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EXHIBIT 10.9
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT ("Agreement") is entered into as of September
30, 1997, by and among Waste Connections, Inc., a Delaware corporation (the
"Company"), the persons named on Exhibit A attached to this Agreement, each of
whom is a holder of shares of Series A Preferred Stock of the Company (each a
"Series A Preferred Stockholder") or a holder of shares of Common Stock of the
Company (each a "Common Stockholder"), (the Series A Preferred Stockholders and
the Common Stockholders sometimes shall be hereinafter collectively referred to
as "Investors"), with reference to the following facts:
As of the date of this Agreement, certain of the Series A Preferred
Stockholders have acquired 2,500,000 shares of Series A Preferred Stock of the
Company and certain of the Common Stockholders have acquired 2,500,000 shares of
Common Stock of the Company pursuant to the terms of the Stock Purchase
Agreement (the "Purchase Agreement") among the Series A Preferred Stockholders,
the Common Stockholders and the Company. It is a condition to the closing of the
transactions contemplated by the Purchase Agreement that this Agreement be
executed by the parties hereto.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth in this Agreement, the parties agree as
follows:
1. Voting Agreement. Each of the Investors hereby agrees with respect to
the election of directors of the Company that upon request of the holders of at
least 50% of the outstanding shares of Series A Preferred Stock of the Company,
the Investors shall vote the shares of the Company's stock then owned by them in
favor of the number of Series A Nominees (the "Series A Nominees") listed below
opposite the then applicable authorized number of directors, which nominees
shall be nominated by the holders of at least 50% of the outstanding shares of
Series A Preferred Stock of the Company:
Authorized Number
of Directors Series A Nominees
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3 1
4 2
5 2
6 3
7 3
8 4
9 4
If at the time such request is made, the authorized number of directors is
five or fewer, the Board of Directors of the Company shall promptly amend the
Bylaws of the Company to increase the number of directors to a number that would
allow the number of Series A Nominees derived from the above table to be
elected, and then shall promptly elect the Series A Nominees selected by the
holders of at least 50% of the outstanding shares of Series A Preferred Stock of
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the Company to fill the vacancies created by such increase in the authorized
number of directors. If at the time such request is made, the authorized number
of directors exceeds five, the Board of Directors of the Company shall promptly
amend the Bylaws of the Company to increase the number of directors to nine, and
one or more of the directors then in office shall resign so that the number of
directors then in office is five. Following such resignations, the Board of
Directors shall elect four Series A Nominees selected by the holders of at least
50% of the outstanding shares of Series A Preferred Stock of the Company to fill
the vacancies created by such increase. If any director refuses to resign after
being asked to do so by the Board, each of the Investors hereby agrees to vote
the shares of the Company's stock then owned by such Investor for the removal of
such director.
2. Co-Sale Agreement.
2.1 Definitions.
(a) "Co-Sale Shares" shall mean shares of the Company's Common Stock
and securities convertible (other than the Preferred Stock) into, exchangeable
for, or exercisable for, Common Stock now owned or subsequently acquired by the
Investors. The number of Co-Sale Shares relating to a convertible security shall
be the number of shares of Common Stock of the Company into which such security
is convertible, exchangeable or exercisable.
(b) "Preferred Stock" shall mean the Series A Preferred Stock of the
Company.
2.2 Sales by a Stockholder.
(a) Except for certain sales and gifts permitted by Section 3, if
any of the Investors or Permitted Transferees (as defined below) proposes to
sell or transfer any Co-Sale Shares (any one of such Investors and Permitted
Transferees being hereinafter sometimes called the "Transferring Stockholder"),
then the Transferring Stockholder shall promptly give written notice (the
"Co-Sale Notice") to the Company and to each of the Investors at least 20 days
prior to the closing of such sale or transfer. The Co-Sale Notice shall describe
in reasonable detail the proposed sale or transfer including, without
limitation, the number of Co-Sale Shares to be sold or transferred, the nature
of such sale or transfer, the consideration to be paid, and the name and address
of each prospective purchaser or transferee. In the event that the sale or
transfer is being made pursuant to the provisions of Section 3 hereof, the
Co-Sale Notice shall state under which subparagraph the sale or transfer is
being made.
(b) With respect to a proposed transfer by a Transferring
Stockholder, the Investors shall have the right, exercisable upon written notice
to the Transferring Stockholder within 15 days after receipt of the Co-Sale
Notice, to participate in such sale on the same terms and conditions specified
in the Co-Sale Notice. To the extent that Investors exercise such right
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of participation in accordance with the terms and conditions set forth below,
the number of Co-Sale Shares that the Transferring Stockholder may sell in the
transaction shall be reduced.
(c) Each Investor may sell all or any part of that number of Co-Sale
Shares at the same price per share and on the same terms and conditions as
involved in the sale by the Transferring Stockholder equal to the total number
of shares to be sold in the transaction multiplied by a fraction, the numerator
of which is the number of Co-Sale Shares held by such Investor and the
denominator of which is the total number of Co-Sale Shares outstanding.
(d) Each Investor to participate in the right of co-sale (a
"Participant") shall effect his, her or its participation in the sale by
promptly delivering to the Transferring Stockholder for transfer to the
prospective purchaser one or more certificates, properly endorsed for transfer,
which represent:
(i) the number of Co-Sale Shares which such Participant elects
to sell; or
(ii) that number of shares of Series A Preferred Stock which
is at such time convertible into the number of Co-Sale Shares which such
Participant elects to sell; provided, however, that if the prospective purchaser
objects to the delivery of Series A Preferred Stock in lieu of Co-Sale Shares,
such Participant shall convert such Series A Preferred Stock into Co-Sale Shares
and deliver Co-Sale Shares as provided above. The Company agrees to make any
such conversion concurrent with the actual transfer of such shares to the
purchaser.
(e) The stock certificate or certificates that the Participant
delivers to the Transferring Stockholder pursuant to Section 2.2(d) shall be
transferred to the prospective purchaser in consummation of the sale of the
Co-Sale Shares pursuant to the terms and conditions specified in the Co-Sale
Notice, and the Transferring Stockholder shall concurrently therewith remit to
such Participant the sale proceeds to which such Participant is entitled by
reason of his, her or its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or otherwise
refuses to purchase shares or other securities from a Participant exercising
his, her or its rights of co-sale hereunder, the Transferring Stockholder shall
not sell to such prospective purchaser or purchasers any Co-Sale Shares unless
and until, simultaneously with such sale, the Transferring Stockholder shall
purchase such shares or other securities from such Participant.
(f) The exercise or non-exercise of the rights of the Participants
hereunder to participate in one or more sales of Co-Sale Shares made under this
Agreement shall not adversely affect their rights to participate in subsequent
sales of Co-Sale Shares subject to this Agreement.
(g) If none of the Investors elects to participate in the sale of
the Co-Sale Shares subject to the Co-Sale Notice, the Transferring Stockholder
may, not later than sixty (60) days following delivery to the Company and each
of the Investors of the Co-Sale Notice, enter
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into an agreement providing for the closing of the transfer of the Co-Sale
Shares covered by the Co-Sale Notice within thirty (30) days after the date of
such agreement on terms and conditions not more favorable to the Transferring
Stockholder than those described in the Co-Sale Notice. Any proposed transfer on
terms and conditions more favorable than those described in the Co-Sale Notice,
as well as any subsequent proposed transfer of any of the Co-Sale Shares by an
Investor, shall again be subject to the co-sale rights of the other Investors
and shall require compliance with the procedures described in this Section 2.2.
(h) Any Co-Sale Shares sold pursuant to this Section 2.2 shall no
longer be subject to this Agreement.
3. Exempt Transfers.
(a) Notwithstanding the foregoing, the provisions of Section 2 shall
not apply to (i) any transfer to the ancestors, descendants or spouse or to
trusts for the benefit of a Transferring Stockholder; or (ii) any bona fide gift
by an Investor; provided that (A) the Transferring Stockholder shall inform the
Investors of such transfer or gift prior to effecting it and (B) the transferee
or donee shall furnish the Investors with a written agreement to be bound by and
comply with all provisions of this Agreement, the Investors' Rights Agreement
and the Stock Purchase Agreement. Such transferred Co-Sale Shares shall remain
"Co-Sale Shares" hereunder and such transferee or donee shall be treated as a
"Transferring Stockholder" and as an "Investor". In addition, notwithstanding
the foregoing, the provisions of Section 2.2 shall not apply to any transfers
from an Investor to a partner, active or retired of an Investor, the estate of
any such partner or a parent or subsidiary corporation of an Investor, or a
corporation which has the same parent corporation as an Investor provided that
such Investor notifies the other Stockholders prior to effecting the transfer
and the transferee shall furnish the Stockholders with a written agreement to be
bound by and comply with all provisions of this Agreement, the Investors' Rights
Agreement and the Stock Purchase Agreement. Such transferred shares shall remain
"Co-Sale Shares" hereunder and such transferee (a "Permitted Transferee") shall
be treated as an additional "Transferring Stockholder" for purposes of this
Agreement.
(b) Notwithstanding the foregoing, the provisions of Section 2 of
this Agreement shall not apply to the sale of any Co-Sale Shares (i) to the
public pursuant to a registration statement filed with, and declared effective
by, the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act") or (ii) to the Company on termination of the
employment of a Transferring Stockholder pursuant to the terms of any agreement
between that Transferring Stockholder and the Company or as otherwise approved
by the Board of Directors of the Company.
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4. Prohibited Transfers.
(a) In the event a Transferring Stockholder should sell any Co-Sale
Shares in contravention of the co-sale rights of the Investors under this
Agreement (a "Prohibited Transfer"), each Investor who had co-sale rights in
connection with the Prohibited Transfer, in addition to such other remedies as
may be available at law, in equity or hereunder, shall have the put option
provided below, and the Transferring Stockholder shall be bound by the
applicable provisions of such option.
(b) In the event of a Prohibited Transfer, each Investor shall have
the right to sell to the Transferring Stockholder the type and number of shares
of Co-Sale Shares equal to the number of shares each Investor would have been
entitled to transfer to the purchaser had the Prohibited Transfer been effected
pursuant to and in compliance with the terms of Section 2.2 this Agreement. Such
sale shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be sold to
the Transferring Stockholder shall be equal to the price per share paid by the
purchaser to the Transferring Stockholder in the Prohibited Transfer. The
Transferring Stockholder shall also reimburse each Investor for any and all fees
and expenses, including legal fees and expenses, incurred pursuant to the
exercise or the attempted exercise of the Investor's rights under Section 2.2.
(ii) Within 90 days after the later of the dates on which the
Investor (A) received notice of the Prohibited Transfer or (B) otherwise became
aware of the Prohibited Transfer, each Investor shall, if exercising the option
created hereby, deliver to the Transferring Stockholder the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(iii) The Transferring Stockholder shall, upon receipt of the
certificate or certificates for the shares to be sold by an Investor, pursuant
to this Section 4(b), pay the aggregate purchase price therefor and the amount
of reimbursable fees and expenses, as specified in Section 4(b)(i), in cash or
by other means acceptable to the Investor.
(c) Notwithstanding the foregoing, any attempt by a Transferring
Stockholder to transfer Co-Sale Shares in violation of Section 2.2 hereof shall
be void and the Company agrees it will not effect such a transfer nor will it
treat any alleged transferee as the holder of such shares without the prior
written consent of a majority-in-interest of the Investors.
5. Further Assurances. The parties shall do or perform any and all such
further acts and things and execute and deliver any and all such documents and
instruments as may be reasonably necessary to carry out the provisions of this
Agreement. Exercise of the parties' rights under this Agreement shall be subject
to and conditioned upon, and each Transferring
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Stockholder, Investor and the Company shall use their best efforts to assist
each Transferring Stockholder in, compliance with applicable laws.
6. Spousal Consents. Any natural person to whose benefit this Agreement
may now or hereafter inure shall use his or her best efforts to obtain the
acknowledgment and consent of his or her spouse, whether such party is now
married or marries or remarries hereafter, in substantially the form attached
hereto following the signature page hereof.
7. Stop Transfer Instructions. The parties agree that stop order
instructions prohibiting transfer of certificates for Shares will be issued and
filed by the Company on its records or with the Company's transfer agent to
prevent any disposition otherwise than strictly in accordance with this
Agreement and agree to cause the officers of the Company to refuse to record on
the books of the Company any assignments or transfers made or attempted to be
made except in accordance with this Agreement and to cause said officers to
refuse to cancel certificates, or issue or deliver new certificates therefor,
where the purchaser, assignee, pledgee, donee or other transferee has acquired
certificates or any Shares represented thereby otherwise than strictly in
accordance with this Agreement.
8. Additional Stockholders. If the Company shall at any future time desire
to issue or reissue Shares to any Investor, all such issuees shall become
parties to this Agreement (and their spouses shall acknowledge and consent
thereto as provided in Section 6) with respect to such Shares by executing a
writing agreeing to be bound hereby.
9. Legend. Each certificate representing shares of stock now or hereafter
owned by any Permitted Transferee shall include the following legend:
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER AND THE VOTING OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT, BY AND BETWEEN THE
STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF STOCK OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE CORPORATION.
10. Repurchase Agreement. This Stockholder Agreement is subject to, and
shall in no manner limit the right of the Company to repurchase securities from
an Investor pursuant to any stock restriction agreement or other agreement
between the Company and the Investor.
11. Ownership. Each Transferring Stockholder represents and warrants that
such Transferring Stockholder is the sole legal and beneficial owner of the
shares of stock subject to this Agreement and that no other person has any
interest (other than a community property interest) in such shares.
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12. Notices. Any notice, consent, authorization or other communication to
be given hereunder shall be in writing and shall be deemed duly given and
received when delivered personally or transmitted by facsimile transmission with
receipt acknowledged by the addressee or three days after being mailed by first
class mail, or the next business day after being deposited for next-day delivery
with a nationally recognized overnight delivery service, charges and postage
prepaid, properly addressed to the party to receive such notice at the following
address for such party (or at such other address as shall be specified by like
notice):
(a) if to the Company, to:
Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Transferring Stockholders, to the address indicated
on the Company's records.
13. Severability. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those to which it is held to be
invalid or unenforceable, shall not be affected thereby.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
15. Entire Agreement; Amendment; Waiver. This Agreement contain the entire
agreement of the parties and supersede all prior negotiations, correspondence,
agreements and understandings, written and oral, between or among the parties,
regarding the subject matter hereof.
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16. Successors and Assigns. Without limiting the restrictions on transfers
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the parties hereto and their respective successors, permitted assigns,
personal or legal representatives, heirs and legatees, whether herein so
expressed or not, and this Agreement shall be binding on any person who acquires
any interest in any Shares, whether or not in accordance with this Agreement,
and on any executor, administrator, successor or assign of any such person.
17. Voting Trust. Notwithstanding anything herein to the contrary, Shares
may be transferred by one or more Transferring Stockholders to voting trustees
subject to all of the terms and conditions of this Agreement; provided that the
beneficial ownership of such Shares is not transferred, that any voting trust
certificates issued refer to the provisions of this Agreement and that such
Shares may not be transferred without the same being considered a transfer of
Shares within the scope of this Agreement.
18. Amendment. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by the written consent of (i)
as to the Company, only by the Company, and (ii) as to each Investor, that
Investor. Any amendment or waiver effected in accordance with clauses (i) or
(ii) of this paragraph shall be binding upon that Investor, and the successors
and permitted assigns of that Investor, as the case may be.
19. Termination. This Agreement shall terminate on the earliest of (a) the
closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act covering the offer and
sale of the Company's Common Stock (A) at a price per share of not less than
$5.00 (as adjusted for stock splits, reverse stock splits and the like effected
after the date of this Agreement) and an aggregate offering price of not less
than $5,000,000 or (B) upon the request of Investors pursuant to the terms of
the Investors' Rights Agreement, dated as of September 30, 1997, to file a
registration statement with the Securities and Exchange Commission, (b) the
written agreement of the Company and parties hereto holding two-thirds or more
of the Shares then outstanding, (c) the dissolution, bankruptcy, insolvency or
receivership of the Company or (d) ten years from the date of this Agreement.
20. Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
21. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of California, without
regard to that state's conflict of laws principles.
22. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
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23. Interpretation. This Agreement shall be construed according to its
fair language. The rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: WASTE CONNECTIONS, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
President and CEO
INVESTOR:
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(Name of Investor)
By:
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Name:
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Title:
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Exhibit A
LIST OF COMMON AND SERIES A PREFERRED STOCKHOLDERS