOSAL TO AMEND
THE 1991 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES WHICH MAY BE
COVERED BY AWARDS?
A. The board believes that increasing the number of shares of common stock
which may be covered by awards under the Plan is necessary to assure that we
continue to have the ability to attract, motivate and retain employees by
means of incentive and stock based compensation arrangements. As a result of
our acquisition of Browning-Ferris, our existing employees have increased
responsibilities and we have many new employees we want to keep as part of
our company. We believe all of these employees should be provided with
appropriate stock based incentives which will motivate them to increase
stockholder value and remain dedicated to our company. We believe
appropriate levels of awards under the Plan to accomplish these goals
require more shares than are currently permitted to be covered by the Plan.
(If the amendment is approved, the number of shares of our common stock
which may be covered by new awards under the Plan will increase from
approximately .8% to approximately 5.6% of our outstanding common stock.)
Therefore, the amendment to the Plan is necessary to provide the
Compensation Committee with sufficient ability to award stock-based
incentive compensation in the future.
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Q. DO ANY MEMBERS OF OUR BOARD OF DIRECTORS HAVE AN INTEREST IN THE AMENDMENT
TO THE STOCK INCENTIVE PLAN?
A. Yes. Any employee is eligible for awards under the Plan, including employees
serving on the board. Thomas Van Weelden, our President and Chief Executive
Officer, serves as a director. Mr. Van Weelden has received awards under the
Plan in the past and, if considered appropriate by our Compensation
Committee, may receive additional awards in the future.
The amendment to the Plan has been approved by our Compensation Committee,
which consists only of directors who are not employees and who, therefore,
are not eligible to receive awards under the Plan. The amendment also was
approved by our board of directors, of which nine of the eleven members are
not employees or former employees.
Q. WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
A. Approval by a majority of the votes cast is required for each proposal.
Holders of common stock and Senior Convertible Preferred Stock will vote
together, as a single class, on each proposal. Each share of common stock is
entitled to one vote. Each share of Senior Convertible Preferred Stock is
entitled to approximately 56.149 votes. A quorum must be present or
represented at the special meeting for any action to be taken. A quorum is
at least a majority of the voting power represented by the shares of common
stock and Senior Convertible Preferred Stock, voting together as a single
class.
In connection with their purchase of Senior Convertible Preferred Stock, the
holders of shares of Senior Preferred Stock agreed to vote all of the shares
of common stock and Senior Preferred Stock they own for approval of the
proposal relating to the conversion of the Senior Convertible Preferred
Stock. These holders own approximately 34% of the voting power entitled to
vote at the special meeting. These holders and our directors and executive
officers, who own securities representing approximately 35% of the voting
power entitled to vote at the special meeting, intend to vote for approval
of both proposals at the special meeting.
Q. HOW ARE ABSTENTIONS AND BROKER NON-VOTES COUNTED?
A. Both abstentions and broker non-votes are counted in determining that a
quorum is present for the meeting and are disregarded in calculating total
votes cast on the proposal.
Q. WHAT ARE BROKER NON-VOTES?
A. The New York Stock Exchange permits brokers to vote their customers' shares
on routine matters when the brokers have not received voting instructions
from their customers. The election of directors and the election of
independent accountants are examples of routine matters on which brokers may
vote in this way. Brokers may not vote their customers' shares on
non-routine matters such as the proposals you are being asked to consider at
the special meeting unless they have received voting instructions from their
customers. Non-voted shares on non-routine matters are broker non-votes. If
your shares are held in your broker's name, you must give your broker
instructions or your shares will not be voted at the special meeting.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A. Your broker will not be able to vote your shares without instructions from
you. You should instruct your broker to vote your shares, following the
directions provided by your broker.
Q. WHAT DO I NEED TO DO NOW?
A. After reading this document carefully, please vote your shares. You can do
this by just completing and mailing your signed proxy card in the enclosed
return envelope. Please do this as soon as possible so that your shares can
be voted at the special meeting. You may also vote your shares by attending
the special meeting.
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Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A. Yes, you can change your vote at any time before your proxy card is voted at
the special meeting. You can do this in one of three ways. First, you can
send a written notice to us stating that you would like to revoke your
proxy. Second, you can complete and submit a new proxy card to us. Third,
you can attend the meeting and vote in person. Your attendance alone will
not, however, revoke your proxy. If you have instructed a broker to vote
your shares, you must follow the procedure provided by your broker to change
these instructions.
Q. DO I NEED TO ATTEND THE SPECIAL MEETING IN PERSON?
A. No. It is not necessary for you to attend the special meeting in order to
vote your shares, although you are welcome to attend.
Q. WHERE CAN I FIND MORE INFORMATION ABOUT ALLIED WASTE?
A. We file reports and other information with the Securities and Exchange
Commission. You may read and copy this information at the SEC's public
reference facilities. Please call the SEC at 1-800-SEC-0330 for information
about these facilities. This information is also available at the Internet
site maintained by the SEC at http://www.sec.gov and at the office of the
New York Stock Exchange.
Q. WHO CAN HELP ANSWER MY QUESTIONS?
A. If you have questions about the special meeting or the proposal after
reading this proxy statement, you should contact D.F. King & Co., Inc. at
(800) 714-3306.
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FORWARD-LOOKING STATEMENTS
This proxy statement includes and incorporates by reference statements that
are not historical facts. These statements are "forward-looking statements" (as
defined in the Private Securities Litigation Reform Act of 1995) based on our
current plans and expectations relating to analyses of value, expectations for
anticipated growth in the future and future success under various efforts, and,
as such, these-forward-looking statements involve uncertainty and risk. Although
we believe that the expectations reflected in such forward-looking statements
are reasonable, we can give no assurance that such expectations will prove to
have been correct. Generally, these statements relate to business plans or
strategies, projected or anticipated benefits or other consequences of such
benefits from acquisitions, divestitures or financings made by or to be made by
us, or projections involving anticipated revenues, internal growth rates,
earnings, levels of capital expenditures or other aspects of operating results.
All phases of our operations are subject to a number of uncertainties, risks and
other influences, many of which are outside our control and any one of which, or
a combination of which, could materially affect the results of our operations
and whether forward-looking statements made by us ultimately prove to be
accurate. These forward-looking statements should be read in conjunction with
our Annual Report on Form 10-K for the year ended December 31, 1998, as amended,
our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K, which
describe many of the external factors that could cause our actual results to
differ materially from our expectations. Our Form 10-K, as amended, Forms 10-Q,
and Forms 8-K are on file with the Securities and Exchange Commission. Copies of
these documents are available without charge upon written request to: Allied
Waste Industries, Inc., 15880 North Greenway-Hayden Loop, Suite 100, Scottsdale,
Arizona 85260, Attention: Secretary.
Other factors and assumptions not identified above or incorporated by
reference could cause actual results to differ materially from those set forth
in the forward-looking statements. We do not undertake any obligation to update
the forward-looking statements contained or incorporated in this proxy statement
to reflect actual results, changes in assumptions, or changes in other factors
affecting these forward-looking statements.
OUTSTANDING VOTING SECURITIES
September 27, 1999 is the record date for determining stockholders entitled
to vote at the special meeting. Holders of shares as of the close of business on
the record date are entitled to vote at the special meeting. As of that date,
there were 188,773,527 shares of common stock outstanding. Each share of common
stock entitles its holder to one vote at the special meeting. As of that date,
there were 1,000,000 shares of Series A Senior Convertible Preferred Stock
outstanding. Each share of Senior Convertible Preferred Stock entitles its
holder to approximately 56.149 votes per share at the special meeting. The
common stock and Senior Convertible Preferred Stock will vote together, as a
single class, at the special meeting.
PROPOSAL FOR POSSIBLE COMMON STOCK ISSUANCE
The first proposal to be considered and voted upon at the special meeting
is to approve the issuance of shares of common stock upon conversion of the
Senior Convertible Preferred Stock if the holders of any shares of Senior
Convertible Preferred Stock choose to convert their shares.
At the time we completed our acquisition of Browning-Ferris Industries,
Inc., we sold 1,000,000 shares of the Senior Convertible Preferred Stock for $1
billion in cash. This $1 billion was used to help finance the acquisition of
Browning-Ferris for cash. The purchasers of the Senior Convertible Preferred
Stock were investors (the "Preferred Stock Purchasers") led by affiliates of,
and persons related to, Apollo Advisors II, L.P. or Blackstone Capital Partners
II Merchant Banking Fund L.P. (collectively, the "Apollo/Blackstone Investors").
The terms of the Senior Convertible Preferred Stock include the right of
the holders of shares of this stock to convert, at the option of the holders,
their shares into fractional units of shares of a new series of junior preferred
stock or, if approval by our stockholders is received, into shares of our common
stock. In either case, the current conversion price is $18.00 per unit or share.
(As of July 30, 1999, their date of issuance, the 1,000,000 shares of Senior
Convertible Preferred Stock were convertible, at the option of their holders,
into an
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aggregate of 55,555,556 units of one ten-thousandth of a share of junior
preferred stock. Assuming these 1,000,000 shares of Senior Convertible Preferred
Stock had been immediately convertible into our common stock, they would have
been convertible, at the option of their holders, into an aggregate of
55,555,556 shares of common stock as of July 30, 1999 and into an aggregate of
56,149,163 shares of common stock as of September 27, 1999.)
However, if stockholder approval for the issuance of shares of common stock
upon conversion of the Senior Convertible Preferred Stock is not received, other
terms of the Senior Convertible Preferred Stock, including the dividend rate
payable by us, will be less favorable to the company and the holders of shares
of common stock. These terms are described below. Therefore, the Board of
Directors (with certain directors with a possible conflict of interest
abstaining) is asking stockholders to approve the issuance of shares of common
stock upon conversion, at the holders' option, of shares of the Senior
Convertible Preferred Stock.
Stockholders are not being asked to vote upon or approve the completed
acquisition of Browning-Ferris or the completed issuance and sale of the Senior
Convertible Preferred Stock. Similarly, the vote of stockholders will not affect
the voting power of the securities already issued to the Preferred Stock
Purchasers. The vote by stockholders only will determine certain terms of the
Senior Convertible Preferred Stock. (For example, if stockholder approval is not
received by January 30, 2000, the minimum dividend rate on the Senior
Convertible Preferred Stock will increase from 6.5% to 7.5% per annum of the
stock's liquidation preference (including accrued but unpaid dividends) and will
increase further by 1% in each subsequent six month period, up to a maximum
dividend rate of 12% per annum of the stock's liquidation preference (including
accrued but unpaid dividends), until stockholder approval is received.)
WHY STOCKHOLDER APPROVAL IS BEING SOUGHT
Under Delaware law and our certificate of incorporation, we are not
required to obtain stockholder approval of the issuance of shares of common
stock upon conversion of the Senior Convertible Preferred Stock. However, the
outstanding shares of common stock are listed on the New York Stock Exchange,
Inc. (the "NYSE") and the shareholder approval policy of the NYSE requires us to
obtain stockholder approval of the issuance of shares of common stock upon
conversion of the Senior Convertible Preferred Stock.
Specifically, the NYSE requires stockholder approval prior to the issuance
of common stock or securities convertible into common stock to a director,
officer, or holder of five percent or more of a company's voting or common stock
(a "Related Party") or any affiliate of a Related Party or entity in which a
Related Party has a substantial interest if the number of shares of common stock
to be issued, or into which the securities may be convertible, exceeds one
percent (or, in certain cases, five percent) of the common stock or voting stock
outstanding before the issuance. Before our sale of the Senior Convertible
Preferred Stock, the Apollo/ Blackstone Investors owned more than five percent
of our outstanding common stock and had representatives on our board of
directors. Consequently, the Apollo/Blackstone Investors were Related Parties.
Of the one million shares of Senior Convertible Preferred Stock sold in
connection with the acquisition of Browning-Ferris, 790,000 of these shares were
sold to affiliates of, and persons related to, the Apollo/Blackstone Investors
and, therefore, to Related Parties or their affiliates. These 790,000 shares had
an initial liquidation preference of $790 million and, at a conversion price of
$18.00 per share, initially would be convertible at the option of the holders
into an aggregate of approximately 43.89 million shares of common stock,
representing approximately 23.3% of the Common Stock outstanding as of September
27, 1999 (before taking into account any shares issuable upon conversion of
Senior Convertible Preferred Stock). 210,000 shares of Senior Convertible
Preferred Stock were issued to parties who are not Related Parties. However,
because all shares of the Senior Convertible Preferred Stock have the same
terms, stockholder approval also will cover the issuance of common stock upon
conversion of these shares.
In addition, stockholder approval also will cover any additional shares of
common stock issuable upon conversion of the Senior Convertible Preferred Stock
as a result of any increases in the liquidation preference of the stock or
changes in the conversion price, as a result of antidilution provisions in the
stock.
Issuance of common stock or securities convertible into or exercisable for
common stock in contravention of the NYSE shareholder approval policy would
permit the NYSE to seek delisting of the shares of common
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stock. Accordingly, we are seeking stockholder approval. If stockholder approval
is not obtained, the Senior Convertible Preferred Stock will not be convertible
into shares of common stock. Instead, the Senior Convertible Preferred Stock
will remain convertible into a junior preferred stock having rights and terms no
worse to the holders of fractional units of the junior preferred stock than
those of the common stock and, in certain respects, more favorable than the
common stock.
The rules and regulations of the NYSE require approval by a majority of the
votes cast by holders of shares of common stock and Senior Convertible Preferred
Stock on the proposal to approve the issuance of common stock upon the
conversion of the Senior Convertible Preferred Stock, provided that the total
vote cast on the proposal represents over 50% of the voting power of all shares
of common stock and Senior Convertible Preferred Stock outstanding. (This
stockholder approval is sometimes referred to as the "Stockholder Approval.")
The Preferred Stock Purchasers and the Apollo/Blackstone Investors have agreed
to vote the 26,351,447 shares of common stock and 1,000,000 shares of Senior
Convertible Preferred Stock they own, representing approximately 34% of the
voting power of securities entitled to vote at the special meeting, in favor of
this proposal.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE ISSUANCE OF
COMMON STOCK UPON CONVERSION OF THE SENIOR CONVERTIBLE PREFERRED STOCK
(Directors with a possible conflict of interest abstain from this
recommendation.)
As explained under "Reasons for the Board's Recommendation," the Board is
recommending that stockholders approve the issuance of shares of common stock
upon the conversion of the Senior Convertible Preferred Stock, at the option of
the holders, because the Board believes that the terms of the Senior Convertible
Preferred Stock will be clearly more advantageous to the company and the holders
of common stock if stockholders approve this issuance. (Board members who are
designees of the Apollo/Blackstone Investors abstain from this recommendation
because of their possible conflict of interest.)
For example, the terms of the Senior Convertible Preferred Stock provide
that the minimum dividend rate on the stock will increase from 6.5% per annum of
the stock's liquidation preference by 1% after each six month period following
the issuance of the Senior Convertible Preferred Stock if stockholder approval
for the issuance of common stock upon conversion is not received by the end of
such six-month period. On the other hand, if stockholder approval is received
then the minimum dividend rate on the Senior Convertible Preferred Stock shall
be fixed at 6.5% per annum of the liquidation preference, generally without any
increase until the tenth anniversary of the issuance of the Senior Convertible
Preferred Stock. Clearly, payment of a 6.5% per annum dividend rate on the
Senior Convertible Preferred Stock is preferable for the company and holders of
common stock to the payment of dividends on the Senior Convertible Preferred
Stock at a higher rate, whether 7.5% per annum or greater. In addition, certain
other terms of the Senior Convertible Preferred Stock are more advantageous to
the company if stockholder approval is obtained. These terms are described below
under "Reasons for the Board's Recommendation."
TERMS OF PREFERRED STOCK
The terms of the Senior Convertible Preferred Stock and related agreements
resulted from negotiations between representatives of the Preferred Stock
Purchasers, on the one hand, and members of our Board of Directors who did not
have a relationship or financial interest in the Preferred Stock Purchasers
("Disinterested Directors") and the advisors and representatives of the
Disinterested Directors, on the other hand. The Disinterested Directors were
advised by independent legal and financial advisors. In connection with their
approval of these matters, the Disinterested Directors were fully aware of the
material facts relating to the interests of the designees of the
Apollo/Blackstone Investors on the Board of Directors in these matters. The
Disinterested Directors separately discussed and approved these matters and the
Disinterested Directors concluded that the transactions were fair to the
company. (In connection with their deliberations, the Disinterested Directors
received an opinion to the effect that the sale of the Senior Convertible
Preferred Stock was fair from a financial point of view to the company from
their independent financial advisor.)
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A summary of the terms of the Senior Convertible Preferred Stock follows:
- par value: each share has a par value of $.10 per share.
- ranking: shares have a preference with respect to dividend payments and
distributions upon our voluntary or involuntary liquidation senior, prior
and superior to all other shares of our capital stock, including, but not
limited to, shares of common stock, Junior Preferred Stock (as defined
below) or any other series of our preferred stock.
- dividends: shares entitle holders to cumulative quarterly dividends in an
amount equal to the greater of (i) the dividends payable on the shares of
common stock or junior preferred stock then issuable upon the assumed
conversion of Senior Convertible Preferred Stock (the "Equivalent
Dividend") and (ii) 6.5% per annum of the sum of the liquidation
preference of the shares plus accrued but unpaid dividends for prior
quarters (provided, however, that if Stockholder Approval is not obtained
before six months after the issuance of the Senior Convertible Preferred
Stock, then the dividend rate will increase by 1% per annum for each
consecutive, non-overlapping full six month calendar period until
Stockholder Approval is obtained, up to a maximum rate of 12% per annum,
and provided, further, that in any event, the rate for dividends accruing
after July 30, 2004 which are not paid in cash and dividends accruing
after July 30, 2009 shall be 12% per annum). Cash dividends will be
payable only if, as and when declared by our Board of Directors. If
dividends are not paid in cash, then the liquidation preference of the
Senior Convertible Preferred Stock increases as described below.
- liquidation preference: shares have an initial liquidation preference of
$1,000 per share and the liquidation preference will increase by accrued
and unpaid dividends; shares shall be entitled to receive upon any
liquidation, dissolution or other winding-up of the company, before any
distribution or payment is made to holders of any other classes of stock,
the greater of (i) the liquidation preference, plus dividends accrued
with respect to the period from the most recent dividend payment date
through and excluding the date of determination, and (ii) the amount that
would be payable to holders of such shares if they had converted all
their shares into common stock (or Junior Preferred Stock) immediately
prior to the liquidation, dissolution or other winding-up.
- voting: in addition to any voting rights provided by law, shares have the
number of votes equal to the number of shares of common stock (or units
of Junior Preferred Stock) issuable upon conversion of such shares; the
shares will vote on all matters submitted to stockholders, vote together
with all such stockholders as one class, vote as a separate class with
respect to amendments to our Certificate of Incorporation that adversely
affect the rights of the Senior Convertible Preferred Stock and for the
election of the number of directors that the Apollo/Blackstone Investors
are then entitled to elect under the terms of the Shareholders Agreement
(as described below).
- redemption: shares may be redeemed in whole but not in part by us, if
Stockholder Approval has been received prior thereto, at any time on or
after July 30, 2004 (or, on or after July 30, 2002 if the average closing
price of the common stock for the thirty consecutive trading days
preceding the redemption exceeds 150% of the conversion price then in
effect upon at least 30 days' notice).
- change of control: shares may be sold back to the company, at the
holder's option, at 101% of liquidation preference plus accrued but
unpaid dividends following a change of control of the company. (A change
of control is defined as (a) a person or group beneficially owning 50% or
more of the total voting power of all of our outstanding voting stock
(other than the Apollo/Blackstone Investors or their affiliates), (b) a
majority of our Board of Directors being comprised of persons (other than
nominees of the Apollo/Blackstone Investors or their affiliates) neither
nominated nor appointed by the Board of Directors, (c) Allied Waste North
America, Inc. ceasing to be our subsidiary unless we otherwise directly
or indirectly own substantially all of its assets or (d) the sale,
transfer or lease by the company (on a consolidated basis) or Allied
Waste North America (on a consolidated basis) of all or substantially all
of its assets unless the assets continue to be owned directly or
indirectly by the company.
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- conversion rights: shares have certain conversion rights. If Stockholder
Approval is obtained, the Senior Convertible Preferred Stock will be
convertible at the option of the holders into the number of shares of
Common Stock obtained by dividing the liquidation preference plus accrued
but unpaid dividends by $18.00, subject to customary antidilution
provisions. Until Stockholder Approval is obtained, shares of Senior
Convertible Preferred Stock will be convertible at the option of the
holders into the number of units of one ten-thousandth of a share of a
newly created series of junior preferred stock, Series B Junior Preferred
Stock, obtained by dividing the liquidation preference by $18.00, subject
to customary antidilution provisions.
The Junior Preferred Stock issuable upon conversion of the Senior
Convertible Preferred Stock unless Stockholder Approval is obtained means Series
B Junior Preferred Stock. A summary of the terms of the Junior Preferred Stock
follows:
- par value: each share has a par value of $.10.
- ranking: shares are junior and subordinate to the preferences of any
other shares of preferred stock (other than shares which by their terms
are not senior to the Junior Preferred Stock) with respect to dividend
payments and distributions upon the voluntary or involuntary liquidation,
dissolution or winding-up of the company.
- dividends: whenever we declare a dividend on shares of common stock, we
must declare a dividend on each share of Junior Preferred Stock equal to
the greater of (i) $100 and (ii) 10,000 times the aggregate per share
dividend declared on each share of common stock, subject to antidilution
adjustments, but shares shall have a claim prior to common stock on such
distributions.
- voting: in addition to any voting rights provided by law, each share
entitles its holder to 10,000 votes on all matters submitted to a vote of
the holders of shares of common stock, subject to antidilution
adjustments, with Junior Preferred Stock and common stock voting together
as a single class, except that shares will vote separately as a class on
amendments to our Certificate of Incorporation which adversely affect the
rights of the shares and for the number of directors that the
Apollo/Blackstone Investors are then entitled to elect under the terms of
the Shareholders Agreement (unless such directors have been elected by
the holders of the Senior Convertible Preferred Stock).
- liquidation preference: upon any voluntary or involuntary liquidation,
dissolution or winding-up of the company no distribution shall be made to
holders of shares, including common stock, junior to the Junior Preferred
Stock unless each share of Junior Preferred Stock shall have first
received $100 plus all accrued, declared but unpaid dividends;
thereafter, once each share of common stock has received one
ten-thousandth of the amount paid to a share of Junior Preferred Stock
(subject to antidilution adjustments), then holders of Junior Preferred
Stock and common stock shall share proportionately in further
distributions in the ratio of 10,000 to one (subject to antidilution
adjustments).
- redemption: shares are not redeemable.
- merger: in the event of a merger or other transaction in which shares of
common stock are changed or exchanged, then shares of Junior Preferred
Stock shall be exchanged in an amount per share (subject to antidilution
adjustments) equal to 10,000 times the amount of stock, cash or property
into which or for which each share of common stock is changed or
exchanged.
- conversion: upon receipt of any required stockholder approval under the
rules of the NYSE or when otherwise permitted, each share of Junior
Preferred Stock will automatically be converted into 10,000 shares of
common stock, subject to antidilution adjustments.
As part of the sale of the Senior Convertible Preferred Stock, we granted
the Preferred Stock Purchasers and the Apollo/Blackstone Investors certain
registration rights in respect of common stock, Senior Convertible Preferred
Stock, and Junior Preferred Stock in addition to the rights the
Apollo/Blackstone Investors had before the sale. These rights permit the
Preferred Stock Purchasers and the Apollo/Blackstone Investors to demand the
registration of their shares of common stock, Senior Convertible Preferred
Stock, and Junior Preferred Stock under the federal securities laws and to have
these securities included in certain other
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registration statements that we file. In addition, upon completion of the sale
of the Senior Convertible Preferred Stock, certain amendments to the previously
existing Shareholders Agreement became effective. Among other things, these
amendments provide that the Apollo/Blackstone Investors are entitled to
designate five directors on our Board of Directors out of a maximum of 13
directors (as compared to the previous four designees out of a maximum of 11
directors), subject to decrease if the Apollo/Blackstone Investors decrease
their stock ownership by specified percentages or if we dilute their ownership
below certain levels (the Apollo/ Blackstone Investors shall lose the right to
elect one director for each reduction of 20% of the number of shares they own
and if issuances by us reduce their ownership to 9% or less of the voting power
then they will be entitled to no more than three board designees); and the
voting and standstill provisions of the Shareholders Agreement shall apply to
the Senior Convertible Preferred Stock and any shares of common stock and Junior
Preferred Stock issued upon conversion of the Senior Convertible Preferred Stock
and shall be extended to last until July 30, 2009 (subject to earlier
termination under certain circumstances set forth in the current terms of the
Shareholders Agreement). See "Agreement With Certain Stockholders."
This proxy statement contains a summary of the material terms of the Senior
Convertible Preferred Stock, Junior Preferred Stock and the amended Shareholders
Agreement and registration rights agreement with the Preferred Stock Purchasers.
We have filed with the Securities and Exchange Commission copies of the
certificates of designation for the Senior Convertible Preferred Stock and the
Junior Preferred Stock and the amended Shareholders Agreement and registration
rights agreement as exhibits to a Current Report on Form 8-K and incorporate
these documents into this proxy statement by reference. You may obtain copies of
these documents free of charge. See "Incorporation of Certain Documents by
Reference".
REASONS FOR THE BOARD'S RECOMMENDATION
The Board recommends that stockholders vote to approve the issuance of
Common Stock upon conversion of the Senior Convertible Preferred Stock. (The
designees of the Apollo/Blackstone Investors abstain from all references to the
Board's recommendation or beliefs in this section because of their possible
conflict of interest. This possible conflict of interest exists because of the
ownership of Senior Convertible Preferred Stock by the Apollo/Blackstone
Investors or their affiliates and related persons. The members of our Board
designated by the Apollo/Blackstone Investors are Messrs. Gross, Kaplan,
Ressler, Blitzer and Lipson.)
The Board's recommendation is based primarily on the Board's strong belief
that it is more advantageous to the company and holders of shares of common
stock to ensure that the dividend rate on the Senior Convertible Preferred Stock
be fixed at 6.5% per annum of liquidation preference for at least the first five
years following issuance rather than the higher dividend rates payable if
Stockholder Approval is not obtained (assuming, as is currently expected, that
the Equivalent Dividend yields a lesser amount). In addition, certain other
terms of the Senior Convertible Preferred Stock will be more advantageous to the
company and the holders of common stock if stockholder approval is obtained.
Specifically, we will not be able to redeem the Senior Convertible Preferred
Stock if Stockholder Approval has not been obtained. Moreover, the Disinterested
Directors believe that the issuance of common stock instead of Junior Preferred
Stock is in the best interests of the holders of common stock. The Disinterested
Directors felt so strongly about their conclusions that they required the
parties who purchased the Senior Convertible Preferred Stock to commit to vote
their shares of common stock and Senior Preferred Stock in favor of this
proposal at any meeting of stockholders at which the proposal is presented. If
Stockholder Approval is not obtained at the special meeting, it is our intention
to resubmit the proposal at other meetings of stockholders until Stockholder
Approval is obtained.
Dividends on the Senior Convertible Preferred Stock will be $65 million per
year based upon a 6.5% rate (assuming the Equivalent Dividend is lower and
dividends can be paid in cash) and would be $75 million (or greater) if the
dividend rate increased because Stockholder Approval has not been obtained
within six months of July 30, 1999. (In addition, if dividends are not paid in
cash, a lower dividend rate also will result in lower amount of aggregate
subsequent dividends because accrued dividends not paid in cash will increase
the liquidation preference of the Senior Convertible Preferred Stock, which is
the amount upon which dividends and the number of shares issuable upon
conversion are calculated. A higher liquidation preference will mean more
dilution to existing holders of common stock if the Senior Convertible Preferred
Stock is converted.) It
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is in our interests and the interests of the holders of common stock to have a
lower dividend rate on the Senior Convertible Preferred Stock.
Until Stockholder Approval is obtained, shares of Senior Convertible
Preferred Stock may not be redeemed. However, if Stockholder Approval is
obtained, the Senior Convertible Preferred Stock may be redeemed at our option
on or after July 30, 2004 (and, in certain circumstances, on or after July 30,
2002). (Our ability to redeem stock or to pay cash dividends on capital stock is
subject to restrictions in the agreements with our banks as well as in the terms
of our other indebtedness.) The flexibility to redeem the Senior Convertible
Preferred Stock at such future times may permit us to refinance such stock at
more favorable terms based upon market conditions at such time or to force the
conversion of such stock if such stock is "in the money" and thereby avoid
paying dividends at a rate in excess of that then being paid on shares of common
stock. Either of these actions would benefit us and the holders of common stock.
The Board's recommendation is further supported by the Board's belief that
the terms of the Junior Preferred Stock issuable upon conversion of the Senior
Convertible Preferred Stock if Stockholder Approval is not obtained are at least
as attractive, and may be viewed as more attractive, to a holder of such stock
as the rights of a holder of shares of common stock. The Junior Preferred Stock
will have the same voting and dividend rights as common stock, would receive the
same per share consideration if we are sold, and will have a liquidation
preference senior to the common stock. Consequently, the Board believes holders
of common stock may be better off and, in any event, no worse off if common
stock is issued instead of Junior Preferred Stock. (The Board recognizes that
the Junior Preferred Stock may be less liquid than shares of common stock
because it is not listed on the NYSE and has no other existing trading market;
however, this possible difference is not likely to produce a benefit for holders
of common stock.)
Therefore, the Board believes that stockholders have the opportunity to
favorably change our obligation under the Senior Convertible Preferred Stock by:
- fixing the dividend rate at the minimum level of 6.5% per annum,
- retaining the flexibility to redeem the Senior Convertible Preferred
Stock when otherwise permitted to do so, and
- changing the equity security issuable upon exercise to one (common stock)
which, in the Board's view, is no less favorable and, perhaps, more
favorable to the holders of common stock than would be the case if Junior
Preferred Stock were issuable upon conversion because Stockholder
Approval were not obtained.
PROPOSAL TO AMEND THE 1991 INCENTIVE STOCK PLAN
The second proposal to be considered and voted upon at the special meeting
is to approve an amendment to the 1991 Incentive Stock Plan as it previously has
been amended and restated (the "Incentive Stock Plan") to increase the maximum
number of shares of common stock which may be covered by awards under the
Incentive Stock Plan from 7.5% of the issued and outstanding shares of common
stock on the final day of our preceding fiscal quarter to 8.5% of that number of
fully diluted shares of common stock on the date of an award under the Incentive
Stock Plan.
In 1991, the Board of Directors adopted the Incentive Stock Plan and our
stockholders approved the Incentive Stock Plan at our 1991 Annual Stockholders'
Meeting held on July 9, 1991.
THE AMENDMENT
After receiving the recommendation of our Management Development and
Compensation Committee (the "Compensation Committee"), in September, 1999, the
Board adopted an amendment to the Incentive Stock Plan, subject to stockholder
approval. If the necessary stockholder approval is received, the amendment will
increase the number of shares of common stock which may be covered by awards
under the Incentive Stock Plan from 7.5% of the shares of common stock issued
and outstanding in the final day of our previous fiscal quarter to 8.5% of the
number of fully diluted shares of common stock as of the date an award under the
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Plan is made. For purposes of the Incentive Stock Plan, the number of fully
diluted shares of common stock includes the aggregate of all issued and
outstanding shares of common stock, any shares of common stock issuable upon the
vesting or payment of awards or exercise of options under any employee benefit
plan, including the Incentive Stock Plan, shares of common stock otherwise
available or reserved for issuance under employee benefit plans, including the
Incentive Stock Plan, and shares of common stock issuable upon exercise or
conversion of any outstanding warrants, options or convertible securities. For
these purposes, shares of Senior Convertible Preferred Stock are deemed
convertible into shares of common stock and, therefore, the stockholder vote
regarding the issuance of common stock upon the conversion of the Senior
Convertible Preferred Stock will not affect the number of shares subject to the
Incentive Stock Plan. (The relevant provision is contained in Section 3 of the
Incentive Stock Plan. This Section in its current form and after giving effect
to the amendment is attached as Exhibit A to this proxy statement.)
Under the current terms of the Incentive Stock Plan and based upon the
188,773,527 shares outstanding as of September 27, 1999, awards covering an
aggregate of 14,158,015 shares of common stock are available under the Incentive
Stock Plan. Previously granted awards under the Incentive Stock Plan which have
been exercised covered approximately 1,308,986 shares of common stock. Currently
outstanding awards under the Incentive Stock Plan cover an aggregate of
approximately 11,354,123 shares of common stock. Consequently, new awards
covering approximately 1,494,906 shares of common stock (representing
approximately .8% of our outstanding common stock) are permitted under the
current terms of the Plan. If the amendment is approved, new awards covering
approximately 10,497,047 shares of common stock (representing approximately 5.6%
of our outstanding common stock) would be permitted based upon fully diluted
shares as of September 27, 1999 and after taking into account the proposed
amendment. Approval of the amendment will increase the number of shares of
common stock which may be covered by new awards by approximately 9,002,141
shares (representing approximately 4.8% of our outstanding common stock).
REASONS FOR THE AMENDMENT
The purpose of our stock-based incentive plans, including the Incentive
Stock Plan, is to provide key employees with a continuing proprietary interest
in the Company, with a view to increasing the interest in our welfare of those
personnel who share primary responsibility for our management and growth. In
addition, these plans provide a significant non-cash form of compensation, which
is intended to benefit the Company by enabling it to continue to attract and
retain qualified personnel.
As a result of our acquisition of Browning-Ferris, existing employees have
increased responsibilities. Moreover, we have acquired many new employees whose
continued employment and dedication to the Company is important to our
successfully integrating Browning-Ferris into our operations and using it as a
platform for future growth. In order to provide all of these employees with
appropriate stock-based incentives and to further motivate them to help increase
stockholder value, both the Compensation Committee and the entire Board believe
that our stock incentive plans should have the capacity to provide meaningful
awards which can create performance targets for employees and significant
encouragement for them to remain with the Company.
Currently, all of our stock incentive plans, including the Incentive Stock
Plan, permit awards covering an aggregate of approximately 1.45 million shares
of common stock. The Board and Compensation Committee believe greater capacity
is necessary to assure that the purposes of our stock incentive plans can be
achieved. It is expected that if this amendment to the Incentive Stock Plan is
approved by stockholders, our Compensation Committee will consider granting new
awards under the Plan in 1999 as a means of providing appropriate incentive and
performance based compensation to key employees in light of the acquisition of
Browning-Ferris.
DESCRIPTION OF INCENTIVE STOCK PLAN
The Incentive Stock Plan provides for the grant of (i) non-qualified stock
options, (ii) incentive stock options, (iii) shares of restricted stock, (iv)
shares of phantom stock, (v) stock bonuses and (vi) performance awards
(collectively, "Incentive Awards"). In addition, the Incentive Stock Plan
permits the grant of cash
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bonuses payable when a participant is required to recognize income for federal
income tax purposes in connection with the vesting of shares of restricted stock
or the grant of a stock bonus. Key employees, including officers (whether or not
they are directors), of the Company and its subsidiaries will be eligible to
participate in the Incentive Stock Plan.
The Incentive Stock Plan is currently administered by the Compensation
Committee. The Compensation Committee, at present, comprises Messrs. Nolan
Lehmann, Howard Lipson and Antony P. Ressler. The Compensation Committee
determines which key employees receive grants of Incentive Awards, the type of
Incentive Awards and bonuses granted and the number of shares subject to each
Incentive Award.
Subject to the terms of the Incentive Stock Plan, the Compensation
Committee will also determine the prices, expiration dates and other material
features of the Incentive Awards granted under the Plan. The Compensation
Committee may, in its absolute discretion, (i) accelerate the date on which an
option granted under the Incentive Stock Plan becomes exercisable, (ii)
accelerate the date on which a share of restricted stock or phantom stock vests
and waive any conditions imposed by the Compensation Committee on the vesting of
a share of restricted stock and (iii) grant Incentive Awards to a participant on
the condition that the participant surrender to the Company for cancellation
such other Incentive Awards (including, without limitation. Incentive Awards
with higher exercise prices) as the Compensation Committee specifies.
The Compensation Committee will have the authority to interpret and
construe any provision of the Incentive Stock Plan and to adopt such rules and
regulations for administering the Incentive Stock Plan as it deems necessary.
All decisions and determinations of the Compensation Committee are final and
binding on all parties. The Company will indemnify each member of the
Compensation Committee against any cost, expense or liability arising out of any
action, omission or determination relating to the Incentive Stock Plan, unless
such action, omission or determination was taken or made in bad faith and
without reasonable belief that it was in the best interest of the Company.
The Board of Directors may at any time amend the Incentive Stock Plan in
any respect: provided, that, without stockholder approval, no amendment may (i)
increase the number of shares of Common Stock that may be issued under the
Incentive Stock Plan, (ii) materially increase the benefits accruing to
individuals holding Incentive Awards, or (iii) materially modify the
requirements as to eligibility for participation in the Incentive Stock Plan.
A summary of the most significant features of the Incentive Awards and the
tax consequences to recipients thereof, follows.
Non-Qualified and Incentive Stock Options. The exercise price of each
non-qualified stock option ("NQO") and each incentive stock option ("ISO")
granted under the Incentive Stock Plan shall be the fair market value (as
defined) of a share of Common Stock of the Company on the date on which such NQO
or ISO is granted. NQOs and ISOs shall hereinafter be referred to collectively
as "Options". Except in certain limited cases regarding grants of ISOs, each ISO
and NQO shall be exercisable for a period not to exceed ten years. The
Compensation Committee shall establish the term of each Option. Each Option
shall vest over a three year period at a rate of one-third of the Options
vesting per year. The exercise price shall be paid in cash or, subject to the
approval of the Compensation Committee, in shares of Common Stock valued at
their fair market value on the date of exercise.
Except in the event of the death or disability (as defined) of an optionee
or the termination of the employment of an optionee for cause (as defined),
Options are exercisable only while an optionee is employed by the Company or
within one month after such employment has terminated to the extent that such
Options were exercisable on the last day of employment. In the event of the
death or disability of an optionee, Options are exercisable within one year
after such death or disability to the extent that such Options were exercisable
on the last day of employment. In the event of the termination of the employment
of an optionee for cause, all Options held by such optionee terminate
immediately. Options are not transferable other than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order
and, in the case of NQOs, in certain situations to family members of the
optionee or trusts or partnerships involving family members of the optionee.
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Upon the occurrence of a change in control of the Company (a "Change in
Control"), all Options become immediately exercisable. The Incentive Stock Plan
defines Change in Control to mean (i) a "change in control" as that term is
defined in the federal securities laws, (ii) the acquisition by any person of
20% or more of the shares of voting securities of the Company (provided that the
Board of Directors, as constituted immediately prior to such stock acquisition,
may determine that a change of control has not occurred), (iii) a majority of
the individuals nominated by the Board of Directors for election to the Board
fail to be elected to the Board as a result of a proxy fight or contested
election for positions on the Board of Directors or (iv) any other event which
the Compensation Committee determines to constitute a change in control of the
Company.
An optionee will not recognize any income for federal tax purposes at the
time an NQO is granted, nor will the Company be entitled to a deduction at that
time. However, when any part of an NQO is exercised, the optionee will recognize
ordinary income in an amount equal to the difference between the exercise price
of the NQO and the fair market value of the shares received, and the Company
will recognize a tax deduction in the same amount (subject to the limitations of
Section 162(m) discussed below).
A participant will not recognize any income at the time an ISO is granted,
nor upon a qualified exercise of an ISO. If a participant does not dispose of
the shares acquired by exercise of an ISO within two years after the grant of
the ISO and one year after the exercise of the ISO, the exercise is qualified
and the gain or loss (if any) on a subsequent sale will be a long-term capital
gain or loss. Such gain or loss is the sum of the sales proceeds less the
exercise price for the stock sold. The Company is not entitled to a tax
deduction as the result of the grant or qualified exercise of an ISO.
Restricted Stock. A grant of shares of restricted stock represents the
promise of the Company to issue shares of its Common Stock on a predetermined
date (the "Issue Date") to a participant, provided the participant is
continuously employed by the Company until the Issue Date. Vesting of the shares
occurs on a second predetermined date (the "Vesting Date") if the participant
has been continuously employed by the Company until that date. Prior to the
Vesting Date, the shares are not transferable by the participant and are subject
to forfeiture. The Compensation Committee may, at the time shares of restricted
stock are granted, impose additional conditions to the vesting of the shares,
such as, for example, the achievement of specified performance goals. Vesting of
some portion, or all, of the shares of restricted stock may occur upon the
termination of the employment of a participant other than for cause, prior to
the Vesting Date. If vesting does not occur, shares of restricted stock are
forfeited.
Upon the occurrence of a Change in Control, all shares of restricted stock
which have not vested or been forfeited will vest automatically.
A participant will not recognize any income for federal tax purposes at the
time shares of restricted stock are granted or issued, nor will the Company be
entitled to a tax deduction at that time. However, when shares of restricted
stock vest, the participant will recognize ordinary income in an amount equal to
the fair market value of the shares of restricted stock on the date on which
they vest. If, however, a participant files an appropriate election under
Section 83(b) of the Internal Revenue Code with the IRS within thirty days of
the issuance of the restricted stock, the participant will be deemed to have
received ordinary income in an amount equal to the fair market value of the
shares of restricted stock on the date on which they are issued (the
"Election"). The Company will be entitled to a tax deduction at the time the
participant makes the Election in an amount equal to the amount of ordinary
income recognized by the participant (subject to the limitations of Section
162(m) discussed below).
The Compensation Committee may grant, in connection with a grant of shares
of restricted stock, a cash "tax" bonus, payable when an employee is required to
recognize income for federal income tax purposes with respect to such shares.
The tax bonus may not be greater than the value of the shares of restricted
stock at the time the income is required to be recognized. The cash "tax bonus"
will be recognized as ordinary income by the participant at the time the shares
vest and the participant is entitled to the cash "tax bonus". The Company will
be entitled to a tax deduction at the time the participant recognizes the
ordinary income equal to the ordinary income recognized by the participant.
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Phantom Stock. A share of phantom stock represents the right to receive
the economic equivalent of a grant of restricted stock. Shares of phantom stock
are subject to the same vesting requirements as are shares of restricted stock.
Upon vesting of a share of phantom stock, the holder is entitled to receive cash
in an amount equal to the sum of (i) the fair market value of a share of Common
Stock as determined on the vesting date and (ii) the aggregate amount of cash
dividends paid in respect of a share of Common Stock during the period
commencing on the date of grant, and ending on the vesting date. The cash
payment for phantom stock is treated the same as a cash bonus for federal income
tax purposes and creates a deduction to the Company when paid (subject to the
limitations of Section 162(m) discussed below). In addition, the value of a
share of phantom stock (whether or not vested) is paid immediately upon the
occurrence of a Change in Control of the Company. The Committee may not grant
any cash bonus in connection with the grant of shares of phantom stock.
Stock and Cash Bonuses. Bonuses payable in stock may be granted by the
Compensation Committee and may be payable at such times and subject to such
conditions as the Compensation Committee determines. Upon the receipt of a stock
bonus, a participant will recognize ordinary income for federal tax purposes in
an amount equal to the fair market value of the stock at the time it is
received. The Company will be entitled to a tax deduction in an equal amount.
The Compensation Committee may grant, in connection with a stock bonus, a cash
"tax" bonus, payable when an employee is required to recognize income for
federal income tax purposes with respect to such stock bonus. The tax bonus may
not be greater than the value of the stock bonus at the time the income is
required to be realized. The grant of a cash bonus shall not reduce the number
of shares of Common Stock with respect to which Options, shares of restricted
stock, shares of phantom stock or stock bonuses may be granted pursuant to the
Incentive Stock Plan.
Performance Awards. The Compensation Committee may grant performance
awards payable in cash or common stock upon the attainment of objective
performance goals established before the award grant. The Committee may grant,
in connection with the grant of performance awards, a cash "tax bonus" payable
when an employee is required to recognize income for federal income tax purposes
with respect to shares of common stock granted as a performance award. The tax
bonus may not be greater than the value of the shares of stock at the time
income is recognized by the employee.
A participant will not recognize any income for federal tax purposes at the
time a performance award is granted and the Company will not be entitled to a
tax deduction at that time. However, a participant will recognize ordinary
income at the time the performance award, in the form of shares or cash, is paid
to the participant. The amount of cash paid or the fair market value of the
shares paid at the time they become available will be the amount of income
recognized by the participant. In addition, the participant will recognize any
cash "tax bonus" awarded in conjunction with a performance share at the time the
performance share is otherwise deemed taxable. The Company will be entitled to a
tax deduction at the time the participant recognizes the amounts into income
equal to the amount of recognized ordinary income.
In General. If any outstanding Option expires, terminates or is canceled
for any reason, the shares of Common Stock subject to the unexercised portion of
such Option shall again be available for grants under the Incentive Stock Plan.
If any shares of restricted stock or phantom stock, or any shares of Common
Stock granted in a stock bonus are forfeited or canceled for any reason, such
shares shall again be available for grants under the Incentive Stock Plan.
The Incentive Stock Plan provides for an adjustment in the number of shares
of Common Stock available to be issued under the Incentive Stock Plan, the
number of shares subject to Incentive Awards, and the exercise prices of certain
Incentive Awards upon a change in the capitalization of the Company, a stock
dividend or split, a merger or combination of shares and certain other similar
events. The Incentive Stock Plan also provides for the termination of Incentive
Awards upon the occurrence of certain corporate events.
The Incentive Stock Plan provides that participants way elect to satisfy
certain federal income tax withholding requirements by remitting cash to the
Company. In addition, the Incentive Stock Plan provides that, at the election of
a participant, an unrelated broker-dealer acting on behalf of the participant
may exercise Options granted to the participant and immediately sell the shares
acquired on account of the exercise
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to raise funds to pay the exercise price of the Option and the amount of any
withholding tax which may be due on account of the exercise.
Limitations on Company Deductions. Section 162 of the Internal Revenue
Code denies a deduction to any publicly held corporation for compensation paid
to certain executives in a taxable year to the extent that such compensation
exceeds $1 million (subject to certain exceptions) for a covered employee. It is
possible that compensation attributable to stock options (including income
derived from the exercise of certain options as measured by the spread between
the exercise price and the fair market value of our common stock at the time of
exercise) and other awards under the Incentive Stock Plan, when combined with
all other types of compensation received by a covered employee from the Company,
may cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with proposed Treasury regulations issued under Internal Revenue Code
Section 162(m), compensation attributable to stock options and similar awards
will qualify as performance-based compensation, provided that: (i) the stock
plan contains a per-employee limitation on the number of shares for which
options and similar awards may be granted during a specific period; (ii) the per
employee limitation is approved by the stockholders; (iii) the option or award
is granted by a compensation committee comprised solely of "outside directors"
and (iv) either the exercise price of the option is no less than the fair market
value of the stock on the date of grant or the option or award is granted (or
exercisable) only upon (as certified by the compensation committee) the
achievement of an objective performance goal established by the compensation
committee while the outcome is substantially uncertain. Currently, awards under
the Incentive Stock Plan do not qualify as "performance-based compensation".
NEW PLAN BENEFITS
It is currently expected that the Compensation Committee will consider the
grant of new awards under the Incentive Stock Plan in late 1999 as a means of
providing appropriate incentive and performance based compensation to key
employees in light of our acquisition of Browning-Ferris Industries, Inc.
However, the Compensation Committee has not yet made any determination as to the
nature, amount or recipients of awards under the Incentive Stock Plan if the
amendments to the Plan are approved by stockholders.
The Compensation Committee made awards of stock options under the Incentive
Stock Plan, the 1993 Incentive Stock Plan, and the 1994 Incentive Stock Plan
during the fiscal year ended December 31, 1998. Information with respect to
these awards is contained in our Annual Report, as amended, on Form 10-K/A for
the year ended December 31, 1998 and our Proxy Statement for our Annual Meeting
of Stockholders held on May 26, 1999. These documents are incorporated herein by
reference. See "Incorporation of Certain Documents by Reference". The following
table provides certain information with respect to the options granted during
our fiscal year ended December 31, 1998:
16
<PAGE> 19
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK UNDERLYING
NAME AND POSITION OPTIONS GRANTED(1)
----------------- -----------------------
<S> <C>
Thomas H. Van Weelden....................................... 0
Chairman of the Board of Directors, President and Chief
Executive Officer
Roger A. Ramsey............................................. 0
Former Chairman of the Board of Directors
Steven M. Helm.............................................. 40,000
Vice President -- Legal and Corporate Secretary
Larry D. Henk............................................... 200,000
Vice President and Chief Operating Officer
Henry L. Hirvela............................................ 150,000
Vice President and Chief Financial Officer
Donald W. Slager............................................ 110,000
Vice President -- Operations
All executive officers as a group (including the six
officers named above)..................................... 665,000
All directors who are not executive officers................ 0(2)
All employees who are not executive officers as a group..... 1,750,600
</TABLE>
- ---------------
(1) All options were granted with an exercise price equal to the fair market
value of our common stock on the date of grant. For the named executive
officers, the exercise price ranged from $21.063 to $21.188 per share.
(2) Non-employee directors are not eligible to receive grants under the
Incentive Stock Plan. See our Proxy Statement for our Annual Meeting of
Stockholders held on May 26, 1999 for information regarding our Non-Employee
Director Stock Option Plan.
In addition, during 1999, the Compensation Committee has awarded under the
Incentive Stock Plan options covering an aggregate of approximately 1.6 million
shares of common stock to the six executive officers named in the table, options
covering an aggregate of approximately 1.8 million shares of common stock to all
executive officers as a group, and options covering an aggregate of 3.6 million
shares of common stock to all employees who are not executive officers, with the
exercise price of such options ranging from $13.31 per share to $15.00 per
share.
REQUIRED VOTE
Approval of the amendment to the Incentive Stock Plan requires the
affirmative vote of a majority of the votes cast on the proposal by the holders
of common stock and Senior Convertible Preferred Stock, voting together as a
single class.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT
TO THE 1991 INCENTIVE STOCK PLAN.
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, derived from filings
with the Securities and Exchange Commission and other public information,
regarding the beneficial ownership of our common stock and Senior Convertible
Preferred Stock at September 27, 1999 by: (i) each person who is known by us to
beneficially own more than five percent of the outstanding shares of common
stock or Senior Convertible Preferred Stock, (ii) each of our current Directors,
and the executive officers, and (iii) all current Directors and executive
officers as a group. Except as otherwise indicated below and subject to
applicable community property laws, each owner has sole voting and sole
investment powers with respect to the stock listed. As of September 27, 1999,
there were 188,773,527 shares of our common stock outstanding and 1,000,000
shares of Senior Convertible Preferred Stock outstanding.
17
<PAGE> 20
<TABLE>
<CAPTION>
APPROXIMATE COMBINED VOTING
BENEFICIAL PERCENT OF POWER OF OWNERSHIP OF
BENEFICIAL APPROXIMATE OWNERSHIP OUTSTANDING COMMON AND SENIOR
OWNERSHIP OF PERCENT OF OF SENIOR SENIOR PREFERRED STOCK AS
COMMON STOCK OUTSTANDING PREFERRED STOCK PREFERRED APPROXIMATE PERCENT
NAME OF PERSON OR IDENTITY OF GROUP(1) (SHARES)(2) COMMON STOCK (SHARES)(3) STOCK OF ALL VOTING POWER
- -------------------------------------- ------------ ------------ --------------- ----------- ---------------------
<S> <C> <C> <C> <C> <C>
Thomas H. Van Weelden............... 1,993,324(4) 1.0% 0 0 *
Roger A. Ramsey..................... 1,462,942(5) * 0 0 *
Apollo Investment Fund III, L.P.
Apollo Overseas Partners III, L.P.
Apollo (UK) Partners III, L.P.
Apollo Investment Fund IV, L.P.
Apollo Overseas Partners IV, L.P.
Apollo/AW LLC....................... 17,119,579(6) 9.1% 440,000 44% 17.1%
c/o Apollo Advisors, II, L.P. and
Apollo Management IV, L.P.(4)
Two Manhattanville Road
Purchase, New York 10577
Blackstone Capital Partners II
Merchant Banking Fund L.P.
Blackstone Offshore Capital Partners
II L.P.
Funds managed by Blackstone Management
Associates II L.L.C. and Blackstone
Management
Associates III L.L.C.(5)............ 9,231,868(7) 4.9% 350,000 35% 11.8%
345 Park Avenue, 31st Floor
New York, New York 10154
Nolan Lehmann....................... 1,089,175(8) * 0 0 *
Henry L. Hirvela.................... 201,667(9) * 0 0 *
Donald W. Slager.................... 93,480(10) * 0 0 *
Larry D. Henk....................... 363,401(11) * 0 0 *
Steven M. Helm...................... 119,913(12) * 0 0 *
Michael Gross....................... 17,166,256(13) 9.1% 440,000 44% 17.1%
David B. Kaplan..................... 17,166,713(13) 9.1% 440,000 44% 17.1%
Antony P. Ressler................... 17,166,698(13) 9.1% 440,000 44% 17.1%
Howard A. Lipson.................... 9,276,868(14) 4.9% 350,000 35% 11.8%
Dennis Hendrix...................... 51,825(15) * 0 0 *
Warren B. Rudman.................... 46,513(15) * 0 0 *
Vincent Tese........................ 46,584(15) * 0 0 *
DLJ Stockholders(16)................ 0 0 110,000 11% 2.5%
Greenwich Stockholders(17).......... 0 0 100,000 10% 2.3%
David Blitzer(18)................... 9,231,868 4.9% 350,000 35% 11.8%
Capital Research and Management
Company........................... 19,995,000 10.6% 0 0% 8.2%
333 South Hope Street
Los Angeles, CA 90071(19)
All Directors and executive officers
as a group (17 persons)(2)-(3), (8)-
(15), (20)........................ 32,173,838 16.7% 790,000(21) 79% 30.8%
</TABLE>
- ---------------
* Does not exceed one percent.
18
<PAGE> 21
(1) Unless otherwise indicated, the address of each person or group listed
above is 15880 North Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona
85260.
(2) Does not include any shares of common stock that may be acquired upon
conversion of shares of Senior Convertible Preferred Stock.
(3) On September 27, 1999, each share of Senior Convertible Preferred Stock was
entitled to approximately 56.149 votes and, if Stockholder Approval is
obtained, could have been converted at the option of the holder into
approximately 56.149 shares of common stock.
(4) Includes 1,113,305 shares of common stock that may be acquired on the
exercise of options and warrants.
(5) Includes 1,130,805 shares of common stock that may be acquired on the
exercise of options.
(6) Apollo Advisors II, L.P. ("Apollo Advisors") serves as general partner for
each of Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P. and Apollo (UK) Partners III, L.P., which directly own 15,632,717,
934,397 and 577,783 shares of common stock, respectively, representing
8.3%, 0.5% and 0.3% of the outstanding common stock, respectively, and
directly own 89,163. 6, 691, and 4,146 shares of Senior Convertible
Preferred Stock, respectively. The general partner of Advisors is Apollo
Capital Management II, Inc. ("Capital Management II"). Apollo Advisors IV,
L.P. ("Advisors IV") serves as general partner to each of Apollo Investment
Fund IV, L.P., and Apollo Overseas Partners IV, L.P., which directly own
284,175 and 15,825 shares of Senior Convertible Preferred Stock,
respectively. The general partner of Advisors IV is Apollo Capital
Management IV, Inc. ("Capital Management IV"). AIF IV Management, Inc.
("Management") serves as the general partner of Apollo Management IV, L.P.,
which serves as the manager of Apollo/AW LLC, which directly owns 40,000
shares of Senior Convertible Preferred Stock. Messrs. Gross, Kaplan and
Ressler are principals of Capital Management II, Capital Management IV and
Management and each disclaims beneficial ownership of the indicated shares.
The directors and principal executive officers of Capital Management II,
Capital Management IV, and Management are Leon D. Black and John J. Hannan.
The foregoing information is based on Schedules 13D filed on behalf of
these persons with the Securities and Exchange Commission.
(7) Blackstone Management Associates II L.L.C. ("Blackstone Associates") serves
as the sole general partner of Blackstone Capital Partners II Merchant
Banking Fund L.P. ("BCP II") and Blackstone Family Investment Partnership
II L.P. ("BFIP II") and the sole investment general partner of Blackstone
Offshore Capital Partners II L.P. ("BOCP II"). Blackstone Services (Cayman)
LDC is the administrative general partner of BOCP II. Pursuant to the
partnership agreement of BOCP II, Blackstone Associates has the sole power
to vote securities held by BOCP II and the sole power to dispose of
securities held by BOCP II. Blackstone Management Associates III L.L.C.
("BMA III") serves as the sole general partner of Blackstone Capital
Partners III Merchant Banking Fund L.P. ("BCP III") and Blackstone Family
Investment Partnership III L.P. ("BFIP III") and the sole investment
general partner of Blackstone Offshore Capital Partners III L.P. ("BOCP
III"). Pursuant to the partnership agreement of BOCP III, BMA III has the
sole power to vote securities held by BOCP III and the sole power to
dispose of securities held by BOCP III. Blackstone Associates, BCP II, BOCP
II, BFIP II, BCP III, BOCP III and BFIP III are collectively referred to as
the "Blackstone Investors". Messrs. Peter G. Peterson and Stephen A.
Schwarzman are the founding members of Blackstone Associates and BMA III
and as such may be deemed to share beneficial ownership of the shares held
by the Blackstone Investors. The other members of Blackstone Associates and
BMA III are David A. Stockman, Michael B. Hoffman, James J. Mossman, Arthur
B. Newman, Anthony Grillo, J. Tomilson Hill, Mark T. Gallogly, Glenn H.
Hutchins, Howard A. Lipson, Thomas J. Saylak and John Z. Kukral. Each of
BCP II, BOCP II and BFIP II directly own 6,611,545, 1,962,385 and 657,938
shares of the outstanding common stock, respectively, representing
approximately 3.5%, 1.0% and 0.3% of such outstanding shares, respectively.
BCP III, BOCP III and BFIP III directly own 277,540.586, 51,459.414, and
21,000 shares of Senior Convertible Preferred Stock. Mr. Lipson is Senior
Managing
19
<PAGE> 22
Director of Blackstone Associates and BMA III and disclaims beneficial
ownership of the indicated shares. The foregoing information is based on
Schedules 13D filed on behalf of the Blackstone Investors with the
Securities and Exchange Commission.
(8) Includes (i) 1,000,000 shares of common stock that are beneficially owned
by an affiliate of Mr. Lehmann and (ii) 62,500 shares of common stock that
may be acquired on the exercise of options.
(9) Includes 196,667 shares of common stock that may be acquired on the
exercise of options.
(10) Includes 92,180 shares of common stock that may be acquired on the exercise
of options.
(11) Includes 343,514 shares of common stock that may be acquired on the
exercise of options.
(12) Includes 119,413 shares of common stock that may be acquired on the
exercise of options.
(13) Includes (i) 17,119,579 shares of common stock and 440,000 shares of Senior
Preferred Stock beneficially owned by the Apollo Investors, and (ii) 45,000
shares that may be acquired on the exercise of options. Each of Messrs.
Gross, Kaplan and Ressler disclaims beneficial ownership of the shares
referred to in (i).
(14) Includes (i) 9,231,868 shares of common stock and 350,000 shares of Senior
Preferred Stock beneficially owned by the Blackstone Investors, and (ii)
45,000 shares that may be acquired on the exercise of options. Mr. Lipson
disclaims beneficial ownership of the shares referred to in (i).
(15) Includes 45,000 shares of common stock that may be acquired on the exercise
of options.
(16) The DLJ Stockholders are DLJMB Funding II, Inc., a Delaware corporation,
DLJ Merchant Banking Partners II, L.P., a Delaware limited partnership, DLJ
Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ
Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified
Partners-A.L.P., a Delaware limited partnership, DLJ Millennium Partners,
L.P., a Delaware limited partnership, DLJ Millennium Partners-A.L.P., a
Delaware limited partnership, DLJ First ESC L.P., a Delaware limited
partnership, DLJ Offshore Partners II, C.V., a Netherlands Antilles limited
partnership ("Offshore II"), DLJ EAB Partnership, L.P., a Delaware limited
partnership and DLJ ESC II L.P., a Delaware limited partnership. Each of
the DLJ Stockholders other than Offshore II has a business address c/o DLJ
Merchant Banking II, Inc., 277 Park Avenue, New York, New York 10172.
Offshore II has a business address c/o John B. Gorsirawig, 14 Willemsted,
Curacao, Netherlands Antilles. Each of the DLJ Stockholders is affiliated
with Donaldson, Lufkin & Jenrette, Inc., a publicly held Delaware
corporation. The foregoing is based on a Schedule 13D filed on behalf of
the DLJ Stockholders with the Securities and Exchange Commission.
(17) The Greenwich Stockholders are Greenwich Street Capital Partners II, L.P.,
a Delaware limited partnership, GSCP Offshore Fund, L.P., a Cayman Islands
exempted limited partnership, Greenwich Fund, L.P., a Delaware limited
partnership, Greenwich Street Employees Fund, L.P., a Delaware limited
partnership, TRV Executive Fund, L.P., a Delaware limited partnership. Each
of the Greenwich Stockholders has a business address c/o Greenwich Street
Investment II, L.L.C., 388 Greenwich Street, New York, New York 10013,
which is the general partner of each of the Greenwich-Stockholders. Alfred
C. Eckert III, Keith W. Abell and Sanjay H. Patel are the managing members
of Greenwich Street Investment II, L.L.C. The foregoing is based on a
Schedule 13D filed on behalf of the Greenwich Stockholders with the
Securities and Exchange Commission.
(18) Includes 9,231,868 shares of common stock and 350,000 shares of Senior
Preferred Stock owned by the Blackstone Investors. Mr. Blitzer disclaims
beneficial ownership of such shares.
(19) Based on a Schedule 13G filed with the Securities and Exchange Commission
and dated September 9, 1999 in which Capital Management and Research
Company states it acts as an investment adviser to various investment
companies registered under the Investment Company Act of 1940 and disclaims
beneficial ownership of the reported shares.
(20) Includes 166,187 shares of common stock that may be acquired on the
exercise of options by two executive officers who are not named officers.
(21) Does not include 210,000 shares of Senior Convertible Preferred Stock owned
by members of the Apollo/Blackstone Group (the DLJ Investors and GSCP) who
do not have the right to representation
20
<PAGE> 23
on our board of directors. These 210,000 shares are subject to an agreement
which requires their holders to vote for our nominees for election to the
board. See "Agreement With Certain Stockholders."
AGREEMENT WITH CERTAIN STOCKHOLDERS
Pursuant to an Amended and Restated Shareholders Agreement, dated as of
July 30, 1999 (the "Shareholders Agreement"), between the Preferred Stock
Purchasers and the Apollo/Blackstone Investors and us, we have agreed, until the
earlier to occur of the tenth anniversary of the Shareholders Agreement or the
date upon which the Apollo/Blackstone Investors own, collectively, less than 10%
of the shares of common stock acquired from TPG Partners, L.P., TPG Parallel I,
L.P. and Laidlaw Transportation, Inc. and the 790,000 shares of the Senior
Convertible Preferred Stock (collectively, the "Apollo/Blackstone Shares"), to
nominate and support the election to the Board of Directors of certain
individuals (the "Shareholder Designees") designated by the Apollo/Blackstone
Investors. For so long as the Apollo/Blackstone Investors beneficially own: (i)
80% or more of the Apollo/Blackstone Shares, they shall be entitled to designate
five Shareholder Designees; (ii) 60% or more but less than 80% of the
Apollo/Blackstone Shares, they shall be entitled to designate four Shareholder
Designees; (iii) 40% or more but less than 20% of the Apollo/ Blackstone Shares,
they shall be entitled to designate three Shareholder Designees; (iv) 20% or
more but less than 40% of the Apollo/Blackstone Shares, they shall be entitled
to designate two Shareholder Designees; and (v) 10% or more but less than 20% of
the Apollo/Blackstone Shares, they shall be entitled to designate one
Shareholder Designee; provided, that if, at any time as a result of our issuance
of voting securities, the Apollo/ Blackstone Investors beneficially own 9% or
less of the total voting power of voting securities then outstanding, the
Apollo/Blackstone Investors shall only be entitled to designate at most three
Shareholder Designees. Messrs. Gross, Kaplan, Ressler, Lipson and Blitzer are
the Shareholder Designees designated by the Apollo/ Blackstone Investors.
In the Shareholders Agreement, we agreed to: (i) limit the number of our
executive officers that serve on the Board of Directors to two; and (ii)
nominate persons to the remaining positions on the Board of Directors who are
recommended by the Nominating Committee and are not our employees, officers or
outside counsel or partners, employees, directors, officers, affiliates or
associates of any Apollo/Blackstone Investors (the "Unaffiliated Directors").
Unaffiliated Directors shall be nominated only upon the approval of a majority
vote of the Nominating Committee, which will consist of not more than four
Directors, at least two or whom shall be Shareholder Designees, or such lesser
number of Shareholder Designees as then serves on the Board of Directors. If the
Apollo/Blackstone Investors beneficially own less than 50% of the
Apollo/Blackstone Shares, the Nominating Committee shall contain only one member
who is a Shareholder Designee.
In the Shareholders Agreement, each of the Apollo/Blackstone Investors and
the other Preferred Stock Purchasers has agreed that, until the earlier to occur
of the tenth anniversary of the Shareholders Agreement or the date upon which
the Apollo/Blackstone Investors own, collectively, voting securities of the
Company which represent less than 10% of the total voting power of all voting
securities on a fully diluted basis, such Apollo/Blackstone Investor and its
affiliates and each other Preferred Stock Purchaser shall vote all voting
securities beneficially owned by such persons to elect the individuals nominated
to the Board of Directors in accordance with the appropriate provisions of the
Shareholders Agreement.
CERTAIN FINANCIAL INFORMATION
We have filed with the Securities and Exchange Commission certain financial
statements for Allied Waste and Browning-Ferris and unaudited pro forma
financial statements for Allied Waste giving effect to the acquisition of
Browing-Ferris in a Current Report on Form 8-K filed on September 14, 1999. This
Form 8-K is incorporated by reference into this proxy statement and copies may
be obtained free of charge as set forth under "Incorporation of Certain
Documents by Reference."
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934. We file reports, proxy statements and other information with the
SEC. You may read and copy such reports, proxy
21
<PAGE> 24
statements and other information at the SEC's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains an Internet website, located at http://www.sec.gov, that
contains reports, proxy statements and other information regarding registrants
that file electronically with the SEC.
You may also read reports, proxy statements and other information relating
to Allied Waste and Browning-Ferris at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We hereby incorporate by reference into this proxy statement the following
documents that we have filed with the SEC: (1) our Annual Report, as amended, on
Form 10-K/A for the year ended December 31, 1998; (2) our Quarterly Reports on
Form 10-Q for the periods ended March 31, 1999 and June 30, 1999; (3) our Proxy
Statement for our Annual Meeting of Stockholders held on May 26, 1999; and (4)
our Current Reports on Form 8-K filed on March 16, 1999, July 19, 1999, August
10, 1999, and September 14, 1999.
All documents and reports filed by us pursuant to Section 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 after the date of this proxy
statement and on or prior to the date of the special meeting are deemed to be
incorporated by reference in this proxy statement from the date of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this proxy statement will be deemed to
be modified or superseded for purposes of this proxy statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference in this proxy
statement modifies or supersedes such statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to contain a
part of this proxy statement.
Any person receiving a copy of this proxy statement may obtain, without
charge, upon written or oral request, a copy of any of the documents
incorporated by reference except for the exhibits to such documents (other than
the exhibits expressly incorporated in such documents by reference). Requests
should be directed to: Allied Waste Industries, Inc., 15880 North
Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260, Attention: Assistant
Corporate Secretary (telephone number 480-627-2700). A copy will be provided by
first class mail or other equally prompt means within one business day after
receipt of your request.
WE HAVE AUTHORIZED NO ONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ABOUT THE SPECIAL MEETING OR OUR COMPANY THAT DIFFERS FROM OR
ADDS TO THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN THE DOCUMENTS WE HAVE
PUBLICLY FILED WITH THE SEC. THEREFORE, IF ANYONE SHOULD GIVE YOU ANY DIFFERENT
OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT.
THE INFORMATION CONTAINED IN THIS DOCUMENT SPEAKS ONLY AS OF THE DATE OF
THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE
APPLIES.
22
<PAGE> 25
MISCELLANEOUS MATTERS
Any stockholder who wishes to submit a proposal for action to be included
in the proxy statement and form of proxy relating to our 2000 Annual Meeting of
stockholders is required to submit such proposals to us on or before December
31, 1999.
By Order of the Board of Directors,
/s/ Thomas H. Van Weelden
Thomas H. Van Weelden
Chairman of the Board,
President and Chief Executive Officer
October 6, 1999
23
<PAGE> 26
ALLIED WASTE INDUSTRIES, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS ON NOVEMBER 17, 1999
The undersigned hereby appoints Thomas H. Van Weelden and Steven Helm
as Proxies, and each of them, with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated on the reverse side
of this proxy card, all shares of Common Stock of Allied Waste Industries, Inc.
(the "Company") held of record by the undersigned on September 27, 1999, at the
Special Meeting of Stockholders to be held on November 17, 1999, or any
adjournments or postponements thereof and thereat to vote all of the shares of
stock which the undersigned would be entitled to vote if personally present, as
follows:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 27
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
SPECIAL MEETING OF STOCKHOLDERS
ALLIED WASTE INDUSTRIES, INC.
November 17, 1999
--Please Detach and Mail in the Envelope Provided--
PLEASE MARK YOUR
/x/ PROXY CARD AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE FOLLOWING PROPOSALS:
1. Proposal to approve the issuance of common stock upon conversion of
shares of Series A Senior Convertible Preferred Stock if the holders of
Series A Senior Convertible Preferred Stock choose to convert their
shares.
FOR - - - - - [ ] AGAINST - - - - - [ ] ABSTAIN - - - - - [ ]
2. Proposal to amend the 1991 Incentive Stock Plan.
FOR - - - - - [ ] AGAINST - - - - - [ ] ABSTAIN - - - - - [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. THIS
PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
SIGNATURE(S) DATE
- ---------------------------------- ---------------------------
NOTE: Please sign exactly as name or names hereon. Joint owners should
each sign. When signing for a corporation or partnership or as attorney,
executor, administrator, trustee, agent, fiduciary or guardian, please give full
title as such.
