1995 STOCKHOLDERS AGREEMENT
This 1995 Stockholders Agreement, dated as of December 22, 1995, is among
▇▇▇▇▇▇▇ Waste Systems, Inc., a Delaware corporation (the"Company"), Norwest
Equity Partners V ("NEP"), Weston Presidio Capital II, L.P. ("WPC"), BCI Growth
III, L.P. ("BCI"), North Atlantic Venture Fund, L.P. ("NAVF"), Vermont Venture
Capital Fund, L.P. ("VVCF"), FSC Corp., Prudential Securities Incorporated,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (collectively, and together with their permitted successors
and assigns, the "Investors"), and the stockholders whose names appear on the
signature page hereof. The parties agree as follows:
1. CERTAIN DEF1NITIONS.
1.1. "Acceptance Period" is defined in Section 2.4(a).
1.2. "Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
other specified Person) and shall include (a) any Person who is an officer,
director or beneficial holder of at least 10 % of the outstanding capital stock
of the Company (or other specified Person), (b) any Person of which the Company
(or other specified Person) or an officer of the Company shall, directly or
indirectly, either beneficially own at least 10% of the outstanding equity
securities or constitute at least a 10% participant, and (c) in the case of a
specified Person who is an individual, Members of the Immediate Family of such
Person.
1.3. "BCI" is defined in the preamble.
1.4. "▇▇▇▇▇▇ Trusts" means the Blake ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust and the
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Trustee.
1.5. "By-laws" means all written rules, regulations, procedures and by-laws
and all other similar documents, relating to the management, governance or
internal regulation of a Person other than an individual, or interpretive of the
Charter of such Person, each as from time to time amended or modified.
1.6. "Casella Trusts" means the Lauren ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, the ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ H, Trust, the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Trust, the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Trust, ▇▇▇▇▇ ▇. ▇▇▇▇, Esq. Trustee and the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Trust and
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, Trustees.
1.7. "Charter" means the articles or certificate of incorporation, statute,
constitution, joint venture or partnership agreement or articles or other
charter of any Person other than an individual, each as from time to time
amended or modified.
1.8. "Code" means the federal Internal Revenue Code of 1986 or any successor
statute, and the rules and regulations thereunder, and in the case of any
referenced section of any such statute, rules or regulation, any successor
section thereof, collectively and as from time to time amended and in effect.
1.9. "Common Stock" means the Company's Class A Common Stock, $0.01 par
value.
1.10. "Company" is defined in the preamble.
1.11. "Company Acceptance Notice" is defined in Section 2.4(a).
1.12. "Company Acceptance Period" is defined in Section 2.4(a).
1.13. "Contractual Obligation" means, with respect to any Person, any
contracts, agreements, deeds, mortgages, leases, licenses, other instruments,
commitments, undertakings, arrangements or understandings, written or oral, or
other documents, including any document or instrument evidencing indebtedness,
to which any such Person is a party or otherwise subject to or bound by or to
which any asset of any such Person is subject.
1.14. "Covered Stockholders" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the
▇▇▇▇▇▇▇ Trusts and their permitted successors and assigns, but in no event
including the Investors.
1.15. "Distribution" means (a) the declaration or payment of any dividend on
or in respect of any shares of any class of capital stock of the Company, any of
its Subsidiaries or other specified Person, other than dividends payable solely
in shares of the common stock of the payor; (b) the purchase, redemption or
other retirement of any shares of any class of capital stock of the Company, any
of its Subsidiaries or other specified Person directly, or indirectly through a
Subsidiary or otherwise; or (c) any other distribution on or in respect of any
shares of any class of capital stock of the Company, any of its Subsidiaries or
other specified Person.
1.16. "ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor statute and the rules and regulations thereunder, and in the case
of any referenced section of any such statute, rule or regulation, any successor
section thereof, collectively and as from time to time amended and in effect.
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1.17. "Exchange Agreements" means the 1993 Exchange and Repurchase Agreement
and the 1994 Exchange and Repurchase Agreement, each dated as of December 22,
1995, among the Company and the noteholders of the Company named therein.
1.18. "GAAP" means generally accepted accounting principles, as in effect
from time to time, applied on a basis consistent with that used in preparation
of the financial statements referred to in Section 5.2(a).
1.19. "Investor" is defined in the preamble.
1.20. "Investor Securities" means the Preferred Stock and the Warrants,
together with any securities issued with respect thereto, upon exercise,
conversion or transfer thereof or in exchange therefor, including the Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants.
1.21. "Legal Requirement" means any federal, state, local or foreign law,
statute, standard, ordinance, code, order, rule, regulation, resolution,
promulgation or any final order, judgment or decree of any court, arbitrator,
tribunal or governmental authority, or any license, franchise, permit or similar
right granted under any of the foregoing.
1.22. "Management Stockholders" means each of the Stockholders specified as
a Management Stockholder on Schedule A, but only so long as such Management
Stockholder or the Settlor of any trust that is a Management Stockholder remains
an employee of the Company or one of its Subsidiaries.
1.23. "Material Adverse Effect" means a material adverse effect upon the
business, assets, financial condition or income of the Company and its
Subsidiaries on a consolidated basis.
1.24. "Material Event Notice" is defined in Section 5.2(d).
1.25. "Members of the Immediate Familv" as applied to any individual, means
each parent, spouse, child, brother, sister or the spouse of a child, brother or
sister of the individual, and each trust created for the benefit of one or more
of such persons and each custodian of a property of one or more such persons.
1.26. "NAVF" is defined in the preamble.
1.27. "Notice of Intention to Sell" is defined in Section 2.4(a).
1.28. "NWI" means National Waste Industries, Inc.
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1.29. "Other Stockholders" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., the ▇▇▇▇ Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and NWI.
1.30. "Person" means an individual, partnership, corporation, company,
association, trust, joint venture, unincorporated organization and any
governmental department or agency or political subdivision.
1.31. "Preferred Director" means the directors designated by BCI, VVCF, NAVF
and the holders of Series D Preferred Stock pursuant to Section 4.1 and, after a
Remedy Event, Section 4.3.
1.32. "Preferred Stock" means the Company's Series A, B and D Convertible
Preferred Stock, par value $0.01 per share.
1.33. "Principal Holder" means each original holder of Preferred Stock and
any permitted transferee of such original holder who holds 20% or more of the
Investor Securities held by the original holder on the date hereof.
1.34. "Purchase Agreement" means the Preferred Stock Purchase Agreement
dated as of December 22, 1995, as from time to time in effect, among the Company
and the Investors named therein.
1.35. "Purchase Price" is defined in Section 2.4(a).
1.36. "Qualified Offering" is defined in Section C.5(a) of Article Fourth of
the Company's Amended and Restated Certificate of Incorporation.
1.37. "Registration Rights Agreement" means the 1995 Registration Rights
Agreement dated as of December 22, 1995, as from time to time in effect, among
the Company and the stockholders named therein.
1.38. "Rejection Notice" is defined in Section 2.4(a).
1.39. "Related Agreements" is defined in Section 4.1 of the Purchase
Agreement.
1.40. "Repurchase Agreement" means the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Agreement among the
Company and the Warrantholders named therein.
1.41. "Remedy Event" is defined in Section 4.5.
1.42. "Required Holders" means the holders at the relevant time (excluding
the Company or any of its Subsidiaries) of a majority or more of the voting
power of
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all Investor Securities of all classes (calculated to give effect to the
conversion of all Preferred Stock that is convertible into Common Stock and the
exercise of all Warrants) voting together as a single class.
1.43. "▇▇▇▇ Trust" means ▇▇▇▇ ▇'▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇ III, Trustees U/T/A dated March 17, 1994, ▇▇▇▇▇ ▇. ▇▇▇▇, III,
Settlor.
1.44. "SBA" means the Small Business Administration.
1.45. "SBIC" means a small business investment company licensed by the SBA
pursuant to the Small Business Investment Act.
1.46. "SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended or both.
1.47. "Securities" means (i) all shares of any class of capital stock of the
Company owned by any Stockholder or Other Stockholder, (ii) all Warrants and
(iii) all shares of capital stock or warrants issued with respect to, in
exchange for or upon conversion of any such Shares or Warrants.
1.48. "Selling Stockholder" means a Stockholder selling Securities under
Section 2 or Shares under Section 3.
1.49. "Shares" means (i) all shares of any class of capital stock of the
Company owned by any Stockholder or Other Stockholder (other than Series A, B or
C Preferred Stock), (ii) all Warrants and (iii) all shares of capital stock or
warrants issued with respect to, in exchange for or upon conversion of any such
Shares or Warrants.
1.50. "Stockholders" means the Management Stockholders, the Covered
Stockholders and the Investors, but in no event including the Other
Stockholders.
1.51. "Stockholder Notice of Election" is defined in Section 2.4(a).
1.52. "Subject Securities" is defined in Section 2.4(a).
1.53. "Transfer" means sell, assign, encumber, pledge, hypothecate, give
away or dispose of or transfer in any other manner, whether voluntarily,
involuntarily, by operation of law, pursuant to judicial process, divorce
decree, property settlement, bankruptcy or otherwise.
1.54. "VVCF" is defined in the preamble.
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1.55. "Warrants" means the common stock purchase warrants issued to certain
Investors dated July 26, 1993 and May 25, 1994.
2. TRANSFER RESTRICTIONS AND PURCHASE RIGHTS.
2.1. Transfers of Securities. No Stockholder nor any Other Stockholder shall
Transfer any Securities or allow the power to vote Securities to be exercised by
any other Person (except through ordinary proxies, revocable at the option of
such Stockholder or Other Stockholder), except that a Stockholder or Other
Stockholder may make a Transfer as permitted under this Section 2 and, if
applicable, Section 3. Notwithstanding anything in this Agreement to the
contrary, no Stockholder or Other Stockholder (or permitted transferee of a
Stockholder or Other Stockholder) may Transfer Securities to a Person (other
than a Stockholder or Other Stockholder) in a business similar to that engaged
in by the Company; provided, however, that, subject to Section 9.4 below, an
Investor may Transfer Securities to any such competitor if there shall have
occurred and be continuing a Remedy Event.
2.2. Right of First Offer with respect to Stockholders. No Stockholder shall
Transfer any Securities to any Person (other than pursuant to Section 2.3)
unless such Selling Stockholder first gives the Company (and the Investors for
purposes of compliance with Section 3) written notice of its intent to Transfer
such Securities (the "Offer Notice"), which notice shall set forth the number of
Securities to be Transferred. The Company may offer to purchase all (but not
less than all) of the Securities specified in the Offer Notice by delivery of a
written offer (the "Offer"), which Offer shall specify the price and terms on
which the Company proposes to purchase the Securities, to the Selling
Stockholder as soon as practical but in any event within 15 days after the
delivery of the Offer Notice. The Company shall also send a copy of the Offer to
the Investors. Upon receipt of the Offer, the Selling Stockholder may elect (i)
to sell to the Company all of the Securities specified in the Offer Notice at
the price and on the terms specified in the Offer or (ii) to market and sell the
Securities to other potential purchasers for a period of 150 days following the
date of receipt; provided, however, that the Selling Stockholder shall not sell
any Securities to other potential purchasers during such 150 day period at a
price or otherwise on terms equal to or less favorable to the Selling
Stockholder than the price and terms set forth in the Offer. If the Company
shall fail to elect to purchase all of the Securities it has the right to
purchase under this Section 2.2, each Stockholder and Other Stockholder shall
have the right and option to elect to purchase, at the price and terms specified
in the Offer, a number of the Securities equal to the product obtained by
multiplying the Securities by a fraction, the numerator of which is the number
of Securities held by such Stockholder or Other Stockholder (assuming the
conversion and exercise of all Securities into Common Stock) and the denominator
of which is the aggregate number of Securities owned by all Stockholders or
Other Stockholders. Each Stockholder or Other Stockholder making such election
shall give written notice to the Company and the Selling Stockholder of its
interest in
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purchasing Securities under this Section 2.2 within fifteen (15) days after the
earlier of the expiration of the 150 day period or the rejection by the Company
of the Offer. Each Stockholder or Other Stockholder shall also have the option
to purchase on a similar basis any Shares not purchased by other Investors.
2.3. Certain Permitted Transfers.
(a) Transfers to Immediate Familv. Any Stockholder or Other Stockholder
may Transfer his Securities to Members of the Immediate Family of
such Stockholder or Other Stockholder so long as each transferee
executes a counterpart of this Agreement as a Stockholder and, in
the case of a transfer by a Covered Stockholder, a Covered
Stockholder.
(b) Public Offering. A Stockholder or Other Stockholder may sell any
Securities in a public offering registered under the federal
Securities Act of 1933, as amended, or, following a public
offering, in a transaction permitted by Rule 144 thereunder.
(c) Investors. Any Investor may transfer Securities to an Affiliate of
such Investor so long as each transferee executes a counterpart of
this Agreement as a Stockholder and an Investor.
(d) Pledges by Other Stockholders. Any Other Stockholder may transfer
Securities owned by such Other Stockholder by a pledge which
creates a mere security interest in the Securities; provided
however that the pledgee thereof shall agree in writing in advance
with the parties hereto to be bound by and comply with all
applicable provisions of this Agreement to the same extent as if it
were the Other Stockholder making such pledge.
2.4. Right of First Offer with respect to Other Stockholders.
(a) If any Other Stockholder (the "Selling Stockholder") shall desire
at any time to Sell any of its Securities, and shall receive a bona
fide purchase offer therefor or the terms of a potential bona fide
purchase offer therefor (such offers being hereinafter referred to
as a "Purchase Offer"), then the Selling Stockholder shall promptly
deliver a notice of intention to sell (a "Notice of Intention to
Sell") to the Company, each Stockholder and each remaining Other
Stockholder setting forth the Securities to be sold (the "Subject
Securities") and the terms and conditions of such Purchase Offer,
which shall be for cash or obligations to pay cash. The Company
shall have the right and option, for a period of 15 days after
receipt of the Notice of Intention to Sell (the "Company Acceptance
Period"), to elect to purchase, at a price and on the terms and
conditions stated in the Notice of Intention to Sell, all but not
less than all of the Subject Securities. The Company shall give
written notice of its
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election to purchase (a "Company Acceptance Notice") or not to
purchase (a "Rejection Notice") to the Selling Stockholder, each
Stockholder and each remaining Other Stockholder prior to the
expiration of the Company Acceptance Period. If the Company shall
fail to elect to purchase all of the Subject Securities in
accordance with the provisions of this paragraph (a), each
Stockholder and each remaining Other Stockholder shall have the
right and option to elect to purchase, at the price and on the
terms stated in the Notice of Intention to Sell, a number of the
Subject Securities equal to the product obtained by multiplying the
Subject Securities by a fraction (x) the numerator of which is
equal to the number of Securities (assuming full conversion and
exercise into Common Stock) at the time owned by such Stockholder
or Other Stockholder and (y) the denominator of which is equal to
the aggregate number of Securities (assuming full conversion and
exercise into Common Stock) at the time owned by all Stockholders
and all Other Stockholders. Each Stockholder and each Other
Stockholder making such election shall give written notice (a
"Stockholder Notice of Election") to the Selling Stockholder, to
each Stockholder, each Other Stockholder and to the Company within
fifteen (15) days after the earlier of the expiration of the
Company Acceptance Period or the receipt by such Stockholder of a
Notice of Rejection, as the case may be (the "Acceptance Period").
Each Stockholder and each Other Stockholder shall also have the
option, exercisable by so specifying in the Stockholder Notice of
Election, to purchase on a pm rata basis similar to that described
above any remaining Subject Securities not purchased by
Stockholders or Other Stockholders, in which case the Stockholders
or Other Stockholders exercising such further option shall be
deemed to have elected to purchase such remaining Subject
Securities on such pro rata basis.
(b) If effective acceptances shall not be received pursuant to
paragraph (a) above in respect of all the Subject Securities, then
the Selling Stockholder may, at its election, either: (i) sell to
the Stockholders and remaining Other Stockholders pursuant to their
elections and sell any remaining Subject Securities to one or more
outside purchasers on terms not more favorable to such purchaser(s)
than those stated in the Notice of Intention to Sell; or (ii)
rescind its Notice of Intention to Sell, which rescission shall be
effected by notice in writing delivered to each Stockholder and
each Other Stockholder that shall have elected to purchase and to
the Company within ten (10) days after expiration of the Acceptance
Period, and keep all (but not less than all) of its Subject
Securities. Any outside purchaser must purchase no more than sixty
(60) days after the end of the Acceptance Period.
2.5. Closing on Stock Sales. The purchase of the Securities by the Company
under Section 2.2 shall occur at a closing on the date specified in the Offer,
which date shall be no fewer than 30 nor more than 45 days after the date on
which the Selling Stockholder receives the Offer. The purchase of the Subject
Securities by the
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Company under Section 2.4 shall occur at a closing on the date specified in the
Company Acceptance Notice, which date shall be no fewer than 30 nor more than 45
days after the date on which the Selling Stockholder receives the Company
Acceptance Notice. At the closing (under either Section 2.2 or 2.4), the Company
shall pay the purchase price in the form and amount specified in the Offer to
the order of the Selling Stockholder. Certificates for the Securities to be
purchased, duly endorsed or accompanied by duly executed stock powers, in each
case with signatures guaranteed, shall be delivered at the closing by the
Selling Stockholder.
2.6. Sale of Warrants. In the event that the sale of Securities involves a
sale of Warrants, each such Selling Stockholder may deliver to the Company as
its agent, the Warrants for the issuance of Securities and executed subscription
forms specifying the number of Securities that Selling Stockholder elects to
receive upon exercise and sell under Section 2. The Selling Stockholder shall
tender payment therefor, or, at its option, specify that payment shall be made
out of the proceeds of the sale of Securities to the purchaser, and the Company
shall be authorized to sell the Securities to the purchaser on such Selling
Stockholder's behalf; provided, however, that the Selling Stockholder directs in
writing that payment of the proceeds in an amount equal to the exercise price be
made directly to the Company. Any unexercised portion of the Warrants shall be
returned to the Selling Stockholder.
3. TAG-ALONG RESTRICTIONS. A Covered Stockholder may sell any Shares in
accordance with Section 2.2 to any other Person (the "Proposed Buyer") only if
such Covered Stockholder complies with the terms set forth in this Section 3.
3.1. Offer. A notice (the "Tag-Along Notice") shall be delivered by the
Selling Stockholder to each Investor and each Other Stockholder at least 30 days
prior to the date of any Proposed Sale (as defined below). The Tag-Along Notice
shall include:
(a) A copy of a bona fide offer from the Proposed Buyer, which shall
set forth the material terms of the proposed sale, including the number of
Shares proposed to be purchased, the purchase price, the name and address of
the Proposed Buyer and the other principal terms of the proposed transaction
(the "Proposed Sale");
(b) An offer by the Selling Stockholder to include in the Proposed Sale
to the Proposed Buyer, at the option of each Investor and each Other
Stockholder, that number of Shares as is determined in accordance with
Section 3.2, on the same terms and conditions as the Selling Stockholder
shall sell his Shares; and
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(c) An agreement from the Proposed Buyer to purchase from the Investors
and the Other Stockholders such number of Shares as shall be includable in
such Proposed Sale pursuant to Section 3.2.
3.2. Time and Manner of Exercise. If any of the Investors or Other
Stockholders desires to accept the offer contained in the Tag-Along Notice, he
or it shall notify the Selling Stockholder in writing within 20 days after
receipt of the Tag-Along Notice. If an Investor or Other Stockholder has not
accepted such offer in writing, he or it shall be deemed to have waived all
rights with respect to the Proposed Sale. Any acceptance of the offer contained
in the Tag-Along Notice shall be irrevocable except as hereinafter provided.
Each Investor and Selling Stockholder who has elected to participate in such
Proposed Sale shall be entitled to sell in the Proposed Sale, on the same terms
and conditions as the Selling Stockholder (treating any Shares that are
Preferred Stock and Warrants as if they had been converted into or exercised for
Common Stock), such number of its Shares equal to the number (rounded to the
nearest whole share) of all Shares to be included in the Proposed Sale times a
fraction, the numerator of which is the total number of Shares held by such
Investor or Other Stockholder (on an as-converted or as-exercised basis)
immediately before the Proposed Sale and the denominator of which is the sum of
the total number of Shares held by all Investors and Selling Stockholders who
exercised their rights under this Section 3 plus the total number of Shares held
by the Selling Stockholder immediately before the Proposed Sale.
3.3. Time and Manner of Closing. Each of the Investors and Other
Stockholders participating in any Proposed Sale shall take such actions and
execute such documents and instruments as shall be reasonably necessary in order
to consummate the Proposed Sale expeditiously on the same terms as the Selling
Stockholder. If at the end of 180 days following the date on which the Tag-Along
Notice was given the Selling Stockholder has not completed the Proposed Sale in
accordance with the terms hereof, the Investors and Other Stockholders shall be
released from their obligations hereunder. At the closing of any sale under this
Section 3.3, each Investor and Other Stockholder shall deliver certificates
representing the Shares to be sold by it, duly endorsed for transfer and (if
requested in writing by the Proposed Buyer) with signature guaranteed, and with
any stock transfer tax stamps affixed, against delivery of the applicable
purchase price. Any shares sold to the Proposed Buyer in accordance with this
Section 3.3 shall no longer be subject to this Agreement.
4. VOTING AGREEMENT.
4.1. Board Representation. Each Stockholder agrees (a) to vote its Shares to
fix the number of directors at nine until a Remedy Event occurs and thereafter
to fix the number of directors at the number contemplated by Section 4.3 and (b)
to vote all Shares owned by such party (i) to elect as directors, three persons
nominated by the
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Covered Stockholders, which persons shall initially be ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (ii) to elect as a director a person designated
by BCI, so long as BCI holds Investor Securities, which person shall initially
be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (iii) to elect as a director a person designated jointly by
NAVF and VVCF, so long as each holds Investor Securities, which person shall
initially be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (iv) to elect as a director a person designated
by the holders of a majority of the shares of Series D Preferred Stock, which
person shall initially be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (v) to elect as a director a person
designated by NWI, which person shall initially be C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; provided;
however, that if NWI shall fail to designate such a person, the Required Holders
may designate a person to fill such position; (vi) to elect as directors two
independent representatives, one of which shall be designated by the Covered
Stockholders and one of which shall be designated by a majority of the eight
directors designated pursuant to this Section 4.1, which person shall initially
be ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, provided, however, that no independent representative shall
be an Affiliate of either the Company, any of the Required Holders or the
Management Stockholders and (vii) after a Remedy Event has occurred, to elect as
additional directors of the Company such persons nominated by the Investors as
is contemplated by Section 4.3 and to continue to vote for such persons (or any
successors nominated by the Investors, as the case may be) as directors of the
Company until the Remedy Event is cured.
4.2. Votes Per Share: Notices; Record holders of Preferred Stock shall be
entitled to notice of any stockholders' meeting or solicitation of stockholders'
consents in the manner provided in the Bylaws of the Company for general
notices.
4.3. Election after Remedv Event. Upon the occurrence and during the
continuation of any Remedy Event (as defined in Section 4.5), then, upon notice
to the Company given by the Required Holders, the number of directors shall be
increased to thirteen and the Required Holders shall have the right to
designate four directors in addition to the persons designated in clauses (ii),
(iii), and (iv) of Section 4.1 above. Following the rectification or cure of the
Remedy Event, whereupon such right of the Required Holders to elect a majority
of the Board of Directors of the Company as set forth above shall cease, (and
the maximum number of directors shall be reduced to nine and shall be designated
pursuant to Section 4.1 above), subject to being again revived from time to time
upon the reoccurrence of the conditions above described.
4.4. Tenure. Each Preferred Director shall serve for a term of the lesser of
(a) one year and until such Preferred Director's successor is elected and
qualified, or (b) until the right to elect such Preferred Director ceases (at
which time such Preferred Director will be deemed to be removed). So long as the
holders of Preferred Stock are entitled to elect Preferred Directors, any
vacancy in the position of a Preferred Director may be filled only by vote of
the holders of a majority of the shares of the series of Preferred Stock
entitled to vote for such Preferred Director. A
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Preferred Director may, during such Preferred Director's term of office, be
removed at any time, with or without cause, only by the affirmative vote of the
holders of record of a majority of the outstanding shares of Preferred Stock of
the respective series.
4.5. Remedy Event. The term "Remedy Event" shall mean the occurrence and
continuance of any of the following events for a period exceeding 150 days
(unless otherwise specified below) after written notice of the occurrence of
such event has been furnished to the Company:
(a) The Company shall fail to make any payment in respect of dividends
declared on any shares of Preferred Stock.
(b) (Capitalized terms used in this Section 4.5(b) and in Section
4.5(d) and not otherwise defined shall have the meanings set forth in the
Amended and Restated Certificate of Incorporation). If at any time after
December 31, 2000, a Series D Holder delivers a Series D Put Notice, the
Company shall fail to pay (i) any quarterly installment payment in respect
of shares of Series D Preferred Stock representing one-eighth of the Series
D Liquidation Amount, plus, in the case of a holder that selects the
Interest Option, interest thereon at a rate equal to 15% per annum on the
Series D Liquidation Amount or (ii) by the expiration of the seven quarters
commencing on the Series D Put Closing Date, the full amount of the Series D
Purchase Price, plus, in the case of a holder that selects the Interest
Option, interest at a rate of 15% per annum on the Liquidation Amount and
prime plus two percent per annum on the amount of the Series D Purchase
Price in excess of the Series D Liquidation Amount.
(c) (Capitalized terms used in this Section 4.5(c) and not otherwise
defined shall have the meanings set forth in the Repurchase Agreement). If
at any time after December 31, 2000, any Holder shall deliver a Put Notice,
the Company shall fail to pay (i) any quarterly installment payment in
respect of Put Securities that are Warrant Shares representing one-eighth of
the Initial Investment Amount, plus, in the case of a Holder that selects
the Interest Option, interest thereon at a rate of 15% per annum on the
Initial Investment Amount or (ii) by the expiration of the seven quarters
commencing on the Put Closing Date, the full amount of the Purchase Price
(determined in accordance with Section 2 of the Repurchase Agreement) for
the Put Securities, plus, in the case of a Holder that selects the Interest
Option, interest thereon (at the rates specified in Section 3(b) of the
Repurchase Agreement).
(d) (Unless otherwise noted, capitalized terms used in this Section
4.5(d) and not otherwise defined shall have the meanings set forth in the
Repurchase Agreement). If at any time after December 31, 2000, upon the
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delivery of a Put Notice by the Holders of the Warrants pursuant to the
Repurchase Agreement, the Company shall fail to pay the full amount of the
Series C Redemption Price (as defined in the Amended and Restated
Certificate of Incorporation) together with the required interest thereon
within 180 days after the Put Closing Date (as defined in the Repurchase
Agreement).
(e) The Management Stockholders shall have known or, in the exercise of
reasonable diligence and inquiry, should have known, that the Company was
not in compliance in all material respects with all applicable Environmental
Laws (as defined in the Purchase Agreement) at the date hereof.
(f) The Company shall fail to issue the requisite number of shares of
Common Stock upon the conversion by the holders thereof of the Preferred
Stock or upon exercise of the Warrants.
(g) The Company or any Subsidiary or Subsidiaries owning an aggregate
of at least 50% of the consolidated assets or contributing over the past
fiscal year an aggregate of at least 50% of the consolidated cash flow
shall:
(i) commence a voluntary case under Title 11 of the United States
as from time to time in effect, or authorize, by appropriate
proceedings of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) have filed against it a petition commencing an involuntary
case under such Title 11;
(iii) seek relief as a debtor under any applicable law, other than
such Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors of the Company generally, or consent to or
acquiesce in such relief;
(iv) have entered against it any order by a court of competent
jurisdiction (A) finding it to be bankrupt or insolvent, (B) ordering
or approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors, or (C) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial
part of its property; or
(v) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint or consent to the
appointment
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of a receiver or other custodian for all or a substantial part of its
property.
(h) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall cease for any reason to be the Chief
Executive Officer of the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease for any
reason to be the Chief Operating Officer of the Company and replacements
reasonably satisfactory to the Required Holders shall not be in place within
nine months from the date on which the later to depart of ▇▇. ▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇ ceases to hold his office.
4.6. Voting. As to any matter on which holders of Common Stock of the
Company are entitled to vote their shares in accordance with the Company's
Amended and Restated Certificate of Incorporation and the Delaware General
Corporation Law, other than the election of directors, which is governed by the
above paragraphs of this Section 4, the Company shall be responsible for first
obtaining indications of voting preferences from each Stockholder and Other
Stockholder, each of which will be entitled to state a preference as to the
number of shares of Common Stock that he then holds or that he has the right to
acquire upon exercise or conversion of Shares that are not Common Stock. The
Company shall notify each Stockholder and Other Stockholder of respective
percentages, based on the aggregate number of shares of Common Stock as to which
preferences can be stated, that were in favor of the matter, that were against
the matter, that abstained from voting, and that did not vote. Except as
otherwise required by law, each Stockholder and Other Stockholder that holds of
record shares of Common Stock entitled to vote on any matter as to which a
preference has been stated agrees to votes his shares in accordance with the
percentages determined by the Company from the foregoing process. In connection
with any matters as to which a vote of the Preferred Stock, voting as a single
class, is required, the Company shall obtain such preferences only from
Stockholders and Other Stockholders who hold Preferred Stock.
5. COVENANTS. The Company covenants that it will comply, and will cause each
of its Subsidiaries to comply, with the following provisions:
5.1. Covenants Relating to the Company's Board of Directors.
(a) Board of Directors. The Board of Directors of the Company shall
meet at least once each fiscal quarter and each original holder of Preferred
Stock so long as it holds Investor Securities originally purchased at an
aggregate cost of at least $1,000,000 shall be notified at least 10 days in
advance of such regular meetings of the Board of Directors and each such
original holder shall have the right to have a representative attend all
such meetings in a nonvoting observer capacity. The Board of Directors shall
establish and maintain an Audit Committee and a Compensation Committee, on
each of which committees there shall be at least one Preferred Director and
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persons who are not employees of the Company shall constitute a majority of
the members.
(b) Directors Expenses. The Company will pay all direct out-of-pocket
expenses reasonably incurred by any Preferred Director in attending each
meeting of the Board of Directors, or any committee thereof. All other
Director fees and incentives shall be subject to the approval of a majority
of the Board of Directors, which majority shall include a majority of the
Preferred Directors.
(c) Indemnity. The Company and each of its Subsidiaries will adopt and
maintain in their respective Charter or Bylaws provisions indemnifying the
directors of each such Person to the fullest extent permitted by applicable
law.
5.2. Information and Reports to be Furnished to Principal Holders. The
Company and its Subsidiaries will maintain a system of accounting in which
correct and complete entries will be made of all dealings and transactions in
relation to their business and affairs in accordance with GAAP. The Company's
internal financial control systems will at all times be reasonably satisfactory
to the Required Holders. The Company will furnish the following information to
each Principal Holder (except as otherwise provided below):
(a) Annual Statements. As soon as available, and in any event within 90
days after the end of each fiscal year of the Company, the audited
consolidated balance sheet of the Company and its Subsidiaries as of the end
of such fiscal year and the audited consolidated statements of income,
stockholders' equity and cash flows for such year of the Company and its
Subsidiaries, together with the consolidated figures for the preceding
fiscal year, if any (all in reasonable detail), such statements being
accompanied by the reports thereon of independent certified public
accountants, reasonably satisfactory to the Required Holders, to the effect
that such consolidated financial statements have been prepared in accordance
with GAAP and present fairly in all material respects the financial position
of the Company and its Subsidiaries as of the dates specified and the
results of their operations and changes in financial position with respect
to the periods specified.
(b) Certificate of Chief Financial Officer. As soon as available, and
in any event within 45 days after the end of each of the first three fiscal
quarters in each fiscal year of the Company, the Company shall deliver a
certificate of the Chief Financial Officer of the Company to the effect that
the Company and its Subsidiaries have complied with all restrictive
covenants contained in Sections 5.4 and 5.5.
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(c) Monthly Reports. As soon as practicable, and in any event within 30
days after the end of each calendar month, the financial statements of the
Company and its Subsidiaries as of the end of such month in the form
customarily prepared by management for internal use, together with a
discussion and analysis of the Company's financial condition and results of
operations as of and for such period.
(d) Notice of Litigation, Defaults. etc. The Company will promptly give
written notice to each Principal Holder of (i) any litigation or any
administrative proceeding to which it or any of its Subsidiaries may
hereafter become a party which after giving effect to applicable insurance
may result in a charge against income in excess of $50,000, (ii) any
resignation of or other change in senior management of the Company or any
serious illness of any member of such senior management, and (iii) any
credible offers to purchase a majority (or greater) interest in the Company
(whether by means of purchase of securities or assets or otherwise). The
Company will promptly, and in any event within seven days after any officer
of the Company or any of its Subsidiaries obtains knowledge of any material
default by the Company under this Agreement, any other Related Agreement or
any other Contractual Obligation, furnish notice to each Principal Holder
specifying the nature of the material default and stating the action the
Company has taken or proposes to take with respect thereto. Promptly after
the receipt thereof, the Company will furnish to each Principal Holder
copies of any reports as to adequacies in accounting controls submitted by
independent accountants. Any notice containing the information contemplated
by this Section 5.2(d) is referred to herein as a "Material Event Notice".
(e) Other Information. From time to time upon the reasonable request of
any Principal Holder, the Company will furnish to any such Principal Holder
such information regarding the business, assets or financial condition of
the Company and its Subsidiaries as it may reasonably request. Each such
Principal Holder shall have the right during normal business hours at
reasonable intervals and upon reasonable notice to examine the books and
records of the Company and its Subsidiaries, to make copies and notes
therefrom, and to make an independent examination of the books and records
of the Company and its Subsidiaries at the expense of such Principal Holder
and in a manner that does not interfere with the business operations of the
Company and its Subsidiaries.
(f) Confidentiality. Each Stockholder will maintain the confidential
nature of information obtained from the Company concerning the Company and
its Subsidiaries; provided, however, that such Stockholder shall not be
precluded from making disclosure regarding such information: (a) to counsel
for any such Stockholder, accountants or other professional advisors on a
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need-to-know basis, (b) to any other Stockholder, (c) as required by
law or applicable regulation (provided that the Stockholder notifies
the Company in advance of any such disclosure and cooperates with the
Company in minimizing the same), (d) to any Person to whom Shares are
proposed to be Transferred in accordance with the provisions hereof so
long as such transferee agrees to be bound by this Section 5.2(f) or
(e) to the extent that such information has become publicly available
other than as a result of the violation of this Section 5.2(f).
5.3. Information and Reports to be Furnished to the Board of Directors. The
Company and its Subsidiaries will furnish to each member of the Board of
Directors of the Company the information below.
(a) Management Letters of Accountants. As soon as available, all
management letters prepared by the Company's independent certified public
accountants and management's written response thereto if any.
(b) Annual Budget. Not later than the end of each fiscal year of the
Company, a proposed month-by-month operating and capital budget for the
following fiscal year of the Company, including projected cash flows.
(c) Notice of Litigation Defaults etc. Promptly, and in any event
within 30 days after the Company has knowledge of such event, a Material
Event Notice to each Director.
(d) SEC Filings. Promptly, and in any event within 15 days after filing
with the SEC, copies of all forms, reports, notices, proxy statements,
registration statements and other documents filed with the SEC.
5.4. Restrictive Covenants Requiring Consent of Required Holders. Without
the consent of the Required Holders (except as otherwise provided below),
neither the Company nor any of its Subsidiaries will:
(a) Issuance of Senior Securities. Authorize or issue, or agree to
authorize or issue, any class or series of capital stock senior to any
Series of Preferred Stock with respect to dividend rights, liquidations
preferences or redemption or repurchase rights.
(b) Restrictive Agreements. Become or remain a party to, or be bound
by, or agree to any amendment or modification of, any Contractual Obligation
that restricts or limits the Company's right to perform its obligations
under this Agreement or the Stock Purchase Agreement.
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(c) Charter Amendment etc. Without the consent of a majority of Shares
of any series of Preferred Stock that is adversely affected, the Company
shall not amend its Charter or By-laws if such amendment would adversely
affect the rights of such series of Preferred Stock.
(d) Merger Consolidation and Sale of Assets. Other than a merger of a
wholly owned Subsidiary of the Company into the Company or another wholly
owned Subsidiary of the Company, become a party to or authorize any merger
or consolidation, or any agreement to sell, lease, or otherwise transfer or
dispose of all or substantially all of its assets, other than sales of
inventory in the normal course of business and transfers of assets among the
Company and its wholly owned Subsidiaries. Notwithstanding anything to the
contrary contained in this Section 5.4(d), in the event that the Required
Holders approve a transaction for which their consent is required by this
Section 5.4(d), and the transaction would result in the consideration to be
received by the holders of Series D Preferred Stock of less than the
internal rate of return as set forth in and calculated in accordance with
Schedule C through December 31, 1997 and the internal rate of return as set
forth in and calculated in accordance with Schedule C thereafter, then the
consent of the holders of a majority of the Series D Preferred Stock, voting
as a separate class, shall be required in order for the Company to enter
into any such transaction.
(e) Liquidation. Enter into or authorize any liquidation, dissolution
or winding up.
5.5. Restrictive Covenants Requiring Consent of Board of Directors. Without
the approval of the Board of Directors, with at least a majority of the
Preferred Directors voting in favor, neither the Company nor any of its
Subsidiaries shall:
(a) Distributions. Make any Distribution except (i) any Subsidiary may
make Distributions to the Company or to any wholly owned Subsidiary which is
its immediate parent, (ii) the Company may repurchase shares of Preferred
Stock in accordance with the Company's Charter, (iii) the Company may
repurchase shares of Common Stock from its employees at cost or fair market
value upon termination of employment, (iv) the Company may make the
repurchase contemplated in the Exchange Agreements and the Repurchase
Agreement.
(b) Amendment of Employee Plans. Amend any stock or stock option plan
or other material employee benefit plan or arrangement in any material
respect.
(c) Transaction with Affiliates. Except for transactions expressly
contemplated by the Related Agreement or disclosed in a schedule to the
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Purchase Agreement, effect or remain obligated with respect to any
transaction with any Affiliate (other than with the Company or any
wholly owned Subsidiary of the Company) or any Member of the Immediate
Family of any Affiliate or amend the terms of any such permitted
arrangement.
(d) Line of Business. Not engage in any line of business other than the
business of providing integrated non-hazardous solid waste management
services to commercial, municipal, industrial and residential customers.
5.6. Conduct of Business. Each of the Company and its Subsidiaries will:
(a) Maintenance of Properties, etc. Keep its properties and assets in
such repair, working order and condition, and will from time to time make
such repairs, renewals, replacements, additions and improvements thereto, as
its management deems reasonably necessary and appropriate, and will comply
at all times in all material respects with the provisions of all material
Contractual Obligations (including its Charter, Bylaws and senior bank
credit facility) applicable to it so as to prevent any loss or forfeiture
thereof or thereunder unless compliance therewith is being at the time
contested in good faith by appropriate proceedings, or management considers
it prudent business judgment not to comply, and will do all things necessary
to preserve, renew and keep in full force and effect and in good Standing
its corporate existence and authority necessary to continue its business.
(b) Compliance with Legal Requirements. Comply in all material respects
with all Legal Requirement, as in effect from time to time, applicable to
it, except where compliance therewith shall at the time be contested in good
faith by appropriate proceedings.
(c) Insurance. Keep its assets which are of an insurable character
insured against loss or damage by fire, explosion or other hazards which may
be insured against by extended coverage in an amount sufficient to prevent
it from becoming a co-insurer and in any event not less than 80% of the
insurable value of the property insured, and will maintain insurance against
liability to persons and property and other hazards and risks to the extent
and in the manner customary in the judgment of the Board of Directors of the
Company for companies in similar businesses similarly situated. All such
insurance shall be provided by reputable insurers licensed to write
insurance in the jurisdiction where the insured entity is located; provided,
however, that the Company and its Subsidiaries may effect workers'
compensation insurance or similar coverage with respect to operations in any
particular state or other jurisdiction through an insurance fund operated by
such state or jurisdiction.
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(d) Foreign Qualification. Be qualified as a foreign corporation in
each jurisdition in which it is required to qualify, except for such
jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.
5.7. Replacement of Chief Executive. Upon the death, resignation, retirement
or removal of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Chief Executive Officer of the Company, the
Required Holders shall have the right to participate in the search for, and
shall approve (not to be unreasonably withheld), his replacement.
5.8. Ownership of Subsidiary Stock. The Company shall not have any
Subsidiary that is not a wholly owned Subsidiary other than Subsidiaries for
which the Required Holders have provided their written consent, which may not be
unreasonably withheld.
5.9. Compliance with ERISA etc. The Company and its Subsidiaries will meet
all minimum funding requirements imposed by ERISA or the Code (without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted) and will at all times comply in all
material respects with all other provisions of ERISA and the Code.
5.10. Annual Meeting. Within 180 days after the Company's annual financial
statements are required to be furnished in accordance with Section 5.2(a) and on
not less than 10 days prior written notice, the Company will hold an annual
stockholders meeting. At such annual meeting the principal executive, financial
and operation officers of the Company and its Subsidiaries will present a review
of, and will discuss with those in attendance in reasonable detail, the general
affairs, management, financial condition, results of operation and business
prospects of the Company and its Subsidiaries.
5.11. SBA Requirements. Each of the Company and its Subsidiaries will:
(a) Information. Promptly furnish to the Investors that are SBICs upon
request all forms that may be required to be filed with the SBA from time to
time in connection with the transactions contemplated by the Related
Agreement and such Investors' Ownership of Investor Securities and shall
provide such Investors and the SBA with such other information and forms
(including all information necessary for the Investors to prepare SBA Form
468 and an accompanying assessment of economic impact under 13 CFR
ss.197.304(c)) as such Investors, in their reasonable discretion, or the SBA
may from time to time request with respect to the transactions completed by
this Agreement and such Investors' ownership of Investor Securities. The
Company shall at all times permit any Investor that is an SBIC and, if
necessary, a representative of the SBA, reasonable access to the Company's
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records during normal business hours upon prior notice and the Company shall
provide such information as such Investor or the SBA may reasonably request
in order to verify compliance with this Section 5.11, including an
officer's certificate indicating such compliance.
(b) Compliance: Rescission Right. Not engage in any discriminatory
activities prohibited by 13 CFR parts 112, 113 and 117. The Company will not
use directly or indirectly the proceeds of the issuance and sale of the
Investor Securities for any purpose for which an SBIC is prohibited from
providing funds under 13 CFR ss. 107.901. The Company shall not change its
business activity in any manner which, by reason of such change in business
activity, would render the Company ineligible as a "small business concern"
under the Small Business Investment Act. The Company acknowledges and agrees
that (a) any diversion of the proceeds from their intended use or (b) the
Company's becoming ineligible as a "small business concern" by reason of a
change in the Company's business activity within one year from the closing
under the Purchase Agreement, shall entitle any Investor that constitutes an
SBIC, upon demand, and in addition to any other remedies that may exist, to
immediate rescission of the Related Agreements and repayment in full of the
funds invested by it as contemplated by 13 CFR ss. 107.305 and 13 CFR ss.
107.706.
5.12. Real Property Holding Corporation. If at any time in the future the
Company or any of its Subsidiaries shall become such a "United States real
property holding corporation" as defined in Section 897(c)(2) of the Code and
Treasury Regulation section 1.897-2(b), the Company shall notify each foreign
Investor of such event as promptly as practicable. Within 30 days after receipt
of a request from a foreign Investor, the Company shall prepare and deliver to
such foreign Investor the statement required under Treasury Regulation section
1.897-2(h) and, subject to the succeeding sentence, either or both of the
following documents: (a) an affidavit in conformance with the requirements of
section 1445(b)(3) of the Code and the regulations thereunder or (b) a notarized
statement, executed by an officer having actual knowledge of the fact, that the
Shares held by such foreign Investor are of a class that is regularly traded on
an established securities market, within the meaning of section 1445(b)(6) of
the Code and the regulations thereunder. If the Company is unable to provide
either of the documents described in clauses (a) or (b) above upon request, it
shall promptly, and in any event within 30 days, notify such foreign Investor in
writing of the reason for such inability. Finally, upon the request of a foreign
Investor and without regard to whether either document described in clauses (a)
or (b) above has been requested, the Company shall reasonably cooperate with the
efforts of such foreign Investor to obtain a "qualifying statement" within the
meaning of section 1445(b)(4) of the Code and the regulations thereunder or such
other documents as would excuse a transferee of a foreign Investor's interest
from withholding of income tax imposed pursuant to section 897(a) of the Code.
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6. RIGHTS TO PARTICIPATE IN FUTURE OFFERINGS.
6.1. Right of First Offer. The Company shall not issue or sell any Common
Stock (including securities convertible into, or options, warrants or other
rights to purchase Common Stock, but excluding the shares described in Section
6.7) (collectively, the "Offered Shares") without first providing each
Stockholder and each Other Stockholder the right to subscribe for its
Proportionate Percentage of the Offered Shares at a price and on such other
terms which are at least as favorable as the Company shall have offered or
proposes to offer and which the Company shall have specified in a notice
delivered to each Stockholder and each Other Stockholder (the "Proposal");
provided, however that each Stockholder and each Other Stockholder shall have
the option to purchase Offered Shares for cash, regardless of the form of
consideration the Company proposes. The Proposal by its terms shall remain open
and irrevocable for a period of 30 days from the date it is delivered by the
Company to each Stockholder and each Other Stockholder (the "Exercise Period").
The Proposal shall also certify that the Company either (a) has received a bona
fide offer from a prospective purchaser, who shall be identified in the
Proposal, for consideration having a fair market value set forth in such Offer
or (b) intends in good faith to offer the Offered Shares at the price and on the
terms set forth in such Proposal.
"Proportionage Percentage" means, for any Stockholder or Other Stockholder,
a percentage of Offered Shares covered by the Proposal equal to (i) the number
of shares of Common Stock held by such Stockholder or Other Stockholder (on an
as-converted and as exercised basis) divided by (ii) the total number of shares
of Common Stock outstanding at the time of delivery of the Proposal (assuming
the conversion and exercise of all options, warrants, rights and shares of
capital stock that are convertible into or exercisable for Common Stock).
6.2. Notice. Notice of each Stockholder's or Other Stockholder's intention
to accept the Proposal made pursuant to Section 6.1 shall be evidenced by a
writing signed by such Stockholder or Other Stockholder and delivered to the
Company prior to the end of the Exercise Period (the "Notice of Purchase")
setting forth that portion of the Offered Shares such holder elects to purchase
(the "Accepted Shares").
6.3. Full Acceptance. In the event that all Stockholders and Other
Stockholders elect to purchase all of the Offered Shares offered in the
Proposal, the Company shall sell to each such holder, pursuant to Section 6.6,
the number of Accepted Shares set forth in such holder's Notice of Purchase.
6.4. Partial Acceptance. In the event that one or more Stockholders or Other
Stockholders do not elect to purchase all of the Offered Shares offered in the
Proposal, the Company shall sell to each holder that has so elected to purchase,
pursuant to Section 6.6, the number of Accepted Shares, if any, set forth in
such
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holder's Notice of Purchase. Stockholders or Other Stockholders may purchase any
remaining shares offered in the Proposal not purchased by the other Stockholders
or Other Stockholders pro rata based on their respective Proportionate
Percentages, or as they may otherwise agree.
6.5. No Fractional Shares. For the purpose of avoiding fractions as to
Offered Shares, the Company may adjust upward or downward by not more than one
full share the number of Offered Shares which any Stockholder or Other
Stockholder would otherwise be entitled to purchase.
6.6. Sale of Shares. No later than 30 days after the expiration of the
Exercise Period, the Company shall deliver to each Stockholder and each Other
Stockholder who has submitted a Notice of Purchase to the Company a notice
indicating the number of Offered Shares which the Company shall sell to such
holder pursuant to this Section 6 and the terms and conditions of such sale,
which shall be in all respects (including, without limitation, unit price and
interest rates) the same as specified in the proposal. The sale to such holders
of such Offered Shares shall take place not later than 10 days after receipt of
such notice.
Any sale of Offered Shares that were not selected for purchase by the
Stockholders or Other Stockholders as provided above shall take place not later
than 180 days after the expiration of the Exercise Period. Such sale shall be
upon terms and conditions in all respects (including, without limitation, unit
price and interest rates) which are no less favorable to the Company than those
set forth in the Proposal. Any refused Offered Shares not purchased as
contemplated by the Proposal within the 90-day period specified above shall
remain subject to this Section 6.
6.7. Exclusion of Certain Shares. Notwithstanding any contrary provision of
this Section 6, Offered Shares shall not include (i) shares of Common Stock
issuable upon conversion of the Preferred Stock, (ii) shares of Common Stock
issued or issuable upon exercise of the Warrants (iii) shares of Common Stock
issued or issuable as a dividend or distribution by the Company, (iv) shares of
capital stock issued to employees, officers or directors pursuant to options,
warrants or rights outstanding on the date hereof, pursuant to plans approved by
the Board of Directors or pursuant to arrangements permitted under this
Agreement, (v) shares of capital stock issued as consideration for the
acquisition of a business or (vi) shares of capital stock issued in a
transaction or series of related transactions in which the Company receives
consideration of less than $500,000 and in which the purchase price per share is
not less than the then-applicable conversion price per share of the Series D
Preferred Stock, provided that the aggregate amount of all such transactions
shall not exceed $500,000 per year.
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6.8. Waivers. The parties hereto waive the provisions of Section 4 of the
Amended and Restated Stockholders Agreement dated May 25, 1994, as amended, with
respect to the offer and sale of Series D Convertible Preferred Stock of the
Company, and the issuance of Series A Redeemable Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, including all notice requirements
relating thereto.
7. LEGEND. Each certificate evidencing Shares shall contain the following
legend:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER RESTRICTIONS AS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF
DECEMBER 22,1995 A COPY OF WHICH IS ON FILE IN THE OFFICES OF THE
CORPORATION ON AND WILL BE FURNISHED TO THE HOLDER HEREOF WITHOUT CHARGE
UPON WRITTEN REQUEST
8. TERMINATION. This Agreement shall terminate upon the first to occur of (i) a
Qualified Offering or (ii) any merger or consolidation of the Company into or
with another corporation (except one in which the holders of the capital stock
of the Corporation immediately prior to such merger or consolidation continue to
hold, directly or indirectly, more than 50% by voting power of the capital stock
of the surviving corporation), or the sale of all or substantially all the
assets of the Company.
9. GENERAL.
9.1. Remedies. The parties shall have all remedies for breach of this
Agreement available to them provided by law or equity. Without limiting the
generality of the foregoing, in addition to all other rights and remedies
available at law or in equity, the parties shall be entitled to obtain specific
performance of the obligations of each party to this Agreement and immediate
injunctive relief. In the event any action or proceeding is brought in equity to
enforce the same, neither the Company nor any party will urge, as a defense,
that an adequate remedy at law exists.
9.2. Notices. All notices or other communications required or permitted to
be delivered hereunder shall be in writing and shall be delivered to each of the
parties at their respective addresses as set forth in Schedules A or B.
Any party to this Agreement may at any time change the address to which
notice to such party shall be delivered by giving notice of such change to the
other parties and such notice shall be deemed given when received by the other
parties. Notices shall be deemed effectively given when personally delivered or
sent to the
-24-
recipient at the address set forth above by telex or a facsimile transmission,
one business day after having been delivered to a receipted, nationally
recognized courier, properly addressed or five business days after having been
deposited into the United States mail, postage prepaid, provided, that any
notice to any party outside of the United States shall be sent by telecopy and
confirmed by overnight or two-day courier.
9.3. Amendments, Waiver and Consents. Any provision in this Agreement to the
contrary notwithstanding, changes in or additions to this Agreement may be made,
and compliance with any covenant or provision herein set forth may be omitted or
waived, if the Company (a) shall obtain consent thereto in writing from the
Required Holders and (b) shall, in each such case, deliver copies of such
consent in writing to any parties who did not execute the same.
9.4. Binding Effect: Assignment. This Agreement shall be binding upon and
inure to the benefit of the personal representatives, successors and assigns of
the respective parties hereto. The Company shall not have the right to assign
its rights or obligations hereunder or any interest herein without obtaining the
prior written consent of the Required Holders. The Covered Stockholders and the
Investors may assign or transfer their rights under this Agreement to the extent
permitted herein and by the other agreements between the respective parties and
the Company. Each of BCI, NAF and VVCF may transfer its rights to designate a
member of the Board of Directors of the Company pursuant to Section 4.1 hereof
so long as such transfer of rights is accompanied by a Transfer of 50% of the
Warrants held by such Investor immediately after the Closing (as defined in the
Purchase Agreement) after giving effect to the transactions contemplated by the
Related Agreements; provided, however, that neither BCI, VVCF nor NAV may
transfer any rights to designate a member of the Board of Directors to any
Person in a business similar to that engaged in by the Company. The holders of
Series D Preferred Stock shall cease to have the right to designate a Director
pursuant to Section 4.1 at such time as a majority of the Shares of Series D
Preferred Stock is owned by a Person in a business similar to that engaged in by
the Company.
9.5 Severability. If any provision of this Agreement shall be found by any
court of competent jurisdiction to be invalid or unenforceable, the parties
waive such provision to the extent that it is found to be invalid or
unenforceable. Such provision shall, to the maximum extent allowable by law, be
modified by such court so that it becomes enforceable and, as modified, shall be
enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect.
9.6. Entire Agreement. This Agreement and the Related Agreements constitute
the entire agreement of the parties with respect to the subject matter hereof
and thereof and supersede all prior and contemporaneous understandings, whether
written or oral, including without limitation, the Amended and Restated
Stockholders
-25-
Agreement, dated May 25, 1994, as amended, by and among the Company and the
Stockholders Party thereto.
9.7. Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one and the same instrument.
9.8. Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
9.9. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of The
Commonwealth of Massachusetts.
The parties hereto have executed this Agreement under seal as of the date
first above written.
▇▇▇▇▇▇▇ WASTE SYSTEMS, INC.
By _________________________
Title:
NORWEST EQUITY PARTNERS V
By: Itasca Partners
By_________________________
Title:
WESTON PRESIDIO CAPITAL II, L.P.
By: Weston Presidio Capital Management, II, L.P.
Its General Partner
By__________________________
Title:
-26-
BCI GROWTH III, L.P.
By: Teaneck Associates
Its General Partner
By________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
General Partner
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, TRUSTEE
FOR BLAKE ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
TRUST FUND #1 U/T/A DATED
DECEMBER __, 1995
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, TRUSTEE
FOR ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
TRUST FUND #1 U/T/A DATED
DECEMBER__ 1995
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇. ▇▇▇▇, III, TRUSTEE
FOR ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TRUST FUND #1 U/T/A DATED
DECEMBER __,1995
By: _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇, III, Trustee
▇▇▇▇▇ ▇. ▇▇▇▇, III, TRUSTEE
FOR ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
TRUST FUND #1 U/T/A DATED
DECEMBER__, 1995
By: _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇, H, Trustee
-27-
▇▇▇▇▇ ▇. ▇▇▇▇, III, TRUSTEE
FOR LAUREN ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TRUST FUND #1 U/T/A DATED
DECEMBER_,1995
By:
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, III, Trustee
NORTH ATLANTIC VENTURE FUND, L.P.
By: North Atlantic Capital Partners, L.P.
Its General Partner
By
---------------------------------
Title:
VERMONT VENTURE CAPITAL FUND, L.P.
By: Vermont Venture Capital Partners, L.P.
Its General Partner
By
---------------------------------
Title:
NATIONAL WASTE INDUSTRIES, INC.
By
---------------------------------
Title:
FSC CORP
By
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
PRUDENTIAL SECURITIES INCORPORATED
By
---------------------------------
Title:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-28-
--------------------------
▇▇▇▇ ▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ O'NElLL ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ AND ▇▇▇▇▇ ▇. ▇▇▇▇,
III, TRUSTEES U/T/A DATED MARCH
17,1994, ▇▇▇▇▇ ▇. ▇▇▇▇, III, SETTLOR
By
---------------------------------
Title:
▇▇▇▇▇ ▇. ▇▇▇▇, III, TRUSTEE
FOR ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TRUST FUND #1 U/T/A DATED
DECEMBER ___, 1995
By:
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, III, Trustee
-29-
▇▇▇▇▇ ▇. ▇▇▇▇, III, TRUSTEE
FOR ▇▇▇▇▇▇ LIVlNGSTONE CASELLA
TRUST FUND #1 U/T/A DATED
DECEMBER __, 1995
By:
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, III, Trustee
▇▇▇▇▇ ▇. ▇▇▇▇, III, TRUSTEE
FOR ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
TRUST FUND #1 U/T/A
DATED DECEMBER __,1995
By:
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, III, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇
▇▇▇▇▇▇, TRUSTEES FOR ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST FUND
#1 U/T/A DATED DECEMBER ___ 1995
By:
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
By:
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇
▇▇▇▇▇▇, TRUSTEES FOR ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ TRUST FUND
#l U/T/A DATED DECEMBER ___ 1995
By:
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
By:
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
-30-
SCHEDULE A TO STOCKHOLDERS AGREEMENT
------------------------------------
Management Stockholders
-----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The ▇▇▇▇▇▇ Trusts
The Casella Trusts
SCHEDULE B TO STOCKHOLDERS AGREEMENT
Number of Shares
Investors and Address Held On Date Hereof
--------------------- -------------------
Weston Presidio Capital II, L.P. 775,370
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Norwest Equity Partners V 818,227
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
BCI Growth III, L.P. 1,635,795
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
North Atlantic Venture Fund, L.P. 309,972
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Vermont Venture Capital Fund, L.P. ▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Number of Shares
Investors and Address Held On Date Hereof
--------------------- -------------------
FSC Corp. 71,429
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop 01-32-01
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Prudential Securities Incorporated 8,572
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 5,714
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
B-2
SCHEDULE C TO STOCKHOLDERS AGREEMENT
------------------------------------
Internal Rate of Return (as defined below) through December 31, 1997
--------------------------------------------------------------------
Internal Rate of Return after December 31, 1997
-----------------------------------------------
Calculation of Internal Rate of Return
--------------------------------------
B-3